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Basmati exporters suffer as Iran stops purchases

Date 13-December-2013
Subject Basmati exporters suffer as Iran stops purchases

KOLKATA/CHANDIGARH: Indian basmati rice exporters have suffered a jolt as Iran has stopped purchasing the cereal from the world market since October. The Islamic republic is weighing its options following the withdrawal of sanctions by the US and five other nations and has not invited bids for procuring rice. India is a major exporter of the Pusa 1121 variety to Iran.

Talking to ET, All India Rice Exporters' Association president MP Jindal said, "It is true that Iran is not picking up rice from India for the past three months. But that is a temporary phenomenon. We have learnt that the country will place orders by early January. They are now liquidating the stock that they have in their warehouses."

Earlier, Western sanctions forced India to trim oil purchases from Iran but the latter remained a loyal and large customer. As sanctions stalled dollar payments in 2012, Iran started settling part of its oil debt in rupees and Iran was making use of rupee transactions to buy goods from India. The rupee trade gave New Delhi an edge over other rice suppliers such as Islamabad which do not have such huge debts with Tehran. This enabled India to establish a near monopoly in exports.

India is expected to export 40 lakh tonne of basmati rice in the current fiscal. Of this, 12 lakh tonne is expected to be imported by Iran and the rest 28 lakh tonne is expected to go to Europe and Saudi Arabia. Jindal said exports were 21 lakh tonne till October 20. The international price of basmati is at $1,450 per tonne in the current fiscal compared to $1,100 per tonne in 2012-13. In rupees, prices are in the range of 5,400 to 6,200 per quintal compared to 2,500 to 3,500 per quintal in 2012 .

Better prices in overseas markets have also pushed up basmati prices helping farmers to earn 60%-80% more vis-a-vis the previous fiscal. Traders say prices are expected to remain strong due to good demand and an overall spike in prices of agriculture commodities. Reports of low output due to erratic rains during the growing phase of the variety have also increased the price trend.

Source : economictimes.indiatimes.com

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