Iran: from self-sufficiency to importing seven million tons of wheat

Iran: from self-sufficiency to importing seven million tons of wheat

Dalga Khatinoglu, Trend Iran News Service, department chief

Iranian Energy Minister Majid Namjou said on Monday that Pakistan will pay its debt to Iran for importing $40 million worth of electricity from Iran by exporting wheat to the country. Considering the global price of wheat and premiums due to sanctions, $40 million is the amount required to purchase over one million tons of wheat.

Last week, Reuters reported that Iran had bought 600,000 tons of wheat from the EU for 35 cents per kilogramme. This is five cents more than the figure paid for the same wheat which has 12 per cent protein on the international market.

Meanwhile, Ukraine announced on June 10 that it will conclude a contract to export two million tons of wheat to Iran annually.

In the last days of Mohammad Khatami's presidency, Iran celebrated its self-sufficiency in wheat. However, two years later during the presidency of Mahmoud Ahmadinejad, the country's wheat production fell to 10 million tons to the extent that it had to import six million tons in 2008.

This trend continued until the past Iranian calendar year (ended on March 20). According to the Iranian Customs Administration, Iran imported 6.68 million tons of wheat worth over $2.5 billion, last year. The wheat was imported at 40 cents per kilo.

The US dollar is sold at 24,500 rials on Iran's Forex Centre. Each dollar was sold at 20,000 rials at the beginning of the past Iranian year. However it rose to 35,000 rials and is still about the same with some fluctuations.

The customs data indicates that agricultural products accounted for six of the 10 main imported goods in the past year. Wheat was at the top of the list. This is while Ahmadinejad had said in 2006 that the government was planning to export 10 million tons of wheat per year.

The exact amount of Iran's wheat production cannot be specified because farmers usually sell their yield on the free market due to the fact that the government has set a low price for purchasing the crop. However, that annual wheat output is estimated to be around 12 million tons.

Officials have reported that Iranian brokers export wheat to Iraq at 10,000 rials per kilogramme, but the customs administration report has not referred to any exports of wheat.

The government buys wheat from farmers at a guaranteed price of 7500 rials per kilogramme which equals 20 cents based on the US dollar's free market price in Iran and is 25 per cent less than the prices paid by brokers and is twice as much as the price which is paid for importing the grain.

Mohsen Daraei, an official at the Sepah Bank for purchasing wheat, told the Fars News Agency on June 7 that the government has bought 1.137 million tons of wheat from farmers and it is expected to buy sven to nine million tons by the end of the year.

Considering the annual consumption of 13.5 million tons of wheat by the Iranian people, the country needs to import 4.5-6.5 million tons of wheat per year. Over the first two months of the current Iranian calendar year (March 21-May 21), Iran imported 500,000 tons of wheat and will import 600,000 tons more from Europe in the coming months.

Some 50 million hectares area of land is cultivable across Iran, but just 16 million hectares area is used by the agriculture sector.

The Food and Agriculture Organisation of the United Nations (FAO) reported last November that Iran imported 8.8 million tons of wheat annually over the past two years. Meanwhile, the country imported 9.9 million tons of wheat from 2008 till 2010. The figure will probably decrease to 6.8 million tons.

The customs administration data shows rice, meal and wheat were at the top of the list of imports during the past two months. Iran imported $359 million worth of rice, $328 million worth of meal and $293 million worth of wheat in the first two months of the current Iranian calendar year.

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