Tehran, Iran, December 4
By Mehdi Sepahvand - Trend:
Succumbing to complaints by consumers, Iran’s Ministry of Industries, Mining and Trade recently put on hold an intended 15-percent increase on the price of bread.
The complaints came despite the fact that naturally bread cost does not potentially pose a great burden on average individuals compared to their expense basket.
However, the psychological impact of such increase would have been serious on the lower economic strata, and by extension to the whole society.
According to cost of living in Iran statistics for 2017 gathered from NUMBEO, bread cost comprises less than 1/8 of the market costs group. The market group comprises of consumable (mostly food) ingredients purchased for home use. The group’s cost is small compared to other groups, such as childcare and housing.
Utilities, clothing, leisure and sports as well as restaurants are also among the expenditure groups to make the whole of a person’s living costs.
One would not expect that prices of bread affect a great part of market as do energy carriers everywhere. But in Iran bread finds great reverberation in virtually all of the market, acting as a price bomb.
In 2016, Mohammad Reza Vaez Mahdavi, an official with the Statistics Center of Iran, claimed that bread cost comprised 30 percent of living cost in Iran.
Official reports indicate that about 20,000 billion rials ($570 million) worth of bread are wasted annually in Iran. One of the strategies adopted by the government has been to gradually raise the cost of bread in order to limit its waste.
Iran is among the top wheat consumers in the world. Consumption per capita in the country is estimated at 167.6 kilograms (369 pounds) per year, almost three times the global average of some 67 kilograms (148 pounds).
At the same time, Iran is one of the driest countries in the world, with an average rainfall of only 250 mm (10 inches) a year, causing huge water shortages across the country. This has turned the supply of wheat to meet domestic needs into one of the main concerns of successive governments, forcing reliance on imports at major costs.
A review of imports shows that Iran over the past 15 years spent some $12.6 billion on buying more than 42 million tons of wheat. Meanwhile, the country has simultaneously sought to attain self-sufficiency, which on occasion has led to success in either reducing or almost halting imports. However, these achievements were not sustainable, mainly due to mismanagement and climate conditions.
Under President Hassan Rouhani, Iran attained self-sufficiency in wheat production. Back in July, it was even said that the country expected to export 1 million tons of surplus wheat and its products this fiscal year (March 2017 to March 2018), up 60 percent from last year.