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Iran’s wheat problem has become complicated

Iran Materials 23 July 2012 15:27 (UTC +04:00)
Iranian outlets are increasingly warning about a wheat shortage in the country which stands beside the world’s biggest cereal importers with an annual corn purchase of more than seven million tons
Iran’s wheat problem has become complicated

Dalga Khatinoglu, Trend Agency's Iran Service Department Chief

Iranian outlets are increasingly warning about a wheat shortage in the country which stands beside the world's biggest cereal importers with an annual corn purchase of more than seven million tons.

Iranian semi-official Fars News Agency reported on July 22 that Indian flour cargoes have been distributed among Tehran's bakeries while according to agreements between Iran and India, New Delhi's wheat should have been imported to Iran, not its flour. The agency added that Iranian flour mill factories are working at 50 per cent capacity.

Iran and India agreed that 45 per cent of Iranian oil export payment be paid off through rupees used for purchasing Indian goods by Iranian businessmen, including rice, tea and wheat.

On the other hand, Iranian Mehr News Agency reported that interior wheat producers prefer to sell their harvest to private sector that pays more for the wheat than the government and sell to poultry and livestock firms.

Reportedly, Iranian Qom city's farmers sold 17,000 tons of wheat to the government in the last solar year (started on March 19), but for current year they have sold only 1000 tons of wheat and the rest of harvest has been sold to poultry and livestock firms which prefer to feed their animals with cheap wheat instead of barley.

The Iranian ISNA agency also reported on Sunday, citing the manager and director of the government trading company of Iran Abbas Ghobadi that the government has purchased about two million tons of wheat from farmers so far and the purchases continue. However, ISNA reported that the amount of purchased wheat is "so little" in comparison with last year.

According to the Food and Agriculture Organisation of the United Nation's (FAO) April report, Iran's wheat production will fall to 13.5 million tons in 2012, compared to 15 million tons in 2010. The country's (only human) wheat consumption is expected to be 14.5 million tons in current year.

According to Iranian outlets, Iran has imported 120,000 tons and 300,000 tons of wheat from the U.S. and Kazakhstan-Russia in March, alongside two million tons of wheat from Russia, Brazil, Australia, India and Germany in February 2012.

According to Reuters June report, Iran's wheat import during the first half of current year reached three million tons and importing additional two million tons of wheat is planned.

Iran and Pakistan have begun talks over bartering Iran's petrochemical productions with one million tons of Pakistani wheat, the negotiations that according to Mehr News Agency finalised after several disputes over Pakistan's wheat price.

Iran's economy is under increasing pressure because of the international sanctions levied against its oil industry and Central Bank because of the country's nuclear development program. The sanctions make it nearly impossible for Iran to conduct financial transactions and move money around the globe.

In mid-March, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) expelled a number of Iranian financial institutions, including the Central Bank, making it almost impossible for them to conduct international banking transactions. SWIFT connects 9700 banking and financial institutions in 209 countries, according to its own website.

On 28 June, the United States sanctions over the Iranian Central Bank came to force. U.S. law penalises countries that do business with the Central Bank of Iran (CBI) by denying their banks access to the United States financial markets. Blacklisting the CBI which involves transferring payments for exported Iranian crude oil is leading to a decrease in Iran's oil exports by 50 per cent to 1.1 million barrels per day, costing more than $3 billion which the Iranian government lost per month. Its 50 per cent of revenues relies on oil exports.

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