Kuwait Times

Published Date: April 04, 2008
By Sajeev K Peter, Staff writer

KUWAIT: India's decision to ban all rice exports except for premium brand basmati is resonating throughout Kuwait's rice market and has accelerated the pace of inflation in the oil-rich country. The ban will hit Asian expatriates especially hard as they are the largest consumers of non-basmati rice in the country, say market watchers.

The scarcity is already being felt in the market. In the near-term, the ban will fuel prices and lead to an acute shortage of the product in the local market. And if the ban continues, we will run out of stock in 45 days, says Ramesh, Concept Manager with Gulf Mart.

Kuwait is already reeling under the impact of unprecedented inflation, with prices of basic foodstuffs registering more than 50 percent rise in the last few months. With inflation hitting an annual rate of 7.3 percent last October, people in this oil rich country find it hard to balance their monthly family budget.

In an emergency meeting, the government of India banned the export of non-basmati rice on Tuesday to control soaring domestic food costs and curb inflation. India accounts for about 50 percent of Kuwait's total rice imports of which roughly 30 percent is basmati and 20 percent is non-basmati rice. Kuwait imports about 25 percent of rice from Pakistan and 15 percent from Egypt.

According to the market observers, the low income segments of the society will bear the brunt of the Indian decision as expatriates from India, Bangladesh, Pakistan and Sri Lanka are the main consumers of non-basmati rice. "Usually, we don't keep bulk stocks of rice because it requires huge space for storage. And nobody anticipated an eventuality like this," Ramesh says referring to the sudden Indian ban.

According to the sources, some importers have already started hoarding rice, anticipating an acute supply crunch and sharp rise in prices. "The ban will not only jack up the demand for basmati rice, usually considered the staple for the affluent class, but it will push up its prices," says Ramesh. The prices of basmati rice have registered more than 50 percent rise in the last few months.

A 20kg packet of Gazalle rice, which was available at KD 6.500 a few months ago, is now sold at KD13. Similarly, popular brands such as India Eastern, Country Rice etc also have recorded a price rise of 50 percent to 60 percent. Kuwaiti companies import more than a dozen varieties of parboiled rice from India including popular brands like 'Pavizaham,' 'Mahabali', 'Nirapara', 'Double Horse', Easter, Grandma etc. There are more than 30 top suppliers who import rice from India.

It will be difficult for us to meet the customer demand, because 90 percent of our rice supplies are from India," says Ronald Allan Salonga, Assistant Store Manager, City Centre, Salmiya. According to Salonga, the present stock will last for only two months. "If we don't get our regular boiled rice from shops, we may have to depend on Qubbus. You know, we can't afford to buy basmati rice," says Iqbal, an Indian driver.

Kuwait dropped its currency peg to the sliding dollar in last May to rein in spiraling inflation. Though dinar has appreciated more than 5 percent since then it has not made its desired impact at the grassroots. "Except for a few items like tea, coffee powder or sugar, the price of almost everything has gone up in the last few months," says a salesman working at a supermarket in Salmiya.

Most of the essential food items such as rice, flour, fresh milk, dairy products, egg, cooking oil, frozen chicken and frozen meat have witnessed a price rise of 40 percent to 50 percent in the last few months. The price of edible oil soared almost 100 percent while frozen chicken, which was available at 400-500 fils per kilo two months back, is now sold at 750 fils, showing a rise of more than 55 percent. The prices of frozen mutton and beef also recorded a proportional increase of about 40 percent to 50
percent.

The price of a two-liter packet of cooking oil, which was available at 600 fils three months back, is now sold at KD 1.200 fils and above. The price of NIDO milk powder (2.5kg pack) soared from KD 3.650 fils to KD 5.290 fils. The prices of other dairy products such as butter, yoghurt, cheese, ice-creams and chocolates have also shot up in the last few months.

The Kuwait government has increased the subsidies of essential commodities and decided to distribute them to the citizens through ration card system. The government is also studying possible means to fill the gap between supply and demand. However, Salonga sounded a bit optimistic about the whole issue saying, "I think it is a serious thing. So, I hope some diplomatic channels will be used to find a solution to the problem at the earliest.

But many people in the street do not share the optimism of Salonga. "I don't think India will lift the export ban soon. Because we also face the problem of inflation and food shortage back home," says Joseph Mathew, an Indian expatriate working with a private contracting company here.

Many believe the Indian decision is likely to have a global impact as the country is the third largest exporter of rice - a staple food in many countries. India had restricted its rice exports a few months back on account of what they called 'poor harvest' in the last few years. "This ban may be India's answer to the high oil prices," comments Abdul Salam, a Sri Lankan driver working with a private company without really knowing the implications of his statement.