Iran Economy NewsIran slashes basmati rice purchases from india

Iran slashes basmati rice purchases from india


Wall Street Journal: Iran has slashed its purchases of India’s basmati rice by around half over the past three months, helping push India’s domestic prices nearly 10% lower in recent weeks.


Shipments fall by half over past three months

The Wall Street Journal

By Biman Mukherji and Benoit Faucon

Iran has slashed its purchases of India’s basmati rice by around half over the past three months, helping push India’s domestic prices nearly 10% lower in recent weeks.

In cutting its purchases, some Iranian buyers have cited stringent new Iranian standards on chemical contamination and dissatisfaction with the quality of rice being delivered, saying grades were below those specified in contracts.

India’s export prices haven’t fallen yet, but it is only a matter of time before they do, traders said.

“We expect to see a price impact on Indian [rice] exports within a week,” said Vijay Setia, a member of the All India Rice Exporters Association.

India and Iran created what is essentially a barter system two years ago to skirt Western sanctions on Iran over its disputed nuclear program. In exchange for Iranian oil, India sells Iran a range of goods, primarily rice, soymeal and pharmaceuticals.

Under the trade arrangement, India pays for part of the crude oil it receives from Iran in rupees. The funds are then deposited at India’s state-run UCO Bank 532505.BY +0.15% and used to pay Indian companies for exports of food and other products to Iran.

Mostafa Pakzad, chairman of Iranian trading company Pakzad Consulting Corp., whose business includes commodities, said Iran’s rice imports from India had fallen because of tightened regulatory oversight by Iran.

Rajan Sundaresan, executive director of All India Rice Exporters Association, suggested Iranian buyers might be positioning themselves to demand lower prices. “There is going to be a meeting soon and we are hoping it would be smoothed out by the end of the month,” he said.

Whether a recent slowdown in oil deliveries from Iran to India is affecting the rice trade isn’t clear. Iranian oil exports to India fell by more than half to 200,000 barrels a day in April from 415,000 barrels a day in January, according to data from the International Energy Agency.

India is the largest exporter of rice to Iran. In the financial year ended in March 2014, India’s sales of basmati rice to Iran totaled 1.45 million metric tons, valued at $1.83 billion, Indian government data show. India shipped about 130,000 tons a month of basmati until February, but sales have since plunged to 50,000-60,000 tons a month, Indian traders said.

India exports only high-grade basmati rice to Iran, so the decline in shipments isn’t expected to have much impact on the price of lower-grade rice from major exporters such as Thailand or Vietnam. Basmati rice costs nearly five times as much as common grades.

In India, domestic prices for basmati have fallen over the past two weeks as a result of weaker demand from Iran. Benchmark 1121 basmati has been trading at around $1,400 to $1,500 a ton for most of this year, but some buyers have started asking for discounts of $50 to $100 a ton.

The drop in shipments to Iran comes as Indian farmers are planting more basmati rice to meet previously strong demand from Iran and other traditional buyers, including Saudi Arabia and Iraq.

Slow processing of payments in rupees by UCO Bank to Indian exporters from an Iranian account is also hampering trade, Mr. Pakzad said.

UCO Bank executives denied that any payments had been delayed.

Tejinder Narang, an independent commodities analyst, said it is unclear when shipments of basmati rice to Iran may pick up again. In any case, it is likely to happen eventually, because Pakistan is the only other supplier of basmati-type rice to Iran, but it has smaller available stocks and no formalized barter trade.

Latest news

A Tsunami of Malnutrition in Iran

The huge class gap in Iran is the result of the Iranian regime’s destructive policies. According to Mohammad Saleh...

Iran’s Regime Punishes People With Poverty To Hide Its Crime

The Iranian regime’s state-run Kayhan daily, the mouthpiece of its supreme leader Ali Khamenei, recently wrote that the regime...

Desperation and Unemployment Are Causing High Suicides Rates Among Youths in Iran

The sharp focus has recently been turned on Iran, once again, because of many bitter events. One such event...

Outcome of Iran Regime’s Corruption, High Number of Deaths in Natural Disasters

Sometimes numbers lose their mathematical meaning and become heralds of disasters. The number of 200 deaths in the village...

Iran Regime’s Oil Revenue Supports Terrorism

On August 2, John Kirby, the US National Security Council Coordinator for Strategic Communications at the White House, stated...

From Flash Floods to Socioeconomic Crises, Iran’s Regime Leaves Destruction in Its Wake

During the trial of Hamid Noury, one of the Iranian regime’s perpetrators in the 1988 massacre, the victims and...

Must read

EU foreign policy chief seeks urgent Iran talks

Reuters: The European Union's foreign policy chief Javier Solana...

Iraqi Defence Minister says Iran opposition group can remain in Iraq

Iran Focus: Tehran, Iran, Jul. 07 – Iraqi Defence...

You might also likeRELATED
Recommended to you