Iran has clamped down on imports of rice to protect the country’s farmers and reduce a stockpile, traders say, sending shivers through Asia because the Middle East is one of the region’s biggest export destinations, according to the iMarketReports website.
The move is especially painful for India, the world’s top rice exporter, as it has stepped up production of drought-resistant rice this year while Pakistan has also been seeking to send more to sanctions-hit Iran.
Thailand, the second largest rice exporter after India, has also been trying to restart exports to Iran, which were halted after a private rice exporter defaulted on its delivery commitment in 2011.
“We got to know of this decision only two to three weeks back. All our supplies have come to a halt,” said Rajan Sundaresan, executive director of All India Rice Exporters Association.
Iran accounts for around a third of India’s exports of top-end basmati rice. India’s production of the premier grade of rice is expected to increase by 20 percent this year to eight million tonnes, as farmers were lured to sow more because of higher returns and drought-resistant characteristics.
The halt to Iranian buying is likely to lead a large surplus of the recently-harvested grain and already pressuring prices downward, throwing into uncertainty a growing new segment of the rice market.
Mohammad Reza Nematzadeh, Iran’s minister of Industries, Mines and Trade, couldn’t be reached for comment.
“The import [of foreign rice] is banned till January and will resume” afterward, says Mostafa Pakzad, an Iranian financial expert who advises the country’s commodity traders.
Typically, Iran raises import duties between September to November when arrivals of rice from overseas peak but a complete ban is unprecedented, say traders.
Many Asian exporters usually chose to pay higher duties and continue their supplies to the Middle East nation though profits are slimmer. The duties are usually lowered every year after December, paving the way for higher exports.
Traders said they are not sure whether normal trade with Iran will resume from January as political leaders have been clamoring for consumption of domestic stockpiles before imports as well as advocating greater self-sufficiency.
Still, the Middle East nation is expected to import soon as its domestic production is expected to be around half of its demand of around 3.45 million tonnes.
Rafique Suleman, chairman of the Rice Exporters Association of Pakistan, said they are in talks with Iran to widen their export channel to the Middle East nation, which have virtually dried up ever since western sanctions due to the lack of a payment mechanism.
He said an Iranian delegation had recently visited Pakistan to hold talks on the issue, but didn’t give details of the outcome.
India and Iran created what is essentially a barter system two years ago to skirt Western sanctions for Iran’s disputed nuclear program. In exchange for Iranian oil India sells Iran a range of goods including rice, although complications mean payments are delayed.
The hurdles in trading with Iran officially have given rise to covert channels wherein shipments are often routed through neighboring countries, say traders.
Read the article HERE.
The move is especially painful for India, the world’s top rice exporter, as it has stepped up production of drought-resistant rice this year while Pakistan has also been seeking to send more to sanctions-hit Iran.
Thailand, the second largest rice exporter after India, has also been trying to restart exports to Iran, which were halted after a private rice exporter defaulted on its delivery commitment in 2011.
“We got to know of this decision only two to three weeks back. All our supplies have come to a halt,” said Rajan Sundaresan, executive director of All India Rice Exporters Association.
Iran accounts for around a third of India’s exports of top-end basmati rice. India’s production of the premier grade of rice is expected to increase by 20 percent this year to eight million tonnes, as farmers were lured to sow more because of higher returns and drought-resistant characteristics.
The halt to Iranian buying is likely to lead a large surplus of the recently-harvested grain and already pressuring prices downward, throwing into uncertainty a growing new segment of the rice market.
Mohammad Reza Nematzadeh, Iran’s minister of Industries, Mines and Trade, couldn’t be reached for comment.
“The import [of foreign rice] is banned till January and will resume” afterward, says Mostafa Pakzad, an Iranian financial expert who advises the country’s commodity traders.
Typically, Iran raises import duties between September to November when arrivals of rice from overseas peak but a complete ban is unprecedented, say traders.
Many Asian exporters usually chose to pay higher duties and continue their supplies to the Middle East nation though profits are slimmer. The duties are usually lowered every year after December, paving the way for higher exports.
Traders said they are not sure whether normal trade with Iran will resume from January as political leaders have been clamoring for consumption of domestic stockpiles before imports as well as advocating greater self-sufficiency.
Still, the Middle East nation is expected to import soon as its domestic production is expected to be around half of its demand of around 3.45 million tonnes.
Rafique Suleman, chairman of the Rice Exporters Association of Pakistan, said they are in talks with Iran to widen their export channel to the Middle East nation, which have virtually dried up ever since western sanctions due to the lack of a payment mechanism.
He said an Iranian delegation had recently visited Pakistan to hold talks on the issue, but didn’t give details of the outcome.
India and Iran created what is essentially a barter system two years ago to skirt Western sanctions for Iran’s disputed nuclear program. In exchange for Iranian oil India sells Iran a range of goods including rice, although complications mean payments are delayed.
The hurdles in trading with Iran officially have given rise to covert channels wherein shipments are often routed through neighboring countries, say traders.
Read the article HERE.
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