Leveraging Pakistan’s rice production

Pakistan’s export basket comprises mostly of resource-based products where food takes the lion’s share. While there are calls for shifting from agri-based exports to manufacturing exports all around, it is not likely that Pakistan will transition from exporting rice to exporting laptops in the next decade. However, what can be transitioned is value addition in the food sector.

Rice exporter Matco Goods Limited has partnered with Ciranda, Inc., a global supplier of certified organic, non-GMO ingredients to produce two types of sweeteners: organic brown rice syrup and organic clarified brown rice syrup. This will aid Matco in exporting rice syrup to the US.

Rice syrup in the form of liquid glucose is used for a variety of purposes from adding flavour and texture to chewing tobacco and cigarettes to acting as a preservative in confectionaries, baby foods, jellies and sauces. Global demand for rice glucose stands at about 1 million tons with major export markets comprising of USA, Europe, Middle and Australia. Though Pakistan is a major rice producer, its share in the rice glucose market is less than 3 percent.

Pakistan’s rice exports earnings for the current fiscal year were about $500 per ton. Due to value addition, rice glucose is sold for $1,200 per ton on average while the domestic selling price is in the range of Rs65,000 ($536) to Rs70,000 ($577). Despite the potential for this sector and the easy availability of the primary raw material for rice glucose, there were only two rice glucose factories in the country prior to Matco’s IPO.

Rice value addition is not restricted to glucose. There is a whole range of product development of processed, canned, ready-to-eat food items in the form of vitamin, iron, calcium enriched flakes and puffed rice, among others. Products such as rice noodles have an expected demand of $3.6 billion by 2022 for Europe and Asia with a CAGR of nearly 8 percent.

Then there are non-edible rice products. For example, in India there is rice moisturizing lotion that is made from rice bran oil and aqueous brown rice extract. The production cost of 100 grams of the lotion is INR 15 and is made mostly by small scale entrepreneurs. Similarly there is a rice pain relieving gel that can be made for INR 20 per 25 grams of the product.

Pakistan should think out of the box and diversify from just exporting rice by tons. Leveraging the country’s agri-base for value addition is one way to increase export earnings while capitalizing on availability of raw materials.