Reference Date: 29-June-2015
FOOD SECURITY SNAPSHOT
About-average wheat crop forecast in 2015
Wheat import requirements forecast at above‑average levels in 2015/16
Inflation rates ease
Food security situation improves, but vulnerable groups in parts are still a concern
Average 2015 wheat crop forecast
The 2015 wheat harvest started in June and will continue up to mid-July. Favourable weather conditions prevailed throughout the growing season. In the first decade of June, hot and sunny weather promoted the harvest. FAO preliminary forecast puts the 2015 wheat production at 13 million tonnes, similar to 2014, and just slightly below the average.
The Government announced on 20 June 2015 its plans to purchase 8 million tonnes of local wheat, an increase of 1 million tonnes compared to the previous year. The Government plans to decrease reliance on imported wheat over the next four years.
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 the performance of seasonal precipitation. Most of the rainfed wheat crop is concentrated in the northwestern region of the country. Small amounts of rice and maize are also produced in the country.
Cereal imports expected to decrease in 2015/16 compared to last year
Cereal import requirements in 2015/16 (April/March) are forecast at 14.9 million tonnes, consisting of maize (5.3 million tonnes), wheat (6.3 million tonnes), rice (1.6 million tonnes) and barley (1.7 million tonnes), about 8 percent less than last year’s and some 30 percent above the average of the last five years.
At the same time, Iran is emerging as a large wheat flour exporter, exporting about 4 percent of the world total (the largest wheat flour exporters, Turkey and Kazakhstan, supply about 20 percent each). Iranian wheat exports are destined to other countries in the region, mostly Iraq.
Inflation easing, subsidy reform progressing
The Central Bank maintains the fixed subsidised rate of about IRR 25 000 (Iranian Rial Rates) per US dollar introduced in early July 2013. Lately the difference before the official and unofficial market rate is decreasing.
The latest official information available from the Central Bank indicates that in March 2015 the food and beverages price inflation index, stood at 1.3 percent on monthly and 13.1 percent on yearly basis. For comparison, in June 2013 food price inflation was above 50 percent on year-on-year basis. The inflation declined sharply in 2014, following more prudent policymaking.
Facing budgetary concerns, in 2010 the Government attempted to phase out the subsidy programme on fuel, electricity and some commodities and replace them with a cash transfer at IRR 455 000 per person (about USD 37 at the pre‑devaluation rate of IRR 12 260 per USD). The second round of subsidy reforms took place in the spring of 2014, increasing prices of electricity (by 24 percent), water (20 percent) and subsidised petrol (by 72 percent). In May 2015 the Government further increased the price of petrol by about 40 percent to IRR 10 000 (about 0.35 USD), and plans to abolish lower priced 60 litres monthly quota for motorists later in 2015.