Basmati rice cargo stuck at Indian ports as Iran crisis hits flows

NEW DELHI - Indian exporters are finding it difficult to get vessels to send basmati rice to the Middle East after US and Israeli strikes on Iran disrupted shipping, leaving cargoes stuck or delayed, according to an industry group.

About 181,400 to 226,800 tonnes of the aromatic rice variety are stranded at ports across India due to heightened shipping risks, said Mr Satish Goel, president of the All India Rice Exporters’ Association.

That’s in addition to cargoes already en route and stockpiles lying in port warehouses, he said, adding that securing ships has become increasingly difficult.

“The government should waive ground rent at ports and help us recover any interest costs incurred due to the delay,” Mr Goel said in an interview on March 2. 

India is the world’s largest basmati rice exporter, with the Middle East its top market and a trade worth billions of dollars annually. Disruptions in shipping routes threaten to raise freight and insurance costs, squeeze exporter margins and push up food prices in key importing nations.

The South Asian nation exported 4.26 million tonnes of basmati rice worth about US$4 billion (S$5.1 billion) in nine months that ended in December, according to government data.  

There is a short-term disruption in trade, and shipping lines have already imposed surcharges of about US$2,000 per container, said Mr Nitin Gupta, deputy country head at Olam Agri India Pvt. All shipments will be affected, he said, adding that freight rates are set to rise, and cargoes destined for the Middle East are unlikely to clear immediately.

Insurance premiums are also expected to climb, Mr Gupta said. The higher logistics and coverage costs will push up prices, ultimately passing the burden to consumers, he said.

“The disruption won’t be limited to basmati rice – it will extend to other agricultural commodities as well,” Mr Gupta said. “Once the situation stabilises, we could see a bout of panic buying.” BLOOMBERG