A Brazilian bank has announced that it will provide Iranians with 80% of the resources needed to fund Iran’s agricultural outsourcing in the Latin American country, says the head of Iran-Brazil Chamber of Commerce, without naming the bank.
Fakhreddin Amerian added that Brazil has offered Iran 1 million hectares for agricultural purposes, ILNA.
“Southern Brazil is suitable for the cultivation of wheat and rice. The Agriculture Ministry has guaranteed the purchase of crops produced in Brazil as part of the government’s agricultural outsourcing program,” he said.
Agricultural 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.
According to Mohsen Shaterzadeh, manager of Agriculture Ministry’s “Farming Beyond Borders” Project, 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 making it necessary for the country to take agro outsourcing plans much more seriously to ensure food security and protect its vulnerable environment.
Although Iran produces a wide variety of agricultural products, the sector has been battling chronic drought and inadequate water resources for years, which has given rise to water tension in some regions.
Iran’s Biggest Trade Partner in Latin America
Brazil is Iran’s biggest trade partner in Latin America.
Bilateral trade with Brazil stood at 201,581 tons worth over $207.5 million during the first six months of the current fiscal year (March 21-Sept. 22), registering a 74.3% and a 35.54% decline in weight and value year-on-year, respectively, latest data released by the Islamic Republic of Iran Customs Administration show.
Iran’s exports stood at 65,108 tons (down 73.02%) worth $32.03 million (down 60.97%) and imported 136,472 tons (down 74.87%) worth $175.45 million (down 26.84%) during the period.
Iran-Brazil trade stood at 1.36 million tons worth $737.77 million in the fiscal 2021-22.
Brazil will replace Ukraine as a supplier of raw materials for animal feed production and measures have been taken to start importing from the South America country in the coming months, the CEO of Iran Animal Farmers National Union has said.
“The conflict between Ukraine and Russia, as well as the worldwide drought, has made the supply of livestock and poultry feed a challenge for almost all countries, including ours, which has prompted officials to take measures to prevent a shortage of animal feed in the domestic market,” Mojtaba Aali was also quoted as saying by ILNA.
The official noted that the government is in talks with the Brazilian side to prepare the grounds for barter trade for expansion of bilateral commercial transactions.
A total of 15.5 million tons worth $6.47 billion of raw materials for the production of animal feed were imported during the 11 months to Feb. 19, registering an 11% and 51% rise in weight and value respectively compared with the corresponding period of the preceding year, data released by the Livestock and Poultry Feed Importers Union show.
Over 856 million tons of field corn worth $2.95 billion were imported during the period, registering a 7% decline in volume and a 28% increase in value year-on-year.
A total of 2.11 million tons of soybeans worth $1.38 billion and 2.27 million tons of soymeal worth $1.24 billion were imported, indicating a 59% and 17% growth in value and weight respectively compared with the corresponding period of last year
Barley imports reached 3 million tons worth $895.96 million, registering a 76% and 112% rise in weight and value respectively YOY.
According to CEO of Livestock, Poultry and Fish Feed Factories Association Majid Jafari, Iranian producers of animal feed have the capacity to produce 22-25 million tons per year, yet they are working at 30% of their full capacity.
Domestic annual demand stands at 12-15 million tons, he added.
Tereza Cristina’s Iran Visit
Brazil’s Minister of Agriculture, Livestock and Supply Tereza Cristina travelled to Iran in February for a four-day visit.
Cristina was in Tehran to sign agreements with Iran’s National Petrochemical Company, NPC, and work on prospects of tripling Iran’s urea shipments to Brazil, MercoPress reported.
NPC President Morteza Shah-Mirzaei said urea exports to Brazil could in the short term reach 2 million tons a year, while the volume currently shipped is 600,000 tons annually.
Cristina confirmed Brazil's interest in importing more Iranian urea and highlighted the quality of the Iranian fertilizer used to supply nitrogen to crops.
“This arrangement guarantees that Brazil is in a position to receive enough imports from Iran to step up our agro-industry. Through this partnership, we will ensure the strategic purchase of these inputs to secure efficient, continuous food production,” she said.
The NPC president highlighted that the company has other petrochemical products ready to supply to the market.
A subsidiary of the Iranian Oil Ministry, NPC is responsible for developing and controlling the Iranian petrochemical sector. It is currently the second-largest producer and exporter of petrochemical products in the Middle East.
The Brazilian minister visited Shiraz Petrochemical Company, one of the country’s main urea manufacturers. Iran’s annual urea production is estimated to be over 5 million tons, most of which is for the domestic market and the remainder is exported.
During a reception at the Brazil-Iran Business Forum in Tehran, the minister stated that with the import of soy-derived products, corn and meat, Iran has become the largest client of Brazilian agricultural products in the Middle East.
However, Brazil is interested in expanding its exporting portfolio to include cotton, rice and sugar, she added.
Brazil is prepared to increase purchases of Iranian walnuts, chestnuts, and dried fruits, and acquire other products such as saffron, pistachio and wheat.
“I am confident that we will pursue the right path to overcome any eventual adversity and intensify bilateral trade for our mutual benefit,” she said.
Cristina underlined that barter trade is an excellent option for shipping grains and other commodities to Iran and, in the same vessels, return with urea and other petrochemicals to Brazil.
“There are Brazilian trading companies that are experienced in such operations, and thus work with more attractive prices,” she added.
The Brazilian minister also highlighted Iran’s interest in soil and water management technologies plus irrigation systems. In this context, Brazil has a long experience, and cooperation between Embrapa and Iran's Agricultural Research, Education and Extension Organization can boost cooperation on these issues.
