Pakistan and India: The Battle for Rice Exports
Pakistan and India are battling a rice war, as India is attempting to gain exclusive branding rights to export basmati rice to the EU. India’s trademark “geographic indication” for basmati rice has received approval from the EU and Pakistan has three months to respond to this claim or it will not be able to export basmati rice to the EU. Further implications of expanding geographic indication could compromise other markets for Pakistan, yet its response so far has been slow and inconsistent. The EU’s decision on basmati rice exports will influence each country’s economy, and with hundreds of millions of impoverished people between the two, there is much at stake.
The Value of Rice in Pakistan and India
The basmati rice industry is one that Pakistan heavily contributes to and relies on. Pakistan contributes to 35% of global basmati rice exports and its trade to the EU has grown from 120,000 tons in 2017 to 300,000 tons in 2019. A whole 40% of Pakistan’s workers work in agriculture, with rice accounting for 20% of agricultural land.
India exported 4.4 million tons of basmati rice between 2019 and 2020, which made up 65% of global basmati rice exports.
Rice Yield Challenges
Despite rice production increasing due to new practices, rice yields in both Pakistan and India are lower than the global average. Growing challenges such as drastic climate change can negatively influence annual rice production. Experts conclude that improving irrigation facilities and increasing the use of new technology will allow the countries to effectively expand their rice yields.
Population Growth & Economic Contraction
Already the fifth most populous nation in the world, projections have determined that Pakistan will grow from 220 million to 345 million by 2045. As its population continues to grow, its economy must grow at least 7% to prevent unemployment. However, in 2019, the economy contracted from 5.5% to 1.9% and the COVID-19 crisis further exacerbated this shrinkage. Unemployment has increased each year since 2014 and currently sits between 4% and 5%. It is imperative that Pakistan jumpstarts its economy or unemployment and poverty will spread.
Poverty in South Asia
Pakistan made great strides in reducing poverty in the early 2000s but has since stalled under more recent governments. By 2015, roughly one in four people, or 50 million Pakistanis, lived under the poverty line. Furthermore, there remains little opportunity for economic improvement.
India also has few opportunities for the poor to improve their lives as it placed 76 out of 82 countries in terms of social mobility. The lack of social mobility means that most people who are born poor will die poor, with minimal chances to jump to a higher social class. India also suffers from severe social inequality and a lack of growth in rural areas. A whole 364 million out of 1.3 billion, or 28% of the world’s poor live in India. However, globalization has allowed India to bring 270 million people out of poverty between 2005 and 2015. Consequently, since 1990, the life expectancy has increased by 11 years, schooling years have increased by three years and India has increased its human development index to above the medium average.
Malnutrition Causes Infant Mortality
Pakistan has an alarmingly high infant mortality rate of 55 deaths per 1,000 live births, which is twice that of India’s. A multitude of factors causes this, most notably, the malnutrition of mothers and their infants. Although wheat and rice are produced in abundant quantities, 44% of children under 5 suffer from stunted growth due to malnutrition. The problem is not whether food is available but it is that food is not accessible for the poor.
Rice as a Key Export
In Pakistan, rice provides value both nutritionally and economically. Rice accounts for 1.4% of the GDP and the traditional basmati rice makes up 0.6% of the GDP. However, most rice is sold as an export and is not used to feed hungry mouths domestically. In 2019, Pakistan exported $2.17 billion worth of rice, of which $790 million was basmati, a 25% increase from 2018.
A whole 90% of the rice grown in India is consumed domestically. Boasting the second-largest population in the world of 1.3 billion people, India accounts for 22% of global rice production but has many more people to feed than Pakistan. India is projected to produce 120 million tons of rice between 2020 and 2021.
Basmati rice exports generate massive profit for each country, If one country were to gain an advantage over the market, it would create enormous value for the winner and dire consequences for the loser. The winner would stand to gain economically and competitively as a result of increased production and profits. Additionally, increased demand for agricultural workers and production in rural areas would create revenue in historically impoverished areas.
– Adrian Rufo