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Emerging Challenge: No Basmati Rice Exports to Iran (1.4 Million Ton or 30% Export) - How to Protect Basmati Paddy Farmer’s Price in Kharif 2020?


A leading listed Basmati rice company’s annual general meeting noted in May 2019 that there is still a sizable surplus of funds available in the escrow account of UCO Bank to export Iran and orders also flowing.  India had stopped importing Iranian crude oil from May 2019.  In an October 2019 estimate, there was Rs. 2,000 Cr worth payment of basmati rice exporters stuck to Iran. A press statement of UCO Bank (January 2020) reads that there is no problem for exporters till the fiscal end (March 2020). The DGCIS statistics towards Iran exports between April to January 2020 reads Rs. 19,660 Cr.  Big questions: Is the money in UCO Bank Escrow Account enough to pay exporters? How many exporters are still to receive payment? Are the basmati rice exporters going to face second wave of NPA?



Now there is no Iran oil trade for the UCO Bank to receive the payment from oil marketing companies and pay Basmati rice exporters. In future, if Indian exporters are going to sell basmati rice to Iran, will they route the consignments through Dubai to Iran? Whether history is going to repeat?  The situation is Catch 22, the size of Iranian basmati rice export market is 1.4 Million Ton or 30% in total exports of Indian Basmati rice.  The Basmati rice-sowing season is just in doorstep. If there is no access to the Iran market and if the over production or supply of 30% of basmati paddy happens, the farm income will get depressed due to lower price realization.  It is an important moment for the Central and the State government to intervene and derisk Basmati rice trade through appropriate policy measures on variety or crop pattern and crop acreage in a careful manner. 

Comments

  1. mera desh, mere log29 April 2020 at 00:11

    Hi, If there is Pandemic situation continuous then we need to fill 1.30 billion people and demand for petroleum products also down by at least 20 percent, in my opinion in this scenario priority of export Rice will be change.

    ReplyDelete
  2. Unknown29 April 2020 at 02:07

    Good analysis....

    ReplyDelete

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