Agriculture Ministry Lags Behind in Oilseed Self-Sufficiency Plans

EghtesadOnline: The Agriculture Ministry devised plans in late 2015 to achieve 70% self-sufficiency in oilseed production in 10 years for controlling the import of oilseeds and vegetable oil.

News ID: ۷۸۷۵۹۴

09 January 2022

At the time, domestic production met 6% of the annual demand and after six years into the plan, the figure has reached 16%.

According to data released by the ministry, oilseed production stood at 46,000 tons in the fiscal 2014-15 and increased to 423,000 tons in the fiscal 2020-21, the Persian newspaper Iran reported.

As part of the 10-year plan, land under oilseed cultivation has to reach 700,000 hectares by the end of the plan in fiscal 2025-26. This is while the figure now stands at 300,000 hectares, meaning the government has less than four years to convince farmers to cultivate these products on 400,000 hectares of their lands.

The oilseed program was devised by the Iranian government to become self-sufficient in the production of eight essential goods, namely rice, barley, wheat, pulses, cotton, beetroot, corn and oilseeds. The main objective pursued was to ensure food safety and reduce the amount of foreign currency used for importing these products.

Also known as necessity goods, essential goods are products consumers will buy, regardless of changes in income levels. The government has been allocating cheap dollar for the import of products under this category.

Latest figures released by the Islamic Republic of Iran Customs Administration show a total of 19.1 million tons of essential goods worth $10.5 billion were imported into Iran during the first nine months of the current Iranian year (March 21-Dec. 21).

About 1.9 million ton of different types of oilseeds worth $1.3 billion and 1.4 million tons of unrefined edible vegetable oils worth $1.9 billion were imported during the period. Put together, 3.3 million tons worth $3.2 billion were imported, making up 17.27% and 30.47% of the weight and value of total essential goods imports during the period.

Contributing Factors

Experts believe the rise in production costs, decline in precipitation, low guaranteed purchase prices and the rise in global oilseed prices to be among the reasons behind the government plan’s failure.

Qasem Pishehvar, the head of Agriculture and Natural Resources Guild Organization, believes drought and water scarcity, coupled with low prices set by the government for guaranteed purchases, let the plan down.

“Compared with other crops, oilseed guaranteed prices have always been low. This is the main reason for farmers’ lack of interest in cultivating such products. This year, the Iranian Parliament ratified a Pricing Committee to take over the responsibility of setting prices for different types of oilseeds instead of the government. This committee is made up of state and private sector officials, which has agreed on higher prices for the next crop year,” he added.

Pishehvar noted that the committee’s ratified guaranteed prices for two main oilseeds, colza and soybean, are 150,000 rials ($0.52) and 153,000 ($0.54) rials respectively for next year’s purchases.

These prices, he said, are closer to production expenses and may encourage farmers to go forth with the plan.

According to the Agriculture Ministry, Iran’s domestic demand for unrefined vegetable oil currently stands at 1.4 million tons per year, only 8% of which are met locally.

Iran’s vegetable oil refineries’ production capacity stands at 4.5 million tons per year, meaning that most of them are working at very low capacities. An increase in production can lead to these factories working full shifts, create jobs and, in the long run, make Iran an exporter of edible oils.

Per capita vegetable oil consumption in Iran is about 18-19 kilograms a year while the global average is 12 kilograms.

Alireza Mohajer, director of the Agriculture Ministry’s “National Oilseed Project” has been quoted by IRNA as saying that due to the reimposition of US sanctions on Iran, the Agriculture Ministry needs to expedite efforts to reach the 70% goal.

Yet, in reality, the government seems to be reluctant to gain all the advantages of the 10-year self-sufficiency plan.

In the next fiscal year’s budget bill (March 2022-23), the government has proposed 1.62 trillion rials ($5.69 million) to be dedicated to oilseed expansion projects while the figure stood at 1.8 trillion rials ($6.33 million) this year.

This becomes more of a concern considering that the subsidized foreign currency has been omitted for oilseed and vegetable oil imports in the next year’s budget. This will definitely increase prices for importers and, in turn, for consumers.

“The government spends more than $4 billion per year to meet the local demand for vegetable oils,” said Mohajer.

In October, the official told Young Journalists Club that 10 oil extraction factories have signed memoranda of understanding with the Agriculture Ministry, based on which they can sign contracts with farmers directly to purchase their products via “contract-based cultivation”.

“As such, these factories have made contract-based cultivation deals with farmers for the production of colza, soybean and sunflower seeds. These firms will be providing the required seeds, fertilizers and pesticides that farmers need for cultivation,” he added.

Mohajer said firms that have participated in the plan will also be insuring the farmers and providing training on modern cultivation methods.

The provinces of Golestan in the north, Ardabil in the northwest and Khuzestan in southern Iran are top producers of oilseeds.