Reference Date: 26-September-2016
FOOD SECURITY SNAPSHOT
Above-average wheat crop harvested in 2016
Wheat import requirements decreasing in 2016/17
Inflation rates ease
Planting of the 2017 winter wheat starts this month with the arrival of cooler weather and seasonal rains and will continue until early November. Winter barley is usually planted until mid‑January.
Above-average 2016 wheat crop harvested
The 2016 wheat harvest concluded in mid‑July. Favourable weather conditions prevailed throughout the growing season. An estimated 12.5 million tonnes were harvested, 9 percent above the 2015 harvest and 28 percent above the five‑year average. As of mid-August, the Government purchased 10.3 million tonnes of wheat out of the 11 million tonnes goal – an increase of 30 percent 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 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 decrease in 2016/17 compared to last year
Cereal import requirements in 2016/17 (April/March) are forecast at 9.9 million tonnes, consisting of maize (5.3 million tonnes), wheat (2.2 million tonnes), barley (1.4 million tonnes) and rice (1.1 million tonnes), about 18 percent below last year’s imports and the average of the last five years. The Ministry of Agriculture banned state imports of wheat for the current Persian year 1395 (which started on 20 March 2016) on the grounds of satisfactory domestic inventories and ample harvest. 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.
Inflation easing, subsidy programme reform progressing
The latest official information available from the Central Bank indicates that in the period from 22 May to 21 June 2016 (Khordat 1395), the food and beverages price inflation index stood at 2.7 percent on yearly basis. By comparison, in June 2013, the food price inflation was above 50 percent year‑on‑year basis. The inflation declined sharply in 2014, following limited sanction relief based on the Joint Plan of Action from November 2013 and consequent economic recovery.
The official exchange rate stabilized in the first half of 2016, supported by slowing inflation and sharply rising oil exports. The Central Bank is planning to end the current dual exchange rate regime of the market rate and preferential official rate for essential imports by the end of the current Persian year of 1395 (20 March 2017). As of mid-September 2016, USD 1 traded for IRR 31 377 (Iranian Rials).