About 500,000 tons of wheat from a total of more than 1 million tons offered on Iran Mercantile Exchange have been bought by producers and factory owners.
“The wheat offered on IME is sold at export prices, which are lower than those in the domestic market, under the condition that the purchased crop be processed into flour or byproducts and then exported,” deputy chairman of Government Trading Corporation of Iran, Hassan Abbasi-Maroufan, also told Financial Tribune.
“This amount is part of last year’s surplus production of 3 million tons for which export permits were obtained. These have been gradually offered at IME. Producers have four months to turn their purchased wheat into derivatives of the crop such as flour, pasta, cake or biscuit. Therefore, right now I cannot specify how much has been exported so far. We have to wait until the end of the year when the Islamic Republic of Iran Customs Administration releases its annual figures.”
The current Iranian year will end on March 20, 2018.
The aim, according to Abbasi-Maroufan, is to create value added to the crop before exporting it so as to gain the most profit from exports.
The official added that until now, exports of flour and final products from wheat have been made to Oman, Iraq, Afghanistan and Turkey while talks are underway with other countries, including Egypt, for such exports. He added that Iran is ready to sell wheat at global prices to all countries with which it has economic interactions.
Asked whether there have been any wheat imports, he said Iran achieved self-sufficiency in the production of the crop last year.
“At present, we have close to 10 million tons of wheat reserves. There is no need for imports and import order registrations have been banned since November 2016. Yet, some order registrations were made prior to this date and traders have been transferring the shipments to the country,” he said.
A record high of 14 million tons of wheat were domestically produced last year, more than 11.76 million tons of which worth over $4 billion were purchased by the government from local farmers at guaranteed prices. This helped Iran achieve self-sufficiency in wheat production for the first time in about a decade.
A ceremony attended by President Hassan Rouhani was held in December to celebrate the bumper wheat harvest and self-sufficiency.
“We expect that last year’s record will endure and this year, the government will purchase around 11 million tons of the crop. If so, this year as well, we will have a surplus for which we are currently in talks to obtain export permits,” the GTC deputy said.
Abbasi-Maroufan noted that in the current Iranian year, more than 4 million tons of wheat worth 52 trillion rials (over $1.38 billion) have been purchased by the government from local farmers in 26 provinces.
“Up until now, Khuzestan Province in southern Iran, with close to 1.35 million tons, tops the list of provinces from where purchases have been made. Golestan and Fars come next,” he said.
GTC is a government-owned company specializing in the purchase, import and distribution of essential foodstuff. It is the lever for enforcing market controls. The company is also in charge of maintaining a supply of wheat, rice, cooking oil and meat, as the country’s strategic reserve of essential commodities.
Every year, the government buys certain strategic crops, including wheat from local farmers at guaranteed prices, to build up its strategic reserves and control prices in the domestic market.
Raw Wheat Export for First Time
With a shipment weighing 29,630 tons from Imam Khomeini Port in the city of Mahshahr in Khuzestan Province to Oman, for the first time, Iran exported wheat in its raw form last week.
“The shipment was also part of the surplus wheat produced last year,” chairman of Foodstuff Bulk Carriage Affairs Office at the Bulk and General Cargo Carriage Company affiliated to the Islamic Republic of Iran Shipping Lines, Mohammad Reza Zarei, said.
“Back then, the government aimed to export the surplus and the very first shipment headed to the neighboring Oman at around 11 a.m. on June 12. Proper marketing was done in Oman and plans are underway to do the same in Turkey as well as some European countries,” he told Financial Tribune last week. Previously, Mohammad Ali Baghestani, the head of Iran Plant Protection Organization, said it is estimated that wheat production will decrease by 6-7% in the current Iranian year that started on March 21.
“This will be a result of the decrease in precipitation as well as the sunn pest infesting some rain-fed farms,” he said.
Abbasi-Maroufan noted that despite the decline in production, hopes are high that wheat self-sufficiency will be attained this year as well.