* India's competitors can sell to Iran as restrictions ease
* Pakistan may recoup lost share in basmati rice exports
* Indian exporters will be forced to bring down prices
By Rajendra Jadhav
MUMBAI, Nov 27 India's near-monopoly in rice and
soymeal exports to Iran could break following Tehran's nuclear
deal with the West which is expected to pave the way for rival
suppliers to boost their trading with the oil-rich country.
The landmark deal struck between the Islamic Republic and
six world powers on Sunday eases some of the sanctions on trade
with Iran that have slashed the OPEC member's oil exports by
more than half and narrowed its options to secure food and
agriculture goods to just a few countries.
The sanctions forced India to trim oil purchases from Iran,
but it remained a loyal and large customer. In 2012 as sanctions
stalled dollar payments, it started settling part of its oil
debt in rupees and Iran was using those to buy goods from India.
That trade in rupees gave India an edge over other rice and
soymeal suppliers such as Pakistan and Brazil who do not have
such huge debts with Tehran and quickly the south Asian country
established a near-monopoly in exports.
"Rice exports to Iran rose as India had an advantage over
other suppliers in payment mechanism. As sanctions are easing,
India has to become much more competitive to retain the share,"
R.S. Seshadri, director of Gurgaon-based rice exporter Tilda
Riceland, told Reuters.
"Pakistan, Thailand lost share, but they can start grabbing
that share again once financial institutions start trade with
Iran in dollar terms," he said.
India's rice exports to Tehran, mainly of the basmati
variety, surged 80 percent in the year ended March 31, 2013 from
a year ago to 1.1 million tonnes. During the same period,
shipments of soymeal jumped nearly four-fold to 886,776 tonnes.
Iran's difficulties in securing rice and soymeal from other
producers due to the sanctions prompted Indian exporters to seek
hefty premiums over global prices, sometimes as high as 20
percent. But that premium has to come down now.
"Dollar trade would end India's monopoly. We can't take Iran
for granted. We need to rationalise our prices," said a rice
exporter based in the northern state of Punjab, who did not want
to be named.
Like India, Pakistan was a leading rice supplier to Iran as
it had a freight advantage, but due to the Western sanctions its
shipments dwindled last year.
But as restrictions are set to ease, "Pakistan can become a
major player as it has a logistical advantage over India",
Seshadri of Tilda Riceland said.
KEEPING SHARE INTACT
"Rupee payment helped India in increasing soymeal shipments.
Iran is paying higher prices compared to other buyers," said
Rajesh Agrawal, chief co-ordinator at the Soybean Processors'
Association of India (SOPA), a trade body.
Now, Indian exporters "need to align prices in line with
international prices", otherwise India will lose its share,
But that could prove a difficult task for exporters. The
competition among them due to the robust Iran demand has doubled
prices across India of basmati rice and soybean in the past two
years and now local farmers see little reason for discounts.
A lack of supplies domestically has halved soybean crushing
and farmers are holding back in the hope that local prices will
stay high, said a spokesman with India's largest soymeal
exporter, Ruchi Soya Industries Limited.
"Right now our soybean prices are high, we are not
competitive in the world market. Even at this price some farmers
are not willing to sell," SOPA's Agrawal said.
(Editing by Jo Winterbottom and Muralikumar Anantharaman)