Indian Basmati Gets A Leg Up From Iran

New Delhi: If there is one development that has really transformed the market dynamics for Indian basmati, it is the emergence - practically from nowhere - of Iran as a major new buyer.

Till around three years ago, the Islamic republic hardly bought any rice from India. In the 2005-06 marketing year (November-October), exports to Iran were estimated at around 60,000 tonnes, which soared to 2.25 lakh tonnes (lt) last year.

Through UAE

“For the new year, contracts have already been entered for 1.25-1.50 lt and the total quantity may cross three lt”, trade sources said.

There are two significant aspects to the newly developed basmati trade with Iran. First is that the exports are mostly routed through the United Arab Emirates (UAE). “The export contracts are with buyers stationed in Dubai, who have their separate channels for despatching the product to the final destination. There is no authentic data of exports to Iran and whatever we have are trade estimates based on what is sold to parties in Dubai,” the sources noted.

The second aspect is that the exports to Iran consist entirely of ‘Pusa-1121’, an evolved (hybrid) aromatic rice yet to be officially notified as ‘basmati’.

Pusa 1121 variety

Till its arrival on the scene, the Iranians were mainly importing par-boiled ‘Super’ and other local basmati varieties from Pakistan, the bulk being through the Quetta-Zahedan border.

“The Iranian authorities have in recent times imposed heavy tariffs and other restrictions on land route shipments, as part of a policy to crack down on the illegal opium trade. This has hit rice exports from Pakistan, which, in turn, has provided a vacuum for the Indian industry to fill. And Pusa-1121 came just at the right time”, the sources said. The new variety has been simply lapped up in Iran, with prices (cost & freight, Dubai) rising from $850 last November to $1,200 towards the season-end and now quoting at $1,150 a tonne.

“Though technically not a basmati, in terms of aroma, taste, fluffiness and other attributes, sella (par-boiled) 1121 scores even over traditional or improved notified varieties. Moreover, it has 30 per cent extra elongation over normal basmati varieties, which means more volume for the same price,” the sources claimed.

Widen market

But what Iran and Pusa-1121 have most importantly done is to widen the market and improve the overall bargaining power for Indian basmati. Till now, the key destinations were Saudi Arabia (4-4.5 lt of par-boiled and one lt of raw basmati) and Europe (3 lt plus of raw brown rice). “Iran’s emergence has led to a once buyers’ market becoming one where sellers call the tune. In fact, we have seen prices being re-negotiated for 1-1.2 lt of exports to Saudi from $700-720 to over $900 a tonne,” the sources added.

Geo-politics

On the flip side, though, is geo-politics.

“With Iran, there is always the spectre of sanctions or even the risk of a military strike. Also, unlike Saudi or even Europe, Iran has no permanent importing interest, as it wants to be self-sufficient in rice”, they observed. The country currently produces 22-23 lt and imports 5-6 lt.