Iranian Government Amends Rice Import Tariffs

EghtesadOnline: The government has amended tariffs for importing rice by reducing it from the previous 40% to 26%, Trade Promotion Organization of Iran announced.

News ID: ۷۳۹۴۷۴

29 January 2017

It was announced on January 21 that the rate would stand at 5% following a series of tariff cuts on a list of agro-food products.

Based on the new regulation, tariffs on butter, meat and bananas will be trimmed to 5% from 20%, 26% and 26% respectively. Tariffs for pulses have also been cut drastically. Split peas will be subject to a 10% tariff, down from the current 15%. Rates on various other types of beans have been reduced to 5%.

The legislation describes these commodities as “basic, essential and urgent", adding that the new tariffs are currently in effect, according to Financial Tribune.

The move is aimed at keeping food prices in check in the runup to the new Iranian year (starting March 21, 2017). Meat and agricultural products have witnessed a hike in the past few weeks.

However, Shamsali Hajizadeh, the head of Agricultural Commission at Iran Chamber of Commerce, Industries, Mines and Agriculture, believes the reduction in tariffs is unlikely to lead to lower prices.

“Manipulating tariff rates benefits neither the producer nor the consumer. Only the intermediaries stand to gain from it,” he told the Persian daily Shahrvand.

Hajizadeh criticized the government for its “flawed” agricultural policies over the past few years.

Instead of manipulating tariff rates, Hajizadeh believes that the government should focus on enhancing productivity to minimize costs and reduce prices.

The Iranian government has a history of placing periodic bans on the import of rice and sugar, among other commodities, in support of domestic producers.

There is an all-out ban on rice imports during harvest seasons, for example. This year the measure was in place from July 21 to November 21.

According to the Ministry of Agriculture, Iranians consume more than 3 million tons of rice every year, of which almost 2.2 million tons are supplied by domestic farmers.

“This [domestic supply] does not suffice demand. We need imports, but imports that are limited and controlled,” Agriculture Minister Mahmoud Hojjati said in November.

Nonetheless, figures show rice imports have been on the rise, despite all the restrictive measures.

Importers shipped more than 630,000 tons of rice valued at $527 million into the country during the nine months to December 20, 2016, which registered a 22% and 4% growth in volume and value respectively compared with the corresponding period of a year ago, according to the latest data released by the Islamic Republic of Iran Customs Administration.

Sugar, chocolate and candy industries have been complaining in the past few months that the commodity was scarce due to restrictive regulations regarding imports. The government has dismissed the claim though.

Temporary bans on sugar imports are imposed mostly to prevent oversupply and support local manufacturers.

According to Iran Sugar Association, Iran is currently 70% self-sufficient in sugar production and a complete self-sufficiency is possible within the next four years.

Sugar production is estimated to exceed 1.52 million tons by the end of the current fiscal year (March 20, 2017). Domestic demand for sugar stands at 2.2 million tons annually. Therefore, the import of close to 700,000 tons is needed, according to the Ministry of Agriculture.

The government also imports a few hundred thousand tons for its strategic reserves every year.