Economy, Business And Markets

Iran Prepared for Agricultural Boom

Iran Prepared for Agricultural BoomIran Prepared for Agricultural Boom

Iran plans to turn itself into a major food exporter, hoping the lifting of sanctions will boost international trade and allow investment in the agricultural sector, an official in Iran’s state grain buying agency said.

“We are ready for a big leap in the post-sanctions era. We hope by removing the shackles of sanctions from our farmers’ hands, we can see an increase in production and even exports,” Amir Hossein Shahmir, head of international trade at the Government Trading Corporation of Iran, told Reuters.

Foreign business delegations have flocked to Tehran since the United States, European Union and United Nations lifted international sanctions last month after reaching a deal to limit and monitor Iran’s nuclear program.

“Among the foreign trade delegations, there are always businessmen keen to invest in Iran’s agriculture, including wheat, sugarcane and fruits. French delegations specifically were interested in investing in Iran’s agribusiness,” Shahmir said.

The government is pushing to cut Iran’s dependency on foreign imports paid for with oil revenues and increase its exports of manufactured goods and agricultural products, President Hassan Rouhani said last week.

Abdolreza Abbasian, senior economist with the United Nations’ Food and Agriculture Organization, said there was more potential in the processed food sector.

“They had done quite a lot in the sanctions period to boost self-reliance on domestic produce, from jams to dairy products to tomato paste and even spaghetti and macaroni,” he said.

GTC’s Shahmir said a project in the southwestern province of Khuzestan to develop 500,000 hectares of irrigated agricultural land was 80% complete, which would boost production of wheat and other strategic products.

The government estimated the cost of the project at $600 million.

  Water Shortage

Iran has 6.1 million hectares of land used for farming wheat, the staple grain. Two-thirds of that are unirrigated, making it susceptible to drought. Iran is one of the world’s driest countries, with an average 250 mm of rain a year.

“The country suffers from a huge water shortage. This is a challenge,” FAO’s Abbasian said, adding that he did not think the country had a comparative advantage to be an exporter of wheat.

The GTC last week banned state imports of wheat for the Iranian year starting on March 20, on the back of 2015’s strong harvest and the expected production boost.

Agriculture Minister Mahmoud Hojjati has said Iran will continue to rely on imports of maize and barley.

Shahmir said Iran had started the year with 5 million tons of wheat carried over from 2015, when the El Nino weather system brought heavy rains and a good harvest.

The official noted that sugar production would also increase, but Iran would still need imports to meet an expected increase in demand.

Iran currently produces 1.5 million tons of sugar each year and imports 1 million tons.

“Iran’s sugar is used in pastry, ice-cream, beverages and chocolate whose consumption is highly dependent on people’s purchasing power.

These are products that people would buy more when they have more money,” he said.