Iran Makes Pitch for Investment in Burgeoning Animal Feed Industry

EghtesadOnline: Iran ranks as the 18th biggest producer of animal feed in the world, as production currently stands at 9.86 million tons worth around $8.5 billion per annum.

News ID: ۷۸۴۲۸۷

03 November 2018

Broken down, 5.64 million tons, 3.96 million tons and 291,000 tons of the total pertain to cattle, poultry and aquatic feed respectively. The figures were disclosed by Iran Feed Industry Association Chairman Majid Movafaq Qadiri during an interview with the Financial Tribune at the First Trade and Investment Opportunities in Iran’s Animal Feed Industry Forum held in Tehran last week.

The Sunday event was attended by the head of Iran Chamber of Commerce, Industries, Mines and Agriculture, Gholamhossein Shafei; deputy agriculture ministers in livestock affairs, Morteza Razaei, and economic and commercial affairs, Aliakbar Mehrfard; head of Iran Veterinary Organization Alireza Rafieipour; head of the Facilitation of Private Sector Affairs Bureau with the Foreign Ministry Hassan Nourian; and director of the Center of Services for Foreign Investments in Iran with the Organization for Investments, Economic and Technical Assistance of Iran affiliated with the Economy Ministry, Mohammad Mehdi Dalvand.

Also present at the forum were the United Nations Industrial Development Organization representative in Iran, Maryam Javanshahraki, together with economic attachés and representatives from a host of foreign embassies in Iran, according to Financial Tribune.

The message sent by the UN’s Food and Agriculture Organization’s designated representative in Iran Gerold Boedeker was read at the forum. The message focused on the share of livestock sector in global economy, the importance of arriving at sustainable livestock activities through healthy and environmentally-friendly feed value chains, future prospects in the field of livestock despite daunting challenges as well as the role of livestock-related business in generating income, creating employment and strengthening the assets that rural households use to achieve their livelihood objectives.

UNIDO Prepared For Coop. With Iran

According to Javanshahraki, UNIDO’s cooperation with Iran began in 1963 and was consolidated in 1985 when the organization opened an office in Tehran.

“Since then, close collaboration with Iran’s private and public sectors has continued, particularly in agribusiness, on par with Iran’s development plans. UNIDO has implemented more than 300 projects in Iran, around half of which has been in the field of agriculture and agribusiness," she said.

"UNIDO is committed to connecting Iranian industries, through its different networks like subcontracting partnership, investment technology promotion, etc. to international markets. I bear the message of UNIDO’s willingness to cooperate in expanding the animal feed production chain in Iran.”

Exempt From Sanctions

The global turnover of animal feed industry amounts to around $430 billion per year, according to Nourian with the Foreign Ministry.

The official added that predictions of international institutions such as FAO show the world population is expected to reach 9 billion by 2050, which means a drastic rise in food demand.

“Estimates believe there will be a twofold increase in meat and chicken demand as well as a threefold growth in seafood demand globally. This shows the ever-growing importance of animal and aquatic feed industries,” he said.

Nourian noted that with the implementation of the Joint Comprehensive Plan of Action in January 2016, Iran’s economy had the opportunity of interacting more actively with the world.

However, after the unilateral and illegal withdrawal of the US from the nuclear deal in May, restrictions are being reimposed on Iran.

Three fields, namely healthcare, pharmaceuticals and food, are exempt from sanctions.

Apparently, he added, animal feed industry will also be exempt from economic and trade sanctions due to its being an intermediate industry in providing food.

Qadiri said that more than 208,000 tons of animal and aquatic feed worth more than $83 million were exported to 16 countries in the last Iranian year (March 2017-18), showing a 20.2% and 9.2% growth in weight and value respectively compared with the previous year.

The main export destinations over the period were the UAE, Iraq, Turkmenistan, Afghanistan, Azerbaijan, Turkey, Armenia, Tajikistan, Georgia, Kyrgyzstan, Kuwait, Oman, Spain and Uzbekistan.

The chairman of Iran Feed Industry Association said some 80% of the raw materials for the production of animal feed in Iran are imported.

Last year, close to 1.65 million tons of field corn worth $360.6 million, 15,467 tons of cotton meal worth $4.21 million, 3,705 tons of sunflower meal worth close to $1 million and 920.8 tons of rapeseed meal worth $310.085 were imported from Russia, Ukraine, Kazakhstan, Brazil, Argentina, China, Germany, the Netherlands, Austria, Australia and East Europe.

“Iran's first feed mill was established nearly 60 years ago near the capital Tehran. Today, 645 feed mills are registered, of which 462 units are active, supporting some 12,000 jobs. More than 82% of the employees in the business are male and 11% are female. The nominal production capacity of these mills stands at 20 million tons,” Qadiri said.

Considering the output of 9.86 million tons per annum, it is evident that only half of Iran's nominal animal feed production capacity is being utilized.

During the Sunday event, the first edition of Iran Animal Feed Market book, containing the latest data on the industry was unveiled.

Feeding Massive, Strategic Sectors

According to Qadiri, at present, fixed and working capital in the business amounts to 34 trillion rials ($230 million) and 110 trillion rials ($743 million) respectively.

In 2017, he added, 823,000 tons of red meat were produced (showing a 1.5% rise year-on-year), of which 53% and 47% pertained to beef and sheep respectively. Some 2.2 million tons of poultry were produced in the same period, registering an 8.1% rise. Iran ranks seventh among the world’s top poultry producers.

The country also ranks 11th and 19th globally with around 888,000 tons and 9.63 million tons of egg and milk production respectively. Fish and shrimp production amounts to 1.06 million tons and 30,800 tons per annum respectively.

“The value added created by animal husbandry accounts for 12% of Iran’s total GDP. The average growth of poultry and livestock production has been at an annual average of 3.7% over the last five years. For aquaculture, the rate is 8.3%,” he said.

The abovementioned facts and figures, according to Qadiri, attest to the importance of animal and aquatic feed industry as a business that sets the ground for and makes possible production at this scale.

Europe Committed to Trade With Iran

Keith Wellings, director of the Department for International Trade with the British Embassy in Iran, was among keynote speakers in the forum.

Wellings said the department has developed a very good relationship with all of the ministries in Iran as well as the private sector, especially ICCIMA.

“In terms of where the European Union stands with Iran at the moment, as you know, we are entering into the third year of the signing of JCPOA and our support for it despite the United States withdrawal in May is absolutely unequivocal. Now, what everybody needs to hear, I think, from us is the whereabouts of that material support," he said.

"It’s understood that we are very keen to see the economic and political benefits of JCPOA delivered in Iran … and we are now in the stage, as we move towards the November 4th deadline when the US full sanctions will start to kick in, for Europe to show what it’s prepared to do. And that’s why we are with our technical experts, at the moment, working on a special purpose vehicle which will effectively be a financial channel that will enable transactions, including commodities, consumer goods as a clearing and settlement mechanism.”

Wellings said Europe is firstly committed to trade with Iran and secondly to providing a financial institution outside of the dollar and American banking system that will enable Europe and other countries to trade with Iran.

The British director added that Europe will be able to engage with Iran in all aspects of the food industry, including the value and supply chains.

“In terms of what we do at the British Embassy, and again I could probably speak for a number of my trade counterparts from other European member states, we are here to promote Iran as being a country that is open for business and is open for our businesses," he said.

"So, where you and your members of the association have any specific requirements from the United Kingdom or from European countries to deliver products, goods, services, technology, we advise you to approach the trade counselors of the countries you are interested in engaging with, and we would try to find partners to operate as joint ventures in Iran as well as potential investors.”

The overriding impression we have, Wellings added, is that any British or European company that come to visit Iran is never anything less than fully impressed by the infrastructure, by the economic conditions for doing business and perhaps most importantly the scale of the market.

“With 80 million people to feed in Iran … and the potential of the neighboring countries as well, British companies acknowledge that is a massive opportunity for food and drink, and therefore, we want to support whatever we can,” he concluded.