Challenges related to transportation and logistics have plagued the Iranian supply system for years, but government officials take notice of this disease only when the market faces a new price shock, Mehdi Karimi-Tafreshi, the head of the Union of Food Product Distribution and Sales Cooperatives, said in an article for the Persian daily Jahan-e Sanat.
A translation of the text follows:
Farmers bear the main burden of production but they gain the smallest fraction of profits from the sales of agricultural commodities. Even consumers have to fork out considerable amount of money for food.
When will middlemen be cut out of the picture? Our country’s transportation system is in a bad condition. When should we think about improving it?
What is certain is that temporary solutions will not help. One day teamsters go on strike, another day transportation costs skyrocket. Products are abundant and ready for distribution at farms but there’s something wrong when it comes to the distribution chain.
The high costs of transportation and the shortage of refrigerated containers have affected the distribution of products, especially agricultural products.
Agricultural commodities are distributed only when the market faces shortage and prices go up. For example, tomatoes are grown in all provinces but there’s a stark difference between the prices of products available at the farm and those in the market.
In addition, the incorrect estimation of Iran’s domestic demand for agricultural products has led to discordance between exports and domestic demand. Normally, the surplus must be exported but we see that products in the domestic market are expensive because of the absence of proper planning. In other words, Iran’s agricultural economy must first serve the local people and then exports can be promoted.
What matters to the producers and shippers is not the transportation cost alone, but the total costs of production and distribution. In fact, poor transportation is a major cause of hunger the world over. The high costs of shipping agricultural products, long delays and the damage inflicted on perishable crops are the main obstacles to achieving global food security. Much of the earth resources (those of forests and mines), which can be used to fight poverty, have remained untouched because people cannot gain access to them.
The role of transportation industry in the growth and prosperity of the country is undeniable. According to statistics, the share of added value of transportation sector is significant and has been growing over the past 10 years. Among these, the share of the added value of road transportation was more than those of other sub-sectors (exceeding 90% of the added value of the transportation sector).
In our country, investment in transportation accounts for a big share of gross fixed capital formation and it seems unlikely that challenges related to this sector would be limited to financial issues. Other factors such as demand and conflicting transportation projects are also at play.
In Iran, the surplus of many agricultural commodities can be exported to the markets of neighboring countries. Food items are mostly perishable. However, by using suitable equipment, it is possible to ship them without any problems.
Lack of mechanized warehouses and proper refrigeration in the agricultural sector is another serious problem in Iran. There are unused aircraft at airports’ hangars, which can be put at the disposal of the agricultural sector to avoid the loss of agrifood products.
Agriculture is the only sector that can help the country gain foreign exchange under the sanctions. If appropriate facilities are provided for this sector, it can play a key role in generating foreign revenues.
