Strategic Reserves of Staple Foods Reassuring

EghtesadOnline: At present, strategic reserves of staple foods in Iran are sufficient to meet domestic demand, a deputy agriculture minister said.

News ID: ۷۷۴۴۶۶

08 March 2017

“Currently, our wheat reserves stand at about 9.4 million tons, which are unprecedented. We will begin the next Iranian year (starting March 21, 2017), with 8.6 million tons of wheat reserves. Given the annual domestic demand of around 11 million tons, our reserves will suffice to meet the domestic need for 9 to 10 months into the upcoming year,” Ali Qanbari was also quoted as saying by Mehr News Agency.

This is while Esmaeil Esfandiaripour, an advisor to the agriculture minister and executive manager of the National Wheat Project, put the annual domestic demand at close to 9 million tons.

“Since this year the government purchased 11.5 million tons of the crop from local farmers, we have 2.5 million tons of wheat in excess of domestic demand,” IRNA quoted Esfandiaripour as saying.

According to Financial Tribune, the National Wheat Project is a government scheme that oversees the guaranteed purchase of the crop from farmers to build up the strategic reserves and balance prices in local markets.

A record high of over 14 million tons of wheat were domestically produced this year, more than 11.5 million tons of which, worth over $4 billion, were purchased by the Government Trading Corporation.

GTC is a state-owned company specializing in the purchase, import and distribution of essential foodstuff from local farmers at guaranteed prices.

Qanbari, who is also the head of GTC, said sugar reserves currently stand at 260,000 tons, rice at 100,000 tons and vegetable oils at 210,000 tons.

Hike in Sugar Imports

According to the Islamic Republic of Iran Customs Administration, more than 651,000 tons of sugar worth nearly $312 million were imported during the 11 months to February 18, registering a 37.5% and 106.7% growth in weight and value respectively compared with last year’s corresponding period.

“Iran’s sugar production is estimated to exceed 1.52 million tons by the end of the current fiscal year (March 20, 2017),” Alireza Yazdani, an official with the Ministry of Agriculture announced in January, ILNA reported.

“Domestic demand for sugar stands at 2.2 million tons annually. Therefore, there is need to import close to 700,000 tons.”

The Islamic Republic of Iran Customs Administration recently announced that imports and sales of raw sugar are now exempt from value added tax.

Decline in Rice Imports

Rice imports over the same period amounted to about 660,500 tons worth $551.9 million, indicating a 2% and 11.5% decline in weight and value respectively year-on-year.

Qanbari added that close to 83,000 tons of rice have been recently purchased from India, Pakistan and Uruguay, which will be imported into Iran within a month.

Bangkok Post reported late February that Thailand has secured a deal to sell rice to Iran for the first time in 10 years, with the delivery of 50,000-100,000 tons of white rice due over the next 1-2 months.

Thailand’s Asia Golden Rice Company is in the process of seeking the cooperation of the Export-Import Bank of Thailand to handle the deal’s payment and settlement issues, which are expected to take about a month, the report added.

Domestic rice production in Iran stands at about 2 million tons, while domestic need is in the neighborhood of 3 million tons.

The Iranian government has recently amended tariffs for importing rice by reducing it from the previous 40% to 26%. It was announced on January 21 that the rate would stand at 5%, following a series of tariff cuts on agrofood products.

Iran imposes an all-out ban on rice imports during the harvest season. This year, the measure was in place from July 21 to November 21.

The two northern provinces of Gilan and Mazandaran are home to a majority of Iran’s paddy fields.

Palm Oil Controversy

A portion of demand for vegetable oils is met through palm oil imports, which stood at over 397,500 tons worth $286.7 million during the 11-month period, indicating a 56.3% and 44.8% growth compared with the similar period of last year.

However, Rasoul Dinarvand, the head of Iran Food and Drug Administration, has denied an increase in palm oil imports, saying the amount imported shows no significant change compared with last year.

“Almost two years ago, we increased the import tariff on the product from 10% to 26% so that palm oil imports become less profitable compared with other kinds of vegetable oils,” he said.

He insisted that imports are still below the 420,000-ton mark that the government has set as the ceiling for palm oil imports.

Early February, Malaysia’s Minister of Plantation Industries and Commodities Datuk Seri Mah Siew Keong paid a visit to Iran, along with an economic and technical mission, including representatives from Malaysian Palm Oil Board and Malaysian Palm Oil Council.

Among the aims of the delegation was to promote palm oil exports to Iran and convince Iranian officials of its nutritional values.

In 2014, the government of Iran imposed import quota on palm oil, whereby its imports were restricted to 30% of total vegetable oil imports.

As a result, imports dropped by 47% from 997,000 tons in 2013 to 330,970 tons in 2015 due to the import quota.

In March 2016, the import quota was removed and replaced by a higher import tariff of 40% whereas other vegetable oils are only taxed at 24%.

Iran’s palm oil imports from Malaysia decreased by 19% in 2016 compared with the previous year. Yet, given the latest figures released by IRICA, it seems that negotiations by the visiting delegation with Iranian officials have been fruitful.

Qanbari noted that nearly 800 tons of butter have been purchased from New Zealand as well as several European countries, which will be imported into Iran in a month.