Iran’s rice production has reached a record breaking 2.6 million tons this year. In other words, production of rice has increased by about 13% against previous year’s production. The government had estimated a target production of 2.5 million tons in 2019 and it has exceeded their estimates.
Impact on Indian Rice Exporters
Iran is the biggest importer of Basmati rice from India. Iran imports about 34% of the overall basmati exports of India. In other words, about one-third of basmati rice exported from India, is imported by Iran. Above all, Iran’s breakthrough in rice production will significantly reduce its imports from India.
Jamil Alizadeh Shayeq, secretary of Iran Rice Association said, “Annual domestic demand for rice stands at around 3 million tons and this year’s increased production means there will be less imports,” as reported by IRNA.
US Sanctions on Iran Lead to Delay in Payments
Payments for 1 lakh tons of Basmati rice which accounts to Rs 1000 crore has been delayed. The reason behind this is as stated by Vinod Kumar Kaul, the executive director of All India Rice Association (AIRA) is that, “the Iranian government has stopped issuing Indian currency (at concessional rate) to the rice importers of Iran without notifying them earlier”.
According to Data Published by APEDA for April-May 2019, Basmati rice exports increased to 8.64 lakh tonnes as compared to previous year’s 7.45 lakh tonnes. However, Iran has imported more rice during this period with 3.3 lakh tonnes of rice imported against previous year’s 2.41 lakh tonnes.
Above all, there is negative sentiment prevailing in the market, as basmati rice exporters to Iran have not received their payments. In addition, kharif harvest of basmati will commence at the end of October to make the situation worse.
Iran Warns India that it would Approach other Countries to buy Rice and Soymeal
After the US sanctions on Iran, India reduced oil imports from Iran to Zero. In US sanctions Trump’s administration has made it clear that any country dealing with Iran would be denied access to US financial banking system.
On the other hand, Iran has warned India, if it does not resume the oil imports from Iran, it will find other countries to buy rice from. Iran argued that US sanctions are unilateral decision of USA and not the United Nations.
Prime Minister Modi met Iran President Hassan Rouhani on Thursday at UN General Meet to discuss trade and regional issues. Further, foreign secretary of India is expected to visit Iran to discuss bilateral issues. We could hope that the Indian government is able to reach to agreeable terms with Iran to boost exports.
It can be concluded that there is no scarcity of rice in Iran. Therefore, we expect decrease in Indian basmati rice exports to Iran this year.