Seasonal Ban on Rice Imports as of Aug. 22

EghtesadOnline: The seasonal ban on rice imports will come into effect from Aug. 22, according to the deputy head of the Islamic Republic of Iran Customs Administration for technical affairs.

News ID: ۷۵۰۶۶۱

10 August 2020

Mehrdad Jamal Oranqi was quoted as saying by IRNA that importers have time to go through the clearance procedures of their rice consignments until that date.

The official noted that so far a total of 819,000 tons of rice have been imported since the beginning of the current Iranian year on March 20.

Every year and during the rice harvest season, the government bans rice imports in support of local farmers and domestic production. The ban usually lasts until November.

A total of 2.9 million tons of rice were produced in the country during the last Iranian year (March 2019-20), registering close to a 45% increase compared with the previous year, according to the director general of the Agriculture Ministry’s Grains and Essential Goods Bureau.

“This increase in rice output is because of favorable weather and heavy precipitations during February and March of 2019, due to which land under rice cultivation increased by 38% to reach 834,000 hectares,” Faranak Aziz Karimi said.

The northern Gilan and Mazandaram provinces together account for 71% of Iran’s rice production, according to figures released in a recent report published by the Statistical Center of Iran.

As per a recent decision made by the Market Regulation Headquarters on June 4, customs duties on rice imports have decreased from 25% to 10%, Fars News Agency reported.

Since March 20, the government has discontinued the allocation of foreign currency at the subsidized rate of 42,000 rials per dollar for rice imports; it has instead called on importers to meet their forex requirements from the export earnings of non-oil products (petrochemicals, steel and minerals) traded through the so-called secondary FX market that has exchange rates much closer to the free market rates.

The decline in rice import duty aims to prevent a surge in prices.

Iranians annually consume 3.2 million tons of rice. Domestic production amounts to around 2.2 million tons every year, but last year the figure increased due to favorable weather and high precipitation levels.

The difference between domestic production and local need is imported from the UAE, India, Pakistan, Thailand, Turkey and Iraq.

India Expects Decline in Exports to Iran

India’s basmati rice exports to Iran may decline 20% this financial year, as the West Asian nation fails to make payment due to US economic sanctions, Indian English-language daily Business Standard reported recently.

Iran ordered nearly 30% of India’s total basmati rice exports in the financial year 2019-20, buying 1.3 million tons. The US economic sanctions have paralyzed business in Iran, which is battling the crisis for a year now.

Indian exporters said they have cut shipments to Iran because of delay in payments caused by US sanctions.

“Iran, which imports around 1.3 million tons annually, is expected to register 20% lower volume from India as payment-related issues continue from last fiscal because of US sanctions,” said a Crisil study.

“Exports to Iran is currently on halt due to a delay in payment receivables. Owing to economic sanctions, dollar availability remained scarce. But, Iran market is set to open very soon,” said Gurnam Arora, joint managing director of Kohinoor Foods Ltd, the producer and exporter of Kohinoor brand basmati rice.