India will have to handle the current impasse with Iran over export of basmati rice with the kind of dexterity that Malaysia employs vis-À-vis its palm oil shipments to India.
“Let’s face it. They have a domestic producers’ lobby for rice, just as we have for oilseeds. At the same time, they are going to be long-term importers, just as we are in edible oil. This whole issue has to be dealt with sensitively and overt belligerence will not pay,” a Delhi-based exporter, who wished not to be quoted, told Business Line.
Earlier this month, Iran’s Institute of Standards & Industrial Research claimed that recently imported Indian basmati shipments contained unacceptable levels of cadmium, arsenic and lead.
Import duty
Further, on September 13, Iran raised the basic import duty on rice from 21 to 41 per cent (not counting the 4 per cent ‘entry dues’ and a value-added tax of 3 per cent, taking the effective tariff to 50 per cent or so).
The increased duty virtually nullified the reduction in the minimum export price (MEP) of basmati rice, from $1,100 to $900 a tonne, announced by India on September 8.
“What they have succeeded through these measures is to talk down demand for imported rice, thereby, pacifying their own rice growers”, the exporter pointed out.
Iran produces 23-25 lakh tonnes (lt) of rice annually and imports 9-10 lt, much of which is from India.
Basmati exports
During the current calendar year till August, India’s total basmati exports were estimated at 18.66 lt.
This included 7.65 lt of the improved ‘Pusa-1121’ variety, 90 per cent of which is reported to have gone to Iran.
The Islamic republic has over the last 3-4 years emerged as a major consumer of Indian basmati: Of the 18.66 lt exported during January-August this year, Iran accounted for 5.44 lt, Saudi Arabia 6.63 lt and the United Arab Emirates (UAE) 4.04 lt.
“If you add the Pusa-1121 indirect exports through the UAE, the actual Iran figure may have already crossed 7 lt and could touch 10 lt for the whole year”, the exporter added.
According to him, India had a huge advantage over other rice suppliers to Iran.
“The sailing time from Kandla to Dubai is hardly 3 days, compared to 12-15 days from Thailand and Vietnam.
Of late, we have even been shipping directly to Bandar Abbas even if the documents originate from Dubai”, the exporter pointed out.
Pusa-1121
Moreover, there is a niche market for Pusa-1121 in Iran because of its 30 per cent extra elongation compared to normal basmati varieties, which means more volume for the same price.
Domestic selling price
The ongoing impasse has not come at the right time for farmers in Punjab and Haryana, who have almost doubled the area sown under Pusa-1121 this year. Till three months ago, par-boiled (sella) Pusa-1121 rice from the 2008 crop was selling at Rs 90 a kg ex-mill, whereas now there are no buyers even at Rs 77-78 a kg.
While harvesting of the new crop is yet to commence fully, traders are said to be informally contracting steamed rice from millers at Rs 48-50 a kg.
Meanwhile, arrivals of various aromatic paddy varieties have started in the mandis of Punjab. ‘Sharbati’ is now selling at around Rs 13 a kg, while ‘Pusa-Basmati’ is fetching Rs 15.50-17 a kg. The few bags of Pusa-1121 to have arrived have been sold at Rs 21-22 a kg.
Source : Business Line