Iran has one of the most diverse climates of any country in the world, with a wide variation in farming conditions. It has been, as a customer, a big player in the grain market, particularly with regional partners, although it is now at, or near, self-sufficiency in wheat. Iranians are among the biggest consumers of bread in the world and the government manages the supply of wheat to ensure adequate supplies.

According to the International Grains Council (IGC), Iran’s total grains production in 2019-20 will come to 19 million tonnes, up from 18.5 million the year before. Of the total, wheat accounts for an unchanged 14.5 million tonnes. Barley production is forecast at 3.2 million tonnes in 2019-20, compared with 2.8 million the year before.

Iran’s total imports of grains in 2019-20 are forecast at 13.3 million tonnes, up from 12.5 million the previous year. Wheat imports are expected to be just 300,000 tonnes, up from 200,000 the year before. Maize imports in 2019-20 are put at 9.8 million tonnes, up from 9.2 million the prior year. Barley imports are forecast at 3.2 million tonnes in 2019-20. The IGC expects Iran to produce an unchanged 2 million tonnes of rice in 2019-20. It also will import 1.3 million tonnes of rice, up from 1.2 million in 2018-19.

Iran is forecast to import 2.2 million tonnes of soybeans in 2019-20, the same level as in the previous year. The IGC forecast for soymeal imports is also unchanged on the year at 2 million tonnes.

The Iranian Ministry of Agriculture said in July that Iran would be self-sufficient in wheat for the fourth consecutive year. Esmael Esfandyari-Pour, an adviser to the minister who is responsible for the administration of wheat planning, said that since the beginning of harvest, more than 2 million tonnes of wheat had been purchased from farmers in the warmer regions of the country. At that point harvesting had just started in more temperate areas.

However, the U.S. Department of Agriculture’s Foreign Agricultural Service (FAS) said in its Grain: World Markets and Trade report for September 2019 that Iran’s wheat import ban remains in place, with exceptions made if the wheat is used to re-export as flour.

“Iran’s imports and exports are both expected to be relatively small in 2019-20,” the FAS said.

The IGC in a report in June forecast Iranian exports of wheat flour in 2019-20 at 250,000 tonnes in grain equivalent, a level unchanged from 2018-19.

Iran also is aiming to become more self-sufficient in oilseeds. The farm ministry reported in May that the Minister of Jihad-Agriculture, Mahoud Hojjati, had called for revolutionary action to mobilize for the production of oil and rapeseed meal. He said there were 3 million to 4 million hectares of land used for wheat cultivation that could be considered for rapeseed. Cultivation of the crop has grown from less than 40,000 tonnes in 2014 to around 450,000 tonnes currently. The Minister stressed the need to reduce Iran’s dependence on other countries for oil and poultry feed.

Flour milling

There are around 350 flour mills in operation in Iran, according to information supplied to World Grain by the European Flour Millers Association. A delegation from the association visited the country in September 2018. The average Iranian consumes around 160 kilograms of bread a year. The production capacity of Iran’s milling industry is 24 million tonnes a year, compared with the country’s consumption of 11.5 million

Iranian millers buy the flour they need from the Government Trading Corporation of Iran (GTC). The GTC describes its role as “procuring, supplying, purchasing, storing and distributing essential commodities.” The basic goods it covers include wheat, rice, crude oil and raw sugar. It supervises the distribution of those goods.

The GTC carries out guaranteed purchasing of basic commodities such as wheat and rice to support the farmers and meet consumer needs. It uses cash markets and futures and options markets to maintain supplies and keep a strategic reserve equivalent to at least three months’ consumption.

GTC’s remit also includes carrying out policies designed to reform the production and consumption of wheat, flour and bread and supporting private facilities for the construction and expansion of bakeries, including grants for renovation.

Self-reliance program

An article by David Michel, senior research fellow at the Center for Climate and Security and published by the Atlantic Council on July 9, explains that “to foster national food security and agricultural self-reliance, Iran has deployed a multi-pronged program of subsidies and trade protection.”

“Farmers receive guaranteed price floors for some 20 crops, thereby boosting supply, while consumer subsidies for bread and grains ensure societal access to basic foodstuffs, bolstering demand,” the article said. “By the same token, Tehran shelters producers behind significant tariff barriers. Import weighted tariffs amount to 50% on wheat and 45% on rice.”

Michel also said Iran subsidizes farm inputs, including water, energy and fertilizers. He put the proportion of the cost of pumping water from its source to the field that is paid by farmers at under 2%.

“By these strategies, Iran has in fact enhanced food production and consumption alike,” he said. “Yet increased production has not kept pace with a growing population and mounting demand.”

He pointed out that subsidies have had a significant financial cost and “the subsidy regime subverts the economic signals to producers and consumers, skewing farm production and resource allocation.” Water use is wasteful and wheat production covers 60% of arable land, “extending through every one of its provinces, without regard for their diverse climatic and agro-ecologic conditions.”

“Iranian authorities recognize the nation’s challenges,” Michel said. “Former Agriculture Minister Issa Kalantari, now Minister of Environment, evokes the prospect that Iran could lose 70% of its farmland, while millions could be forced to migrate as the Iranian plateau becomes effectively uninhabitable due to drying rivers and dwindling groundwater.”

Tehran has taken some steps toward averting this grim scenario, he said.

“The 2010 Targeted Subsidies Reform Act sought gradually to raise electricity and water charges to cover full costs and replace food subsidies with cash transfers,” Michel said.

However, many of its changes have been suspended. Michel said more fundamental measures will be needed to ensure Iran’s food and water security, insisting that “continued subsidy reforms should further align water and fuel charges with their true cost to incentivize more efficient use.”

“Iran retains considerable agricultural potential,” he said. “With practicable policy reforms and increased political commitment, the Islamic Republic can realize a more sustainable future.”

The sanctions imposed on Iran do affect trade in grains from time to time. In July, two Iranian bulk carriers, transporting 110,000 tonnes of maize, got stuck in the Brazilian port of Paranagua because the oil company Petrobras would not supply them with fuel, believing it to be covered by U.S. sanctions that would make Petrobras liable to penalties. After a complaint from the Brazilian supplier of the grain, the country’s Supreme Federal Court ordered the oil company to refuel the vessels.

In August, Peiman Seadat, Iran’s Ambassador to the E.U., wrote to Members of European Parliament to complain about the effect of U.S. sanctions. In a letter published by the E.U. Observer website, he complained that “U.S. sanctions, and in particular banking restrictions, continue to constrain Iran’s ability to import food commodities. As such, delays in food delivery are more frequent,” citing the delayed grain ships in Brazil as an example.