Pakistan’s rice export earnings have increased remarkably since the early 70’s. Of the two major varieties grown and exported, it is the traditional variety,Basmati, which has shown an enormous potential for export earnings. The other variety, namely IRRI, was introduced in the midst of the green revolution. Although IRRI’s yield has been higher as compared to Basmati, the latter has fetched a very high price in the international market. This paper attempts to estimate the social profitability of the two varieties and shows that Basmati enjoys a much higher profitability viz-a-viz IRRI. The policy implication is that the cultivation of Basmati needs to be encouraged by direct price incentives and other means.