Domestic Economy

World Grain Traders Lining Up for Business

World Grain Traders  Lining Up for BusinessWorld Grain Traders  Lining Up for Business

Food was not subject to sanctions, but the rules created enough difficulty to keep out many grain suppliers. Now, with world powers expected to lift restrictions as early as next year, new companies are entering the market. One example: BayWa AG, a German firm that recently shipped Russian grain and South American soybean meal to Iran. While the biggest traders, such as Bunge Ltd. and Cargill Inc., kept operating in the country, the end of sanctions is a chance to expand operations.

“When the sanctions came in, you started to see some people shying off and not willing to take the risk anymore,” Michel Dumoulin, a trader at Rotterdam-based Nidera BV, was quoted as saying by Bloomberg on Thursday.

“In the past six to eight months, we’ve seen a lot of new, small players in the Caspian Sea. Russian and Ukrainian companies are all entering the market in Iran.”

As traders gathered in Geneva for the annual Global Grain Conference last week, Iran, tied with Turkey as the Middle East’s second-biggest wheat consumer, was a key point of conversation and the new business could not come at a better time.

  Trade Delegations

BayWa sent an executive to Tehran recently as part of a German trade delegation of 100. The Munich-based company plans to ship 250,000 tons of grains and oilseeds to the country this quarter.

Nidera’s executives are due in Iran to visit customers, according to Dumoulin. He said the end of sanctions does not necessarily mean grain imports will rise and predicted more competition for business and lower profit margins.

Nidera, majority owned by China’s largest food company Cofco Corp., already ships as much as 3 tons of grain and vegetable oils to Iran a year.

Hakan Agro DMCC, which already supplies dairy products to Iran, is planning to expand its business in the country to grains, Scott Wellcome, a trader at the Dubai-based company, said in an interview in Geneva.

Iran could become a “big hub” for the Middle East and North Africa region and has the land to expand storage facilities, he said.

“The European Union, Russia, Australia and Kazakhstan stand to benefit the most from easing of sanctions and there’s a chance demand for grain will increase over time,” said Amy Reynolds, a senior economist at the International Grains Council in London.

It may be cheaper for Russia and Kazakhstan to send grain to Iran because all three countries border the Caspian Sea.

  More Trade

“We hope that, if sanctions are eased or lifted, trade in food and agricultural commodities will increase,” Elissa Bertot, a spokeswoman for Chicago-based Archer-Daniels-Midland Co., the world’s largest corn processor, said in a statement November 5.

Iran is a big player in global grain markets, ranking third globally for barley imports and fourth for rice. The country is also a major buyer of corn.

Bunge shipped almost a million tons of corn from Brazil to Iran last year, the most of all exporters, according to data from shipping agency SA Commodities. Cargill exported about 269,000 tons in 2014.

“The termination of these sanctions would have a clearly positive impact,” BayWa’s Lutz said. “Iran is one of the most essential import markets for grain and oilseeds in the world and has great significance for the agricultural trade.”

  Self-Sufficiency Goal

Iran’s Ministry of Agricultural Jihad has formulated action plans for achieving self-sufficiency in the production of eight essential agricultural products, namely rice, barley, corn, pulses, wheat, sugarbeet, cotton and oilseeds, by 2025.

On Wednesday, Deputy Agriculture Minister Ali Qanbari said wheat imports have come to a halt and will remain so by the end of the current Iranian year (March 19, 2016). He even announced plans to export as much as 300,000 tons of durum wheat.

Achieving self-sufficiency in production of essential food has been one of the major objectives of Iranian agricultural policies since the Islamic Revolution of 1979 as part of its overall goal of reducing dependence on food imports.

This objective was reinforced through the “Resistance Economy” policy—outlined by the Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei to promote economic self-reliance—and the general policies of the sixth five-year economic development plan (2016-21).

 No Permit for Rice Imports

Amid recent reports that Iran has lifted a ban on rice imports, Kaveh Khaksar, head of Agriculture Ministry’s Department Of Cereals and Basic Crops, said on Monday no rice import permit has been issued as of late.

“For now, the country needs no [rice] imports,” he was quoted by Mehr News Agency as saying.

The ban on rice imports was imposed last October to protect domestic rice farmers during the production season.

Last week, Reuters quoted Qanbari as saying that “the ban has automatically been lifted”, as domestic rice harvest has come to an end.

“Our target is to produce 1.8 million tons [of rice] this year,” Khaksar said, adding that Iran produced 1.65 million tons of the crop last year.

Qanbari declared that Iran plans to meet its consumption needs through domestic production as far as possible, however, “limited imports are inevitable”.