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Iran feed industry strong despite geopolitical concerns

The Iran government has managed to avoid a serious turbulence on the domestic feed market on the back of US sanctions and the volatility of the national currency, Dr Majid Movafegh Ghadirly Chairman of the Iran Feed Industry Association said.

The government of Iran is now allocating funds in order to ensure sustainable import of feedstuff that Iran has a rather high dependence on. In addition, the market prices on raw materials are regulated by the government agencies. “We have government pricing in Iran, so prices have not fluctuated sharply,” Dr Majid Movafegh Ghadirly said. “Another reason we did not have high price fluctuation is because of the use of strategic stocks at a time when the market is in short supply.” The government distributes its reserve stocks at a guaranteed low price to ensure the feed mills in the country are not short of feedstuffs.

Dr Majid Movafegh Ghadirly Chairman of the Iran Feed Industry Association. Photo: Iran Feed Industry Association
Dr Majid Movafegh Ghadirly Chairman of the Iran Feed Industry Association. Photo: Iran Feed Industry Association

Governmental pricing

“The government prices in the market haven’t changed significantly over the past year, but naturally in some seasons of the year due to domestic crops [harvest] we are likely to have very slight price fluctuations, with volatility limited to 7%,” Dr Majid Movafegh Ghadirly said. The government policy is believed to be very important factor to maintain a stable operation of the national feed industry.

US sanctions on Iran

Iran imports 80% of its feedstuffs, including corn and barley, and as the exchange rate of the Iran’s national currency, Rial, slumped nearly threefold to 120,000 to the US dollar, in the 6 months following the introduction of the US sanctions in 2018, import supplies have become much more expensive. In the year ending March 2019, production amounted to 10.5 million tonnes, of which 6.3 million tonnes was feed for ruminants and, 4.2 million tonnes was feed for poultry. “However, the [actual] consumption of animal feed in Iran is 20 million tonnes, with about 9.5 million tons being produced in animal breeding farms,” Dr Majid Movafegh Ghadirly said. The feed production has not been seen to shrink in 2019, despite the sanctions.

The Iran government earlier ruled out that livestock companies should phase out feed production gradually until 2023. This means that from that time, only feed mills would be authorised to manufacture feed.

The US has re-imposed penalties on all Iranian individuals and organisations that saw the lifting of sanctions following the 2015 nuclear deal, under which Tehran accepted strict curbs on its nuclear programme The various restrictions were introduced against a broad range of different companies and banks indirectly affecting almost all segments of the national economy. The Trump administration officials announced new sanctions on Iran in early January 2020, as the stand-off between the 2 countries escalated during previous week following Donald Trump’s decision to launch the deadly drone attack on Qasem Soleimani, a powerful Iranian general. It is yet to be seen whether those new sanctions would affect the feed industry.