Prices critical for rice exports

Rice prices are very critical for Pakistan as they constitute approximately nine percent of Pakistans total exports and rice is the second largest foreign exchange earner after cotton. Pakistan plays a key role in global rice market, being amongst the top five rice exporting countries of the world, production of rice in Pakistan affects global rice prices. Pakistans rice exports have not been very pleasing this year, even though the overall value of rice exports fell by a negligible amount due to the increase in prices in the world market, the quantity of rice exported from Pakistan in July-June 2010-2011 was 3.6 million tons, roughly 12 percent lesser than July-June 2009-2010. Sources tell that this decrease in quantity exported is due to the loss of non basmati rice caused by the floods. During July-August 2011, 0.44 million tons of rice was exported from Pakistan as compared to 0.63 million tons in the same period in 2010. This decrease is also attributed to the crop losses during the floods. Global rice prices have followed an inconsistent pattern over the last couple of years. The FAO rice price index stood at 259 in September 2011, 27 points higher than the level in September 2010. The index followed an upwards trend and reached a level of 256 in December 2010, the trend reversed in the beginning of this year and index reached its lowest 242 in May 2011. Rice prices gained momentum once again and the FAO index reached 260 in August the highest level of this year. The mean index level between Jan-Sept 2011 experienced a 13.7 percent increase as compared to the same period last year. One of the major reasons of price fluctuations in recent times are the natural disasters in rice producing countries. The recent typhoons in the Philippines and floods in Cambodia and Pakistan are examples of such catastrophes. 0.44 million tons of rice paddy has been damaged in the Philippines. Export from Cambodia would be short by 0.3 million tons due to flash of floods from the Mekong River which damaged 0.67 million acres of rice fields. The export prices of majority of the rice types followed an upward trend in the last two months but Pak Irri rice price fell from $467 to $ 455 per ton in the same period. Sources say this decrease in price will not make such a difference and prices would remain stable in the coming months.

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Pakistan rice exports
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                Qty (mn tons)   $ (mn)
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FY08                 2,809       1,836
FY09                 2,729       1,983
FY10                 4,180       2,184
FY11                 3,679       2,156
FY11 (July-Aug)        633         346
FY12 (July-Aug)        425         299
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Source : FBS