Food security “cushion” of Iran
Azerbaijan, Baku, May 8 / Trend /
Leyla Abdullayeva, Trend analytical centre expert
A ring of economic sanctions increasingly clenching around Iran, actualized the problem of food security in the country. Financial difficulties with the import of food, shortages and rising prices for food, force Iran to create a strategic reserve of food.
According to the forecast of the Central Bank of Iran (CBI), the expense of Iranians for food will increase from 50 to 165 per cent a year. Food prices have risen by as much as 50 per cent indicating a runaway inflation in the country. Prices have risen for almost all products - milk, mutton, beef, legumes, vegetables and fruits. Meat prices rose by 45 per cent, fresh vegetables by 156 per cent, tea 33 per cent, vegetable oil, sugar and sugar sand by 42 per cent, legumes 50 per cent and dairy products by 51 per cent.
Iran has already taken control over stocks of agricultural products. This means that on May 1 the government of Iran allocated $2 billion for ensuring the country has vital agricultural products which are practically not produced in the country. The list of essential foodstuffs of Iran mainly includes such agricultural products as rice, vegetable oil, sugar, red meat, chicken and corn. In total, the Iranian government on the import and storage of 20 kinds of basic food commodities allocated from $22 to 24 billion.
Food security of each country depends on how it can provide itself with the necessary amount of sustenance, the main indicator of which is the volume of the stock of grain remaining in the state until the next harvest. According to the International Organisation for Agriculture and Food (FAO), the safe level is the so-called carry-over stocks of grain for 60 days (about 20 per cent of grain consumed in the country during the year). Given this, Iran has also purchased 1.2 million tons of wheat. The country has bought 800,000 tons of wheat including 500,000 tons in Russia and 300,000 tons in Australia. Private importers of Iran bought about 200,000 tons of Brazilian and 200,000 tons of German wheat. All grain is purchased with immediate delivery.
A major purchase of Iran in recent months after the imposition of the United States and the European Union sanctions is from India for 60,000 tons of sugar. Earlier, Iran imported rice from India. Also from India, Iran stepped up purchases of soybean meal and purchased this product to 275,000 tons. India has already shipped about 175,000- 200,000 tons. Meal delivery to Iran scheduled for the period is from April to June.
In this case all transactions were carried out by record high prices. Iran, along with several international trading companies, is considering a scheme of payment for the supply of grain in gold and oil in barter. Thus, Iran is going to get about 200,000-400,000 tons of wheat in exchange for oil. Also, calculations in exchange for oil deliveries will be made with palm oil, rice, corn, and Indian tea.
The reason for these actions is the struggle with Western sanctions which limited the ability of the country to buy food from other sources. Because of the sanctions Iranian private mills have problems with payments which ultimately frustrate the supply of grain.
The U.S. continues to urge all countries including those of Central Asia to support sanctions against Iran. By its sanctions, the U.S. and the European Union intend to force Tehran to abandon programmes to develop nuclear weapons.