A total of 19.27 million tons of basic goods were unloaded at Iranian ports of entry during the first ten months of the current Iranian year (March 21-Jan. 20), latest data released by the Ports and Maritime Organization of Iran show.
As the news portal of Ministry of Roads and Urban Development reported, corn accounted for the biggest share of the unloaded goods with 7 million tons, down from 7.45 million tons during the corresponding period of last year.
It was followed by wheat with 4.25 million tons (down from 5.42 million tons), soybean with 3.15 million tons (down from 3.94 million tons), barley with 2.09 million tons (down from 2.68 million tons), sugar with 1.03 million tons (up from 997,628 tons), edible vegetable oil with 1.15 million tons (down from 1.47 million tons), and rice with 191,608 tons (down from 198,378 tons).
Also known as necessity or essential goods, the term “basic goods” refers to products consumers will buy, regardless of changes in income levels.
In the last Iranian year (March 2021-22), 30.9 million tons of essential goods worth $19.6 billion were imported into Iran, according to the Islamic Republic of Iran Customs Administration, registering 32% and 60% rises in weight and value respectively compared with the year before.
*** Decline in Wheat Imports Spurred by Boost in Local Supplies
The Government Trading Corporation of Iran recently said it registered significant increase in buying wheat from local farmers this year which has in turn resulted in substantial decline in imports.
GTC, affiliated with the Ministry of Agriculture, is in charge of ensuring adequate supply of basic goods, including wheat, rice, cooking oil, sugar and meat to the local market.
“Despite widespread drought across the country, [the volume of] guaranteed wheat purchases from farmers have reached 7.2 million tons this year following support policies such as 130% increase in prices and other incentives like 50% reduction in prices of agricultural inputs [provided by the government],” deputy minister of agriculture Saeed Raad was quoted by IRNA as saying.
Considered a staple grain in Iran, wheat is purchased every crop year by the government at guaranteed prices from local farmers to build up its reserves and supply the market over time.
Raad noted that part of this year’s wheat purchases has been supplied to bakeries across the country for bread and the rest has been stored in silos for future reserves.
“Last year [March 2021-22], only 4.7 million tons of wheat were purchased from farmers,” he said.
According to the official, Iran moved to fill up its wheat reserves following global food security crisis due to drought and war in Ukraine.
A total of 11.5 million tons of wheat were produced on over 4.9 million hectares of farms across Iran during the past crop year (September 2021-22), registering a 45% rise compared with the previous year, Sohrab Sohrabi, the head of Agriculture Ministry’s executive of “Wheat Project” said recently.
The official added that this crop year, wheat has been planted on over 1.58 million hectares of irrigated and 3.48 million hectares of rain-fed land so far and estimates are the overall figure will reach six million hectares.
He went on to say that cultivation is currently in progress in Khuzestan, Fars, Bushehr, Ilam, Hormozgan, Kermanshah, north of Ardebil, Golestan, Mazandaran, Sistan-Baluchestan, Kerman, Yazd, and Isfahan provinces.
“We estimate that wheat harvest will yield more than 12 million tons this year and that the government will purchase around nine million tons of the sum.”
According to Sohrabi, domestic demand for wheat stands at 13.5 million tons per year. Some 10 million tons of the sum is used to supply bread, 2 million tons is used for industrial purposes (pasta, biscuit, pastry production), around 1.2 million is used for seeds and the remaining by villagers and nomads.
Only 17% of the agricultural land across the world is under wheat cultivation, yet in Iran the figure stands at 50%, he noted, adding that Iranians get 40% of their daily energy from wheat on average, while the global share stands at 20%.
Notably, the private sector has been allowed to place orders for wheat imports as of August 2020. The government agreed to take the measure after seven years of banning wheat imports by private traders, according to the head of the Agriculture and Food Processing Commission of Tehran Chamber of Commerce, Industries, Mines and Agriculture.
“In a meeting with First Vice President around three months ago, we made our request for the private sector to be allowed to be active in the field of wheat imports. Fortunately, our request was accepted and later the government’s Economic Council agreed to give us the permit. Now a directive allowing private businesses to imports different types of wheat has been communicated to provinces across the country,” Kaveh Zargaran was quoted by the news portal of TCCIM as saying.
*** Main Port of Entry
Imam Khomeini in the southern Khuzestan Province is the main port of entry for essential goods.
The lion’s share of the country’s demand for livestock feed raw material and grains is imported through this southern port.
Overall, Imam Khomeini is Iran’s second busiest port after Shahid Rajaee in Hormozgan Province. It boasts 40 wharfs, 140 kilometers of railroads within its premises and equipped with the latest loading and unloading facilities.
Last year, Imam Khomeini with 12.59 million tons topped the lists of ports through which essential goods were imported into the country. These goods included 7.71 million tons of corn, 2.95 million tons of wheat, 1.32 million tons of barley and 607,021 tons of sugar.
*** Prices Shoot Up After Import Subsidy Removal
The government of President Ebrahim Raisi abolished the long-standing practice of subsidizing basic imports in May 2022.
Previously, cheap dollars at the rate of 42,000 rials per dollar, locally known as the Preferential Foreign Currency, were allocated to import essential goods, including corn, soymeal, unprocessed oil, oilseeds and barley, in addition to wheat, flour and medicine.
Today, the market value of the dollar is currently around 440,000 rials.
“Until now, we have been paying to producers [read importers] but now the subsidies go to consumers. In fact, the Preferential Foreign Currency has not been ceased, rather the allocation method has changed,” President Ebrahim Raisi said in a televised speech on the eve of the introduction of the move in May.
In his speech, Raisi emphasized that the removal of cheap dollar allocation will not lead to a price rise in wheat, flour and medicine. However, the move has resulted in a dramatic rise in the prices of essential goods. In fact, the prices of all commodities and services have also risen suddenly in a ripple effect.
New data released by the Statistical Center of Iran shows the annualized inflation reported by the center on a monthly basis has reached a new high.
The average annualized inflation in the tenth month of the current Iranian year (Dec. 22-Jan. 20) stood at 46.3%.
Only in 1995-96 and 1996-97 Iranian years did Iran experience inflation rates above the current level.
Notably, this is the eighth consecutive month the annualized inflation is rising after the government put into effect what it touted as “economic surgery” by abolishing the heavily subsidized import of essential goods.
Food inflation is above 65%.
