Wheat and rice export from India is likely to hit severely this year due to lower prices in global markets on record high supply. Food grains shipment will also get affected due to a steep hike in import duty by the government of Iran, India's largest destination for grain exports. Experts believe India's grain exports will decline at least by 15% this year.
The United Nations' agriculture body the Food and Agricultural Organisation (FAO) has said global foodgrains prices slumped to hit six months low in July.
"Production prospects especially of foodgrains have improved especially in major producing countries including the United States, the European Union and India which is likely to keep global prices under pressure much of this year as well," said FAO study.
Most importantly, the largest importer of Indian rice constituting around 37.5% of total rice (both basmati and non-basmati) exports from India has doubled import duty to 45% from July 1 against 22.5% earlier. Consequently, rice exports to Iran will be difficult this year. Because of global oversupply, however, the loss in exports to Iran will not be covered up by any other country. Iran constitutes around 22.23% other cereals exported from India.
"This is a very challenging time for India's wheat and rice exports. We cloaked $10.5 billion exports of rice last year which we would not be able to achieve this year as Iran, India's largest rice importer, has turned surplus from domestic production this year," said Ajay Sahai, Director General and Chief Executive Officer of the Federation of Indian Export Organizations (FIEO).
Between April-May period, overall basmati rice exports declined by 16% to 622259 tonnes compared to 737987 tonnes in the corresponding period last year. Non basmati rice exports also declined by 5.5% to 820991 tonnes in the first two months of the current fiscal compared to 868643 tonnes in the same period previous year. Total exports of wheat plunged by a steep 23.5% to 1.30 million tonnes compared to 1.70 million tonnes in the same period previous year.
FAO forecasts global rice supply at 685.2 million tonnes in 2014-15 against 502.3 million tonnes of utilization. This means, the global rice market will remain in surplus with 183 million tonnes. Similarly, global wheat supply is estimated at 881 million tonnes compared to 699 million tonnes of utilization, resulting into 182 million tonnes of oversupply.
"Effective July 1, Iran has doubled import duty on foodgrains to 45% from 22.5% earlier. India, therefore, will lose a major grain market which would not be covered up by any others," said M P Jindal, President, All India Rice Exporters' Association.
India's wheat exports to Iran also face deadlocks over quality issues. In July 2013, Iranian authorities inform their Indian counterpart that wheat imported from India contains fungus fearing Karnal bunt, a disease does not affect human but fears to spread on farm fields. Iran has not imported wheat from India since 1996 due to quality issue despite importing large quantity of soyameal but, of late, the country evinced interest in resuming import due to restricted export from Russia, an earlier source for wheat.
Iran's above-average grain harvest in 2014 is attributed to favourable weather and moisture conditions with better snow accumulation in winter. In Iran, the second biggest wheat producer in the sub-region after Turkey, the 2014 production is anticipated to remain unchanged from the five-year average of about 13.5 million.
Source:- business-standard.com
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