The government will no longer allocate subsidized foreign currency at the rate of 42,000 rials per US dollar for rice imports, Fars News Agency quoted the head of Rice Importers Association, Abbas Tavakkoli, as saying.
Rice importers are allowed to procure their forex requirements from the export earnings of non-oil products (petrochemicals, steels and minerals) traded through the so-called secondary FX market, known by its Persian acronym Nima.
Following the re-tanking of the national currency in early 2017, the government introduced stringent rules like banning the import of non-essential goods, especially those produced inside the country (known as Group IV goods).
It allocated subsidized currency at the rate of 42,000 rials to a dollar to 25 categories of goods (also known as Group I or essential goods) to help protect consumers against galloping inflation, rampant price gouging and hoarding, not to mention the high and rising cost of living.
Two other categories of imports were also defined: Group II, which mostly included raw materials, intermediate and capital goods, and Group III consisting of essential consumer goods.
Importers of products in Group II were to meet their forex requirements from the secondary forex market. Importers of goods in Group III could buy hard currency from exporters who were not required to offer their forex earnings on Nima.
In the last fiscal year (March 2019-20), the government removed five items, namely red meat, butter, pulses, tea and sugar, from the list of basic goods entitled to subsidized currency.
Vegetable oil, oilseeds, corn, barley, soybean meal, raw materials for manufacturing tires, heavy-duty vehicle tires, paper pulp and different types of paper are still considered essential goods.
The decision comes as domestic rice production has reached satisfactory levels, officials say, that breaks Iran free from the need to import rice amid abundant rainfalls in the current fiscal year (started March 20).
A total of 2.9 million tons of rice were produced in the country during the last Iranian year (March 2019-20), registering close to a 45% increase compared with the previous year, according to the director general of the Agriculture Ministry’s Grains and Essential Goods Bureau.
“This increase in rice output is because of the favorable weather and heavy precipitations during February and March of 2019, due to which land under rice cultivation increased by 38% to reach 834,000 hectares,” Faranak Aziz Karimi was also quoted as saying by IRNA.
What's more, the Agriculture Ministry has temporarily lifted restrictions on rice cultivation in the country, despite plans to gradually limit and ultimately ban growing the staple crop in all provinces, except Gilan and Mazandaran, amid fears of drought in Iran.
“All provinces that enjoy bountiful water resources due to the recent high levels of precipitation and those with favorable weather conditions and enough raw material [seeds, fertilizer] can engage in rice cultivation this year. These provinces have also been allowed to dedicate more land to this cultivation,” the head of Iran Rice Association, Jamil Alizadeh Shayeq, was quoted as saying by Young Journalists Club.
The restrictions were first proposed in the summer of 2018 by the Committee for Adaptability to Water Shortage. It was approved by the Cabinet and conveyed to provinces across the country for implementation in June 2019.
Latest figures released by the Statistical Center of Iran show per capita rice consumption in the country stands at 35 kilograms.
The northern Gilan and Mazandaram provinces together account for 71% of Iran’s rice production, according to figures released in a recent report published by the Statistical Center of Iran.
The report shows Mazandaran accounts for 38% and Gilan for 33% of the country’s overall rice production. The two provinces are followed by Khuzestan with 11% and Fars and Golestan with 4% each.
The remaining 10% are cultivated in other Iranian provinces.
