West Asia curbs threaten Indian rice exports.

NEW DELHI: India’s basmati rice exports to West Asia could be hit after Saudi Arabia and Iran took measures to curb imports. Even the shipments to Europe are under a cloud after a prominent Hamburg-based laboratory alleged high levels of pesticide residue in Indian basmati in June.

Rice shipments to Iran and Saudi Arabia comprise 60% of the exports. While Iran has withdrawn import licences, Saudi Arabia has removed subsidy on rice imports.

“Both these developments could impact short to medium- term exports to W Asia,” a Delhi-based exporter said.
“Compared with last year, the exports were slightly lower in the April-July 2010, but are expected to pick up once the monsoon withdraws,” Vijay Setia, president of All India Rice Exporters’ Association, said.

But the export prospects can take a hit as Iran’s Trade Promotion Organisation has withdrawn licences for rice imports, primarily to improve the quality of domestic products and lower consumer prices. Saudi Arabia removed subsidies on rice imports last week citing that foreign exporters have been taking advantage of these to increase prices.

The decision is being viewed as part of an exercise to ensure food security for the Saudis and reducing over-dependence on countries such as Philippines and India.

In the short term, it will help Thailand, Vietnam and even the US if they offer competitive prices. Thailand has stocked 6mt of rice and is desperate to offload without crashing prices.

“In the longer term, this could jeopardise India’s basmati exports to Saudi Arabia,” an industry source said.
Private investors and government agencies from Saudi Arabia have been acquiring arable land in African countries for growing aromatic rice. India annually exports about $500 million worth of basmati and $102 million worth of non-basmati rice to Saudi Arabia.

“ the only beneficiaries of the subsidy are the exporters and not the consumers,” the Saudi trade minister was quoted as saying. But exporters claimed prices were high last year because of the worst drought in three decades and higher farmer input costs had pushed up basmati price.

Rice exports increased by 44% to 2.3 million tonne in 2009-10 from 1.8 million tonne in 2008-09, Agricultural and Processed Food Products Export Development Authority (Apeda) data said.

In value terms, exports crossed Rs 12,000 crore in 2009-10, as against Rs 9,476 crore in 2008-09. The inclusion of Pusa 1121 variety of rice under basmati in October 2008 expanded the size of basmati market, especially in Iran.

Source : economictimes.indiatimes.com