Gov’t Ends Subsidies for Import of Animal Feed Premixes

EghtesadOnline: The government has discontinued the payment of subsidies for the import of animal feed premixes—vitamins, minerals, trace elements and other nutritional additives—used to prepare animal feed, Chairman of Iran Feed Industry Association Majid Movafeq Qadirly said.

News ID: ۷۸۵۵۳۶

20 June 2020

It has instead called on importers to meet their foreign currency requirements from the export earnings of non-oil products (petrochemicals, steel and minerals) traded through the so-called secondary FX market where exchange rates are closer to the free market rates.

“Importers of corn, barley and soybean meal can receive subsidized US dollar at the rate of 42,000 rials. The government is giving the subsidies in driblets, though. Importers are taking risks and they don’t see a bright future,” he was quoted as saying by Mehr News Agency.

“Animal feed prices in the market are now twice as much as regulated prices: Each kilogram of corn costs over 22,000 rials ($0.12), barley 19,000 rials ($0.1) and soybeans are sold at 50,000 rials ($0.27).”

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 (otherwise known as Group I or essential goods) to help protect consumers against galloping inflation, rampant price gouging and hoarding, not to mention the 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 basic goods entitled to subsidized currency. Since the beginning of the current year (March 20), rice has also been taken off from the list of subsidized imports.

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.

More than 1.8 million tons of raw materials used in the production of animal feed went through clearance procedures in Iran's customs terminals and were distributed among producers during the first two months of the current Iranian year (March 20-May 20), according to the CEO of State Livestock Affairs Logistics Company affiliated with the Agriculture Ministry.

“Though domestic demand for animal feed over the period stood at around 2.2 million tons, slow transportation prevented efficient supply to the market. Until last month, between 10,000 tons and 15,000 tons of feed were transported to provinces across the country on a daily basis, but we have quickened the procedures and now some 40,000 tons are transported per day,” Hassan Abbasi Maroufan was also quoted as saying by IRNA.

Maroufan noted that there are currently 2.25 million tons of animal feed stored in Iranian ports, which will enter the local market as soon as they undergo clearance.

Latest figures on animal feed imports pertain to the first month of the current year (March 20-April 19) released by the Animal and Poultry Feed Importers Association.

According to this report, a total of 866,570 tons of animal feed worth $253 million were imported into the country over the one-month period, showing a 6% and 7% decrease in weight and value respectively compared with the similar period of last year.

More than 166,620 tons of barley worth $41.37 million were imported over the period, registering a 14% and 21% year-on-year decline respectively.

About 430,220 tons of corn worth $104.62 million were imported, which shows a 14% and 15% decline respectively YOY.

A total of 269,730 tons of oilcake worth $106.99 million were imported during the same period, indicating an 18% and 9% growth compared with the corresponding period of last year.