Small wins should be celebrated, big wins, even more so. During the current fiscal year 2023-24, Pakistan’s foreign exchange earnings from rice exports have nearly doubled; not just over the preceding flood year, but also when compared to the last 10-year average. Quantity exported has also increased by nearly 50 percent, when compared across similar periods.

This is not just a major win for Pakistan’s otherwise stagnant export scene – but also by the standards of global commodity trade. Rarely is a country able to record a quantum jump in its share of world trade, while also increasing the per unit selling price by almost 30 percent. This does not include the additional jump in earnings due to currency depreciation, which has lost 24 percent of its value during the 8MFY24 (compared to the same period last year). There could not have been a better time to be a rice exporter out of Pakistan.

But that’s kind of where the good part also ends. Agricultural produce is finite by definition. Meaning, the output cannot be scaled immediately only because there exists unmet demand in the market. By the time producers can scale up demand – usually, by the next crop season – competitors, especially those with scale - catch wind of market conditions, often times flooding the market with what was until then a commodity in short supply. Result? An overnight crash in prices.

It is no surprise then that even though the Indian ban on exports is still very much in place, Pakistan’s rice exports have been witnessing a secular decline over the past three months. Rice exports out of Pakistan have witnessed a 15 percent contraction every month for the last three months, after peaking out in December 2023 at 0.85 million metric tons. In fact, export report card for February 2024 shows only a 10 percent increase in volume over the same month last year, which is still significant but hardly impressive compared to an increase of 135 percent (year on year) recorded for every month between October 2023 to January 2024.

The harsh reality is that although the supply-demand situation in the international market remains tight, Pakistani origin players no longer have the stocks to cater to the unmet international demand. Supply side constraints have kicked in, with monthly volume trends per marketing year falling in line with the long-term average. Historically, export volume for February is exactly twice that of in September of the preceding year (which is when the marketing year begins). It is no coincidence that this is where the export performance for the current year stands, only that this time, the base is elevated.

Regardless, the taper has begun. Which means that while on one hand a year of stellar export performance with record volume of 5.5 million metric tons exported is now an absolute certainty (barring of course, an Act of God between now and year-end, if the pandemic has taught us anything).On the other hand, the next year looks increasingly uncertain.

For the irrationally exuberant who insist that good times will never end. Remember, it took Pakistani rice industry exactly one year to bounce back from lowest production in six years to highest exports in history. There is really no reason why – following a resounding win in the general elections come April 2024 – an emboldened Modi government won’t lift export restrictions to placate the north Indian farm lobby, bringing the high of Pakistani rice exporters to an abrupt halt.

The party could be very soon, probably even before the fiscal year is over. The only way for it to continue into the next fiscal year, is for things to turn very sour between the farm lobby and the central government in Delhi post-elections. Slim chance of things going that way. About time the market also prices in this reality.