RIYADH, 20 May 2008 -- Saudi Arabia, one of the world's top rice buyers, has approached India to discuss issues relating to supply and to possibly lift restrictions imposed on rice exports to the Kingdom.

At the same time, the Kingdom and the UAE are securing more rice from Thailand to meet growing domestic demand, diplomatic and market sources here said.

"The Council of Saudi Chambers of Commerce and Industry is currently in touch with Indian officials on the issue of rice imports," said Rajeev Shahare, deputy chief of the Indian mission in Riyadh.

"Moreover, the whole issue of Indian rice exports to the Kingdom was discussed at length when Montek Singh Ahluwalia, deputy chairman of India's Planning Commission, visited the Kingdom," said Shahare, adding that there was no export ban on high-quality Indian basmati rice.

Dr. Charn Jullamon, charge d'affaires at the Thai Embassy in Riyadh, said, "Saudi rice imports from Thailand rose by nearly 90 percent during the first quarter of 2008, indicating a massive surge in imports."

India, the world's second-biggest rice exporter and a main supplier to the Gulf region, banned all non-basmati rice shipments in March. Shahare said India had been exporting 500,000 to 600,000 tons of rice, mainly basmati, to Saudi Arabia annually.

The Indian government's curbing of supply has spooked importers at a time when global stocks have halved since hitting a record high in 2001, causing benchmark Thai prices to nearly treble this year. India's Food Secretary T. Nand Kumar said earlier this month that India would soon consider selling limited volumes of the Asian staple to its neighbors.

"But, most importers in Saudi Arabia and the UAE are planning to secure more supplies from Thailand instead of waiting for India to lift its export ban," said a local rice importer.

"Prices are skyrocketing, but we are very keen on securing enough supplies from Thailand, which is the most suitable alternative for the time being," he said.

But Jullamon said no Saudi government agency had contacted Thai authorities on the supply issue or on the possibility of Saudis growing rice in Thailand.

There have been reports that the Kingdom is likely to start investing in rice farms in Thailand by the end of this year. "Thailand can definitely provide technical assistance to Saudi Arabia when it comes to producing rice," said the Thai diplomat, adding that Saudi imports of Thai rice increased from $20 million in 2005 to $37 million last year.

"During the first half of this month, Bangkok exported rice worth $11.7 million, indicating an upswing in rice exports," he added.

"But, it can only be done by joint ventures because Thailand does not allow foreigners to buy paddies," said another Asian diplomat, who did not want to be named.

In the UAE, which buys about 750,000 tons of rice mainly from India, Pakistan and Egypt, Thai rice imports stand at 60,000 tons a year.

Last year Saudi Arabia imported a total of 960,000 tons of rice, making it the world's sixth biggest rice importer.

Around 70 percent of the Kingdom's rice imports were basmati rice, mainly from India, while Thai rice accounted for 10 percent.

By Ghazanfar Ali Khan

© Arab News 2008