JEDDAH, 20 April 2008 — Minister of Commerce and Industry Abdullah Zainal Alireza told Saudi traders that the government would put pressure on New Delhi to ease rice exports to the Kingdom, press reports said yesterday quoting traders.
The move comes after the Indian Parliament asked producers to stop export of all types of rice, including basmati. Saudi traders expect government intervention to force Indian rice exporters to honor the deals they had signed with them.
Analysts said the Indian government has two choices either to allow export of all types of rice or impose a total ban. New Delhi is likely to opt for the second option as the country of 1.1 billion people has witnessed heavy shortage in rice in recent months, its worse in 25 years.
Saudi traders have conveyed their fears that India would stop exporting rice to the Kingdom, causing a big crisis in the country. The price of rice in the Kingdom has already increased three times, sending shockwaves among Saudis and expatriates. Many Saudi traders are now meeting local demand taking from their previous stocks.
The Saudis have complained that Indian traders were delaying supply of rice in accordance with deals they had signed before at lower prices. They have expressed their readiness to pay the price difference if supplies are made on time.
Khaled Al-Mahrous, a trader, said an agreement between Saudi Arabia and India in this respect was essential to protect Saudi rice reserves and keep prices at reasonable levels. He hoped that rice prices would come down in coming months with beginning of new harvest season in India.
Alireza has also told traders that he would intervene for the quick payment of subsidies, one paper said. Traders said the Ministry of Finance was obstructing payment, even after presenting necessary documents. They said total subsidies would reach SR450 million annually, at the rate of SR1 per kilogram of rice.
Rice prices have gone up 50 percent in international markets during the past six months. Many Asian producing countries, except Thailand have put restrictions on rice exports. In Vietnam, consumer prices rose by nearly 20 percent in March, the highest in more than 12 years.
India has raised the minimum export price for non-basmati rice to $1,000 per ton from $650 to protect domestic supplies. It also scrapped tax incentives for exporters of non-basmati rice to try and tame price pressures in Asia’s third-largest economy. “The government’s move is aimed at a complete halt of non-basmati rice exports,” said Prem Garg, managing director of Lal Mahal Group, a leading rice exporter.
Trade officials believe India will be able to export 5.5 million tons of rice in the year to March 31, up from 3.8 million tons in the previous year, but say the new restrictions could cut sales in coming months. “The government is concerned about domestic supplies,” said Vijay Sethia, president of the All India Rice Exporters’ Association.
Nearly half the planet’s 6.6 billion people depend on rice to survive but rising populations and economic growth mean that the world is already eating more of the grain than is harvested.
