Pakistan’s Rice Exports Decline Amidst Challenges in International Market

Web DeskSeptember 20, 2023
Pakistan's Rice Exports Decline Amidst Challenges in International Market

In the first two months of FY24, Pakistan’s rice exports have fallen by 17.3%, totaling $233 million compared to $283 million in FY23. While basmati rice exports showed an 8.2% increase, other rice categories, which constitute 80% of total rice exports, witnessed a sharp decline of 28%.

Several factors contribute to this decline, including lower inventories of non-basmati rice and the anticipation of increased output in the upcoming harvest season. The floods of the previous year had reduced national production by 21%, contributing to the decline in FY23.

However, there is an opportunity for Pakistan to capitalize on rising international rice prices due to India’s export restrictions. India, the world’s largest rice exporter, has banned non-basmati rice exports, imposed duties on parboiled rice, and set a higher floor price for basmati varieties.

Also Read: Gilgit-Baltistan Imposes Ban on Wheat Export

Despite this opportunity, obstacles persist. Cargo insurance requirements for trading directly with major markets like the United States can cost up to $2 million, making it affordable only for a few exporters. As a result, many exporters opt to trade through intermediaries in hubs like the United Arab Emirates, reducing profit margins.

Additionally, regulatory hurdles during export shipments have deterred exporters. A lack of agile policymaking and a complex bureaucracy hinder the industry’s growth potential. There is a need to incentivize both exporters and buyers, streamline export processes, and encourage new players to enter the market.

The Trade Development Authority of Pakistan (TDAP) reported that fulfilling commercial and regulatory requirements for rice export can take an average of 16 business days, with the actual time likely closer to 20-21 days. Existing exporters often face delays, and entry barriers for newcomers are even higher.

In the quest to compete with India, Pakistan should focus on innovative branding and marketing strategies for its rice products. Overhauling the agriculture sector to lower production costs is a long-term goal, but improving branding and marketing can yield immediate results.

While there have been some positive developments, such as Mexico allowing rice imports from Pakistan and Russian markets opening up, policymakers must take action to reduce barriers to entry, simplify export processes, and create an environment conducive to growth in the rice export industry.

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