The rising Iran-Israel conflict harming the global basmati rice market, further drops in price. This drop stems from reduction in Indian basmati rice exports to Iran, an important customer.
Geopolitical stability directly affects agricultural commodity prices, showing how sensitive the balance of trade is.
Anticipated Price Drop and Market Dynamics
Due to a strong export demand of basmati rice, the prices are now higher than ever. But there is a forecast that it will now recede. This result is an impact of a reduced number of shipments to Iran amidst rising tensions.
Exporter Rajesh Jain Paharia claimed prices already shifted: “The export prices have come down from $950-1000/tonne about a month ago to $900-950/tonne.” This is linked to further anticipated freight costs and transshipment complexities.
Before this, lower range basmati rice priced at around (₹75-90/kg) saw an increase in purchases by primary importers, like Iran, leading to a price surge.
However, exporter Dhaval Shah says that while food prices may stabilize temporarily, factors like the “Trump effect” or escalation of wars will predict the future.
Additionally Shah notes that typically during times of conflict, countries increase the imports of food to ensure food security.
Iran’s Pivotal Role in Indian Basmati Exports
Iran is still an important market, ranking as the third-largest international purchases of Indian basmati rice, after Saudi Arabia and Iraq.
APEDA data shows India’s basmati exports to Iran reached ₹6,374 crores in 2024-25, representing 12.6% of total Indian basmati exports. A disruption here could have far-reaching implications for the supply chain.
Challenges and Financial Implications for Exporters
Rising tensions are creating difficulties for Indian basmati rice exporters. Prem Garg, Indian Rice Exporters Federation president showed his concerns about the ongoing sea shipments and substantial payments from Iran.
These payments range between ₹1,000-2,000 crore. Rajesh Jain Paharia detailed payment terms: “In our trade with Iran, we take 20% advance payment and rest all is on 180 days credit.” An extended credit period increases the exporters financial risk, especially when geopolitical events meddle with payments.
Future Outlook
Industry experts are cautious, hoping for a stability in prices. However, the market is highly susceptible to external shocks. Geopolitical developments in the Middle East will dictate price trajectories and export volumes. Exporters are continuously keeping their eye on the conflict, as its de-escalation or intensification can impact food security and commodity trading.
The Iran-Israel conflict has a profound impact over India’s basmati rice sector. This situation has shown how geopolitical events can directly affect agricultural markets. Indian exporters are dealing with challenges related to shipments, and payments.
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