Miller Magazine Issue 109 / January 2019

PAKISTAN 84 MILLER / JANUARY 2019 While world rice export at 48 million tons is a shade less than 10 percent of world rice production, Pakistan’s rice export has been in the 3.5-4.0 million tons range in recent years, representing a little over half of domestic production. The country’s paddy cultivation is supported by favou- rable agro-climatic conditions. With improving agrono- mic practices paddy yields are expected to trend up gra- dually. Pakistan’s rice, especially long grain rice, is well received in many markets including the Middle East and Africa. The following table gives a focused view of Pakistan’s rice market fundamentals. Interes- tingly, the USDA has projected Pakistan’s 2 0 1 8 - 1 9 rice pro- d u c t i o n higher at 7.4 mil- lion tons and exports also higher at 4.25 million ton on calendar year basis. Following improved availability due to crop harvest Pakistan rice prices have softened to $ 365 a ton for 5 percent broken. The IGC has projected that the world rice output will trend upward in the next five years. However, consump- tion is seen growing at a slower pace than in the past. Stocks with major exporters (including Pakistan) are seen broadly steady. This suggests that the world rice market is unlikely to witness any dramatic or disruptive changes in the rice market fundamentals over the projected period. However, while India and Thailand are expected to do- minate the export market with annual shipments of about 10 million tons each, followed at a distance by Vietnam (up to 7 million tons), rice shipments out of Pakistan and USA may be determined by the quantum of crop produc- tion and therefore exports may rise marginally. Wheat: Pakistan’s staple cereal is wheat. Unlike rice, Pakistan is a minor player in the world wheat sector in terms of production, consumption and trade. However, almost every one of the 170 million strong population eats whe- at, making the fine cereal the most popular food crop of the country. Pakistan’s share of world wheat production of over 700 million tons is less than four percent. In recent years, Pakistan’s wheat production has stagnated around the 25-26 million tons level, while its domestic consumption is in the 24-25 million tons range. There is a system of procurement of wheat by the government. A quantity of 6.0 million tons has been reported procured from the latest harvest. According to USDA, Pakistani wheat growers receive attractive government support prices (procurement pri- ce $ 310 a ton) and are among the better compensated wheat growers globally. The government now holds an estimated 10.8 million tons in its warehouses. Wheat export during the upcoming crop season is fo- recast to be slightly lower at 1.0 million tons comprising 800,000 tons of subsidized export plus 200,000 tons of wheat-equivalent flour to Afghanistan. Because the country consumes almost all of its produ- ction barring a small quantity for export, Pakistan has a vibrant wheat milling industry. Investments are now sought to be made to mo- dernize these mills. Also, the country has opportunity to produce more wheat through improved agro- nomic practices to feed the growing population. Pakistan is thus a market to be watched. It has potenti- al for growth in terms of both production and consump- tion of rice and wheat. Investment in modernization of the milling industry – both rice and wheat – will result in supply chain efficiencies and lend a competitive edge to its grain export efforts. *(G. Chandrashekhar, Economist, Senior Editor and Policy Commentator is a global agribusiness and com- modities market specialist. Views are personal. He can be reached at gchandrashekhar@gmail.com)