After touching the peak of 4.9 million metric tons during the last fiscal, Pakistan’s rice exports are well on their way to explore a fresh bottom. Seven-month fiscal report from Pakistan Bureau of Statistics indicates that the country would be lucky to manage 3.2 million metric tons in exports during 2022-23, lowest quantum in past 15 years. Per PBS, rice exports are already down 25 percent during 7MFY23, easily making rice one of the worst performers among major exporting segments.
January 2023 turned out to be one of the worst performing months, as coarse rice - which constitutes up to 85 percent of exports by quantity – saw volume exported decline by 56 percent year on year to just 0.18 million metric tons. If last year isn’t fair comparison given record exports, consider that January 2023 underperformed Covid year exports (Jan’21) by 30 percent, and were 51 percent lower than average exports for the month over the last decade.
Export revenue performance from coarse rice offers little cause for hope either, falling 40 percent over last year. It was also one-third lower than the 10-year average, despite 40 percent higher unit prices fetched. At this rate, coarse rice exports would be lucky to breach the 2.8MMT mark in the full fiscal, having managed at least 3MMT every year since at least FY14. Coarse rice export revenue may rake in $1.3 billion, a six-year low. However, it may not the worst year for the exporting firms, who have fetched the highest per unit prices for coarse exports in well over a decade.
Meanwhile, export performance of the higher value basmati rice hasn’t been too different either. Although per unit basmati prices fetched in the export market during the 7MFY23 – nearly $1,100 per metric ton - have climbed up to their highest level in the last 10 years, basmati export volume remained lowest in five years, barely breaching 0.3MMT in the seven-month period. In fact, this may be the first time in five years when annual basmati exports from Pakistan once again fall under half a million metric tons, putting Pakistan’s share in the global market well below 10 percent, barely putting a dent in the market share of neighboring India, which commands the remainder 90 percent market share.
Here too, however, higher prices once again come to the rescue. Basmati unit prices are at least 25 percent higher compared to last fiscal year, raising the average earnings for the exporters. If prices remain elevated for the remainder fiscal year, revenue from basmati exports will only be 18 percent lower than last year, compared to one-third lower had prices remained at the same level as year – when they averaged around $900 per metric ton during the full fiscal. Revenue from basmati exports is expected to remain under $600 million, lowest in five years.
Although higher prices amid low volumes will make 2022-23 a mixed season for exporters, it is surprising that basmati exports did not pick up during the current marketing year. According to provisional crop statistics from provincial authorities, basmati crop had performed better during the kharif 2022 season, unlike coarse rice varieties such as IRRI and hybrid, which had become victim to the devastating floods in southern parts of the country. If export volumes do pick up during the remaining fiscal, it may lend credence to the theory that keeping the currency artificially appreciated during the first half caused irreparable damage to revenue from exports. Keep a close eye!
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