KARACHI: Pakistan’s rice exporters are losing smaller overseas buyers as the Iran war drives up freight costs and forces a shift toward bulk shipping, an industry official said on Tuesday, warning that container shortages could also trigger order cancelations and undermine the country’s position in key export markets.

The disruptions threaten a recovery in Pakistan’s rice trade after exports fell sharply in the previous fiscal year. Smaller buyers in Africa and the Middle East, who traditionally rely on container shipments, are struggling to compete as soaring freight costs force exporters to turn to larger vessels that require substantially bigger orders.

“The biggest problem that Pakistani rice exporters are now facing is that you see a lot of these destinations in the Middle East and Africa, they were container shipment destinations,” Muhammad Raza, chairman of the Rice Exporters Association of Pakistan (REAP), told Arab News.

“All the smaller buyers who are buying 2,000, 3,000, 5,000, 7,000, 8,000 tons, they have sort of exited from the market because based on the high freight cost, they cannot compete,” he added.

Pakistan’s rice exports fell 32 percent to $2.29 billion in the last fiscal year from $3.35 billion a year earlier, according to Pakistan Bureau of Statistics (PBS) data, reflecting weakness that preceded the conflict.

The latest shipping disruptions have also affected trade with the Philippines, an emerging market where Pakistan’s rice exports surged to about $118 million in July-September, up from just $160,000 a year earlier, according to customs data.

Raza said container availability for the Philippines was “close to zero,” while limited port capacity and shortages of smaller vessels made bulk shipments difficult.

“I am pretty sure a lot of orders even toward the Philippines will get canceled,” he said.

The cost of shipping a container to East Africa has risen from $800-$1,200 to $2,400-$3,000, while freight to West Africa has climbed from about $2,200 to nearly $5,000, according to Raza.

The increases have widened the gap between prices exporters can offer in Pakistan and what buyers can afford in destination markets, making Pakistani rice less competitive.

Raza warned that prolonged disruptions could have lasting consequences if consumers switched to rice supplied by competing countries.

“If today I stop selling you Pakistani rice and every day you start eating a competitor’s rice, your palate will eventually adjust to its taste,” he said.

FRAGILE RECOVERY

Despite the pressures, Pakistan’s rice exports rose 56 percent to $652.4 million in the July-September quarter of the current fiscal year, from $418.5 million a year earlier, PBS data showed.

Basmati exports increased 86 percent to $276.3 million, while non-Basmati shipments rose 39 percent to $376.1 million.

Raza credited government incentives, including the Drawback of Local Taxes and Levies (DLTL) scheme, which helps exporters offset certain domestic taxes and levies, with supporting the recovery.

He said Pakistan could realistically earn between $2.5 billion and $3 billion from rice exports this fiscal year, depending on shipping conditions, international prices and harvests in competing countries.

“A realistic target for this year based on the current global conditions would be between $2.5 billion to $3 billion,” he said.

Pakistan’s rice harvest is underway, with most of the crop expected by the end of November. REAP expects production to exceed 10 million tons, although Raza cautioned that adverse weather, including stronger El Niño conditions that can reduce rainfall, remained a risk.

GULF MARKET SHARE

The shipping crisis has also complicated Pakistan’s efforts to regain market share in the Gulf, particularly Saudi Arabia, where Indian rice remains dominant because of its lower prices.

Raza said freight to the United Arab Emirates had risen from about $100 per container before the conflict to $3,500 at its peak, before easing to around $2,500-$2,600.

Pakistan and Saudi Arabia signed an agreement in August targeting $3 billion in Pakistani agricultural and food exports to the Kingdom over two years, with rice identified as a priority product.

Raza said Pakistan currently supplied around 15-20 percent of Saudi Arabia’s rice market and was working with the commerce ministry to expand its share, alongside efforts to develop higher-yielding, heat- and disease-resistant rice varieties.

“To get 30-35 percent market share of the Saudi market, that would be a big achievement for Pakistan based on the availability and the crop size that Pakistan has,” he said.