Where is the rice export rally?

Numbers are a fickle mistress. One look at export data from PBS would seem to suggest that the country exported highest monthly volume of rice in over six years. That would be cause for celebration. Yet the same dataset also indicates that – on six monthly basis - this is the poorest performance by rice exporters since PTI came to power. So, what is really happening in the paddy universe?

First off, the frequent revisions in (prior) monthly databy PBS isn’t inspiring confidence, as the quantum of revisions is stretching further. But more importantly, paddy prices in the international market are trading against the tide, facing considerable downward pressure,even as prices of many other grains have galloped forward for many months.

Six-month moving average of international rice prices (various indices, by type) are trailing below levels last witnessed in 2016. In fact, rice prices of various commodities such as IRRI (Pak) may be second-lowest in a decade. That’s certainly one reason why Pakistan hasn’t seen its rice export earnings explode, but doesn’t fully explain the picture.

Quantity exported during H1-FY22 is also significantly lower than in recent past; even lower than the dreadful pandemic stint of H2-FY20. At 2.08 million tons exported during H1-FY22, quantity exported is lowest since at least H2-FY17. Variety-wise breakdown is equally bleak, with 6-month basmati exports lowest since H1-FY19 (minus H1-FY21); while coarse rice exports being lowest since H2-FY17.

And that trend alone offers insight into what’s been brewing in Pakistan’s rice exporting market. After peaking during H2-FY19, Pakistan’s rice exports appear to be on a secular decline, both in value and volume terms. That peak had come with the precipitous decline in currency value between Jan – Jun 2019, when Pak Rupee breached Rs160/$ parity for the first time in history. Rice export earnings shot up by 36 percent during H2-FY19 against the preceding six months, while quantity exported also rose by nearly one-third over the same period.

Since then, export earnings are crawling back in the 2015-18 territory, with slight seasonal upticks during second half of the year (when autumn harvest makes it to market). Quantum exported also seem to be mirroring the much-reviled PML-N era, during which artificially overvalued currency was held guilty for lack of competitiveness of Pakistan’s exports in the global market.

The currency is arguably now as free as it ever has been. Global container shortage also seems to be eking itself out. December export performance is certainly uplifting, but medium-term trend is insipid, if not altogether alarming. Will exporters take the stand and explain: where is the rice export rally?