ISLAMABAD (Reuters) - Pakistan exported about 2.9 million tons of rice in the fiscal year 2008-09, decreasing from 3.3 million tons the previous year, and a possible water shortage has raised concern for the new crop, an industry official said on Wednesday. Pakistan, the worlds fifth-largest rice exporter, produced about 6.3 million tons of rice from the 2008-09 crop versus 5.5 million tons the previous year, and was hoping to export up to 4 million tons in the year ended on June 30. But exports suffered from November to January following a government decision to buy rice from traders and enter the export market itself, which drove up the price of rice and ultimately hurt exports, according to traders. As of June 26, we exported 2.89 million tons of rice and there were some big orders due to be shipped in the remaining days of the financial year, said Abdul Rahim Janoo, chairman of the private Rice Exporters Association of Pakistan (REAP). The governments decision to buy rice and paddy was aimed at helping farmers and maintaining stability in the domestic market in the face of a bumper crop, but traders said the move left Pakistan uncompetitive in the international market. Government data showed rice exports fell nearly 8 percent in the July-February period from a year earlier, while exports in January alone fell more than 50pc from the same month in 2008. Exports picked up in April after the government ended its intervention in the market following an outcry from traders, according to industry officials. Pakistan exported 909,709 tons of basmati rice and 1.99m tons of other varieties of rice by June 26, REAP data showed. But the prospect of a water shortage, due to scant rainfall in recent months, has raised alarm among farmers and millers about the next crop. May, June, July, these are the three months when paddy needs a lot of water, and there was already less rains in May and June. It will be very bad if we dont have enough rains in July, Janoo said. We are very, very concerned about the prospects of a water shortage. Harvesting of non-basmati rice begins at the end of September and that of basmati rice, a month later. Rice accounts for about 8 percent of Pakistans exports and 12pc of gross domestic product. Janoo said the government decision to raise diesel prices would also hurt farmers who use diesel-run tractors for farming and diesel generators to run tube-wells.