News last update:6 Aug 2012

Iran: Wheat independence creates shortage

The excessive focus on wheat self sufficiency in Iran has created shortages in other commodity areas and raises the government's import bill, according to a report in the Financial Times.

The distortions are seen by regime critics as an example of the waste and economic mismanagement that has bedevilled the Iranian economy for decades and has been exacerbated by the policies of the current government.

"The government's agricultural policies and its obsessive focus on wheat while ignoring other products has disrupted the agriculture sector," says Issa Kalantari, former minister of agriculture and now head of the top nationwide farmers union.

It was in 2004, under the previous reformist government of Mohammad Khatami, the moderate president, that Iran first celebrated self-sufficiency in wheat production.

The Khatami government, however, appeared to be pursuing the policy grudgingly, as if to show that Iran could be independent but without ruling out a continuation of imports.

By contrast, current Ahmadi-Nejad's administration has been a vigorous supporter of self-sufficiency, on both nationalist and security grounds.

Wheat exports
Iran plans to export a total of 400,000 tons of wheat from Shahid Rejaei Port from September to March 2007, an Iranian official says.

The private sector has already started exporting Iranian wheat to Oman, the United Arab Emirates and other neighbouring countries.

Although Iran had been a net importer of wheat since many years ago, now it has reached a point where wheat exports are possible. The country needs to purchase special equipment for facilitating wheat exports.

Imports needed of other raw materials
But as more and more land has been diverted to wheat cultivation – 500,000 hectares on top of the 2.2m hectares that were already in use – the production of cattle feed, cotton, potatoes and grains has suffered, sending prices higher and pushing the government to increase its imports.

The Iranian regime sees wheat as a strategic commodity and always stores at least three months of consumption, which currently stands at 11.2m tonnes a year.

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