Thailand Seals 1st Iran Rice Deal in 10 Yrs.

Thailand has secured a deal to sell rice to Iran for the first time in 10 years, with delivery of 50,000-100,000 tons of white rice due over the next 1-2 months.

Sombat Chalermwutinan, president of Asia Golden Rice Company, said the company has already reached an agreement to sell rice to the Iranian government after Iran’s Health and Medical Education Ministry inspected Asia Golden Rice’s factory late last year, Bangkok Post reported. 

The company is in the process of asking for cooperation from the Export-Import Bank of Thailand to help handle the payment and settlement system, which is expected to take about one month. Delivery is likely over the next 1-2 months or before June this year. 

“The purchase order is considered good news for Thailand after a close partnership between the government and private sector to resume Thai rice shipments to Iran after 10 years as a result of United Nations sanctions,” he said. 

In the past, Iran used to import 700,000 to 1 million tons from foreign countries, about 300,000-500,000 tons of which came from Thailand. 

With the easing situation in Iran, Thailand and Iran signed a memorandum of understanding in early 2016 to resume sales of 300,000 tons of rice worth 4.3 billion baht ($120 million). 

Thailand and Iran agreed in October last year to a preferential trade agreement, a move intended to rev up bilateral commerce to 104.7 billion baht ($3 billion) by 2021. 

Both sides have agreed to cut import tariffs on 100 goods. 

The PTA differs from a free trade agreement, as the pact will be much easier to conclude and does not require the need to completely eliminate tariffs. Generally, tariffs will be cut to 10% or less, depending on the outcome of negotiations. 

An FTA generally requires that talks cover not only access to goods, but also for investment and services. 

Iran is Thailand’s ninth largest trading partner in the Middle East. In 2016, two-way trade totaled $421 million, up 36.1% from a year before. Exports from Thailand reached $267 million, up 23.1% from 2015. 

Thailand’s Commerce Minister Apiradi Tantraporn said good signs have appeared since early this year for Thai rice export prospects, both through government-to-government and private-to-private deals. 

The Commerce Ministry expects Thailand to ship 10 million tons of milled rice this year, but the Thai Rice Exporters Association said shipments would amount to 9.5 million tons. 

Meanwhile, India, Thailand’s major rival in the Iranian rice import market, seems to be missing out.

Basmati export market of India was expecting a good time this year, as Iran had decided to resume rice imports from the country. But the higher price of Basmati rice made the situation hard, as Iran has fixed its import price at $850 per ton, Indian news portal Commodity Online reported earlier this month.

Indian exporters have to fix the price at least $900 per ton for the trade to be economical, which has made the hopes of Indian exporters fade, the report added.

Iran annually imports about 1 million tons of rice to supplement its domestic production of about 2 million tons.

The Iranian government has recently amended tariffs for importing rice by reducing it from the previous 40% to 26%. It was announced on January 21 that the rate would stand at 5%, following a series of tariff cuts on a list of agrofood products.

There is an all-out ban on rice imports during harvest season in Iran. This year, the measure was in place from July 21 to November 21.