Brazil will replace Ukraine as a supplier of raw materials for animal feed production and measures have been taken to start importing from the South American country in the coming months, says the CEO of the National Union of Agricultural Products of Iran.
“The conflict between Ukraine and Russia, as well as the global drought, has made the supply of livestock and poultry feed a challenge for almost all countries, including ours which has prompted officials to take measures to prevent a shortage of animal feed in the domestic market,” Mojtaba Aali was also quoted as saying by ILNA.
The official said the government began talks with the Brazilian side more than six months ago to prepare the grounds for barter trade for expansion of bilateral commercial interactions.
A total of 15.5 million tons worth $6.47 billion of raw materials for animal feed production were imported to Iran during the 11 months to Feb 19, registering an 11% and 51% rise in weight and value respectively compared with the corresponding period of the preceding year, data released by the Livestock and Poultry Feed Importers Union show.
Over 856 million tons of field corn worth $2.95 billion were imported during the period, registering a 7% decline in volume and a 28% increase in value year-on-year.
Moreover, 2.11 million tons of soybeans worth $1.38 billion and 2.27 million tons of soymeal worth $1.24 billion were imported, indicating a 59% and 17% growth in value and weight respectively compared with the corresponding period of last year
Barley imports stood at 3 million tons worth $895.96 million, registering a 76% and 112% rise in weight and value respectively YOY.
According to CEO of Livestock, Poultry and Fish Feed Factories Association Majid Jafari, Iranian producers of animal feed can produce between 22 million tons and 25 million tons per year, yet they are working at around 30% of their full capacity. He, however, did not elaborate on reasons behind the current state of affairs.
Domestic annual demand stands at 12-15 million tons, he added.
Brazilian Minister of Agriculture’s Iran Visit
Brazil’s Minister of Agriculture, Livestock and Supply Tereza Cristina travelled to Iran in February for a four-day visit. She was in Tehran to sign agreements with the National Petrochemical Company and working on prospects for Iran to triple its urea shipments to Brazil, MercoPress reported.
NPC Managing Director Morteza Shah-Mirzaei said urea exports to Brazil could reach 2 million tons a year, while the volume currently shipped is 600,000 annually.
Cristina confirmed Brazil's interest in importing more Iranian urea and highlighted the quality of Iranian fertilizer.
“This arrangement guarantees that Brazil is in a position to receive enough imports from Iran to step up our agro industry. Through this partnership, we will ensure the strategic purchase of these inputs to secure efficient and continuous food production,” she said.
The NPC chief highlighted that the company has petrochemical products, including urea, ready to supply to the market.
NPC, a subsidiary of the Iranian Oil Ministry, is responsible for developing and controlling the Iranian petrochemical sector. It is currently the second-largest producer and exporter of petrochemical products in the Middle East.
The Brazilian minister visited Shiraz Petrochemical Company, one of the country’s main urea manufacturers. Iran’s annual urea production is estimated to be over 5 million tons, most of which is used in the domestic market, while the remainder is exported.
During a reception at the Brazil-Iran Business Forum in Tehran, the minister stated that with the import of soy-derived products, corn and meat, Iran has become the largest client of Brazilian agriculture in the Middle East.
However, Brazil is interested in expanding its exporting portfolio to include cotton, rice and sugar, Cristina said.
Likewise, Brazil is prepared to increase purchases of Iranian walnuts, chestnuts and dried fruits, in addition to saffron, pistachio and wheat. “I am confident that we will pursue the right path to overcome any eventual adversity and intensify bilateral trade for our mutual benefit,” she said.
Cristina underlined that barter trade is an excellent option for shipping grains and other commodities to Iran and, in the same vessels, return with urea and other petrochemicals to Brazil.
“There are Brazilian trading companies that are experienced in such operations, and work with more attractive prices,” she added.
The Brazilian minister also highlighted Iran’s interest in soil and water management technologies plus irrigation systems. In this context, Brazil has a long experience, and cooperation between Embrapa and Iran's Agricultural Research, Education and Extension Organization can cooperate on these issues.
Call for More Balanced Trade
According to Vice Chairman of Arak Chamber of Commerce Hamed Amini, Iran annually imports more than $5 billion worth of essential goods from Brazil with a customs tariff of up to 4% while the Islamic Republic’s exports to the South American country is less than $100 million per year. Brazil imposes an over 100% customs duty on Iranian exports.
Amini called on parliamentarians to pass a bill for signing a preferential trade agreement between the two countries with the aim of cutting Brazil’s import tariffs on Iranian goods for a more balanced bilateral trade regime.
“Iran can boost its export of petrochemical products, gasoline, pistachio, raisins and dates to Brazil,” he added.
The official noted that Iran imports 50-60% of its essential goods from Brazil.
Also known as necessity goods, essential goods are products consumers will buy, regardless of changes in income levels.
Joint Chamber of Commerce
Iran-Brazil Chamber of Commerce was inaugurated in a meeting held in the presence of Iranian and Brazilian officials and parliament members, Mehr News Agency reported on Nov. 20, 2021.
Addressing the gathering, Iran's ambassador to Brazil, Hossein Gharibi, expressed satisfaction with the inauguration of such an institution for Iranian and Brazilian private sectors.
He called for the preservation, expansion, stabilization and diversification of relations between the two sides.
Brazil is an influential member of Mercosur, the envoy said, adding that Iran also boasts a good market and can facilitate relations between Mercosur and Eurasian countries.
Mercosur’s full members are Argentina, Brazil, Paraguay and Uruguay. Venezuela is a full member but has been suspended since 1 December 2016. Associate countries are Bolivia, Chile, Colombia, Ecuador, Guyana, Peru and Suriname.
Mercosur's purpose is to promote free trade and the fluid movement of goods, people and currency. Since its foundation, Mercosur's functions have been updated and amended many times; it currently confines itself to a customs union, in which there is free intra-zone trade and a common trade policy between member countries.
Ahmad Naderi, the head of Iran-Brazil Parliamentary Friendship Group, said that with the opening of the chamber, exports from Iran to Brazil will increase to balance trade between the two countries, as imports from the South American country currently outweighs exports.
Iran’s Top Trade Partner in Americas
Naderi noted that Brazil is the eighth largest economy in the world and Iran's top trade partner in the Americas.
Iran traded 1.73 million tons of non-oil goods worth $1.25 billion with Latin American countries in the fiscal 2021-22, latest data released by the Islamic Republic of Iran Customs Administration show.
Trade with Brazil stood at 1.36 million tons worth $737.77 million, for the Latin American country to top the list of Iran’s partners in the region. It was followed by Argentina with 325,523 tons worth $455.633 million and Venezuela with 32,879 tons worth $40.03 million.
Iran’s exports totaled 441,822 tons worth $211.84 million during the period under review.
Brazil topped the list of export destinations among Latin American nations with 406,628 tons worth $182.92 million. It was followed by Venezuela with 32,738 tons worth $22.9 million and Mexico with 374 tons worth $1.78 million.
Imports, which stood at 1.29 million tons worth $1.03 billion during the period, mainly came from Brazil with 955,729 tons worth $554.85 million, Argentina with 324,920 tons worth $454.34 million and Venezuela with 140 tons worth $17.13 million.
