Pakistan’s Raw Food Exports Surge 21.73% Amid Rising Domestic Prices

The export of raw food items from Pakistan has seen a remarkable surge, growing by 21.73% in the first four months of FY25 to reach $2.36 billion, up from $1.94 billion in the same period last year. While this growth bolsters Pakistan’s foreign exchange earnings, it has also led to a notable increase in domestic food prices, putting pressure on consumers nationwide.

Here’s an in-depth look at the factors behind this surge, its impact on the local market, and its implications for Pakistan’s economy.

Key Drivers of Export Growth

1. Rice: A Star Performer

Rice has been the standout contributor to Pakistan’s raw food export growth, with a 52.53% increase year-on-year, bringing in $1.08 billion in July-October FY25.

• Basmati Rice: Shipments rose by 47% in quantity and 66% in value, showcasing increased demand in the EU, Africa, ASEAN, and GCC markets.
• Non-Basmati Rice: Exports grew by 55.11% in value and 47.78% in quantity, driven by competitive pricing and adherence to international quality standards.

However, the export boom has led to domestic price hikes. The average price of basmati rice now stands at Rs400 per kg, a steep rise from Rs150 per kg two years ago, making it less affordable for local consumers.

2. Sugar Exports Skyrocket

Sugar exports surged by a staggering 413.46%, reaching 187,247 tonnes compared to 33,101 tonnes in the same period last year. Most of this sugar was exported to Afghanistan, fueled by millers capitalizing on higher international prices.

3. Vegetables and Fruits

• Vegetables: Exports grew by 36.74%, with onions playing a pivotal role.
• Fruits: The export of fruits recorded a 7.02% increase, adding diversity to Pakistan’s food export portfolio.

4. Meat Exports

Meat exports rose by 4.67%, supported by the opening of new markets, approvals for slaughterhouses, and increased participation of export companies.

Impact on Domestic Food Prices

The rise in raw food exports, while beneficial for foreign earnings, has exacerbated food inflation in Pakistan:

1. Rice Prices: The surge in exports has pushed basmati rice prices to Rs400 per kg, leaving domestic consumers struggling to afford this staple.
2. Meat Prices: Buffalo meat has doubled from Rs700 per kg to Rs1,400 per kg in three years, while chicken prices have reached unprecedented levels.
3. Vegetables: The focus on exports, coupled with supply gaps, has contributed to higher vegetable prices in local markets.

Reasons Behind the Export Boom

1. Increased Market Penetration: Pakistan’s food products have made strong inroads into key markets, including the EU, ASEAN, GCC, and Africa, driven by competitive pricing and adherence to international standards.
2. Minimum Export Pricing: The government’s efforts to fix minimum export prices have ensured higher returns for exporters.
3. Improved Compliance: Enhanced compliance with sanitary and phytosanitary standards has made Pakistani food exports more competitive globally.

Challenges and Concerns

While export growth is a positive economic indicator, it comes at the expense of affordability for local consumers:

• Supply-Demand Imbalance: The focus on exports has created a domestic supply gap, driving up prices of staple foods.
• Food Inflation: With prices of essential items like rice, sugar, and meat soaring, food inflation has hit record levels, straining household budgets.
• Sustainability: The current trajectory of export-focused policies may not be sustainable if domestic needs are consistently overlooked.

Opportunities for Balanced Growth

To maintain a balance between export growth and domestic affordability, the government could consider:

1. Regulated Exports: Imposing caps or conditional limits on exports of essential food items to prevent domestic shortages.
2. Subsidies for Local Consumers: Providing targeted subsidies to mitigate the impact of rising food prices on low-income households.
3. Boosting Production: Encouraging increased agricultural production through subsidies on inputs like fertilizers, seeds, and machinery.
4. Diversifying Exports: Expanding the export portfolio beyond raw food items to value-added goods, generating higher revenue without stressing local supplies.

Conclusion: A Double-Edged Sword

The surge in Pakistan’s raw food exports highlights the country’s growing presence in international markets and its ability to meet global demand. However, the resulting food inflation has left domestic consumers bearing the brunt of this success.

To strike a balance, policymakers must adopt strategies that support export growth while ensuring affordable access to essential food items for local consumers. A sustainable approach will not only stabilize the domestic market but also solidify Pakistan’s position as a reliable exporter in global food markets.