Business Times
By Issac John (Deputy Business Editor)
29 May 2008
DUBAI — Prices of all varieties of rice are expected to rise in the UAE following India's decision not to relax a ban on rice exports imposed in March.
India, the largest rice supplier to the Gulf, has been widely expected to ease curbs on exports of rice with the prospects of an imminent record crop. However, dashing hopes of easing export curbs, Trade Secretary Gopal Pillai said on Tuesday that despite the promise of a bumper crop in 2008, the country would not be following Cambodia's lead in allowing shipments of rice.
India is set to harvest a bumper crop. Output in the year ending June may reach a record 95.68 million tonnes, compared with 93.35 million tonnes produced a year earlier.
Like other Asian rice exporters, India banned exports of non-basmati rice after a series of earlier partial restrictions, in a bid to boost supplies to contain record high inflation.
Importers and distributors in the UAE said prices of non-basmati and basmati rice would come under further pressure as stock levels are fast depleting. "The shortage of popular non-Basmati variety such as Palakadan Matta and Thanjavoor Ponni is already being felt at small and medium retailers." With the current stocks unlikely to last more than two months, the UAE and other GCC countries are going to face a serious supply crunch despite news that Vietnam, following Cambodia, is expected to relax export curbs in July.
India, the world's second largest exporter of the grain — exporting about four million tonnes annually — accounts for more than 50 per cent of UAE's rice imports. Indian rice export to the UAE is around 120,000 metric tonnes per month. Prices of non-Basmati rice have gone up by 25 per cent from Dh15 per five kilo bag to Dh20 while traditional Basmati price has surged 87 per cent — from Dh8.5 to Dh13 per kilo. The price of US-style Thailand rice has almost surged by more than 70 per cent, from Dh40 to Dh70 per 20 kilo bag.
Market analysts said the shortage of rice supply will further inflate prices in the UAE, where core inflation is estimated to be around 13 per cent this year. Deepak Thawani, an expert on commodities, said prices of rice in the UAE are unlikely to return to earlier levels in the near future as global demand for rice would continue to outstrip supply, particularly with hopes of an export relaxation by India fading.
Globally, rice prices have skyrocketed by around 76 per cent between last December and April, according to the UN Food and Agriculture Organisation Rice Price Index. Experts blame the trend on higher energy and fertilizer costs, greater global demand, droughts, the loss of rice
farmland to bio fuel plantations, and price speculation. To avoid food scarcities in their own countries, major rice exporters have imposed export bans, taxes or caps.
Although the Indian government has set the minimum export price of premium traditional Basmati at $1,000 per tonne, the current market price is $2,500 per tonne, and for the medium type Basmati, price is hovering between $1,700 and $1,800 per tonne.
India's move to ban non-basmati rice exports and curb sales of the superior basmati variety triggered protectionist measures by other leading producers to secure supplies for the staple consumed by half of the world. The curbs trebled benchmark Thai prices. Prospects of a good harvest in India and some other countries have softened prices, prompting Cambodia to lift a ban on rice shipments it imposed two months ago, the first major Asian exporter to roll back such curbs.
According to the Food and Agriculture Organisation of the United Nations, global output of milled rice in 2008 will be 445.3 million tonnes, up 2.3 per cent from last year's record 435.2 million tons,. Consumption will rise 2.4 per cent.
By Issac John (Deputy Business Editor)
29 May 2008
DUBAI — Prices of all varieties of rice are expected to rise in the UAE following India's decision not to relax a ban on rice exports imposed in March.
India, the largest rice supplier to the Gulf, has been widely expected to ease curbs on exports of rice with the prospects of an imminent record crop. However, dashing hopes of easing export curbs, Trade Secretary Gopal Pillai said on Tuesday that despite the promise of a bumper crop in 2008, the country would not be following Cambodia's lead in allowing shipments of rice.
India is set to harvest a bumper crop. Output in the year ending June may reach a record 95.68 million tonnes, compared with 93.35 million tonnes produced a year earlier.
Like other Asian rice exporters, India banned exports of non-basmati rice after a series of earlier partial restrictions, in a bid to boost supplies to contain record high inflation.
Importers and distributors in the UAE said prices of non-basmati and basmati rice would come under further pressure as stock levels are fast depleting. "The shortage of popular non-Basmati variety such as Palakadan Matta and Thanjavoor Ponni is already being felt at small and medium retailers." With the current stocks unlikely to last more than two months, the UAE and other GCC countries are going to face a serious supply crunch despite news that Vietnam, following Cambodia, is expected to relax export curbs in July.
India, the world's second largest exporter of the grain — exporting about four million tonnes annually — accounts for more than 50 per cent of UAE's rice imports. Indian rice export to the UAE is around 120,000 metric tonnes per month. Prices of non-Basmati rice have gone up by 25 per cent from Dh15 per five kilo bag to Dh20 while traditional Basmati price has surged 87 per cent — from Dh8.5 to Dh13 per kilo. The price of US-style Thailand rice has almost surged by more than 70 per cent, from Dh40 to Dh70 per 20 kilo bag.
Market analysts said the shortage of rice supply will further inflate prices in the UAE, where core inflation is estimated to be around 13 per cent this year. Deepak Thawani, an expert on commodities, said prices of rice in the UAE are unlikely to return to earlier levels in the near future as global demand for rice would continue to outstrip supply, particularly with hopes of an export relaxation by India fading.
Globally, rice prices have skyrocketed by around 76 per cent between last December and April, according to the UN Food and Agriculture Organisation Rice Price Index. Experts blame the trend on higher energy and fertilizer costs, greater global demand, droughts, the loss of rice
farmland to bio fuel plantations, and price speculation. To avoid food scarcities in their own countries, major rice exporters have imposed export bans, taxes or caps.
Although the Indian government has set the minimum export price of premium traditional Basmati at $1,000 per tonne, the current market price is $2,500 per tonne, and for the medium type Basmati, price is hovering between $1,700 and $1,800 per tonne.
India's move to ban non-basmati rice exports and curb sales of the superior basmati variety triggered protectionist measures by other leading producers to secure supplies for the staple consumed by half of the world. The curbs trebled benchmark Thai prices. Prospects of a good harvest in India and some other countries have softened prices, prompting Cambodia to lift a ban on rice shipments it imposed two months ago, the first major Asian exporter to roll back such curbs.
According to the Food and Agriculture Organisation of the United Nations, global output of milled rice in 2008 will be 445.3 million tonnes, up 2.3 per cent from last year's record 435.2 million tons,. Consumption will rise 2.4 per cent.
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