Drought and extreme cold experienced at the beginning of the current crop year have inflicted heavy losses on many wheat farms across the country, which is estimated to reduce the government’s guaranteed wheat purchases to 5-6 million tons this year, according to the deputy head of the National Wheat Farmers Empowerment Foundation.
“This amount is far less than the annual domestic demand. Therefore, a considerable amount of imports will be needed to make up for this deficit,” Aliqoli Imani was quoted as saying by Mizan Online.
Iran’s wheat demand stands at 11-13 million tons per year.
The official said on Tuesday the government has bought a total of 2.5 million tons of wheat from local farmers since the beginning of the current Iranian year on March 21, which shows a decline compared with the similar period of last year.
Director General of the Agriculture Ministry’s Grains and Essential Goods Bureau Faramak Aziz Karimi said this year a total of 12 million tons of wheat will be harvested across the country’s 31 provinces, the lion’s share of which will be bought by the government.
Iran’s main wheat cultivating provinces are Khuzestan, Golestan, Kurdestan, Fars, North Khorasan, Khorasan Razavi and South Khorasan.
The government bought 8.25 million tons of wheat from local farmers in 31 Iranian provinces during the last fiscal year (March 2020-21), which indicated a 7% increase compared with the similar period of the year before.
This amount of purchased wheat cost the Government Trading Corporation a total of 207.8 trillion rials ($880 million).
Khuzestan with 1.2 million tons, Fars with 911,000 tons and Golestan with over 820,000 tons topped the list of provinces from where the purchases were made.
GTC enforces market controls and is in charge of maintaining a supply of wheat, rice, cooking oil and meat for the country’s strategic reserve of essential goods.
Considered a staple in Iran, wheat is purchased every crop year by the government to build up its reserves and supply the market over time.
GTC is believed to have purchased around 195,000 tons of milling wheat with a tender for 60,000 tons, which closed on Wednesday, European traders said recently.
It was believed to have been bought in three 65,000-ton consignments. Prices were unavailable. Shipment was sought in June and July, Reuters reported.
Traders suspected the wheat could be sourced from Russia, Germany or the Baltic States, all large suppliers of grains to Iran.
“I think the market is starting to expect Iran will have considerably more access to the international banking system in the third quarter of this year with the US-Iranian nuclear negotiations continuing,” one European trader said.
“Iran has a lot of money; the problem is the continuing sanctions that hinder its ability to make international payments.”
The United States expects to have a sixth round of indirect talks on reviving compliance with the 2015 Iran nuclear deal and probably more, a US State Department spokesman said on Thursday.
The European Union envoy coordinating talks on reviving the Iran nuclear deal said on Wednesday he believed a deal would be struck at the next round of talks starting next week, but other senior diplomats said “the most difficult decisions lie ahead”.
Iran can produce only around 6 million tons of its domestic demand for wheat domestically in the current Iranian year (March 2021-22) due to drought, low precipitation levels and rampant mismanagement.
“As a result, the government has to import 5-7 million tons of this staple grain this year,” deputy chairman of Majlis Agriculture, Water and Natural Resources Commission said.
“Iran’s annual wheat demand currently stands at 11-13 million tons that could be produced locally if domestic farmers were supported and guaranteed purchase prices were set on par with inflation rates and production costs,” Mohammad Javad Askari was also quoted as saying by Mehr News Agency.
The official noted that the government could increase guaranteed prices fairly and purchase the grain from Iranian farmers, but now has to import wheat from overseas at global prices that are much higher than local prices.
Askari said that his proposed guaranteed price for wheat to the government was 80,000 rials ($0.33) per kilogram, which was not taken into consideration by officials in charge.
