Indian rice exporters will be worst hit by a general ban on imports of rice imposed by Iran recently. The Iranian ban will further drag depressed prices of basmati rice in the domestic market.
Iran has barred rice from other countries as its local crop is reported to be good this year and is set to arrive in the market there. Teheran has imported over 1.25 million tonnes (mt) of rice this year during April-July against 1.45 mt in the same period a year ago. Iran has bought over 2.5 million tonnes of basmati rice from India in the last two years.
“We feel the ban is temporary, but it will hit the exporters. Prices will also come under pressure,” said MP Jindal, President of All India Rice Exporters Association.
Jindal, who is the Chairman of Best Foods International, a major exporter to Iran, said officials of the industry body are meeting the Commerce Secretary on Friday to take up the issue at government-level with Iran.
According to Agricultural and Processed Food Products Exports Development Authority (Apeda), basmati exports to Iran during April-July were valued at ₹1,732 crore against ₹1,810 crore a year ago.
AK Gupta, Advisor to Apeda, said, “though the ban seems temporary, it may lead to loss of our market, which we may or may not regain”. Gupta said the exports to Iran were lower by about three lakh tonnes in the current fiscal so far. Overall, the basmati exports this fiscal may end lower by 5-7 per cent at around 3.5 million tonnes, Gupta added.
The consensus among the Indian exporters is that Iran may re-open their markets by end-January or early February.
Prices plungeCurrently, the basmati paddy is ruling at around ₹2,960 a quintal, far lower than the ₹5,360 it fetched during the same time a year ago, in the markets of Punjab and Haryana.
The market seems to have factored in the Iranian ban as the rumours have been floating around over past three weeks, an exporter said. Basmati prices are down by about 30 per cent over last year, also influenced by a higher crop in India.
“Our production is higher by about 30-35 per cent higher than last year with output being higher in the non-traditional States such as Madhya Pradesh, Rajasthan and eastern UP,” said Anil Mittal, Chairman of KRBL, the largest producer and exporter of basmati rice.
While KRBL’s exposure to Iran has been minimal only at around 15,000 tonnes annually, Mittal said the demand from Europe was on the rise.
Earlier this year, Iran cut imports of India’s basmati rice after it imposed new standards on chemical contamination.
Dissatisfaction over the quality of rice being delivered by Indian exporters also led to fall in shipments.
India-Iran pactIndia and Iran created a barter system two years ago to overcome Western sanctions following a dispute with Teheran over its nuclear programme. In exchange for Iranian oil, India offers Teheran rice, soyameal and pharmaceuticals.
Under the trade arrangement, India pays for part of the crude oil it receives from Iran in rupees.
The funds are then deposited at the Public sector UCO Bank and used to pay exporters for shipment of food and other products to Iran.
“Exporters will take a hit since prices are bound to fall in view of the ban. They deserve it since they have been ignoring other markets at the cost of focusing on Iran,” said an official of a rice exporting firm not wishing to identify himself.
India is already paying dearly for focusing on only Iran to export soyameal. In September, soyameal exports plunged to lower than 1,000 tonnes in view of Iran cutting its imports.
As a result of focusing on Iran, Indian exporters had neglected or ignored other markets such as Japan and Korea.