Pakistan’s basmati exports have risen sharply in the last few months. According to the Rice Export Association Pakistan, the late surge in exports has resulted in a substantial increase of 29pc in quantity and 55pc in dollar earnings during the first eight months of the current fiscal year.
From July to February, Pakistan was able to export 424,053 tonnes against 328,373 tonnes for the same period last year, earnings rising to $494m from $319m last year.
The development is attributed to the Indian failure on two fronts – price and quality. The Indian basmati prices rose for some domestic reasons, making them more expensive in international market. This price increase made Pakistani rice competitive. During the same period, many Indian rice consignments, according to media reports were rejected at some American and European destinations
However, with a strong rupee, rice exports have become expensive by almost Rs7 per kilogram. Though good for exporters and bad for farmers, the fall in domestic price may compensate rupee appreciation. It would, however, have its own social and financial affect on farmers and political burden for government.
According to the Food and Agriculture Organisation (FAO), rupee appreciated by about 7pc – from around Rs104.3 per dollar on February 28 to Rs97.2 on March 14. This appreciation, exporters fear, would slow down exports in the weeks to come. But as stated by the FAO, in terms of local currency, the average export prices declined in March to around Rs131,978 per tonne, down by about 6pc, from around Rs140,731 per tonne in February. The currency appreciation might decide the quantum and frequency of exports in days to come.
Pakistani exports are vulnerable to highly competitive Indian basmati and the current window of opportunity may not remain open for long. Pakistan was virtually driven out of the Iranian market by the Indian exporters till the Indians developed some quality issues with the Iranian authorities, giving Pakistani basmati some space. Pakistan needs to make productivity, quality and price of basmati rice globally competitive to have a stable export market particularly for branded products.
Pakistani planners and exporters need to realise that all those countries, which have made name in exports, started with development of their domestic markets. They created quality rules for local markets, made the private sector developed domestic brands and, once the domestic supply chain was modernised, took those brands to the international market. None of the world brands were created in the world markets and taken back to home. Pakistan hugely suffers on this front.
Very few domestic players have invested in local brands. Government officials blame it on business myopia for short gains, whereas the private sector bemoans absence of legal and administrative setup to ensure such quality rules. But, the net result remains the same; the domestic brands are focused on domestic clientele. Some brands have developed local presence, and a few are struggling to get a foothold in the international market. Much more strenuous efforts need to put in by all relevant quarters to stabilise basmati on its own competitive strength.
