Pakistani exporters hopeful of tariff reduction on rice exports to Kenya: sources

Pakistani market participants are optimistic that Kenya may soon reduce import duties on rice from Pakistan, amid ongoing trade negotiations between the two governments, multiple trade sources told S&P Global Energy July 25.

A tariff cut would significantly improve Pakistan's price competitiveness in one of East Africa's fastest-growing rice markets, potentially boosting export volumes, and reshaping regional trade flows at a time when traditional buyer Indonesia is absent from the market.

Pakistan currently imposes a 10% duty on Kenyan tea, despite being its largest buyer. In contrast, Kenya charges a 35% import duty on Pakistani rice.

Multiple trade sources said that a mutual understanding has recently been reached, under which they expect Kenya to lower the duty on Pakistani rice either to 10% or zero.

"Six months after Indonesia halted rice imports, Pakistan still holds white rice stocks, as Indonesia has been a key buyer. This year, both Indonesia and China are expected to stay out. Meanwhile, India has a white rice surplus and a bumper crop, while Pakistan anticipates a good harvest, keeping prices low across origins," a Karachi-based exporter said.

The exporter added that, to mitigate this, Pakistani exporters are trying to secure conventional buyers like Kenya.

"A 500,000 mt duty cut or duty-free access from Kenya could significantly support Pakistan's white rice market and prevent further price declines," the exporter said.

The potential move comes against a backdrop of sustained lobbying by Pakistan's government as well as by industry body Rice Exporters Association of Pakistan, which has repeatedly demanded more equitable trade terms.

The Pakistani government has indicated it may raise the duty on Kenyan tea imports if a more balanced trade arrangement is not implemented, several participants said.

Kenya remains a key destination for Pakistani rice, with a strong commercial footprint already in place.

Surging deliveries

Kenya's rice imports from Pakistan surged to 252,244 mt in 2024, marking a 143% year-on-year increase, according to data from S&P Global. This significant increase has positioned Pakistan as the largest exporter of rice to Kenya.

"Kenya has traditionally been Pakistan's backyard market. Over 50 exporters have their own offices and distribution setups there, many in partnership with local firms," said a Karachi-based trader.

REAP has been trying to negotiate duties on tea imports for years, but that never worked. Kenyan tea is firmly preferred in the Pakistani market, the trader said.

"There are strong rumors Kenya may allow duty-free imports from all origins next month. If that happens, it'll likely put an immediate floor on Pakistani rice prices. Let's see," the trader added.

At a recent press conference, Pakistani exporters with a base in Kenya emphasized that price remains the key factor driving trade flows.

"The need for tariff reduction was highlighted. Its impact will only be felt once implemented, especially given the current shortage of stock," another Pakistani rice exporter said.

"The new crop has begun arriving gradually from Punjab, but as is typical with early harvests, the quality is inconsistent, grains appear grey and fall short of standard specifications. Exporters with a strong presence in Kenya typically handle a mix of both Indian and Pakistani rice to meet diverse market demands," the exporter added.

Early arrivals from the new rice crop in Punjab have begun to trickle in, though traders noted that initial quality is mixed.

On being asked about the potential tariff reduction on rice imports to Kenya, a Pakistani trade source said: "Yes, it is true. The impact on Pakistani rice prices is expected to be minimal. This is largely due to the projected crop size and yield, anticipated to be the highest in Pakistan's history, which will likely keep prices at historically low levels."

Looking ahead, if the Kenyan government formally announces a tariff reduction or zero-duty access for Pakistani rice, it could reshape East Africa's import dynamics, intensify competition among origins, and solidify Pakistan's foothold in the region for the upcoming marketing year.

Pakistan's rice exports are estimated to be at 5.20 million mt for MY 2025-26 (November-October), down by 8.8% approximately year over year, as per the latest S&P Global Energy data.