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28 March 2024

Rice traders 'fried'; some abscond

Published
By VM Sathish

Nearly 20 Indian rice traders are believed to have absconded from the wholesale market in Al Ras, Deira, Dubai.

The traders reportedly ended up with a huge stock of unsold rice and paddy, after a steep drop in demand was reported from the Middle East.

Some are believed to have left the country, fearing jail or prosecution for non-payment of loans.

Iran, a traditional buyer of bulk rice has stopped importing such quantities and has begun using its stock bought earlier, one trader told Emirates 24|7.

Commodity traders in the Al Ras wholesale market deal also dealing in sugar, edible oil and frozen chicken legs are facing a liquidity crunch.

"Some rice traders have absconded from the market without paying creditors because there is a unique situation.

“Iran used to buy a lot of rice and all the South Asian rice traders in the UAE were expecting to sell an equal quantity of rice.

“After sanctions have eased, Iran now has the option to buy commodities, including rice, from South America as well. Indian traders who sued to get a premium in the past are not in that position anymore,” one trader told Emirates 24|7.

India exported 900,000 tonnes of basmati rice to Iran in 2014-15 compared with 1.4 million tonnes in 2013-14.

India used to meet 90 per cent of Iran’s basmati rice demand and according to the All India Rice Exporters Association the figure was expected to go up by 10 per cent per year.

Indian traders enjoyed a near monopoly and charged a 20 per cent premium.

“However, the demand from Iran has declined considerably, affecting the price," said Harish Kumar, Managing Director, Arab and India Spices, running one of the biggest commodity processing plants in Ajman.

He says at least 19 rice traders, mostly Indians and Pakistanis, have left the country.

"Today we heard that one more trader could have absconded. A lot of Indian rice traders have set up shop in the Al Ras market, to serve the Iranian market. Most Indian rice traders have their mills in India and an office in Dubai," says another rice trader in Al Ras.

"The problem is complicated because banks which used to give credit to anyone in the market have now started reducing their limits to individual traders.

“The rice and paddy are in the warehouses, with prices falling every day."

"The problem is complicated with the banks squeezing credit limits, leaving traders with few options," added Neeraj, another Indian rice trader in Al Ras.