Iran’s payment default leaves rice traders apprehensive about further export

With Iran failing to clear their pending dues for the last eight months, rice traders in Haryana are reluctant to export this season’s produce to the country, fearing more defaults. As per information, Iran owes about ₹1,200 crore to the state’s farmers. Adding to their apprehension is the fact that Basmati price have seen a steep fall this season.

This development is likely to affect rice traders of the country, especially Haryana, adversely as Iran is the biggest consumer Indian aromatic Basmati rice as it imports about 20-25% of India’s total rice exports of 4.5 million tonnes every year.

Haryana’s rice traders say that payment of about ₹1,200 crore was stuck in Iran since May this year when India stopped importing oil from the country due to US sanctions. Though the Iran government had started to clear pending payments, it stopped after clearing dues to the tune of ₹100 crore.

The traders say that the delay has caused them huge losses and the Indian government did not intervene to help them clear their dues.

As per members of the All India Rice Exporters Association (AIREA), most of the affected traders belong to Haryana and Punjab. They further said the farmers had to sell their produce for around ₹2,500 per quintal, the lowest in the past five years.

“Since Iran is the largest basmati importing market for Indian traders and the annual the basmati exports to Iran in the past three years had increased to 14.83 lakh MT (₹10,790 crore) in 2018-19 from 7.16 lakh MT (₹3,778 crore) in 2016-17. But the delay in payments has left farmers not wanting to take any risks next year,” said Vijay Setia, former president of AIREA.

AIREA president Nathi Ram Gupta said, “The delay in payment has affected the big rice exporters of the country. They will now have to focus on the local market, which may lead to a fall in prices, affecting both traders and farmers.”

“The bad trade with Iran has also affected farmers during this harvesting season. Affected traders could not purchase paddy this year and farmers had to sell their produce at ₹2,000 to ₹2,800 per quintal this season against ₹3,000 to ₹4,500 per quintal last year,” said Gurdev Singh, a rice trader of Kurukshetra.