The lifting of international sanctions following a nuclear deal with the West creates new economic optimism in country
DUBAI (Reuters) — Iran plans to turn itself into a major food exporter, says an official in Iran’s state grain buying agency.
The expectation is based on the hope that the lifting of sanctions will boost international trade and allow investment in the agricultural sector.
“We are ready for a big leap in the post-sanctions era,” said Amir Hossein Shahmir, head of international trade at the Government Trading Corp. (GTC).
“We hope by removing the shackles of sanctions from our farmers’ hands, we can see an increase in production and even exports.”
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Foreign business delegations have flocked to Tehran since the United States, the European Union and the United Nations lifted international sanctions last month after reaching a deal to curb and monitor Iran’s disputed nuclear program.
“Among the foreign trade delegations there are always businessmen keen to invest in Iran’s agriculture, including wheat, sugar cane and fruits,” Shahmir said.
“French delegations specifically were interested in investing in Iran’s agribusiness.”
The government is pushing to cut Iran’s dependency on foreign imports paid for with oil revenues and increase its exports of manufactured goods and agricultural products, said president Hassan Rouhani.
Abdolreza Abbassian, a senior economist with the United Nations’ Food and Agriculture Organization, said there was more potential in the processed food sector.
“They had done quite a lot in the sanctions period to boost self-reliance on domestic produce, from jams to dairy products to tomato paste and even spaghetti and macaroni,” he said.
Shahmir said a project in the southwestern province of Khuzestan to develop 1.2 million acres of irrigated agricultural land was 80 percent complete and would boost production of wheat and other strategic products. The government estimated the cost of the project at $600 million.
Iran has 15 million acres of land used for farming wheat, the staple grain. Two-thirds of that is unirrigated, making it susceptible to drought. Iran is one of the world’s driest countries, with an average 250 millimetres of rain a year.
“The country suffers from a huge water shortage. This is a challenge,” Abbassian said, adding he did not think the country had a comparative advantage to be an exporter of wheat.
The GTC recently banned state imports of wheat for the Iranian year starting March 20 on the back of 2015’s strong harvest and the expected production boost. Agriculture minister Mahmoud Hojjati has said Iran will continue to rely on imports of corn and barley.
Iran had started the year with five million tonnes of wheat carried over from 2015, when El Nino brought heavy rain and a good harvest, Shamir said.
Shahmir said sugar production would also increase, but Iran would still need imports to meet an expected increase in demand. Iran produces 1.5 million tonnes of sugar a year and imports one million tonnes.
“Iran’s sugar is used in pastry, ice cream, beverages and chocolate, whose consumption is highly dependent on people’s purchasing power,” he said.
“These are products that people would buy more when they have more money.”
