Wheat and rice exports may fall 15% this year

Global oversupply, steep rise in import duty in Iran likely to affect shipments

Wheat and rice export from India are likely to fall about 15 per cent this year due to lower prices in global markets, experts say. It is expected the export will also be affected by a steep rise in import duty by Iran, which accounts for the highest grain export from India.

The Food and Agricultural Organization (FAO), the United Nations’ agriculture body, has said global food grain prices slumped to a six-month low in July. “Production prospects, especially of food grains, have improved, especially in major producing regions, including the US, the European Union and India, which is likely to keep global prices under pressure during much of this year,” said an FAO study.

On July 1, Iran, which accounts for 37.5 per cent of Indian rice export (both basmati and non-basmati), had doubled import duty from 22.5 per cent to 45 per cent. Consequently, rice export to that country are expected to fall. And, because of global oversupply, the loss in export to Iran isn’t expected to be made good by any other country.

“This is a very challenging time for India’s wheat and rice export. We clocked $10.5 billion of rice export last year. This year, we weren’t able to achieve this as Iran has turned surplus from domestic production,” said Ajay Sahai, director-general and chief executive of the Federation of Indian Export Organisations.

India’s wheat export to Iran also faces quality concerns. In July last year, Iranian authorities told their Indian counterparts the wheat imported from India contained fungus. Iran has not imported wheat from India since 1996 due to quality concerns. But of late, it has evinced interest in resuming import, due to restricted export from Russia. Iran has been importing large quantity of soyameal from India.

Between April and May this year, basmati rice export declined 16 per cent to 622,259 tonnes from 737,987 tonnes in the corresponding period last year. During the same period, non-basmati rice export fell 5.5 per cent to 820,991 tonnes from 868,643 tonnes in the year-ago period. Total wheat export plunged 23.5 per cent—from 1.7 million tonnes (mt) to 1.30 mt.

For 2014-15, FAO estimates global rice supply at 685.2 mt, against the required 502.3 mt. This means the global rice market will have a surplus amount of 183 mt. Wheat supply is estimated at 881 mt, compared with the required 699 mt—surplus of 182 mt. Iran’s above-average grain harvest this year is attributed to favourable weather and moisture conditions. In Iran, the second-biggest wheat producer in the region after Turkey, production is anticipated to remain unchanged from the five-year average of 13.5 mt.