Over the last couple of seasons, Iran, along with neighbour Iraq, has emerged prime favourite with Indian basmati exporters for several reasons. One, Iranians buy large quantities of parboiled Pusa 1121. With its own farming in doldrums, Iran is increasingly dependent on the world market to supply it long grain aromatic rice. With India at its doorstep willing to export 3 mn tonnes basmati, Iran has shifted its custom to us.
In the new season starting October 1, almost half of the 2.5 million tonnes labeled basmati leaving India will reach Iran finally.
In the new season starting October 1, almost half of the 2.5 million tonnes labeled basmati leaving India will reach Iran finally.
Second, Iran pays top-notch prices beyond India's wildest dreams. Whoever imagined that the variety Pusa 1121, which entered the basmati family with the skin of its teeth, will be the most expensive one, fetching $1500/t or Rs 70/kg in Isfahan.
But it does. Chiefly because Iranians are used to paying over-the-top prices for their local aromatic Domsiah rice in chronic short supply, and since rice is not a staple, it doesn't bother any one too much to pay exorbitantly for Pusa 1121 that comes closest to Domsiah. This has led to a scramble among Indian companies and farmers to produce and export more and more quantities of only this variety. Haryana is rapidly hurtling towards virtually a monoculture of Pusa 1121.
Moreover, Iranian buyers don't like to hold large stocks and begin importing only when a short supply is clearly visible. This just-in-time inventory management means they gain on low carrying costs but lose on bargaining power with India. Nothing could be better news for exporters who are pocketing record margins for parboiled 1121.
Third, Iranians make quick payments.
But it does. Chiefly because Iranians are used to paying over-the-top prices for their local aromatic Domsiah rice in chronic short supply, and since rice is not a staple, it doesn't bother any one too much to pay exorbitantly for Pusa 1121 that comes closest to Domsiah. This has led to a scramble among Indian companies and farmers to produce and export more and more quantities of only this variety. Haryana is rapidly hurtling towards virtually a monoculture of Pusa 1121.
Moreover, Iranian buyers don't like to hold large stocks and begin importing only when a short supply is clearly visible. This just-in-time inventory management means they gain on low carrying costs but lose on bargaining power with India. Nothing could be better news for exporters who are pocketing record margins for parboiled 1121.
Third, Iranians make quick payments.
When you need rice shipped urgently, you can't afford to play fast and lose with suppliers because they tend to have long memories. This is manna from heaven for cash-strapped Indian exporters. The entire payment cycle, from the time they get an order to buy paddy and parboil it to shipping and cash in hand, takes less than four weeks. In the basmati business, this is unprecedented.
Lastly, the Iranians have effectively and swiftly undercut the Saudis, who controlled international basmati market for over a decade, much to the delight of Indian exporters. Though Saudi Arabia still buys up to 750,000 tonnes basmati from India, it is a tough bargainer.
Lastly, the Iranians have effectively and swiftly undercut the Saudis, who controlled international basmati market for over a decade, much to the delight of Indian exporters. Though Saudi Arabia still buys up to 750,000 tonnes basmati from India, it is a tough bargainer.
As there are only a handful of Saudi importers and always hold a year's supply in stocks, they would quote rock bottom prices. As all Indian and Pakistani exporters wanted to desperately sell to them, Saudis would do deals on their own terms. Not any more. With the Iranians buying larger quantities at higher prices, exporters need not queue out side Saudi offices and hotel rooms any more.
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