Agri Business

Basmati exports to Iran will pick up after October

Tomojit Basu New Delhi | Updated on January 24, 2018 Published on June 12, 2015

A view of Basmati rice field.

Teheran policy requiring Indian mills, exporters to register causing delay in shipments

First quarter numbers for basmati rice exports to Iran – the biggest buyer, accounting for a fourth of sales overseas – are yet to be released, but industry sources say that volumes are likely to pick up only after October even if issuance of import permits may be undertaken from July.

Policy hassles

The current delays are due to the Iranian government’s policy of Indian units and exporters being required to be registered with the Teheran’s Health and Medical Education Ministry. The process can only be initiated by an Iranian importer, who has to furnish a list of intended exporters.

“The main factor is the initiation of a new process which requires Indian mills to be assessed for good manufacturing practices. They will be eligible to export to Iran and it’s a slow process, since few units have got themselves registered so far,” said R Sundaresan, Executive Director, All India Rice Exporters’ Association (AIREA).

“Exports to Iran are on, but not at the same quantity or speed as the same time last year. We expect sales to pick up after October, since their own produce is available currently,” he added.

While there is no guarantee of basmati sales gathering pace, the issuing of import licenses should begin next month.

“A resumption of issuing import permits will take place after Ramadan, which is in July,” said AK Gupta, Director, Basmati Export Development Foundation, APEDA.

Iran stopped issuing authorisations last October which saw India’s basmati rice exports slide from $1.4 billion in 2013-14 to $600 million last fiscal.

By volume, exports fell from 1.44 million tonnes (mt) to 0.94 mt over the same period.

Importer cartel

Agriculture Minister Radha Mohan Singh met with his Iranian counterpart Mahmoud Hojjati on the sidelines of the UN’s Food and Agriculture Organisation conference in Rome earlier this week to enhance agri-cooperation and increase farm trade.

Some domestic millers alleged that political intervention in granting these import permits is partly responsible for dragging basmati prices down to around $1,000/tonne from $1,400-1,500/tonne during the same period a year ago.

“A syndicate has been created in Iran on the pretext that it’s easier to monitor quality of Indian basmati. There are 5-10 importers who work with a few exporters from here. It’s skewing the market in favour of the buyer and driving prices down,” said Vijay Setia, Executive Director, Maharani Rice, told BusinessLine.

The process of selling basmati on a loan-basis under a clean direct-advance (DA) system needed to be corrected as well, he said. “It’s a matter of judgment, once you have a system of import permits, how many people will get them and the number issued is up to the Iran government since it’s their system,” said Gupta.

Prices dip

With the acreage under Basmati expected to rise 5 per cent this year in the counrty against 2.1 million hectares coverage last year, prices could come under further pressure.

“The association has no confirmed reports of a cartel operating in Iran. Prices are lower mainly due to huge production of 8.1 mt last year, up from 6 mt the year before and there’s a lot available at the moment,” said Sundaresan.

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Published on June 12, 2015
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