Iran has to import wheat and US sanctions threaten it

Press TV – Minister of Agriculture Mahmoud Hojjati says Iran has to import some shipments of wheat this year because state purchases from local farmers at guaranteed prices are not enough.

“Although wheat production increased this year, we were not able to buy enough wheat at guaranteed prices,” the minister said Tuesday.

Many local wheat growers were unhappy with buying prices offered by the government this year, opting to sell their crop to intermediaries instead.

“Last year, despite the severe drought, we were able to buy about a million tonnes of wheat more than the year before, but this year in some provinces farmers did not even sell us equivalent of their irrigated crop,” Hojjati said.

Much of Iran’s wheat cultivation depends on non-irrigated farming as the country is expanding dryland agriculture amid a lingering drought which is forcing it to use its water resources more economically.

Irrigated wheat covers only one-third of the total wheat area, thus the bulk of the crop depends on seasonal precipitation.

Most of the rain-fed wheat crop is concentrated in the northwest, but farmers in the region as well as in the country’s west sold very little new crop to the government this year, Hojjati said.

At the start of the year, state officials were expecting wheat harvest to be enough to make it self-sufficient in the strategic crop for the fourth year in a row. They believed better rainfall across Iran would offset the loss of crops from unprecedented flash flooding in some provinces in March.

However, the government’s price tag of 2.2 million rials (nearly $18) per 100 kg was not enough to whet the appetite of many wheat growers to sell their produce to the state.

Wheat production in Iran has experienced a cycle of boom and bust. Largely self-sufficient in wheat a decade ago, the country turned into one of the world’s biggest importers for many years due to a combination of population growth, receding farmlands and back-to-back drought years.

Most of the aquifers which carried water from under mountains into plains for hundreds of years have hit rock bottom, leaving vast expanses of farmland and orchards bone dry.

The country is now embracing new cropping methods and improving irrigation and seed technology to perpetuate its self-sufficiency in wheat which is a strategic commodity.

Agriculture accounts for about one-fourth of Iran’s gross national product and employs about two-fifths of the labor force.

The Iranian plateau is believed to be the homeland to a number of fruits, vegetables and ornamental plants such as Persian walnuts, pomegranates, peaches, spinach and tulips.

Hojjati put the overall value of Iran’s agricultural products at $80 billion a year, more than $2 billion of which are exported.

“In value terms, dairy products with $250 million, vine crops with $233 million, pistachios with $178 million and fresh and processed tomatoes with $190 million have been the top hard-currency earners of the country,” Deputy Agriculture Minister Abdol-Mahdi Bakhshandeh said on Tuesday.

US sanctions target food, medicine imports

Unlike Washington’s claims, Tehran’s food and medicine imports are virtually subject to US sanctions.

“Although they say food and medicine are not subject to sanctions, they are subject to some kind of sanctions due to money and banking restrictions,” Hojjati told members of Tehran Chamber of Commerce on Tuesday.

Sanctions on Tehran, many of which had been relaxed under the 2015 nuclear deal struck during President Barack Obama’s administration, snapped back into place after President Donald Trump took the US out of that deal last year.

The US claims it is allowing for the sale of agricultural commodities, food, medicine and medical devices, but there is no instance of requests related to humanitarian trade being cleared by American authorities.

Hojjati said Iran depends on the American continent for part of its euro-denominated imports. “Oilseeds, soybean meal, raw oil and corn are imported from the Americas,” he said.

“Of course, there is no worry about supplying these goods and we are in a good position in terms of supply and stock,” Hojjati added.

Nevertheless, shortages in essential goods have affected households across the country.

One of the critical areas is Iran’s health sector which is struggling to keep up with soaring prices of medications and medical instruments.

Iranian companies, even those not blacklisted by the US, are often cold-shouldered by European banks, fearing secondary US sanctions.

Their imports of medicines and medical instruments require paying exorbitant sums to intermediaries, which prohibitively jacks up the value of needed supplies.

While Iran produces more than 96% of its medical needs, pharmaceutical companies rely on local formulation of generic drugs, which means they have to import ingredients for some drugs.

Some of the generic brands formulated, processed and packaged in Iran are licensed by European and American companies and their production includes imports of semi-manufactured drugs which has been disrupted by the sanctions.

Last October, the US government blacklisted Iran’s Parsian Bank which processed much of Iran’s humanitarian trade transactions.