Rice tops Iran’s imports

  • Iran imported 48.041 million tons of goods, worth $19.442 billion, during the first five months of the current fiscal year (started March 20, 2017). The figure indicates a 16.49 percent increase in terms of value compared to the same period of preceding year, the Iranian Customs Administration reported Aug. 30. Average price for each ton of Iran’s imported goods in the mentioned period was around $1,367, indicating a rise by 8.84 percent, YOY. Rice worth $963 million topped the list of Iran's imported goods during the five-month period. Corn fodder ($612 million), cars with 1,500-2,000 cc engines ($515 million), car parts ($434 million) and soybean meal ($410 million) were the other goods mainly imported to the Islamic Republic in the first five months of the current fiscal year (March 20-Aug. 22). China was the main exporter of goods to Iran in the mentioned period. Iran imported $4.256 billion worth of goods from China in the five-month period. After China, the UAE ($3.341 billion), South Korea ($1.346 billion), India ($1.266 billion) and Turkey ($1.138 billion) were other four biggest exporters of goods to Iran.
  • How India is paying the price of rice exports to Iran; the story

  • How India is paying the price of rice exports to Iran; the story is of crashed markets, reneging buyers

    There are whispers in the market that Iranian buyers are yet to pay for 1.25 lakh tonnes of rice—valued at nearly Rs 875 crore—that had been shipped out in 6,000 containers a few months back.

    Iranian buyers, Iranian rice market, Iran, markets, India, rice exports, markets There are whispers in the market that Iranian buyers are yet to pay for 1.25 lakh tonnes of rice—valued at nearly Rs 875 crore—that had been shipped out in 6,000 containers a few months back. (Image: IE) There is now the risk of non-payment/delayed payment/outright loss against large volumes of basmati rice shipped to Iran. There are whispers in the market that Iranian buyers are yet to pay for 1.25 lakh tonnes of rice—valued at nearly Rs 875 crore—that had been shipped out in 6,000 containers a few months back. Small- and medium-sized exporters had entered into contracts with Iranian buyers for rice priced at Rs 65,000-70,000 per tonne—with the average value almost 25% higher than those realised in 2016-17.  Reportedly, the Iranian rice market has crashed and buyers have reneged on the contract price. But after protracted negotiations, cargoes are being accepted at a discounted value of around Rs 44,000-50,000/tonne—which effectively means a price cut of about 30%, or an outright loss of Rs 260 crore. Even then, the payment is being offered on a deferred basis, against future purchases by inflating invoice values. This is as per mutual convenience. However, such settlement may vary depending on the understanding between the parties.  The result of non-payment/loss at such scale is that payments to farmers for the paddy could also get delayed. Suppliers of PP bags, transporters and handling agents at the port may also remain unpaid. Since exporters generally avail pre-shipment credit from banks, ultimately, banks are exposed to the risk of non-payment—that may worsen the bad loan count. Iran has a regular requirement of Indian Pusa 1121 (parboiled) basmati rice, varying between 0.7 million tonnes (mt) to 1 mt annually depending upon its domestic output. Value-wise, Indian shipment to Iran touched $1.8 billion in FY14, but was down, at $0.57 billion, in FY17. India ships out about 4 mt of such rice in to international markets annually without any serious payment problems. It is not the first time that shippers have had to face delayed-/non-payment by Iranian buyers. There have been defaults/short payments in past as well. There has been frequent recurrence of such non-payment, wherein sellers have either suffered a total loss or loss of profit. Even soyabean meal cargoes in the past have met a similar fate. It is immaterial whether the buyer is a private party or an entity run by the government of Iran. The distinctive feature of this trend is that the same Iranian buyers often front new companies as purchasers, while Indian counter-parties conclude rice contracts at seemingly advantageous prices. Once the shipment is made, shipping documents are forwarded usually on DP (documents to be delivered to buyer by the bank against payment) or other terms, but seldom against letters of credit. Iranian buyers dither in making payments through banking channels; shipping documents are allowed to stagnate in Iranian banks or are declared deficient while rice is not lifted from the destination port. With the stalemate on payment and fear of cargo going bad, sellers rush to Iran to settle the matter—resulting in the Iranians forcing discounts or settlement at arbitrary terms.At a time when the government is focusing on farm income growth, it is important that this issue is resolved once and for all. The Agricultural and Processed Food Products Export Development Authority (Apeda) is the India’s controlling body for export of basmati rice. Allowing open and free exports of rice to Iran must be reviewed, and such exports need to be secured with suitable restrictions. Put simply, this could be enforced through a “canalised payment mechanism” via an authorised agency like Apeda. A possible procedural format for this could be as follows: An exporter/seller may sign a contract with an Iranian buyer with the stipulation of 100% advance payment to be made to Apeda within 7-10 days of the contract signing. The date of receipt of payment by Apeda could be treated as the effective date of contract. Apeda then notifies this date to both the seller and buyer; custom may clear cargo offered by seller for shipment after receipt of written acknowledgement from Apeda of payment having been received from Iran. The buyer can nominate its inspection agency with the condition that inspection at loading port being deemed final. Apeda should effect payment to the seller after receipt of shipping documents that require compliance—as agreed in the contract—and issue a “no objection certificate” to the bank of the seller so that foreign exchange earnings accrue to the seller/shipper. In case the seller defaults in making shipment, Apeda should remit the funds back to the buyer at the cost of seller, including any difference in the rate of exchange, and it shall not be liable for any quality/quantity/delayed shipment claims whatsoever. Apeda/the directorate general of foreign trade will also list buyers who have earlier reneged on commitments, as also the brand names of the rice they sell in the Iranian market, and maintain an abeyance list for them. The government can also nominate another trading PSU for the said purpose if Apeda is not willing to undertake this activity. Such a payment security system should be tried for at least two years, and depending upon its efficacy, can be reviewed thereafter. Exports without receipt of full payment retard economic activity. When a suitable security mechanism is introduced and fake importers are filtered out, buyers with respectable credentials and financial capabilities will trade with Indian counter parties. Exports will be truly rewarding when transactions are considered clean and above board and probability of disputes diminish.
  • Iran to Produce Compost From Rice Waste

  • The technology of producing bio-compost from urban waste has been developed and transferred to Isfahan Municipality. The Agricultural Biotechnology Research Institute of Iran is currently working on the production of compost from rice bran and straw so as to prevent its disposal through the environmentally harmful method of burning. Each year, up to 5 million tons of rice bran and straw are produced in Iran, most of which is burned. The practice is among the biggest environmental problems of agricultural waste disposal in Iran, ISNA reported. The institute has been conducting a comprehensive plan on quick production of enriched compost from agricultural and urban waste since 2007. According to Gholamreza Salehi Jozani, an expert at ABRII, the technology of producing enriched bio-compost from urban waste has been developed and transferred to Isfahan Municipality. The technology enables the production of the material in one month (down from six months) while the final product is of a better quality. "The fertilizer meets national and international standards and is free of any infection for humans and plants and any unpleasant smell," he said. The technology of producing enriched compost from sugarcane bagasse, which was a main issue for sugar factories, has also been developed by the institute. "Using rice bran and straw to make the fertilizer is next on ABRII's agenda," said Salehi. The expert lamented the lack of high quality equipment for the production of the material in Iran and the numerous challenges facing the industry. "Due to shortages, the manufactured compost is often of poor quality while its production process is uneconomical," he said. Besides, the process often takes three to six months and the product gives off an unpleasant smell. Benefits of Rice Bran Compost One of the most eco-friendly methods of disposing solid agricultural and urban waste is by turning it into compost, an organic fertilizer. Compost is an organic matter that has been decomposed and recycled as a fertilizer and soil enricher. It is a key ingredient in organic farming and a perfect replacement for chemical fertilizers. While the organic compost enhances the soil to create a beneficial environment for plants, fertilizers overload the soil with nutrients. Chemicals in fertilizer can upset the symbiotic relationship of microbes in soil while compost is a naturally balanced mixture of microorganisms that provide a healthy medium for plant growth. Based on statistics, the amount of organic carbon in soil is less than 1% in 60% of farmlands in Iran. This is while the amount required for sustainable development has been determined at 3%.   The Agriculture Ministry has been tasked with boosting the organic carbon levels by an additional 1%. "The production of organic fertilizer is an effective method of adding the vital nutrient to soil," he said.  
  • Iran to import 1st rice cargo from Thailand after sanctions lifted

  • Baku, Azerbaijan, July 9 By Fatih Karimov– Trend: Iran will import first rice consignment from Thailand after 10 years, Secretary of Iran Rice Association Jamil Alizadeh Shayeq said. He said that the deal for importing the aforementioned cargo was actually signed before sanctions, but Thailand stopped export to Iran, after the Islamic Republic failed to pay the money due to sanctions, Alizadeh Shayeq said, Tasnim news agency reported July 9. He further said that Iran needs to import about 800,000 to 1 million tons of rice per year from abroad. International sanctions against Iran removed in January 2016, after the country signed a historic nuclear deal with the six world powers. In the past, Iran used to import 700,000 to 1 million tons from foreign countries, about 300,000-500,000 tons of which came from Thailand. With the easing situation in Iran, Thailand and Iran signed a memorandum of understanding in early 2016 to resume sales of 300,000 tons of rice worth 4.3 billion baht ($120 million). The Iranian government bans rice import annually with only a few months of break to support domestic products. The annual consumption of rice in Iran is 3 million tons. India, Pakistan and Uruguay are main supplier of rice to Iran.
  • Iran | 2.25 million tons of rice are estimated to be produced in Iran

  • Rice Mechanization Plans Making Headway

    A 100% automation of rice harvest is  projected by the end of the sixth five-year development plan (2017-22).
    A 100% automation of rice harvest is projected by the end of the sixth five-year development plan (2017-22).
     
    Rice Mechanization Plans Making Headway
     
    About 81% and 70% of rice harvest in Mazandaran and Gilan provinces respectively were carried out using machinery in the last Iranian year (ended March 20, 2017), director general of Grains and Staple Foods Office with the Ministry of Agriculture said.
    “The figures are estimated to increase to 86% for Mazandaran and 80% for Gilan in the current year. Mechanization expansion is done with the aim of increasing productivity and achieving self-sufficiency. A 100% automation of rice harvest is projected by the end of the sixth five-year development plan (2017-22),” Kaveh Khaksar was also quoted as saying by Mehr News Agency. The official added that this year out of the 185,000 hectares of paddy fields in Mazandaran, 38,000 hectares went under automated rice planting. In Gilan, mechanized rice planting was carried out over 95,000 hectares from the total of 238,000 hectares of paddy fields. The five-year economic development plans are medium-term roadmaps designed by the government to help achieve sustainable growth, the strategies for which are outlined in its budget planning for the next five years. Back in January, Kambiz Abbasi, an official with the Ministry of Agriculture, had said that the government of President Hassan Rouhani invested 6 trillion rials (about $156 million) on the mechanization of rice production, describing the investment as “unprecedented”. According to the official, automation would cut rice harvesting costs by up to 70%. “The government will cover about 80% of the costs of buying the machinery by granting loans with a 15% interest rate,” he said. “In view of the water shortage in Iran, the administration is not willing to expand paddy fields in provinces other than the northern Mazandaran and Gilan.” Jamil Alizadeh, the head of Iran Rice Council, said about 2.25 million tons of rice are estimated to be produced in Iran in the current year. “This is almost the same amount as last year’s. If everything goes well and no unexpected frost or water shortage is experienced, this goal can be accomplished,” he said.  Iranians consume about 3.2 million tons of rice a year while domestic production stands at around 2.2 million tons. Therefore, there is a need for around 1 million tons of imports every year. The government periodically places a ban on imports during the harvest season to support local farmers.
  • Corn, Rice Top List of Iran Imports

  • Economy, Domestic Economy
    Monday, May 22, 2017

    Corn and rice had the largest share of non-oil imports into Iran in terms of tonnage in the first month of the current Iranian year (started March 21.

    During the period, 662,000 tons of corn worth $144 million were imported, accounting for 6.12% of the total weight of all imports, ISNA reported. A total of 85,000 tons of rice worth $74 million were imported, accounting for 4.08% of the total import tonnage. All in all, 2.091 million tons of non-oil commodities worth $2.34 billion were imported during the month ending April 20. Of all the imports, intermediate goods had an 87.8% and 67.14% share in volume and value respectively, as 1,835 tons of these commodities worth $1.577 million were imported during the one-month period. Consumer goods with 219,000 tons worth $410 million had a 10.49% share in volume and a 17.46% share in value.