500K Tons of Imported Rice Stranded at Customs Terminals

“Since March 20, the government has discontinued the allocation of foreign currency at the subsidized rate of 42,000 rials per dollar to import rice; it has called on importers to meet their forex requirements from Nima,” Abbas Tavakoli was also quoted as saying by IRIB News. 

Noting that even the supply of forex from the secondary FX market is experiencing disruptions, Tavakkoli said rice is a perishable food item and traders will face serious challenges if their shipments remain in storage on customs premises for longer. 

“Imported rice is the staple of six low-income deciles; it was the only item whose allocated subsidy reached the target group of consumers. The removal of rice from the list of subsidized imports was a misguided measure.”  

Following the re-tanking of the national currency in early 2017, the government introduced stringent rules like banning the import of non-essential goods, especially those produced inside the country (known as Group IV goods). It allocated subsidized currency at the rate of 42,000 rials to a dollar to 25 categories of goods (also known as Group I or essential goods) to help protect consumers against galloping inflation, rampant price gouging and hoarding, not to mention the high and rising cost of living.

Two other categories of imports were also defined: Group II, which mostly included raw materials, intermediate and capital goods, and Group III consisting of essential consumer goods. 

Importers of products in Group II were to meet their forex requirements from the secondary forex market. Importers of goods in Group III could buy hard currency from exporters who were not required to offer their forex earnings on Nima.

In the last fiscal year (March 2019-20), the government removed five items, namely red meat, butter, pulses, tea and sugar, from the list of essential goods entitled to subsidized currency. 

Vegetable oil, oilseeds, corn, barley, soybean meal, raw material for manufacturing tires, heavy-duty vehicle tires, paper pulp and different types of paper are still considered essential goods.

The decision to discontinue the allocation of subsidized foreign currency for rice imports comes as domestic rice production has reached levels, officials say, that break Iran free from the need to import rice amid abundant rainfalls in the current fiscal year (started March 20).

According to the director general of the Agriculture Ministry’s Grains and Essential Goods Bureau, a total of 2.9 million tons of rice were produced in the country during the last Iranian year (March 2019-20), registering close to a 45% increase compared with the previous year. 

“This increase in rice output owes to the favorable weather and heavy precipitations during February and March of 2019, because of which land under rice cultivation increased by 38% to reach 834,000 hectares,” Faranak Aziz Karimi was also quoted as saying by IRNA.

Latest figures released by the Statistical Center of Iran show per capita rice consumption in the country stands at 35 kilograms.

The northern Gilan and Mazandaram provinces together account for 71% of Iran’s rice production, according to figures released in a recent report published by the Statistical Center of Iran.