GTC to Purchase 10m Tons of Wheat From Local Farmers in Current Crop Year

EghtesadOnline: The Government Trading Corporation of Iran plans to purchase a total of 10 million tons of wheat from local farmers at guaranteed prices in the current crop year (Sept. 2020-21).

News ID: ۷۸۵۸۵۴

30 January 2021

“This will account for some 90% of the domestic demand for this staple grain,” Qodrat Heydari, the deputy head of GTC, was quoted as saying by IRNA.

Noting that GTC is responsible for meeting domestic demand for bread, the official said it has to annually distribute around 10.5 million tons of flour to bakeries across the country.

The government bought more than 8.22 million tons of wheat from local farmers in 31 Iranian provinces over the last crop year (Sept. 2019-20), which indicated a 7% increase YOY. This amount of purchased wheat cost GTC a total of 207.8 trillion rials ($900 million), Mizan Online reported.

Khuzestan with 1.2 million tons, Fars with 911,000 tons and Golestan with over 820,000 tons topped the list of provinces from where the purchases were made.

A lever for enforcing market controls, GTC is in charge of maintaining a supply of wheat, rice, cooking oil and meat for the country’s strategic reserve of essential goods.

Considered a staple in Iran, wheat is purchased every crop year by the government to build up its reserves and supply the market over time.

According to CEO of the National Foundation of Elite Farmers Ali Khan-Mohammadi, domestic demand for this staple grain in Iran is around 12 million tons per year.

Plan to Import 2.3m Tons

The government plans to import 2.3 million tons of wheat during the course of the current crop year to replenish its strategic reserves, according to the head of the National Wheat Farmers Foundation.

“Local farmers and our foundation are bitterly opposed to this decision. We believe that if the guaranteed prices are reasonably set and the government devises proper policies for the annual purchase of the grain, domestic production can sufficiently meet the country’s demand,” Ataollah Hashemi was quoted as saying by the Young Journalists Club.

The official noted that due to faulty policies and low guaranteed purchase prices set by the government, farmers refrain from selling part of their harvest and subsequently high-quality wheat is used as livestock and poultry feed because it pays better.

Hashemi said wheat production is estimated to exceed 13 million tons in the current crop year, which is enough to meet domestic annual consumption and fill the government’s strategic reserves.

Esmaeil Esfandiarpour, the manager of the Agriculture Ministry’s “Wheat Project”, recently told ILNA that 4.49 million hectares of land have gone under wheat cultivation so far this year, more than 1.27 million hectares of which are irrigated land and 3.21 million hectares are rain-fed, registering a 7.4% and 3.7% increase respectively compared with the similar period of last year.

“We estimate that a total of 6 million hectares will go under the cultivation of this staple grain this year,” he said, adding that precipitation has been favorable so far this year and ample yields are predicted.

Storage Capacity on the Rise

The government is building up its wheat reserves by constructing new silos across the country.

The construction of a 100,000-ton grain silo has recently begun in Chabahar's Shahid Beheshti Port. The silo is being built on a 3.5-hectare area. It is expected to create about 200 direct jobs, Roads and Urban Development Ministry's official news outlet reported.

An estimated $20 million will be put into the development of the key project.

Increasing Chabahar's grain storage capacity is expected to help the port play a more significant role in transportation of goods to/from Central Asian countries, particularly the Commonwealth of Independent States.

Chabahar, Iran’s sole oceanic port along its southeastern coast, serves as a transit route linking India, Iran and Afghanistan, bypassing Pakistan.

Another silo, with a capacity to store 100,000 tons of the grain, is expected to be inaugurated in Semnan Province’s Garmsar County by the end of the current Iranian year on March 20, 2021.

This will be the largest silo in the east of the country, according to the CEO of the Government Trading Corporation.

“The Islamic Development Bank and the Iranian government have invested €18.96 million, in addition to 190 billion rials [$700,000], in the project,” Yazdan Seif was also quoted as saying by ILNA.

The official noted that the silo, which has so far made over 90% physical progress, has been built on a 10-hectare plot and will be a great help in storing and the distribution of this strategic staple food in the country.

A contract was signed in June for the construction of another silo with a storage capacity of 30,000 tons of grains in the northern Amirabad Port.

According to Director of Amirabad Special Economic Zone Mohammad Ali Saeedi, the contract is in the form of a BOT (build, operation and transfer) and the project is expected to be completed within two years.

“Presently, Amirabad has the capacity to store 235,000 tons of grains. More silos, with a collective storage capacity of an additional 235,000 tons, are under construction,” the official was quoted as saying by IRNA.

The new silo will be built on 7,000 square meters of land and create 12 direct jobs for local people.

Amirabad is the largest port facility on the Caspian shore and the third largest in Iran. The 1,000-hectare port has nine berths, which can accommodate Ro-Ro vessels, trains and trucks.

Iran’s capacity for storage of strategic goods and grains is currently at 21 million tons, says Qodrat Heydari, an official with the Government Trading Corporation of Iran, a subsidiary of Agriculture Ministry.

The capacity of government-owned storage units stands at 5.5 million tons with 156 silos, mechanized or semi-mechanized storehouses and warehouses, and that of private-owned units hovers around 15.5 million tons with 600 silos, mechanized storehouses, cement and metal silos, Heydari added.

“The government has no concern about food security, particularly about wheat. However, we definitely welcome further investment in sectors that need it most,” he said.