Mideast Crisis Strands Indian Rice Exports
The conflict in Iran is causing major disruptions for Indian rice exporters, with a reported 400,000 metric tons of basmati rice stuck at ports and in transit. Freight rates have doubled, deals have dried up, and Iran's own ban on food exports is adding to the uncertainty for regional trade flows.
The crisis hits a critical market, as Iran is one of the top two buyers of Indian basmati rice, importing 681,436 metric tonnes between April and December 2025. The Middle East as a whole accounts for over 70% of India's basmati exports, with Saudi Arabia, Iraq, Iran, the UAE, and Yemen alone making up about 67% of the total. In response to the risks, the Indian Rice Exporters Federation has advised members to stop making new cost, insurance, and freight (CIF) commitments and to sell on free-on-board (FOB) terms instead. This disruption comes shortly after India reversed its protectionist stance on non-basmati rice. In September 2024, the government lifted a ban on non-basmati white rice exports that had been in place since July 2023, and in October 2024, it eliminated the minimum export prices for both basmati and non-basmati rice. The earlier restrictions had caused global rice prices to soar to their highest levels in over 15 years. Meanwhile, competitor Vietnam is shifting its export strategy to focus on quality over quantity, aiming to reduce export volume to about 4 million tonnes by 2030. The plan, approved by their government, targets developing new and potential markets, particularly in developed countries, and increasing the market share of high-quality, organic, and branded Vietnamese rice. For exporters targeting Europe, the market for specialty rice like Basmati and Jasmine is growing, driven by culinary trends. However, new EU regulations may soon favor European-based processing; the Federation of European Rice Millers is pushing for higher duties on milled and packaged rice to encourage imports of raw paddy instead. A new safeguard mechanism, expected to take effect January 1, 2027, could trigger higher tariffs if imports from Asia surge beyond historical levels. The Thai Baht has fluctuated against the Euro, moving between 0.0266 and 0.0274 over the past 90 days. This currency movement is critical for pricing as logistics costs rise for all exporters due to disruptions in the Red Sea, which have forced shippers to use the longer, more expensive route around the Cape of Good Hope. The demand for organic rice is a key opportunity, with the global market projected to grow at a CAGR of 8% between 2025 and 2033. The Asia-Pacific organic rice market, valued at over $520 million in 2024, is expected to grow at a CAGR of 10.1%, offering a significant margin for premium and sustainably-certified products.
