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UAE market set to reach boiling point over rice ban

India's latest decision to ban the export of non-basmati rice is bound to have a negative impact on consumers in the UAE and other Gulf states, as the country supplies a large amount of the region's staple food requirements.

  • Gulf News Report
  • Published: 00:05 April 3, 2008
  • Gulf News

  • Rice being planted in the paddy fields of India. The country supplies a large amount of the UAE's staple food requirements.
  • Image Credit: Bloomberg News

Dubai: India's latest decision to ban the export of non-basmati rice is bound to have a negative impact on consumers in the UAE and other Gulf states, as the country supplies a large amount of the region's staple food requirements.

A section of the Indian media yesterday also hinted that the government is planning to ban exports of the cheaper version of basmati rice, which will further aggravate the situation. The UAE Ministry of Economy has fixed the price of a 40kg bag at Dh140, well below the market price of Dh200 to Dh210.

Traders say, this make it uneconomical to sell the rice at this price. "Who is going to bear the rest of the cost?" asked a top importer. "As we are not allowed to sell the rice at even our cost price, the only option is to not import it, which will have an adverse impact."

Dubai's's Foodstuff Trading Group intends to raise the issue with the Ministry of Economy soon. In the meantime, other major traders and retailers are looking at alternative sources.

"We have already started looking at alternative sources to import rice, as being one of the largest retailers, we cannot afford to keep our racks empty," Ashraf Ali, executive director of the Emke Group, which operates the largest chain of hypermarkets in the Gulf, told Gulf News.

Dubai's food trade increased by 23.18 per cent in 2007 to reach Dh29.243 billion compared to 2006. Figures released by Dubai World's statistics department show food imports are still forming the larger part of this trade (69.55 per cent of the total trade volume) while exports were at 15.8 per cent and re-exports at 14.64 per cent.

Exporters: Confusion abounds

Confusion has gripped exporters in India following a blanket ban announced by the government on the export of non-basmati rice on Monday.

The decision to ban the export of non-basmati rice and levy additional excise on the export of basmati rice was taken to control spiralling prices in the domestic market.

The fate of nearly one million metric tonnes of non-basmati rice ready for shipment is unknown as exporters are awaiting a response from the government.

India has witnessed a rise of about 20 per cent in the retail prices of non-basmati rice over the past year.

This is the government's second attempt to ban the export of non-basmati rice. The ban imposed last October was lifted following protests by exporters.

The government of Pakistan has imposed restrictions on exports of lentils in view of the shortage and an increase in prices of the staple commodity at home, a commerce minister official said yesterday.

The move is said to be part of a comprehensive policy being drawn up by the new coalition government led by Prime Minister Yousaf Raza Gilani to address the problem of double digit inflation and shortages of basic items such as wheat flour.

A senior official at the commerce ministry told Gulf News that instructions had been issued to border personnel and other agencies to intensify checks to prevent any smuggling by sea or other means.

- By Ajay Jha, New Delhi Chief Correspondent and Shahid Hussain, Islamabad Correspondent

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