Pakistan Market Monitor Report – February 2023
HIGHLIGHTS
• Food prices continued to rise high since February 2022 for the 11th consecutive month (except for a decline by 0.1% in Dec-2022), with CPI food inflation in January 2023 increasing by 42.94% over January 2022. National and international drivers (fuel price hikes, energy costs, devaluation of rupee against dollar increasing prices of food/Non-food imported items, Russia-Ukraine war, etc) suggest that prices will remain high for the coming months.
• Headline inflation based on the Consumer Price Index (CPI) is now 27.55%, the highest in 48 years (since 1975), representing an increase of 27.55% in January 2023 over January 2022. It should be noted that inflation rates in neighbouring countries stand at 5.2% (Afghanistan), 6.5% (India), and 8.6% (Bangladesh).
• In January 2023, prices increased for staple cereals wheat (+27.1%), wheat flour (subsidized) (+17.0%), wheat flour (Fine) (+8.2%), rice Basmati (+16.3%) and rice Irri-6 (+14.6%) compared to December 2022, representing an increase of 90% in wheat, 78% in both wheat flour (subsidized) and wheat flour (Fine), 61% in rice Irri-6 and 53% in rice Basmati from the same time a year ago.
• Among non-cereal food commodities, prices increased for chicken (+21.0%), pulses (Moong (+5.2%), Gram (+2.7%), Mash (+2.6%), Masoor (+2.0%)) and eggs (+2.0%) from the previous month, representing an increase in chicken (+99%), eggs (+60%), Moong (+56%), Gram (+48%), Mash (+40%) and Masoor (+21%) from the same time a year ago. On the other hand, prices decreased for ghee (-2.1%) and sugar (-1.1%) from December 2022.
• A comparison of pre-flood (June 2022) and post-flood (January 2023), some food commodities indicated huge increase in prices; for instance, price of onions increased up to 220%, wheat flour 74%, rice Irri 68%, pulse moong 65%, rice Basmati 45%, and milk 39%.
• Average Terms of Trade (ToT) for January 2023, measuring the amount of wheat flour that can be purchased with one-day of casual unskilled labor wage worsened by 14.0% from the previous month. The retail prices of automotive fuels increased in January 2023 compared to the previous month i.e., Super Petrol (+16.0%) and High-Speed Diesel (+15.0%).
Asia rice: more exports, stronger baht send Thai rates to 6-month high

MUMBAI/ HANOI/ BANGKOK,/DHAKA: Prices of rice exported from Thailand this week rose to their highest since early June on the back of increasing shipments and a stronger baht, while cheaper rates for the staple in India kept orders rolling in.
Thailand’s 5% broken rice prices were quoted at $452-$460 per tonne, up from a $425-$457 range last week.
“There is more demand from Asian countries now, while African countries are more interested in rice from India,” said one Bangkok-based trader.
There was news that supply could soon tighten so exporters were buying to stock up, said another trader.
Top exporter India’s 5% broken parboiled variety edged higher to $374-$380 per tonne, from last week’s $373-$378, on a slight improvement in demand, although rising supplies from the new season crop capped the upside.
“December’s second half usually remains quiet but this year few sellers got export orders since Indian rice is cheaper than other destinations,” said an exporter based at Kakinada in the southern state of Andhra Pradesh. Traders said Cuba was buying more rice from India, with a vessel being loaded with 28,150 tonnes at Kakinada Port for delivery.
Neighbouring Bangladesh was in talks with India to buy a total of 200,000 tonnes of rice in government-to-government deals, officials said, as it seeks to build reserves to cool domestic prices of the grain. Vietnam’s 5% broken rice was offered at $448-$453 per tonne, unchanged from a week ago, when rates reached their highest level since July last year.
“Demand for Vietnamese rice remains steady, especially from top buyer, the Philippines,” said a trader based in Ho Chi Minh City.
Preliminary shipping data showed 167,650 tonnes of rice is to be loaded at Ho Chi Minh City port in the Dec. 1-28 period, with most of it heading to the Philippines and Indonesia.
Rice 2022: a good year for (some) farmers?

Just 9 months ago, rice was marketed as the cereal that would save the planet. As war broke out in the Black Sea, fertilizer prices spurt out of control, and wheat harvests failed across the globe, world rice production remained unaffected, restraining fears of global food insecurity and hunger. Pakistani policymakers breathe a sigh of relief, as a substantial surplus in rice production could help mitigate two of their worst fears: a grain/cereal shortage in the local market; and, a widening trade deficit. Unfortunately, that hope could prove short-lived.
First, came the floods. The horrific monsoon rains destroyed Sindh’s coarse rice crop, which in the past has contributed up to 80 percent of Pakistan’s rice export by volume, and 75 percent by value. Pakistan’s annual rice production has now been written down by at least 3 million metric tons (MMT), down from 9.3MMT achieved last year. During 5MFY23, coarse rice exports are down by 5 percent in volume, and 9 percent in value, even as residual exports fetched the highest unit prices in nearly a decade.
Since then, luck has only taken a turn for the worse. Global rice production forecast has been lowered by 12 percent, as output in India dropped by a whopping 6MMT. As the world’s largest rice exporter imposed duties and tariffs on the export stage – particularly on broken rice and other coarse rice varieties – global prices have picked up, further tightening world supply. Unfortunately, Pakistani exporters are in no position to gain from the situation.

The story of basmati export is even berserk. Basmati prices in the international market have risen by more than half – 56 percent between Nov 2021 and 2022. Yet, it seems a grain shortfall in the local market coupled with tightening supplies due to lower cultivated area has resulted in weaker exports – which are 29 percent lower in volume terms during 5MFY23 compared to the same period last year. This more than offset the gains on unit prices, with an overall 11 percent drop in basmati export revenue during the period under review.
Although the exporting industry is hopeful that things shall pick up in the latter half of the fiscal year, don’t pin your hopes on it. After the wiping out of coarse rice surplus from Sindh, the record-shattering export target achieved during the last fiscal is now a distant dream. Higher basmati prices could stem the tide of falling export revenue, but the quantity exported of basmati would have to rise by at least 50 percent – from 0.75MMT in FY22 to 1.15MMT in FY23 – for annual rice export receipts to reach the $2.5 billion goal.
Two push factors may alleviate the export situation. First, premium basmati prices in the local market have skyrocketed over the last two months. If demand shows significant price elasticity, expect more supplies to become available for export. Two, inventory financing trends raises the possibility that procurement by milling segment may be keeping up pace with last year, even though bank lending rates have basically doubled between Nov 2021 and 2022. Of course, an alternative explanation could be that mills are paying through their noses for a smaller crop. Only market insiders can explain!
Either way, if you were a Pakistani rice farmer with a healthy crop yield during the outgoing Kharif 2022 season – most likely located in the northeast or central Punjab, congratulations on a year of excellent profitability!
Anti-smog action may delay wheat sowing in rice belt
LAHORE: The ongoing anti-smog crackdown may impede wheat sowing campaign in the rice belt as farmers are not clearing paddy stubble from their fields through manual or chemical means.
“We don’t have finances and tools other than applying the centuries old technique of burning the paddy crop leftovers for preparing our fields for next crop (wheat) in the small window available for both clearing remnants of the previous harvest and ploughing the land for next plantation,” says Abu Bakr, a farmer from Gujranwala district.
But the anti-smog squad of the provincial government is imposing heavy fines on the farmers who are getting rid of stubble through burning for timely preparations of lands for wheat sowing, he says.
Devoid of financial and technical resources, small farmers in the rice area are sitting idle at their homes, perplexed how to prepare their fields for the next crop, he adds.
Farmers lack resources to opt for alternative to stubble burning
If no step is taken by the government at the earliest, wheat plantation will at least be delayed if not missed and late sowing will lead to poor crop yield, he fears.
Endorsing his views, Kisan Board Pakistan central vice-president Amanullah Chattha regrets that the administration in rice-growing districts is harassing the farmers through heavy fines and instituting criminal cases against those who burn stubble at their fields for timely preparing them for wheat plantation.
This crackdown, he warns, is not only causing unrest among the farming community but will also lead to national food insecurity if wheat could not be sown in hundreds of thousands of acres of land.
He argues that the administrative action against the growers is uncalled for because the agriculture research institutions could not offer any alternative system or chemical to dispose of the paddy stubble.
He urges the government to refrain from penalising the farmers until and unless it comes up with an alternative method other than burning for getting rid of crop leftovers otherwise, he cautions, the unrest among the farming community may make it to take to the streets.
Pakistan rice export to China increases nearly 10%

BEIJING: Pakistan’s export of rice to China crossed $277.56 million in the first five months of Financial Year 2021-2022, up 9.73 percent year-on-year bases. Pakistan remained one of the major broken rice suppliers to China, according to the official data from the General Administration of Customs of the People’s Republic of China (GACC).
Badar uz Zaman, Commercial Counselor of the Pakistani Embassy in Beijing, said that currently broken rice, especially IRRI-6, IRRI-9, and semi or wholly milled rice were the main varieties of rice exported to China while Basmati and other top varieties still need to work hard to capture the Chinese market.
“Last year, China imported 973,000 tons of rice worth $437 million from Pakistan. Seven new Pakistan rice exporters have been added to the approved list, which has risen to 53 in 2021. China relaxed import restrictions on Pakistani rice which helped rice export to China”, Badar mentioned.
He believes that within a few years Pakistan will become the largest rice exporter to China, CEN reported.
In the first five months, broken rice, commodity code (10064080), crossed about $42 million, an increase of nearly 865.26% as compared with last year, which was $4.32 million. Semi or wholly milled rice, commodity code (10063020), reached $132 million, according to GACC data received by Pakistan.
Badar Uz Zaman said that Pakistan was using traditional and especially social media platforms here to create awareness about Pakistani rice in the Chinese market.
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Pakistan’s Basmati rice exports up by 8.97%

Pakistan has potential of $4.5b rice exports

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Applications invited from rice growers for subsidised machinery provision
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Pakistan to lend Sri Lanka $200mn: report

The high cost of low yields

Pakistani rice sold in international market labeled ‘made in India’
Pakistani rice traders are reportedly unhappy after they found out that Pakistani rice is being sold in the international market with a "made in India" tag.
Speaking to Deutsche Welle (DW) a German international broadcaster, the Managing Director of Charagh Group of Companies Khalil Ahmed said that "Indians in Muscat, Saudi Arabia, and Dubai purchase rice from us but sell it under their own brands and labelling." Pakistan's rice export association has filed a lawsuit against Indian rice purchaser companies in an international court. But since the case is still pending in court, the association has declined to speak with DW about the matter. According to rice traders, the issue is not just about branding. Ahmed explained that as a result of crop cultivation when farmers sow the seed, rice becomes scarce in the market, which naturally increases the price of rice. Once the crop has reached maturity, the farmer begins harvesting. He stated that 10% to 20% of paddy is broken during the reaping process due to a lack of modern equipment. Once the rice crop reaches the mills, the crop must be dried and husked, which requires more modern machinery. Similarly, the rice breaks during the process and all of these factors add to the cost.This year, Pakistan will export 36 million tonnes of rice to a lot of different countries, with basmati rice accounting for 20% of the total.
Rice valuing $1.066b exported in H1-FY2021-22
EDF Board approves Rs27m for global ‘Biryani Festivals’

Pakistan posts record rice production

Containers: Rice exporters urge govt to ensure timely availability

Pakistan poised to export near-record rice volume this season

Pakistan poised to export near-record rice volume this season

Pakistani rice export to China has huge potential perts

rice export: cautious optimism




India-Pakistan tug of war over GI tag for Basmati rice takes a new turn

RUSSIA INCREASES RICE IMPORT VOLUME FROM PAKISTAN

Rice exporters slam PM aide’s claim
Rice Exporters Association of Pakistan say the statement regarding no demand of basmati rice in the world is misleading

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