TEHRAN, IRAN — While Iranian agriculture officials claim the nation is self-sufficient in wheat production, the nation is grappling with soaring prices for bread — a critical part of the Iranian diet — partly due to inflation, increasing demand and subsidy reforms last spring.

Bread prices increased as much as 40% in some regions, with Iranian television confirming in August price jumps in 13 provinces. In May 2022, the government reduced subsidies for essential food and medicine, causing the price of flour to increase tenfold. This summer, flour allocations to some bakeries had dropped by more than half their quota.  

Iran’s agricultural minister, Mohammad Ali Nikbakht, said in September that the country is self-sufficient in wheat and will not need to import the grain in the coming year. So far in the first five months of the year (March to August), the state-run Government Trading Corp. (GTC) has purchased 10.3 million tonnes of wheat from domestic farmers. 

“We are trying to continue the sustainability of self-sufficiency in wheat production so as not to face problems in unbalanced climatic conditions,” Nikbakht told the Islamic Republic News Agency. 

Wheat production in 2023 is estimated at 14 million tonnes, up from 13.2 million tonnes last year, according to the US Department of Agriculture (USDA). 

Agriculture is a major economic sector in Iran, providing 11% of gross domestic product and 18% of total employment. It is expected to grow by 4% annually and create 250,000 jobs by 2035, according to McKinsey & Company, a global management consulting firm. 

The country is one of the top exporters of agricultural production in the region, partly because many of its neighboring countries lack any agricultural potential. Iran has diverse climate zones along with fertile and abundant soil, but low level and unevenly distributed rainfall means wet winter months are typically followed by long dry summers. 

While demand is increasing for water, Iran can produce between 80% to 90% of its domestic needs for agricultural goods. Nearly 80% of farmers have land holdings of less than 10 acres with 90% of the sector privately held. However, most of the agricultural output comes from larger farms and is under the control of public or semi-public entities. 

Crop production, trade

Field crops represent 70% of Iran’s total agricultural production. Total grain production in 2021 reached 17.9 million tonnes, according to the Ministry of Agriculture Jahad. The USDA estimates 2023 production at 20.4 million tonnes.

Wheat is by far Iran’s largest crop with production estimated at 14 million tonnes in 2023, up from 13.2 million tonnes last year, according to the USDA. The use of improved seed varieties over the past five years has boosted the nation’s self-sufficiency in wheat by more than 30%, according to a report from the Tehran Chamber of Commerce, Industry, Mines and Agriculture.

“Iran’s wheat production is enough to make the country self-sufficient in the production of this strategic crop for the fifth year in a row,” it said. 

At 21.41 million tonnes, Iran has one of the largest wheat storage capacities in the Middle East. The 158 silos include metal, concrete and mechanized storage with a capacity of 18.01 million tonnes of wheat for long-term storage and 3.4 million tonnes of simple semi-mechanized storage for shorter periods, according to the Islamic Republic News Agency.

Barley is the second most widely grown crop with production estimated at 3 million tonnes in 2023-24, the same as last crop year, the USDA said. Rice production is estimated at 1.9 million tonnes, down slightly from 2 million tonnes, while corn (maize) is estimated at 1.4 million tonnes, the same as last year’s harvest. 

Iran produces a small amount of soybeans, rapeseed and sunflower with combined forecast production of 528,000 tonnes in 2023-24. 

There has been an upward trend in the import and export of agricultural products, according to the Tehran chamber. Iran exported 23.7 million tonnes of agricultural products in 2021 and imported 8.8 million tonnes. 

Top imports included corn at 9.9 million tonnes, wheat at 3.3 million tonnes, soybeans at 2.1 million tonnes, barley at 1.9 million tonnes and soybean meal at 1.8 million tonnes. 

Wheat supplies

In the nine months prior to March, Iran imported 3.241 million tonnes of wheat, according to the deputy minister of agriculture. In the same period a year earlier, Iran had imported 5.29 million tonnes of wheat. 

Russia had been a significant trade partner for Iran in the months after its invasion of Ukraine. Iran remained one of the top three destinations for Russian wheat, accounting for 15% of its overseas sales in 2021 and 13% in 2022, according to commodity tracker KPLER. Wheat imports from Russia in 2022 reached 1.8 million tonnes. 

Since then, Iran has imported small amounts of wheat from Russia with media reports that the GTC purchased 240,000 tonnes of milling wheat in mid-September. 

The GTC is in charge of ensuring adequate supplies of basic goods, including wheat, rice, cooking oil, sugar and meat to the domestic market. The 10.3 million tonnes of wheat purchased so far from domestic farmers represents a 43% increase from the same period a year ago.

The increase comes months after Iran increased its purchase price for the grain amid concerns that the war in Ukraine might impact global markets and imports. GTC offers 150,000 rials (30 cents) for each kilogram of wheat supplied to government silos. 

Total domestic demand for wheat is estimated at 13.5 million tonnes, with 10 million tonnes used for bread, 2 million tonnes for pasta, biscuits and pastry and 1.2 million tonnes used for seeds. 

Iran has 350 flour mills with a production capacity of 24 million tonnes per year. Mills are located in wheat production regions and close to transit entry points, such as ports. There are four mills 167 kilometers from the Bandar Imam Khomeini port on the northwestern coast of the Persian Gulf and three mills near the Bandar Abbas port on the country’s southern coast. 

KFF Company is the largest producer of general and specialized quality flours in the country. 

Iran is the world’s second largest consumer of bread. The average household consumed an average of 161 kilograms of bread in 2022, up from about 150 kilograms in 2011. Consumption is two to three times higher than in other countries. 

Bread constitutes a significant portion of diets for lower-income families, accounting for 29% of the food consumed vs. meat, which accounts for only 16%.  

The Iranian government introduced a new bread program after prices skyrocketed in May 2022, and led to weeks of protests. Under the program, Iranians were issued digital coupons to be used for a limited amount of bread at subsidized prices.