During the Venezuelan President Nicolas Maduro’s recent visit to Iran, Tehran and Caracas reached an agreement for Iran to launch an agricultural outsourcing project on about 1 million hectares of arable land in the South American country.
Experts, however, are questioning the feasibility of such an arrangement
Among the concerns put forward by agricultural experts are handicaps related to the distance and transportation of yields, technological shortcomings and lack of industrial machinery and equipment, the Persian daily Etemad reported.
Vice chairman of Iran’s House of Farmers said agro outsourcing agreements were previously reached with some countries in the Eastern Bloc, but all failed to bear results.
“Our country is located in a dry and semi-dry part of the world where drought and water shortage are serious issues. In the past few years, droughts have come at shorter intervals and water shortage has exacerbated. Therefore, farming beyond border schemes seem to be a propitious solution to ensure food safety,” Enayatollah Biyabani added.
The official noted that similar contracts have previously been reached with Kazakhstan and Uzbekistan, but since the Iranian signatories of these deals did not envisage how the process was going to take place, and had no detailed plans regarding investment, transportation, equipment, etc., these projects never took off.
During Mahmoud Ahmadinejad’s presidency, plans were devised to implement such a scheme in an African country, he added, which also failed.
The main reasons were the outbreak of the Ebola virus disease in the target country and the drastic depreciation of Iranian rial against the US dollar.
Agro outsourcing involves the practice of purchasing, renting or leasing by one country of arable land for the cultivation of agricultural products in another country. These products are later imported into the active country, or alternatively exported to other destinations by the same country. This process ensures food security and boosts agricultural production.
“The recent agreement with Venezuela has the potential to benefit Iran in many ways, but this would depend on detailed plans. For instance, we need to know what the best and shortest transportation route is, since transportation costs directly impact end prices. How exactly and via what mode of transportation should consignments reach Iran is also a question for which we have not received any response from relevant officials so far,” the official said.
“Iran is currently facing problems in meeting domestic demand for essential goods that are water-intensive, like wheat, rice and oilseeds from local production.”
Advantages of Agro Outsourcing
Biyabani noted that self-sufficiency in the production of these crops puts extreme pressure on the country’s limited water resources.
“Agro outsourcing allows us to use water and arable land in countries that have bountiful water and soil resources and seems to be a perfect solution to our predicament. In planning for these projects and before signing agreements, every detail must be taken into account,” he said.
According to the manager of Agriculture Ministry’s “Farming Beyond Borders” Project, Mohsen Shaterzadeh, Iran’s location on the Earth’s dry latitudes, its drastically changing climate, annual precipitation levels amounting to a third of global average, consecutive droughts, high water consumption and diminishing water resources, soil degradation and low productivity in the agriculture sector are all reasons making it necessary for the country to take agro outsourcing plans much more seriously to ensure food security and protect its vulnerable environment.
Experts say the biggest advantage of overseas cultivation for Iran is preservation of precious water resources. Iran’s agriculture uses around 85% of all available water resources, UkrAgroConsult wrote.
Although Iran produces a wide variety of agricultural products, the sector has been battling with serious drought and inadequate water resources for years, which has given rise to water tension in some regions.
Ali Rezvanizadeh, an Iranian Agriculture Ministry official, says Venezuela can provide a better opportunity than Brazil and Russia for Iran’s overseas agricultural projects, including growing crops of soybeans and corn.
He says Iran requires 7 million hectares of overseas agricultural land to ensure its food security, but Iranian investments have been on a much smaller scale so far.
The private sector investors are mainly driven by higher profit margins in their overseas cultivation projects.
According to Rezanizadeh, of the 30 million tons of all agricultural imports, only 7% come from overseas cultivation projects. This includes investment in crops such as bananas and other exotic fruit that have a much higher profit margin than strategic crops such as wheat, corn, rice and oilseeds.
Iran imports around 90% of all oilseeds such as rapeseed and soybeans and around 30% of rice consumed in the country. The country is also a huge importer of corn and barley for animal feed.
Investment in overseas agricultural projects also requires financial measures such as bartering agreements to circumvent the obstacles in international banking resulting from US sanctions.
The United States and China have the most extensive overseas agricultural production. Iran’s southern neighbors, the UAE and Saudi Arabia, have also invested heavily in agriculture in African and Asian countries in the past.
