Minimum rate on rice exports from India to push local prices

Published Tuesday, March 11, 2008

By VM Sathish

(SATISH KUMAR)

A new price floor on rice exports from India could force up prices in the UAE with traders warning they are caught in the middle between UAE and Indian official commodity price lists.

Last month, India, the world’s second-largest rice producer, increased the minimum price for overseas shipments of basmati and non-basmati rice in an attempt to boost local supplies and curb domestic inflation.

Dubai-based rice traders and re-exporters told Emirates Business the new price hike has come at a time when the market was just recovering from the shock imposed two months ago, when the Indian Government imposed a fixed price of $550 (Dh2,020) per tonne for non-basmati rice.

With the new minimum prices, Indian rice exporters can export non-basmati rice for not less than Rs 26,000 a metric tonne (Dh2,356). And exports of aromatic basmati rice, grown in the foothills of the Himalayas, has had a price floor set at Rs36,000 a tonne (Dh3,263).

Meanwhile, the UAE Ministry of Economy attempted to head off a significant price hike by issuing a new price list of essential commodities last week.

However, traders have said that the two price lists including the UAE’s that mandates shops sell a bag of basmati (39kg) for no more than Dh145 have left them no room for profit.

“The new price restriction will push up the retail and re-export price of rice. In the past two-and-half years, rice prices have doubled. Recently, we had to increase the price by $50 per tonne three times. The cost of a tonne of basmati 1121 rice has more than doubled from Dh700 to Dh1,500. We expect it to go up further. The ban on cheap rice exports will create new demand for basmati rice,” said Abbas Ali, sales officer, Asia and Africa General Trading, Dubai.

Ali said under the new rules, the Ministry of Economy price list will only allow traders to sell 1121 basmati rice for Dh3.7 per kg, while he maintains it costs them Dh7 per kg to procure.

Mohan Kumar, manager of Arab India Spices, agreed the Middle East is likely to see a spike in the cost of rice varieties.

“The new restriction will push up price in the Middle East market. The price of a packet of rice, which was Dh19, is now Dh50.

“There are 30 rice importers in the UAE and most of them will find it difficult to supply rice to supermarkets, hypermarkets and other retail outlets.”

Import options are limited, because Thailand and Pakistan – the two main alternative markets to Indian rice – have also increased prices due to increasing demand.

New UAE commodities prices

The Ministry of Economy is cracking down on what it has said is price manipulation by supermarkets and hypermarkets. The ministry issued a new price list last week mandating traders cannot charge more than Dh145 for a bag of basmati rice (39kg).

The price of five-gallon Al Waha Oasis water has been set Dh8 and the price of diary products milk, ghee and yoghurt was allowed to increase by 10 per cent. Juice prices can be increased by 17 per cent and the price of egg is fixed at Dh14 for a tray of small eggs, Dh16 for medium-sized eggs and Dh17 for large egg trays.

The price of the Americana brand of food items has also been fixed by the ministry, which said traders who violate the prices will be punished.

To prevent a black market in commodities, price of cement has been fixed at Dh17 per bag from the factory and Dh18 at the retail level. The price of a tonne of cement is now Dh295.

Abu Dhabi aims to raise quality levels

Abu Dhabi is in for a new phase of government performance to deliver a safe society, an open economy and new space for UAE nationals to contribute to the country’s development march, according to the head of the Abu Dhabi Food Control Authority (Adfca).

In a speech during the Abu Dhabi Food Control Authority Forum held at the Emirates Palace Hotel, Sheikh Mansour bin Zayed Al Nahyan, Minister for Presidential Affairs and Chairman of Adfca added: “What was achieved during the past makes us feel reassured about the Adfca’s future and its ability to perform its responsibilities.

The achievements were not realised through individual efforts or personal endeavors. They were a result of a collective effort that all of you participated in.

“That confirms our conviction that independence, responsibility and teamwork are the secrets to our nation’s advancement. We hope to raise establishment work to new horizons of quality and distinction.”

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The page was last updated on: 14 January 2016 14:21