The government’s new decision to impose duties on the export of agrifood products has agitated exporters.
The new fiscal year’s budget bill (2022-23) stipulates a 0.5% duty on the export of agricultural and food products.
Reza Nourani, the head of the National Association for Agricultural Products, slammed the imposition of duties at a time when the country is facing severe economic sanctions, the news portal of Tehran Chamber of Commerce, Industries, Mines and Agriculture reported.
“The government says the new regulation is aimed at making up for the water used in cultivating agricultural products. The question is whether it wouldn’t be better if policymakers had provided new irrigation technologies to farmers to reduce water consumption in the agricultural sector?”
The official believes that the government’s move to charge exporters 0.5% of their consignment’s value will negatively impact agricultural and food exports.
“We want to know why exporters have to pay the price for water that has been used not by them, but by producers in farms and orchards. Prior to this, exporters were awarded incentives for selling products to foreign customers and now, with this regulation, it is as if they are being punished,” he added.
Nourani noted that sooner or later, producers too will be hit by this new decision, because if exporters suffer losses they will refrain from buying from farmers.
“If this happens, the government has no way but to pay subsidies to compensate for the losses and to guarantee farmers’ livelihood,” he said.
The Agriculture Ministry, said Nourani, is responsible for introducing cropping patterns for different climates and soils in the country and has so far it has failed to do so.
“It is interesting to know that the 0.5% customs duty is set for all agricultural and food products and not just water-intensive crops like watermelon. The only outcome of such a decision will be a decline in exports,” he added.
Sadreddin Niyavarani, the deputy head of the National Association of Agricultural Products, has called the decision “illegal”.
“It is illegal, based on national development plans, to set customs duties on agricultural products. Due to this very measure, agrifood exports have come to a halt since the beginning of the current Iranian year [March 21]. We have made inquiries from the government as well as members of parliament but to no avail. Some MPs were totally oblivious of the new regulation,” he was quoted as saying by the news portal of Iran Chamber of Commerce, Industries, Mines and Agriculture.
Niyavarani, who is a member of the board of representatives at Tehran chamber, noted that agricultural products are perishable and need to get to their destinations in a very short period of time, adding that the new measure has caused delays in exports and damaged many agricultural export consignments.
“It has also caused discontent among our foreign partners since we have not been able to deliver on our contracts. Iranian businesspeople are losing credibility in international markets due to the faulty, inexpert decision,” he said, adding that the regulation has not specified where the customs duties will be spent.
Calling for the immediate abolition of duties, Niyavarani said, "The government, parliament and private sector should come together and think of a proper solution to reduce water consumption in agricultural activities.”
Threatened by Drought
Agriculture in Iran is threatened by drought.
In a report, Iran Chamber of Commerce, Industries, Mines and Agriculture has warned agricultural officials of an imminent drought that would cripple the country’s agricultural activities and hamper economic growth in this sector in the current Iranian year (March 2022-23).
The ICCIMA report says precipitation levels have fallen drastically, Mehr News Agency reported.
The Majlis Research Center has released a list of Iranian provinces in critical state of water shortage: Isfahan, Hormozgan, Sistan-Baluchestan, Ardabil, Fars, Markazi and Khorasan Razavi.
“Drought inflicted 670 trillion rials ($2.4 billion) in losses on Iran’s agriculture sector in the 2020-21 crop year,” Mohammad Mousavi, director general of the Agriculture Ministry’s Crisis Management Department, said in June 2021.
Assessments carried out over 11.2 million hectares of farmlands in 30 provinces show 43% of the total losses pertained to the decline in production of agronomic crops, as well as 26% to horticultural products, 13% to fisheries and livestock and 11% to forage crops, he added.
“In addition, 4% of the total damage are to blame on challenges created in water transportation infrastructures, pools, pipes, aqueducts and springs, and 3% of losses can be attributed to water supply complications and the animal feed used by nomads,” he was quoted as saying by Mehr News Agency.
Noting that precipitation rate in the last crop year has decreased by 54% compared with the year before and 41% compared with the long-time average, the official said, “Besides the decline in precipitation rate, increase in heat waves and evaporation as well as the inappropriate distribution of rainfalls have resulted in drought and its adverse consequences on the agriculture sector.”
Reports by Iran Meteorological Organization show 92% of the country have been affected by drought at different levels: 20% of the country’s area are facing extreme drought, 28% severe drought, 25% moderate drought and 19% of the country are going through stages of being abnormally dry; only 8% of the country are in normal conditions.
