Pakistan’s rice exports slump over 35 per cent in February

Pakistan’s rice exports declined by over 35 per cent in February despite government subsidies, raising concerns over the effectiveness of the support measures, according to a report.

According to the report in Dawn, exporters said the subsidy programme had pushed up domestic prices, making Pakistani rice less competitive in global markets and undermining the intended benefits.

However, official data from the Pakistan Bureau of Statistics showed that basmati rice exports fell 19.21 per cent in value and 27.98 per cent in quantity in February.

In addition, coarse rice exports also declined sharply, dropping 42.50 per cent in value and 32.94 per cent in volume during the same period.

The Pakistani government had announced a 3 per cent duty drawback on local taxes and levies for coarse rice and 9 per cent for basmati exports, with an allocation of around Rs 15 billion to support exporters.

Exporters said the decline was driven by higher domestic prices and hoarding, which weakened Pakistan’s competitiveness in international markets. They also noted that the sector has remained largely focused on commodity trading, with limited progress in developing value-added products.

“Our rice exporters have remained largely commodity traders over the past four decades, focusing primarily on meeting export refinance facility performance (ERF) targets rather than developing into efficient exporters like their counterparts in the region,” an exporter was quoted as saying.

Industry participants further said that rebates offered under the duty drawback scheme are insufficient to offset structural challenges at the farm level.

They emphasised that sustainable export growth depends on improving agricultural productivity, lowering input costs and enhancing supply chain efficiency.

According to exporters, measures such as better seed quality, efficient irrigation and reduced fertiliser and energy costs are critical to boosting competitiveness. Without such reforms, subsidies at the export stage are likely to have only a limited impact.

They also called for a policy shift to redirect incentives towards value-added rice products and byproducts to strengthen export performance over the long term.

Meanwhile the current account deficit could expand significantly if these trends persist. The trajectory bears uncomfortable resemblance to the 2022 crisis, when rising global oil and commodity prices pushed the economy to the brink, forcing Pakistan to seek a bailout from the IMF.

The consequences for the public would be even more severe and last longer as higher global oil prices feed directly into petrol prices and electricity tariffs while also triggering a broader wave of price increases through higher transportation and logistics costs, the article observes.

If crude prices approach the peaks witnessed during the Ukraine war, Pakistan risks sliding back into another high-inflation environment from whose impact low- to middle-income households have yet to recover, the article added.

A significant jump in oil prices − due to escalating geopolitical tensions in West Asia − has raised concerns over energy security and economic stability in import-dependent Pakistan, according to a report.

According to Business Recorder, the ongoing conflict has intensified concerns over the safety of the Strait of Hormuz, a key shipping route that handles nearly 20 per cent of global seaborne oil trade.

Pakistan remains particularly vulnerable due to its heavy reliance on imported energy. More than 80-85 per cent of the neighbouring nation’s oil imports come from Gulf countries such as Saudi Arabia, the UAE and Kuwait, with shipments routed through the Strait of Hormuz.

Meanwhile, petroleum products account for nearly 30 per cent of the country’s total imports.

The report said that a $10 per barrel increase in global oil prices could raise Pakistan’s annual import bill by $1.8-2 billion.

A prolonged disruption, such as a three-month closure of the Strait of Hormuz, could push monthly import costs to $3.5-4.5 billion and drive inflation to 15-17 per cent.

Moreover, higher freight and insurance costs may further widen the trade deficit and strain foreign exchange reserves.

Pakistan’s energy buffers remain limited, with strategic reserves covering only 10-14 days of consumption.

In contrast, India maintains stronger reserves and foreign exchange buffers, providing greater resilience to external shocks, the report added.

The report also warned that any sharp oil price shock could derail Pakistan’s economic recovery, widen the current account deficit and accelerate inflation, particularly as the country stabilises its economy under an IMF programme.

Agencies