Reference Date: 20-November-2013
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 north-western region of the country. Small amounts of rice and maize are also produced in the country.
Above average wheat production forecast in 2013
Planting of the 2014 wheat crop is just completed, while planting of barley is still underway. In the main rainfed cropping areas in the northwest, drier than normal conditions in October were followed by abundant precipitation in November, which improved soil moisture and favoured the establishment of crops, before the dormancy period in winter.
Harvesting of 2013 wheat crop was completed last August. The final production estimates are not yet available; however, preliminary forecasts indicate a 2013 wheat production of about 14 million tonnes, slightly exceeding the already above average harvest in 2012.
In June 2013, the Central Bank of Iran allocated IRR 70 trillion (USD 5.7 billion) for buying wheat from domestic farmers. The Government increased the guaranteed purchase price of wheat from IRR 7 200 to IRR 8 000. As of mid August 2013, about 4.3 million tonnes of wheat were purchased domestically by the state trading institution.
Cereal imports expected to decline in 2013/14 compared to last year but would still remain high
Total cereal imports, mainly consisting of maize (4 million tonnes), wheat (4 million tonnes), rice (1.5 million tonnes) and barley (1.2 million tonnes) are forecast at 11 million tonnes in 2013/14 (April/March), about 25 percent less than last year’s high levels but still 8 percent above the average of the last five years.
The forecast wheat imports, at about 4 million tonnes, are one-third less than last year, mainly due to higher carryover stocks following large purchases in 2012.
Iran’s state grain buyer continues to build its strategic stocks in light of concerns about domestic food security.
Sharp currency devaluation raises concern for food security and inflation
Although the Rial (the local currency) has been experiencing devaluation since 2011, in early July 2013 the Central Bank devalued the national currency’s fixed subsidised rate from IRR 12 260 for USD 1 to IRR 24 779. This sharp devaluation of the Rial contributed to increased concerns about inflationary pressures and food security by limiting the purchasing power of the population, especially of the poor. The Rial depreciation is tied to international sanctions and lower oil exports. The energy sector provides about 80 percent of the total export revenue.
Facing budgetary concerns, the Government attempted to phase out the subsidy programme on fuel, electricity and some commodities and replace them with a cash transfer, currently at IRR 455 000 per person (about USD 37 at the pre-devaluation rate of IRR 12 260 per US dollar).
The latest official information available from the Central Bank indicates that in September 2013 the food and beverages price inflation index increased by 2 percent from the previous month and was 51 percent higher than 12 months earlier.