Rice is Pakistan’s only major cash crop that does not have a minimum support price (MSP) for growers or an energy subsidy for rice exporters. India, however, has a strong MSP mechanism. The Indian government purchases

paddy and milled rice to support growers and offers heavy direct subsidies on inputs. Recently, India announced Rs240 billion for fertilisers. Thus, India’s exports are heavily subsidised.

Despite the August 2023 restrictions, India is still the largest rice exporter and enjoys over a 27 per cent share of global rice exports. India has devised its food diplomacy to strengthen diplomatic ties, imposed an export ban on wheat, sugar, rice, and onion, and pushed sky-high prices of these commodities globally, endangering the world’s food security.

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Pakistan’s rice exports could not cross the mark of $2.5bn in the last decade, but during the first eight months of fiscal year 2024, they reached a peak of $2.5bn compared to $1.1bn in 8MFY23 and $2.1bn in FY23.

Overwhelming growth in value and quantity has rung alarm bells in the competitor’s house. India sensed that their Basmati exports would fall, and apprehensions were raised in Pakistan that prices may rise, making basmati rice beyond consumers’ reach.

Pakistan’s strong harvest, along with strategic support from the Ministry of Commerce, has led to record rice exports

However, this year, domestic prices of basmati rice are falling: the price of super basmati has fallen by Rs4,000 per 40kgs to Rs8,000 per 40kgs.

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It is incorrect to link rice export growth with rupee devaluation, as the dollar-rupee parity last year remained at almost Rs280.

Another opinion is that India’s export ban on white rice and 20pc export tax on parboiled rice has terrified global demand pressure, exacerbating prices globally, and bears little weight.

The main factors behind rice export growth are the record bumper crop in Pakistan, harvested 9.5 million metric tonnes (MMT), and the upward revision of Minimum Export Prices (MEPs), which boosted foreign exchange earnings.

We must appreciate the Ministry of Commerce (MoC) and its strategy devised at the start of harvest — implementing upward MEPs on Sep 2023 — to counter the aftermath of India’s ban on white rice exports. Upward revision enabled the country to fetch the true value of the crops, increase foreign reserves, curb under-invoicing, and keep local Basmati rice prices stable.

The Agro Products Wing was monitored closely and revised again on Nov 7, 2023, to align with the global rice market. MEPs are still below the prevailing market prices, and if the MoC revises them to match the market, Pakistan can fetch more earnings and ensure domestic prices remain affordable.

Due to warmer and drier weather because of an early El Nino in the Far East and a short-harvest rice crop, Pakistan shipped a large quantity of rice to Indonesia, the Philippines and Malaysia. Besides, significant achievements in non-traditional markets were added with the help of MoC.

Due to collaborative efforts of the Ministry of Commerce, the Department of Plant Protection (DPP) and the Commercial section in Russia, rice exports resumed, and the DPP approved more exporters.

Pakistan exported 3.9MMT of rice — 0.5MMT Basmati of $1,142 per ton and 3.5MMT Non-Basmati of $572 per tonne during the 8MFY24.

In FY22, rice grown on 3.5m hectares produced 9.3MMT rice in Pakistan, averaging 27 maunds per acre. Hybrid rice is rapidly growing in Pakistan due to a higher yield of 80 to 100 maunds, which is good and bad news.

This is good for non-basmati growing zones and bad for basmati growing areas, where growers are tempted to get higher yields. Two rice crops resulted in coarse rice exports increasing, but Pakistan is losing the global Basmati market share where once Pakistan was ruling.

To increase rice exports, we need to develop more open-pollinated Basmati aromatic extra long grain varieties and revive world-famous Kernel Basmati rice. We also need to grow and increase hybrid coarse rice in Basmati zones.

Hypothetically, 100 maund paddy productions can process 34.8MMT of rice at 60pc recovery, and for 25pc broken, 20.9MMT is available for export. Assuming $590 per tonne (free on board), the price can fetch over $12bn.

Transportation of 20MMT rice to ports is another costly head. We need to use cargo trains to reduce inland freight costs and increase exports. Our exporters always pray for a miracle of a pandemic, devaluation, export bans, or export taxes by competitors.

Afghanistan and Iran’s rice exports are misdeclared as non-basmati and under-invoiced. A major chunk of rice exported to Iran by road is not declared in customs or paltry reported. The MoC and Federal Board of Revenue must check this menace and apply the same MEPs via land and sea.

So, if we think beyond emotions purely to increase rice export earnings, it might be doable. A lot of rethinking and meticulous planning is needed, and dumping many earlier notions might be required.

The writer is a former member of the managing committee of the Rice Exporters Association of Pakistan and former Vice President of Karachi Chamber of Commerce and Industry

Published in Dawn, The Business and Finance Weekly, April 15th, 2024