MUMBAI, 1 June 2020: The recent outbreak of the Covid-19 virus have severely affected Indian basmati rice exports destination, with Iran being severely affected, Agricultural and Processed Food Products Export Development Authority (APEDA) said in its market intelligence report.

Exports of basmati rice to Iran, the largest importer (accounting 33 percent of total exports) fell significantly in nine months of fiscal year 2019-20 (13 percent lower in volumes, 11 percent lower in value terms than the corresponding previous year).

Basmati rice exports to the European Union (EU) dropped sharply by 32 percent in FY2019 to INR 1,590 crores, post implementation of new regulations pertaining to chemical residues in Basmati rice.

However, exports of basmati rice increase by 12 percent to Saudi Arabia, the second largest importer (20 percent of exports) to the tune of INR 4,246 crores (12 percent higher) in nine months of fiscal year 2019-20, prior to revised import rules by the Saudi Food and Drug Authority (SFDA).

The higher buying can be attributed to pre-emptive action before the change rules came into effect from January 2020, APEDA added.

Subsequently, the new norms are likely to slow down imports in the near term as it would take time for the industry to develop adequate sources of compliant paddy.

Despite pandemic challenges in the short-term, the outlook for the Indian Basmati rice industry remains Stable. In the medium term, demand prospects from key destinations such as Iran and Saudi Arabia will play a significant role and determine trade prospects.

Availability of a secure payment mechanism for exports to Iran, easing/ removal of sanctions by the US and response to pandemic in the destination country would be the factors underscoring the Basmati rice trade.

Rice exporters in India seek European pesticides norms

Basmati rice exports to the EU have shrunk to a third in the past fours as new MRLs have been introduced that have tilted the market toward competitors, including Pakistan. The issue of residue norms has also cropped up in traditional markets such as Saudi Arabia in the past two years.

Therefore, Rice exporters in India have sought a ban on pesticides that are not registered in foreign markets, a bid to shore up exports to Europe and the United States.

Exporters have sought a ban on pesticides used in paddy cultivation that fail to conform to the latest maximum residue levels (MRL) norms in the key export markets.

The Centre is set to amend the Insecticide Act, 1968 with the Pesticide Management Bill, 2020 to help the industry step up to new global challenges.

The Pesticide Management Bill, 2020 will exhort pesticide manufacturers to register their products in foreign markets such as the US and European Union and help boost shipments from India, the largest producer of premium rice. The aim is to curtail usage of red triangle pesticides or high toxicity in paddy and other crops.

Tea, basmati export orders from Iran, China and Russia

 Iran, China and Russia have placed fresh orders for Indian black tea in the midst of the Covid-19 outbreak, a boost for the domestic industry which has incurred losses of about 100 million kg of teas owing to the lockdown. West Asian nations led by Iran have also placed orders for basmati rice.