India QueenThe future for Indian Basmati rice export seems to be diminished as the rice export deals with Iran are lingering on and rice prices in international market are also low.

Agricultural and Processed Foods Export Development Authority (APEDA) says that India’s Basmati rice export has declined marginally from around 3.76 million tons in FY 2013-14 to 3.7 million tons in FY 2014-15. This decline in basmati rice export is mainly due to Iran’s ban on Indian basmati rice import.

Iran, a major buyer of Indian Basmati Rice had banned rice import citing excess stock which has affected Indian rice market. Of total rice production in India, 40% of the rice goes to Iran as export. India had exported a total of 11.65 million tonnes (MT) of rice in 2014-15, of which basmati accounted for about 3.78MT and Iran has imported about 9.35 lakh tonnes of basmati in 2014-15.

So far, there are no clues from Iran about the upliftment of ban from Iran. Recent visit by a team of high level delegates and Commerce Ministry officials to Iran did not produces any positive results.

The Director General of Federation of Indian Export Organizations (FIEO) was quoted as saying that government of Iran takes a rice import decision based on the current paddy crop Since September is the normal harvesting season, any decision on bilateral rice import will be taken only around that time Normally, they reduce customs duty on import from the Most Favoured Nation So, we will have to wait a couple of months for any purchase agreement to get signed with India,”

Also he noted that the demand of India’s Basmati rice export has declined as many competitor as well as buyers are consuming their previous stocks to without ordering for new stocks.

Demand from other countries such as Saudi Arabia and the European markets supported India’s basmati rice sales this year. Saudi Arabia remained largest buyer of India’s basmati rice in 2014- 15 with 966,931 tons, up about 17% from 2013-14.

Global prices of rice have declined significantly and basmati rice prices are currently ruling near $1,000 per ton from around $1,400 – $1,500 per ton during the same time last year.

The All India Rice Exporters Association (AIREA) President noted that basmati rice exporters had witnessed a loss of about 30% in 2014-15 due to increased production costs as well fall in prices He noted that considering total production, procurement, storage and export costs of basmati rice, a sale price of about $1800 per ton would help exporters breakeven, he says. But prices are currently much lower than this figure, leading to concerns that exporters may face losses for a second consecutive year.

He urged the government to protect the interest of India’s basmati exporters through some form of export subsidy.