Iran Chamber of Commerce, Agriculture Ministry Sign MoU to Boost Water Productivity

EghtesadOnline: Agriculture Minister Mahmoud Hojjati and President of Iran Chamber of Commerce, Industries, Mines and Agriculture Gholamhossein Shafei signed a memorandum of understanding.

News ID: ۷۴۶۳۵۸

22 December 2018

The deal was signed during the opening ceremony of the biennial Second Conference on Water Economy at ICCIMA's Tehran headquarters on Tuesday and Wednesday to increase water productivity in the agriculture sector.

As stipulated in the MoU, which will be valid for 10 years, the two sides will cooperate in increasing the production of all agricultural commodities from the current average of 1.1 kilograms for each cubic meter of water to 2.2 kg/m³ in the fiscal 2026-27, ICCIMA's news portal reported.

"With around 8.8 million hectares, Iran ranks fifth on the list of countries with the most land under irrigated cultivation of crops globally, while the country ranks 30th in irrigated crop production. This indicates that Iran’s water economy mechanisms are dysfunctional," Energy Minister Reza Ardakanian said on the sidelines of the conference, according to Financial Tribune.

“About 12% of Iran’s total area goes under cultivation every year. Yet, the agriculture sector accounts for 90% of the country’s annual water consumption. Despite this amount of water consumption, agro production for every one cubic meter of water consumed in the sector stands at only 40% of the global average," he was quoted as saying by IRNA.

"Agriculture accounts for around 11% of Iran’s annual gross domestic product and 17% of the country’s employment. Some 92% of the farms are owned by small-scale farmers and 94% of Iran’s rural economy pertain to agricultural and animal husbandry activities. These figures are discordant with the modern global economic and industrial norms."

Ardakanian admitted that Iran is among countries facing serious water shortage.

Today, a majority of countries, he said, are working toward improving water productivity and economy, and given the per capita water consumption in Iran, the country must do the same.

According to the minister, per capita water use in Iranian metropolises, such as Tehran and Isfahan, exceeds 200 liters whereas the global average stands at 150 liters.

“Like these countries, we have to shift the dependency of our rural economy on agriculture to activities related to small- and medium-sized processing industries, tourism, handicrafts and services,” he said.

Ardakanian noted that an efficient way to improve rural economy and use water more efficiently is by setting up industrial greenhouses, which generate 40 times as much added value and reduce water consumption by a tenth.

Water Cheaper in Iran

One main problem that brings about wasteful water practices, said Ardakanian, is the low price of the commodity for both agricultural and drinking purposes.

“Urban and rural consumers of potable water, for example, pay only 47% and 27% of the end price of water provision respectively,” he said.

Granting subsidies to the agriculture sector, including its water usage, he said, is a normal measure taken all around the world, but paying attention to how and to what extent this is done from an economic point of view is a very important issue.

Ardakanian stressed the importance of devising the country’s development plans while taking into account the fact that it is located in arid and semi-arid regions with a chronic water crisis.

The Energy Minister said agro outsourcing and observing virtual water trade in agricultural and industrial imports and exports can help rectify the water economy structure of Iran.

“At present, our virtual water imports and exports stand at 40 billion cubic meters and 7 billion cubic meters respectively,” he said.

The official highlighted that food safety is not synonymous with self-sufficiency.

"Self-reliance on staple foods must be implemented instead, which will guarantee our water and national security as well," he said.

President Hassan Rouhani's economic advisor, Mohammad Nahavandian, also addressed the conference and said that in some parts of the country, the subject of water shortage has assumed a political aspect whereas water should be a national concern.

“The more we look at the problem from a political point of view, the harder it will be to find solutions to overcome it,” he said.

“In the past few years, the government has been seeking the assistance of private sector in resolving water problems and carrying out water management projects. In this respect, incentives are granted to investors in the field."

Hojjati said that it is of utmost importance to be able to increase water productivity in the agriculture sector.

“We have taken measures to achieve this goal over the past few years. This included shifting the planting season in some water-intensive crops from spring to autumn, converting from seed to sapling cultivation, which reduces water consumption by 25% to 30%, and expanding greenhouses,” he said.

Greenhouse Expansion

According to Valiollah Bani-Ameri, the manager of Greenhouse Expansion Project undertaken by the Agriculture Ministry, the ministry plans to establish 2,763 hectares of greenhouses by the end of the current Iranian year on March 20, 2019, which needs 8 trillion rials ($78 million) worth of investments.

“Currently, around 1,357 hectares of the targeted figure are in the final stage of establishment,” he was quoted as saying by Young Journalists Club last month.

The official added that Iran has 14,000 hectares of greenhouses in Iran, more than 12,000 hectares of which are under the cultivation of vegetables and fruit, supporting 120,000 direct and more than 350,000 indirect jobs.

“Right now, annual production in our greenhouses stands at 3 million tons. The target set by the Agriculture Ministry is to increase the greenhouse area to 48,000 hectares by the end of the 20-Year Vision Plan (2005-25)," he said, adding that more than 20 million tons of agro products will be cultivated across the area annually.

Bani-Ameri noted that 90% of the equipment used in greenhouse construction in Iran are locally-made, adding that Iran ranks second globally in terms of greenhouse expansion after Mexico and that the reimposition of sanctions will not thwart the country’s activities in the field but will increase costs.

Greenhouses generate 8 to 12 jobs per hectare.

The Ministry of Agriculture plans to transfer all vegetable farms to greenhouses within 10 years to save 10 billion cubic meters of water per year.

Iran is home to a meager 0.3% of the world’s greenhouses.