Rice exporting companies rally as Iran opens up market for India

The share price of companies engaged in basmati rice rose 18 per cent on Tuesday, following the news that Iran has lifted the ban on import of Basmati from India. Iran contributes one-third of India's overall basmati exports.

Kohinoor Foods' shares jumped 17.75 per cent to close at Rs 51.40 apiece on Tuesday on the BSE. LT Foods and KRBL reported 13.12 per cent and eight per cent increase, respectively, to close at Rs 260.30 and Rs 224.7 a share, respectively.

Iran had invoked self-declared restriction on import of basmati rice from India following high imports in the past few years. The Iran government had stopped issuing rice import permits from India. While Indian exporters continued to execute past orders, new orders dried up, resulting in sharp decline in India's rice exports to Iran.

"It is a very good development as India would again see a sharp increase in basmati rice exports to Iran, the world's largest importer for aromatic rice," said Gurnam Arora, joint managing director of Kohinoor Foods, the producer and exporter of Kohinoor brand basmati rice.

Data compiled by the Agricultural and Processed Food Products Export Development Authority showed India's exports of basmati rice to Iran declined to 940,000 tonnes in 2014-15 from 1.44 million tonnes (mt) in the previous financial year.

Trade sources attribute the decline in Iran's rice import from India to bitter political relations between the two countries. Last year, Iran had turned to Pakistan for import of basmati rice. "Iran's comeback to Indian market would boost India's basmati rice exports," said Rajan Sundareshan, executive director, All India Rice Exporters' Association.

Reports said Iran faced one of the worst droughts in the last monsoon season, resulting in estimates of lower rice production. According to Food and Agricultural Organization data Iran's total rice output in 2015 rose to 1.7 mt, from 1.6 mt in the previous year.

Iran's rice import is forecast to increase to 1.3 mt in 2015 versus 1.2 mt in 2014. But, with the drought estimated to damage standing crop, Iran's import of rice could increase proportionately this year.