REAP opposes additional 2pc tax on exporters

Business Recorder

22-07-2025

KARACHI: Following the government's imposition of an additional 2 percent tax on exporters, Pakistani rice exporters failed to fetch expected prices in the global market, leading to a significant decline in rice exports during the fiscal year 2025. A key reason behind this has been the rapid drop in international rice prices.
In this regard, Rafiq Suleman, former Chairman of the Rice Exporters Association of Pakistan (REAP) and Convener of the Rice Committee of the FPCCI, said that the government's decision to impose 2 percent tax was not appropriate. If the government had formulated policies in consultation with REAP leadership, not only could rice exports have been increased, but more foreign exchange could have been brought into the country.
Rafiq Suleman stressed the need to focus on agriculture and improve crop yield. He stated that farmers must be provided with affordable pesticides and seeds so they can work properly and grow quality crops to ensure better yield. He noted that despite numerous challenges, exporters have worked hard to export rice from Pakistan—an effort he called a 'jihad' that deserves praise.
He also pointed out that many issues affected rice exports this year, especially problems related to plant protection, which severely impacted exports for nearly a month. Now that the sector is trying to stabilize again, the government is not paying adequate attention.
He further added that he had clearly warned that due to the 2percent tax, next year's rice exports would not reach even $3.5 billion, let alone $4 billion.
Current export figures confirm this, with rice exports totalling $3.2 billion. If more pressure is placed on exporters through taxation, exports will decline further. The government must play its role by providing cheap electricity, eliminating excessive taxes, and offering as many benefits as possible to exporters to keep the wheels of the economy moving smoothly.
REAP Chairman Malik Faisal and Senior Vice Chairman Javed Jelani are making strong efforts for rice exporters, but the government must also take their suggestions into account.
Moreover, according to statistics, Pakistan's total rice exports in fiscal year 2025 stood at 5.8 million metric tons (MMT), reflecting a 3.7 percent decrease compared to 6 MMT in the previous fiscal year. However, the situation in terms of revenue was more disappointing. Total revenue from rice exports dropped significantly by 14.7percent, falling from $3.93 billion to $3.36 billion.
This decline is primarily attributed to falling prices in the international market, especially for non-Basmati varieties, which make up over 85 percent of Pakistan's rice exports. Basmati rice exports saw a slight increase of 3percent in volume, reaching 797,000 tons. However, revenue from Basmati exports fell by 5.2percent to $832 million, compared to $877 million in FY2024.
Data shows that a major reason for the decline in prices was a 9.1percent drop in average price per kilogram, from PKR 320.8/kg in FY2024 to PKR 291.6/kg in FY2025.
Meanwhile, exports of other rice varieties saw a 4.7 percent drop in volume and a 17.4percent decline in value, reflecting weak demand and heavy price pressure in key international markets. In FY2025, non-Basmati rice exports generated $2.52 billion, down from $3.05 billion in FY2024.
A sharp decline in rice exports was recorded in June 2025. Compared to May, exports dropped by 40.6percent, and by 37.1percent compared to June 2024. Monthly export revenue also fell to $150 million, marking a 50 percent year-on-year and 37.4 percent month-on-month decrease.
In addition, in FY2025, the share of rice in Pakistan's total exports declined to 10.5percent, down from 12.8percent in the previous year. Despite the significant decline in revenue, the rice sector continues to play a key role in Pakistan's exports and foreign exchange earnings.
Copyright Business Recorder, 2025