Pakistan’s agricultural trade is struggling to regulate to the tip of a shortlived growth in supplying a staple for China’s kitchens, as demand and costs for sesame seeds collapse amid growing competitors from different international locations.
China, the world’s largest sesame seed purchaser, imported simply $19mn value of seeds from Pakistan within the harvesting months of August and September this yr, a 53 per cent fall in contrast with the identical interval in 2023 when demand was at its peak, in keeping with knowledge from Beijing’s Normal Administration for Customs.
Pakistan had been benefiting from battle in Sudan, Ethiopia and Myanmar disrupting provides from producers there, and Beijing’s determination to abolish a 9 per cent responsibility on seeds from its neighbour.
Alan Xi, common supervisor for agriculture at China Equipment Engineering Company in Pakistan, stated waning demand from China was driving costs right down to Rs12,000 per maund (40kg) — a couple of greenback a kilo — for the farmers he contracts to develop sesame, properly under the Rs20,000 they fetched final yr.
“Very, very high demand from China drove farmers to want to switch to sowing sesame seeds,” stated Xi. Now “some farmers are telling me, they will never grow sesame again because of the low price”.
“Since the season started [in August], prices [of sesame] have been coming down every week,” stated Fahad Shoukat, chief government of Armcom, a Karachi-based sesame exporter.
Though his firm specialises in promoting premium-grade sesame to the US and Europe as a substitute of China, the value stoop has nonetheless hit his firm’s backside line. “Nobody [importers] is taking long-term positions, while last year people in Europe and the US would keep bigger stocks in their warehouses.”
Pakistan exported $403mn value of sesame final yr, making it the world’s fifth-largest exporter, up from simply $40mn in 2019, in keeping with knowledge from S&P International Commodity Insights, as China scrambled to switch misplaced volumes from battle zones and assaults on Crimson Sea delivery lanes.
Pakistan’s tariff exemption has given its exporters an edge over fellow autumn and winter suppliers in India, whereas the port of Karachi is comparatively nearer to Chinese language ports than these of opponents in west and east Africa, in keeping with analysts and exporters. Pakistan was chargeable for a couple of fifth of the $1.53bn in sesame imports by China in 2023, which had been was cooking oil, sauces and dessert garnishes.
Farmers sow sesame on greater than 1.8mn acres of Pakistani farmland, 4 instances the world below cultivation for the seed in 2020, in keeping with knowledge from the Ayub Agricultural Analysis Institute, a Faisalabad-based analysis centre.
They chased “exceptionally high prices” globally that peaked close to $2,500 per tonne for some seeds final yr, stated Jose Gutierrez Fernandez, an analyst at S&P International Commodity Insights.
However sesame was now “correcting” to a value of about $1,200 per tonne this yr, he stated, as new rivals, similar to Brazil and Niger, scaled up manufacturing, and Sudanese and Ethiopian exporters discovered their means again to the market.
Ibrahim Shafiq, director for exports at Lahore-based Latif Rice Mills, stated that the corporate, which sells half of its sesame seeds to China, noticed a surge in orders final yr, however the enhance “was artificial and could not be sustained”.
“This year, orders from China have slowed as buyers hope for better prices and better quality,” he stated.
The hit to Pakistan’s sesame market is the most recent signal of how the success of the cash-strapped nation’s agriculture exports, which policymakers are banking on to spice up much-needed international change, is tied to its neighbouring economies. A surge in rice gross sales overseas final yr was aided by a year-long Indian ban on exporting non-basmati kinds of the grain and now seems threatened after New Delhi lifted the restriction final month.
As Pakistan can now not financial institution on file excessive demand from China for its lower-grade seeds, exporters must enhance their high quality to enchantment to higher-end patrons, analysts stated.
“The key factor to export to China is high volumes and low prices,” stated Gutierrez Fernandez.
“The challenge for Pakistan in this price environment might be increasing its exports to markets such as South Korea and Japan that are willing to pay high prices for sesame that meets their maximum residue limits, but that requires more cleaning of the product from debris and pesticides.”
For farmers, nonetheless, the choice is switching to a special crop.
“It’s been a demoralising year,” stated Feroz Akhtar Shah, a sesame farmer from Layyah in central Pakistan who additionally collects crops from different farmers. He bought 30 tonnes to exporters in 2023 receiving greater than Rs18,000 per maund, however the value has now fallen to Rs13,000.
“We barely broke even this year — no profit, but thankfully not a loss,” he stated.
The previous garment manufacturing unit common supervisor had already modified careers, leaping into the sesame market two years in the past after a cousin finding out in China instructed him in regards to the nation’s demand for the seed.
Unusually intense monsoon rains this summer time devastated the standard of his seeds and, if costs don’t choose up subsequent yr, Shah and the farmers he collects from are contemplating investing in mango timber as a substitute.
Extra reporting by Wenjie Ding in Beijing
