The government has set wheat’s guaranteed purchase price at 22,000 rials ($0.14) per kilogram for the harvest of the next Iranian year (starting March 20, 2020).
"If the Economic Council, which has set the price, does not revise this price, we have no recourse but to import the grain to supply the domestic demand for the grain," says the head of the National Wheat Farmers Foundation.
“The real price of each kilo of wheat currently stands at 25,000 rials [around $0.16]. Any price lower than that will not cover production costs and farmers' living expenses. If prices are not raised, the government’s guaranteed purchase will face the same problem as in last year,” Ataollah Hashemi was quoted as saying by Young Journalists Club.
Every year, the government buys strategic crops, including wheat, from local farmers at guaranteed prices to control prices in the domestic market and fill its strategic reserves.
Last year and after prolonged discussions, the government set the guaranteed price of 17,000 rials (around $0.15) per kilo for local wheat purchases. The price did not satisfy farmers. Consequently, they abstained from delivering all their harvest to the government.
Experts warn that if the guaranteed purchase prices remain low and do not rise on par with the annual inflation and increasing production costs, farmers will do the same during the next harvest season and the government will face a bigger problem.
Aliqoli Imani, the deputy head of National Wheat Farmers Empowerment Foundation, citing latest data released by the Agriculture Ministry, said the land under wheat cultivation in Iran reached 6 million hectares in the current crop year.
“These figures show that this year 2 million hectares of the grain have been cultivated on irrigated lands and 4 million hectares on rain-fed farms. If the Economic Council does not reform the guaranteed prices, the country’s self-sufficiency in wheat production will be at risk,” he said.
Iran has been self-sufficient in meeting its domestic demand for wheat since 2016.
The official said the government bought around 8 million tons of the grain during the last wheat cultivation season worth 132 trillion rials ($1.16 billion).
“The government’s wheat purchases from local farmers declined by 3 million tons in the current fiscal year [ending March 19]. Therefore, the government decided to import this volume of staple food to replenish its strategic reserves,” Imani said in November 2019.
Iran bought up to 1 million tons of wheat in recent weeks on international markets, trade sources said in the closing days of 2019.
The purchase is expected to be made from Russia and some European Union countries, including Germany, they said.
Most of the purchase was believed to have been undertaken by Iran’s state purchasing agency, the Government Trading Corporation of Iran, with private buying reported for shipment across the Caspian Sea.
“The guaranteed price set by the government is not economically viable. During these hard times of sanctions, we expect the Economic Council to rethink the price so that farmers are encouraged to continue their cooperation,” said CEO of Iran’s National Assembly of Agricultural Elite, Ali Khan-Mohammadi.
Khan-Mohammadi added that the country’s food security is at stake and if farmers refrain from delivering wheat to the government, there will be no choice other than to import wheat to supply bread.
Wheat cultivation season started around Sept. 11 in northwest Iran.
According to Food and Agriculture Organization, Iran is the 11th biggest wheat producer in the world.
This year’s cultivated land almost equals the area that went under wheat cultivation last year, which means production will likely remain the same as last year.
