Iran has to pay almost twice as much for each grain of Indian basmati rice as it did two years ago. Iran’s increasing purchases of Indian rice have been key to jacking up the price Iran must pay.
Bloomberg news last week reported that sales of Indian basmati rice may rise 10 percent to 3.8 million metric tons in the year that began April 1 compared to the previous year, said R.S. Seshadri, general secretary of the All India Rice Exporters Association.
“Prices rose because of demand from Iran, which has got India as a reliable supplier after the sanctions,” Seshadri said. “Farmers have raised the area under basmati crop as they know that the returns will be higher than other cereal crops.”
Traders contracted to export basmati rice to Iran at an average $1,659 a ton in July, data from the association showed. The average export price was $1,300 a ton for 2012-2013 crop compared with $900 a ton a year earlier, he said. Iran is India’s biggest buyer of basmati rice.
Iran must buy more goods from India because sanctions now mean it is being paid for oil in Indian rupees that can only be spent in India. Before the stiff oil sanctions were imposed last year, India bought about $12 billion a year in Iranian oil while Iran bought only about $2 billion in Indian goods. To use up its rupees, Iran must now buy much more from India.