Pakistan Trains Sight on Russia to Boost Rice Exports to Record

(Bloomberg) -- Rice shipments from Pakistan are expected to surge to a record this year on bumper production in the world's No. 4 exporter, a weaker local currency and Russia's move to resume purchases.

A jump in exports, which are likely to climb as much as 15% from a year earlier to more than 6 million tons in 2021, will be good for Pakistan as Prime Minister Imran Khan's government is trying to revive the fragile economy with the help of the International Monetary Fund, and aims to cut imports and boost overseas sales.

“We have got access to the Russian market and our exports to that region will increase by as much as 200,000 tons,” said Syed Waseem-ul-Hassan, food security commissioner at Pakistan's national food ministry. Total exports are expected to increase by 10% to 15% this year from 2020 as the government also aims to boost shipments to regions like Africa, he said by phone.

Russia lifted its 2019 ban on purchases from Pakistan in early June after the South Asian nation strengthened its phytosanitary quality certification process for rice processing units, according to the food ministry. The government also sees increased buying from other countries in the region, such as Ukraine, Tajikistan and Turkmenistan. Pakistan exports rice to about 140 nations.

The resumption of rice exports to Russia is a milestone, said Malik Faisal Jahangir, senior vice chairman of the Rice Exporters Association of Pakistan. Four members of the group have already complied with the Russian milling standards, and many more compliant units will be added this year, he said, noting that overseas sales are attractive due to the huge availability of rice.

Domestic production is estimated to surge 13.6% to an all-time high of 8.4 million tons in the year ended June, according to government data.

However, a rise in global supply could further pressure prices of the staple, a predominant source of nourishment for more than 3 billion people worldwide. The Asian benchmark for Thai white rice has slumped 24% since a peak in February, while rice futures in Chicago have gained only 4% during the period.

Currency Boost

A weaker local currency has also helped shippers as Pakistani rice becomes relatively cheaper for overseas buyers. The rupee fell about 3.5% against the dollar in the April-June quarter, according to Bloomberg data. It may slide further by the end of September, with high commodity and oil prices weighing on sentiment.

“A weaker rupee will benefit rice exports, which are already increasing,” said Ahsan Mehanti, chief executive officer at Arif Habib Commodities. “We see our competitors getting more impacted by Covid. This too would help Pakistan's exports,” he said, adding that shipments of more than 6 million tons would be a record high.

India, the second-biggest grower and top exporter of rice, is just emerging from a devastating second wave of the pandemic. Some scientists say a third wave could arrive within months, driving fears the country may see a repeat of the recent nightmare of oxygen shortages and overwhelmed hospitals.

Pakistan's successful effort this year to secure the Geographical Indication tag for its basmati rice has also helped the country to compete with India. Basmati rice exports from Pakistan surged 68% to 87,413 tons in March from a month earlier, according to official data.