Reference Date: 26-June-2017
FOOD SECURITY SNAPSHOT
Above-average wheat crop output forecast in 2017
Wheat import requirements increasing in 2017/18
Inflation rates increase
Above-average 2017 wheat crop to be harvested
Harvesting of the 2017 winter wheat started in June and will continue until mid-July. Remote sensing images indicate a delayed start of the season due to a late onset of the rains in the northwest and centralwest parts of the country, potentially impacting yields. Favourable weather conditions prevailed across the rest of the country, with above-average temperatures towards the end of the season accelerating crop development in central and northern Islamic Republic of Iran.
The 2017 harvest is forecast at levels similar to last year and some 15 percent about the average of the last five years. The Government intends to locally purchase 11 million tonnes of wheat, about the same as last year, to decrease reliance on imported wheat over the next four years. The Government guaranteed purchase prices for the 2017 crop are IRR 13 000 per kg (equivalent to USD 340 per tonne) of common wheat and IRR 13 300 per kg (USD 350 per tonne) of durum wheat.
Wheat and barley are the main crops cultivated in the country. Wheat is the dominant cereal crop, accounting for almost 70 percent of the aggregate cereal production. Irrigated wheat covers only one‑third of the total wheat area, thus the bulk of the wheat crop depends on rainfall. Most of the rainfed wheat crop is concentrated in the west and northwestern regions of the country. Small amounts of rice and maize are also produced in the country. Reports indicate that the Government plans to improve irrigation by introducing modern irrigation systems to 450 000 hectares of farmland.
Cereal imports expected to increase in 2017/18 compared to last year
Cereal import requirements in 2017/18 (April/March) are forecast at 11.3 million tonnes, including maize (8.5 million tonnes), wheat (2 million tonnes), barley (1.2 million tonnes) and rice (1.3 million tonnes), about 9 percent above last year’s imports and 12 percent below the average of the last five years. Importers usually receive foreign exchange at concessionary rates from the Government for imports of basic commodities (considered essential imports). Otherwise, importers use foreign exchange at market prices to finance their purchases.
The latest official information available from the Central Bank indicates that in the period from 20 April 2017 to 20 May 2017 (Farvardin 1396), the food and beverages price inflation index stood at 19.9 percent, on yearly basis, driven by increases in the prices of fresh fruits and vegetables. By comparison, at the same time a year ago, the food price inflation was less than 2 percent year‑on‑year basis. In an effort to keep the annual inflation around 10 percent, the Central Bank is trying to lower the baseline interest rate, currently at 18 percent.
The Central Bank postponed the decision to end the current dual exchange rate regime of the market rate and preferential official rate for essential imports from the end of the Persian year of 1395 (20 March 2017) to February 2018.