Economy, Domestic Economy
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Advantages of Investment in Food Industry

Advantages of Investment in Food IndustryAdvantages of Investment in Food Industry

The CEO of Azarnoosh company—a producer of raw materials and additives for the food industry— discussed the advantages of investing in the Iranian food industry, as well as the problems this sector is still facing, In an interview with Persian newspaper Forsat-e-Emrooz.

The food industry is currently one of the most active and modern industrial sectors of Iran, said Ali Movahed, who was head of the Federation of Iranian Food Industries before joining Azarnoosh, adding: “The technological level of this sector can even be compared with advanced countries, though we are still a long way from reaching the very top. Over the past 15 years investment in the food industry has been substantial, but that does not imply that new investment projects are no longer needed.”

According to the expert, two sectors in particular are weak and need more investment: processing and the packaging. “The weakness in these sectors has, however, opened the way for great investment opportunities in the food industry,” Movahed said.

There are several reasons why these sectors have received less direct investment than the food industry as a whole, he pointed.

“One of the issues holding investors back is bureaucratic procedures, as obtaining licenses from the appropriate government organizations is a daunting task. Another issue is the shortage of credit, with high bank interest rates scaring investors away. The food industry has also been partly affected by the economic sanctions (imposed against Iran by UN Security Council over its nuclear energy program),” he added.

However, the industry is also blessed with comparative advantage over other industrial sectors.

In particular, the food industry is diverse and dynamic, providing a certain measure of security and stability for investors.  

Asset diversification is often cited as one of the most important factors in investment decisions. Movahed believes the food industry provides the basic necessities through its product diversity as Iran produces more than 500 types of food products.

“The food industry is one of the most dynamic sectors primarily because it is so closely linked to household expenditures, creating a lot of investment opportunities,” said Movahed, adding that Iran’s demographics also promote an appropriate investment climate.

Stressing the regional opportunities in the Iranian food industry, he says, “The regional markets have a combined population of over 500 million people, and most have religious and cultural commonalities with Iran, and hence consume similar food.”

Movahed believes that the food industry is also of crucial importance for the national economy. First of all, promoting the domestic food industry will improve Iran’s national food security, making the country less reliant on foreign import partners. Additionally, supporting domestic production will lead to more exports, which can in turn alleviate Iran’s dependence on oil exports.

According to the expert, primary products are a field in which the private sector should play a more central role. Most primary products are currently imported from Western Europe and East Asia.

He further suggested that the food industry, being labor intensive, could also help to alleviate the unemployment problem the country is facing.

“The food industry is not attractive or unique primarily because of the high rates of profitability that can be achieved from it, but because of the stability and consistency in profits.

Azarnoosh specializes in baking products and sells a range of emulsifiers.

Financialtribune.com