After a new round of negotiations, the government has reformed the prices of guaranteed wheat purchases, based on which each kilo of common and durum wheat will be purchased at the rates of 25,000 rials ($0.15) and 26,000 rials ($0.16) respectively, showing a 47% increase compared with last year.
Ataollah Hashemi, the head of the National Wheat Farmers Foundation, says the reform came after holding sessions in which the message of farmers’ dissatisfaction with this year’s wheat prices was conveyed to related government administrations and officials.
“Fortunately, our efforts paid off and prices were raised on par with the annual inflation rates,” Mehr News Agency quoted him as saying.
Hashemi noted that this year’s wheat production will hit 14 million tons that is sufficient to meet the entire domestic demand.
“There was no decrease in wheat production last year either, but due to low guaranteed prices, farmers refrained from selling their harvest to the government,” he added.
In February, Hashemi said that if the Economic Council, which had set the price, does not revise this price, imports will become necessary to meet domestic demand for the grain.
“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 scheme will face the same problem as in last year,” he explained.
Last year, the government bought common wheat for 17,000 rials (around $0.10) per kilo and had set this year’s guaranteed price at 22,000 rials ($0.13).
Every year, the government buys strategic crops, including wheat as well as beetroot, tea, barley, cotton boll and oilseeds, from local farmers at guaranteed prices to control prices in the domestic market and fill its strategic reserves.
Wheat harvest has commenced in the south of the country where the weather is warm and dry. A ceremony was held in Bushehr Province’s Dayyer County on Saturday to celebrate what is estimated to be a bountiful yield.
Esmaeil Esfandiarpour, the official in charge of the “Wheat Project”—the government program to purchase the crop from farmers at a guaranteed price—who was present at the event, said that yields are going to be high due to high levels of precipitation this year.
“Harvest will last for four and a half months. It begins here in the south and later in provinces with milder and colder weather in the center and northern regions of the country,” he said.
The official added that the government aims to purchase around 10.5 million tons of the grain from farmers.
CEO of the Government Trading Company Yazdan Seif said 280 quadrillion rials (over $1.75 billion) are required to purchase this amount of wheat this year (started March 20).
“Around $750 million of this sum will come through revenues earned from targeted subsidies, $687.5 million will be borrowed from the Central Bank of Iran and the banking system, and the rest will be provided by GTC,” Seif was quoted as saying by ILNA.
Affiliated to the Agriculture Ministry, GTC is the official government body in charge of guaranteed wheat purchases.
Wheat Production Drives Growth in Grains Production
Iran’s wheat production is forecast to reach close to 15.36 million tons by the year 2028. The figure shows an annual growth of 2.7% year-on-year from 2019 when production stood at 13.57 million tons, according to a joint report released by the Food and Agricultural Organization of the United Nations and the Organization for Economic Cooperation and Development.
Based on the report, Iran’s grain production will experience an annual growth of 2.4% from 2019-28. This increase is mostly indebted to the rise in wheat production. The staple grain is projected to account for 70% of Iran’s total grain production by the end of 2018.
Wheat consumption is expected to increase by 8% over the next decade to reach 15.95 million tons in 2028 from the 14.77 million tons of 2019.
Imports of the grain are expected to increase from 1.07 million tons in 2019 to 656,160 tons in 2028 to register a 39.1% decrease.
Iran exported 58,030 tons of wheat last year. The figure is expected to see a 48% decline to stand at 30,210 in 2028.
Each Iranian is expected to consume 166.61 kilograms of the grain in 2028, slightly higher than the 2019 per capita wheat consumption of 166.31 kilograms.
Land under wheat cultivation stood at 6.11 million hectares in 2019, which is expected to increase to 6.16 hectares within the next decade.
