INTERVIEW: Pakistan's ambitious rice export goals face competitive challenges: industry official

Pakistan aims to boost rice exports by two and a half times by 2030, but faces hurdles including fierce competition from India and rising costs of fertilizers, seeds, and machinery that impede sustainable shipment growth, Malik Faisal Jahangir, Chairman of the Rice Exporters Association of Pakistan (REAP), told S&P Global Commodity Insights.

In the financial year ended June 30, 2024, Pakistan's rice exports hit a record high of $4 billion, driven by a bumper crop and robust global demand.

Despite challenges, exporters optimistic for 2025

Exporters are looking forward to a promising year ahead, targeting $5 billion for the next fiscal year. A comprehensive strategy will focus on modern seed research and promoting agricultural practices to boost exports further.

The government has set an ambitious target of increasing annual rice exports to $10 billion by 2030, a more than two-fold increase from the current $4 billion. "To achieve this, the focus will be on improving quality assurance and brand management globally. With the right conditions and support, Pakistan's rice exporters are poised for a record-breaking year," Malik Faisal said.

The rationale behind setting the latest target for Pakistan's rice exports is to capitalize on the country's potential for increased rice production and export earnings. This ambitious target is driven by the introduction of high-yielding hybrid rice varieties and improved quality control measures, he added.

Pakistan's rice exports showed a significant increase in the year ended June 30, 2024. According to the Rice Exporters Association of Pakistan, total rice exports for the year 2023-24 reached 6.010 million mt, valued at $3.93 billion. In comparison, total rice exports for 2022-23 were at 3.717 million mt, valued at approximately $2.15 billion. This represents an increase of 61.5% in quantity and 83.5% in value compared to the previous year.

Pakistan rice exports in November rose 29% year on year to 781,882 mt, according to the data released by the Pakistan Bureau of Statistics Dec. 18. During July to November, basmati rice exports rose by 51% year on year to 370,282 mt while non-basmati increased 36% to 2 million mt, the data said.

India's export ban lift influences global rice market

Malik Faisal stated that India's export ban on non-basmati white rice in 2023 caused rice prices to surge globally. This move was initially expected to benefit other rice-exporting countries like Pakistan, which could fill the gap left by India. However, in late 2024, India lifted its ban on rice exports, leading to multiple consequences: "With India back in the market, Pakistan faces stiffer competition, especially in the non-basmati sector, which India dominates. This is concerning as India can offer rice at lower prices due to its larger production scale and subsidies," he said.

• Price pressure: The global rice market has experienced price volatility due to various factors, including export bans, weather conditions, and changing supply chains. Prices, which surged in the absence of Indian exports, are likely to fall again with India's return, pressuring Pakistan's exporters to lower their prices and potentially squeezing profit margins.
• Market share loss: Before the lift of the ban Pakistan had seen a boost in rice exports, particularly to Africa and the Middle East. Now, with India's re-entry, Pakistan may lose some of these key markets, especially if India offers more attractive prices or higher volumes.
• Shifting demand: Global rice demand remains strong, particularly in Africa, the Middle East, and Southeast Asia. However, the demand for different rice types varies.

Basmati Rice: Pakistan is known for its premium basmati rice, sought after in the Middle East, Europe, and North America. While it competes with India, the rising demand for high-quality rice offers some protection against India's policy changes. However, this demand does not offset the loss of market share in non-basmati rice.

Non-Basmati Rice: In regions like Africa, where demand for cheaper rice is growing, Pakistan had a better chance of capturing market share when India was restricted. With India's return, Pakistan will face a price-sensitive market and must compete with India's ability to offer large volumes at lower prices.

Impact on rice export outlook

High inflation, rising fuel prices, and currency depreciation have escalated rice production costs in Pakistan, making it difficult for exporters to compete amid falling global prices. The depreciating rupee lowers export prices but raises input costs, eroding profit margins. Economic instability exacerbates logistical issues, with port congestion and high freight costs reducing competitiveness against India, which has better infrastructure and government support.

Considering these dynamics, Pakistan's rice export outlook is shaped by several key factors.

Pakistan could benefit from global demand for basmati rice; however, export growth may slow due to competition from India, falling prices, and economic challenges, Malik Faisal said. To remain competitive, Pakistan should focus on value-added rice products for niche markets willing to pay premium prices and explore untapped regions, such as parts of Latin America and Eastern Europe, to counter India's market presence, he added.

While Pakistan's basmati rice sector remains strong, the overall outlook for rice exports in the coming years will depend on how the country adapts to these global shifts, including reducing production costs, diversifying export markets, and increasing the value-added component of its rice exports, Malik Faisal said.