UAE rice importers demand 25% subsidy


Rice importers in the UAE, under intense pressure to cope with the international shortage of rice and its rising price, have demanded a 25 per cent subsidy on the food grain from the UAE government as part of measures to control inflation.

Last year, the UAE imported about 750,000 tonnes of rice mainly from India, Pakistan, Thailand and Egypt, traders said. In March this year, India, the world's second-biggest rice exporter in 2007, banned all non-basmati rice shipments as a protectionist measure that triggered a wave of panic buying, causing the prices of rice from Thailand – the only producer not to curb exports – to nearly treble. Other rice producers Vietnam, China and Egypt have stopped or reduced their exports.

The Emirates Society for Consumer Protection has also urged the government to subsidise basic food items as part of measures to curb food price rises, which it expects to reach 40 per cent this year, according to its executive manager Jamal Al Saeedi. "The loss figures of rice importers are very alarming," said a rice importer in the UAE who wanted his name withheld. "A number of companies have already stopped importing until the government offers some sort of support and I will do the same soon if this situation continues," he said while speaking to Reuters.

P Vishnu Kumar, Director of Vishnukumar Traders and General Secretary of the South Indian Rice Exporters Association representing 40 Indian rice exporters, said export to the Middle East has stopped in four months.

"Our UAE customers' stock will be exhausted in a months' time. A 25 per cent subsidy from the UAE Government, as introduced by Saudi Arabia, will ultimately help consumers who are paying three times more now."

He added a subsidy from the government will arrest inflation and help supermarket chains, some of which have agreed to retain last year's price.

Aneesh K S, brand manager of the Nirapara brand, which sold 2000 containers of rice in the UAE last year, said he expects rice exports from India to resume after a week as the Indian Government was considering allowing export of smaller pouches of rice weighing two kg, five kg and 10kg. Previously, Indian rice used to come usually in 40kg or 20 kg sacks.

According to Aneesh, the Indian Government is considering an annual export quota for different rice varieties. Nirapara, which supplies premium rice to 3,000 supermarket chains in the UAE, said a subsidy from the government would help rice traders and consumers.

He said most Indian families had stockpiled rice for a month, after which they will feel the real impact of the shortage. He expected the Indian Government to fix the price of rice, which is at $1,000 (Dh3,672) per tonne now, at its previous level of $525 per tonne.

The Gulf countries rely heavily on rice imports, leaving them vulnerable to price changes on the international markets. Oman said last week it was buying 200,000 tonnes of rice for its strategic food reserves, enough to feed the population for two years, while Saudi Arabia plans to create facilities to stockpile basic staples and said it would increase global investments to ensure its long-term food security.

"Some of the Gulf countries, including the UAE, are looking for opportunities to invest in agricultural lands outside their territories, but these things don't happen overnight," a government source said.

"The government is also looking into other alternative solutions such as building up strategic food reserves. This will make people less anxious and importers less exposed to international prices," the source said. (With inputs from Reuters)

Shortage in rice supplies

The UAE will continue to face a shortfall in rice supplies at least until August when consumer and producer nations replenish stocks and expected extra crops boost supplies, traders said yesterday.

Rice output is set to rise this year as major producers plant additional crops, likely slowing or halting a rally that has caused prices to more than double since January.

"The UAE's rice shortage won't ease before August when production in countries such as India and Pakistan rise, and we see more supplies in the market," an Abu Dhabi-based rice importer said.

"Of course, we will have to assume that unexpected incidents such as hurricanes or floods also happen in some countries, which only worsens things," he said. (Reuters)