Pakistan being amongst the worlds top five rice exporters is largely affected by changes in global rice prices and production levels. Rice constitutes roughly 10 percent of Pakistans total exports.
In recent times the world rice prices have experienced a roller coaster ride, mainly due to many natural disasters through out the world. Since August 2010 the FAO rice price index went northwards from 217 to 256 in December 2010.
This price trend was not able to gain any momentum in 2011, from the beginning of this year the global price index declined and in May 2011 reached its lowest point 242.4, it took another U-turn just after three months in August 2011 when the index reached its two-year high of 261.
FAOs outlook for Asian production is still favourable after downward revision. Indias sizable increase in production is the main reason for 2.5 percent expansion of output in this region. FAOs forecast for world rice trade has been raised to 33.2 million tons, an increase of 1.4 million tons.
The increase in production by India would create a downward pressure on prices but the 4.2 percent increase in world rice trade forecasted by FAO would offset this downward pressure, which is good news for the local rice exporters.
According to a rice exporter, recent floods have destroyed around 10 percent crops - primarily in upper and lower Sindh.
According to Rice Exporting Association of Pakistan (REAP), during July 2010 to August 2010, 0.53 million tons of Rice worth $291million has been exported from Pakistan, whereas in the same period July 2011 to August 2011 0.48million tons of rice worth $319 million has been exported. This nine percent increase in value was recorded even though the quantity exported slid slightly.
The outlook of rice production is ambiguous since authorities haven started assessing the devastation caused by the floods. Once exact figures are quantified, a clear picture of the losses to farmers and exporters can be drawn.
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