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UAE Traders Concerned Over Iranian Rice Ban

Iran's ban on rice imports will result in local markets being flooded with oversupply, the rice traders of the United Arab Emirates said to Emirates 247.

Rice traders in the UAE said that reports of a ban by Iran on rice imports will affect domestic rice price in the PGCC and cause the market to be flooded with oversupply, according to a report by Emirates 247, Moj News Agency wrote.

The Iranian Agricultural Ministry is considering rising import tariffs on 15 agricultural items. The Iranian government announced the ban on import of several agricultural products, including rice, until December.

A leading rice exporter in Dubai told Emirates 247, "There is a lot of confusion in the commodity market about Iranian announcement of a food import ban. Already there is a ban on 1121 basmati rice import to Iran for the last seven months. The price of 1121 basmati came down sharply due to the existing ban.

Due to the flood in Pakistan and India, price of rice started going up but with the Iranian plan to ban rice imports, the Dubai market will be flooded with rice."

"The price of 1121 basmati rice, a major export from India, has been hovering around $950 per ton for the last several months. The price of 1121 basmati rice had gone up to $1400 per ton and following the Iranian ban seven months ago, it has come down to $950 because traders who had stocked the rice for the Iranian market started selling desperately," the trader said.

Indian rice exporters have been worried about losing Iranian market, a major consumer of Indian rice, according to the report.

Indian basmati rice exporters have been concerned about the slowdown in export demand mainly due to lower demand from Iran, the report read.

Export to Iran, a major market for 1121 basmati rice, has slowed down due to significant export from Pakistan. Pakistan is learnt to have recently supplied 200,000 MT of 1121 rice to Iran, the report added.

According to Emirates 247, rice traders have been expecting a 10 percent increase in the price of rice because production from the next harvest season in India will be down due to flood. "November is the new harvest season in India and we expected rice price to go up by 10 percent. With the Iranian rice ban announcement, there will be over supply in the UAE market," said the general manager of a leading rice dealer.

According to the report, Iran considers rice and wheat as strategic food items and encourages domestic production through agricultural cooperatives. Iranian rice producers have been complaining against rice imports that affect domestic prices. A number of Iranian parliamentarians had asked local television channels to ban airing foreign basmati rice advertisements.

Iranian rice dealers have been quoted as saying that more than 100 types of rice are traded in the rice market of northern Iran, the main rice farming and consuming area. Foreign rice comprises more than 80 percent of them and the share of domestic productions is only 20 percent, the report read.

© Iran Daily 2010