Focus on Iran

by Chris Lyddon
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Iran has one of the most diverse agricultural sectors in the world, with a huge variation in local climate and conditions, from mountains to irrigated plains, deserts to fertile crop land. It also has one of the highest levels of grain consumption and a government that’s determined to be self-sufficient. With the state planning to move away from subsidies on grain toward welfare targeted to the most needy, it faces major changes.

The International Grains Council (IGC) now puts Iran’s total grains crop for 2010 at 19.3 million tonnes, compared with 16.4 million tonnes in 2009. The crop includes 14.5 million tonnes of wheat, up from 12 million, and 3.1 million tonnes of barley, up from 2.6 million.

It means a likely fall in Iran’s imports of grain to a total of 5.7 million tonnes in 2010-11, compared with 7.3 million the year before. Wheat imports are predicted at 1.5 million tonnes, down from 3 million in 2009-10. The IGC predicts maize imports of 3.6 million tonnes, up from 3.3 million. Barley imports are predicted at 600,000 tonnes, down from 1 million.

The IGC predicts a 2010 rice crop of 2 million tonnes, up from 1.5 million, with imports of 1.4 million, up from 1.3 million.

Grain production in Iran is highly regulated by the state. Farmers get access to subsidized inputs and a guaranteed support price for their output. Wheat sold to consumers is highly subsidized.

Under the reform plan passed by the Iranian parliament in January, subsidies on food will be replaced with direct payments over the next five years.

"Savings on resources, increasing creativity and innovation, and a fair distribution of resources are the most significant parts of this plan," President Mahmoud Ahmadinejad said in remarks on Iranian television, picked up by the Bloomberg news agency. The cuts are due to start on Sept. 23, the beginning of the second half of the Iranian year. According to Bloomberg, subsidies accounted for 27% of the Iranian economy in 2007.

They cover a huge range of products and services and account for Iran’s high level of oil consumption. By shifting to direct payments to the needy, Ahmadinejad is seen as courting popularity, while trying to save money.

In February, the Tehran Times reported an Iran Statistics Center announcement that out of 17 million households that had filed forms declaring their economic status, 40% had been placed in the lowest income bracket.

The president justified reform in a speech in 2008, reported by the IRNA news agency. He attacked waste and extravagance. "Currently the greatest waste is in consuming energy in our country, while the wasted time and other resources, too, are huge. We can, for instance, particularly refer to the waste of different types of energy, fuel, bread, electricity and time," he said. "Subsidies are not allocated to those groups that truly deserve them."


The Flour Fortification Initiative (FFI) has highlighted Iran as a good place for a fortification program because of its high level of bread consumption. "Bread was considered the more important food to fortify, because it is less expensive than rice and consequently more widely consumed," FFI said in a case study on the country. "People in Iran consumed 11.8 million tonnes of wheat in various food products in 2003. That amounts to 416 grams of wheat per person per day, one of the highest wheat consumption rates in the world."

Iran also has a fast-growing poultry sector. In February, the Tehran Times reported the inauguration of a poultry slaughterhouse, which is the fourth largest in the world and the largest in the Middle East.

"The plant has the state-of-the-art technology and a capacity to slaughter 10,000 birds an hour," it said.

There’s another reason why FFI thinks Iran is ripe for fortification. "Iran’s milling industry is highly organized, uses modern equipment and is readily supportive of flour fortification efforts. Iran is unique in that, to help ensure food security, all activities related to wheat and flour are under government regulation and control," it said. "This means that buying wheat from farmers, storing wheat in silos, transporting wheat to mills, covering processing costs, and delivering flour to bakeries are all at the government’s expense. When the government opted to produce and supply fortified flour to all Iranians, it determined to do so at no additional cost to the consumer."

Iran has more than 335 mills, according to the Federation of Iranian Associations of Flour Milling, and their combined milling capacity is 23 million tonnes wheat equivalent annually.

Merzad Jamshidi, managing director of KFF Mills and director of the International Association of Operative Millers Mideast & Africa District, put the annual consumption of wheat at 12 million tonnes. "Iran is currently selfsufficient and has so far sold close to 700,000 tonnes for export, out of which 280,000 tonnes has been exported," he told World Grain.

The government’s reform plan will mean changes for the milling industry. "The government is planning to lift subsidies on the remaining bakery flour as the rest, which includes pasta, French-style bread, cookies and confectionary flour, is already unsubsidized," he explained. "The plan is to switch from flour subsidy to wheat subsidy."

"I believe the reform plan will result in a drop in flour consumption and mills will begin a fierce competition in gaining market share, which would open the door for flour additives, correctors and high-quality wheat imports," he said.


Iran is famous for the diversity of its farming sector, but dependence on irrigation is widespread, John Neville, a British agricultural specialist who has farmed in Iran, explained. "In the northwestern corner, where it joins on to Georgia, there’s a mountain range, the Alborz," he said. "On the northern side of the Alborz Mountains is the Caspian Sea. It’s well-watered and humid so you get crops like rice, tea and maize. Keeping on the same level, you’ve got a province called Gorgan. That's a big wheat-growing area. Going to the west, by the Turkish border, you get a lot of extensive dry farming with very low yields."

He described some of Iran’s irrigation schemes as huge. "South of Tehran, down toward the oil fields, you got pretty big irrigation schemes," he said. "They grow vegetable crops. They grow maize and sugarcane."

The widespread use of irrigation was one of the targets of President Mahmoud Ahmadinejad’s attack on waste.

"For instance, we use excessive amounts of water in our agricultural sector. While irrigation of one hectare of land is possible using one to two thousand liters of water, even if we were not suffering from drought, the current water usage is much higher and extravagance has unfortunately become habitual in that sector," Neville said.

Water is a big issue. Since Iran is in the arid zone — some 65% of its territory is arid or hyper-arid and approximately 85% has an arid, semi-arid or hyper-arid environment — the specific features and location of Iran causes it to receive less than one-third of the world average precipitation, the United Nations Food and Agriculture Organization said in its report on Iran’s climate. Only the Caspian Plain in the north receives more than 1,000 millimeters of rain annually.