Rice traders worried about Iran ban proposal

A proposed Iranian ban on rice and other food products’ imports will help arrest the increase in basmati rice price which has been under pressure due to the severe flood in the rice belts of Pakistan and India.

Rice traders in the UAE said that reports of a ban by Iran on rice imports will affect domestic rice price in the GCC and cause the market to be flooded with oversupply.

The Iranian Agricultural Ministry is considering raising import tariffs on 15 agricultural items but did not say which ones. The Iranian government announced the ban on import of several agricultural products including rice, until December.

A leading rice exporter in Dubai said: “There is a lot of confusion in the commodity market about Iranian announcement on a food import ban. Already there is a ban on 1121 basmati rice import to Iran for the last seven months. The price of 1121 basmati came down sharply due to the existing ban. Due to the flood in Pakistan and India, price of rice started going up but with the Iranian plan to ban rice imports, the Dubai market will be flooded with rice.”

“The price of 1121 basmati rice, a major export from India, has been hovering around $950 per tonne for the last several months. The price of 1121 basmati rice had gone up to $1400 per tonne and following the Iranian ban seven months ago, it has come down to $950 because traders who had stocked the rice for the Iranian market started selling desperately,” the trader said..

Indian rice exporters have been worried about losing Iranian market, a major consumers of Indian rice.

Indian basmati rice exporters have been concerned about the slowdown in export demand mainly due to lower demand from Iran for Indian rice.

Export to Iran, a major market for 1121 basmati rice, has slowed down due to significant export from Pakistan. Pakistan is learnt to have recently supplied 200,000 MT of 1121 rice to Iran.

Rice traders have been expecting a 10 per cent increase in the price of rice because production from the next harvest season in India will be down due to flood. “November is the new harvest season in India and we expected rice price to go up by 10 per cent. With the Iranian rice ban announcement, there will be over supply in the UAE market,” said the General Manager of a leading rice dealer.

He said there are 70,000 varieties of rice in the world, and even if Iran bans certain category, exporters will find other ways to enter the Iranian market, which is one of the largest export markets for Indian and Pakistani rice.

“Iran has banned rice imports in the past and lifted the ban after sometime. There is a possibility that they will remove the ban after 15 days,” traders said. There is always a supply demand gap in Iranian market and imports are inevitable to keep prices under control.

A recent statement from the Pakistan’s Ministry of Food and Agriculture estimated that the recent floods have destroyed about a fifth of the country's total crop area, causing losses worth $2.8 billion. Flood surges, triggered by unprecedented monsoon rains, have washed away more than a quarter of the estimated summer rice crop and shaved off 16 per cent of the estimated cotton output, the statement said. It has damaged crops sown over 1.93 million acres, or 776,996 hectares.

Output of the main summer-sown grain staple, rice, will fall by 1.6 million MT to 4.35 million MT as more than a quarter of the rice area has been ruined.

Iran considers rice and wheat as strategic food items and encourages domestic production through agricultural cooperatives. Iranian rice producers have been complaining against rice imports that affect domestic prices. A number of Iranian parliamentarians had asked local television channels to ban airing foreign basmati rice advertisements.

Iranian rice dealers have been quoted as saying that more than 100 types of rice are traded in the rice market of northern Iran, the main rice farming and consuming area. Foreign rice comprises more than 80 per cent of them and the share of domestic productions is only 20 per cent.

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