WorldSouth Asia
Pakistan's rice exporters lose smaller buyers as Iran war pushes up freight costs
Container rates to Africa and the Gulf have doubled or more, and exporters say buyers of a few thousand tonnes have walked away. Cheaper Indian rice still dominates the Saudi market Pakistan wants to win.
Key points
- Freight to West Africa has risen from about $2,200 a container to nearly $5,000.
- Buyers ordering 2,000 to 8,000 tonnes have exited the market, Pakistan's rice exporters say.
- Pakistan holds about 15-20 per cent of Saudi Arabia's rice market, where Indian rice is dominant.
Pakistan’s rice exporters are losing their smaller customers in Africa and the Middle East because the war around Iran has sent shipping costs soaring, the head of the country’s main exporters’ body said on Wednesday.
Muhammad Raza, chairman of the Rice Exporters Association of Pakistan, said buyers who traditionally took 2,000 to 8,000 tonnes in containers “have sort of exited from the market” as exporters shift to bulk ships. Container freight to East Africa has climbed from $800-$1,200 to $2,400-$3,000, and to West Africa from about $2,200 to nearly $5,000. A container to the UAE that cost about $100 before the conflict peaked at $3,500 and is still around $2,500.
For the Philippines, a fast-growing market, container availability was “close to zero”, he said. “I am pretty sure a lot of orders even toward the Philippines will get canceled.”
The squeeze comes as exports were recovering. Shipments rose 56 per cent to $652.4 million in July-September, with basmati up 86 per cent, after falling 32 per cent to $2.29 billion last year. Raza put a realistic target for this year at $2.5 billion to $3 billion and expects a crop of more than 10 million tonnes.
Pakistan wants a bigger share of Saudi Arabia, where it supplies about 15-20 per cent of rice. Reaching 30-35 per cent would be “a big achievement”, Raza said. But Indian rice, which is cheaper, remains dominant in the kingdom, and he warned that buyers who switch suppliers during the disruption may not come back: “your palate will eventually adjust to its taste.”