Hidden costs of Iran's wheat obsession
Tuesday, 23 October 2007
Najmeh Bozorgmehr from Tehran
THE government of Mahmoud Ahmadi-Nejad brags about the Islamic Republic's self-sufficiency in wheat, holding it up as a source of security and a cause for pride.
But while Iran no longer needs to rely on wheat imports, the pursuit of self-sufficiency has had hidden costs, creating shortages in other produce and raising the government's import bill.
The distortions are seen by regime critics as an example of the waste and economic mismanagement that has bedevilled the Iranian economy for decades and has been exacerbated by the policies of the current government.
"The government's agricultural policies and its obsessive focus on wheat while ignoring other products has disrupted the agriculture sector," says Issa Kalantari, former minister of agriculture and now head of the top nationwide farmers union.
It was in 2004, under the previous reformist government of Mohammad Khatami, the moderate president, that Iran first celebrated self-sufficiency in wheat production.
The Khatami government, however, appeared to be pursuing the policy grudgingly, as if to show that Iran could be independent but without ruling out a continuation of imports. By contrast, Mr Ahmadi-Nejad's administration, which has faced escalating tensions over Iran's controversial nuclear programme, has been a vigorous supporter of self-sufficiency, on both nationalist and security grounds.
But as more and more land has been diverted to wheat cultivation - 500,000 hectares on top of the 2.2m hectares that were already in use - the production of cattle feed, cotton, potatoes and grains has suffered, sending prices higher and pushing the government to increase its imports.
"This self-sufficiency (reached in 2004) has been at the cost of other products, like barley, which has lost lands to wheat production," said Mansour Bitaraf, an economic analyst. "This has indirect impacts on other goods like red meat, because barley is also used as cattle feed."
The Iranian regime sees wheat as a strategic commodity and always stores at least three months of consumption, which currently stands at 11.2m tonnes per annum.
Wheat is also highly subsidised in a country where bread and rice constitute a main part of daily food. According to Mr Kalantari, the government buys wheat from farmers at $200 per tonne and sells flour at $50 per tonne to bakers.
Iran's ministry of agriculture was not available for comment. But according to government newspaper reports Iran used to import about 2.2m tonnes of wheat a year, with the purchases reaching a peak during the drought in 1999, when 6.6m tonnes were imported.
Mr Ahmadi-Nejad, however, recently said that thanks to a drop in wheat imports, Iran has saved $4.0bn during the past two and a half years.
Yet, food imports as a whole have doubled to more than $3.1bn during the past Iranian year (ending March) and food supply is now 10 per cent dependent on imports, according to the government, though experts put the figure at 25 per cent.
Moreover, prices of grains and potatoes have gone up by an estimated 200 per cent in the past two years, with potatoes now being imported for the first time.
The ballooning agricultural import bill has sparked controversy in Iran, with economists complaining that the government is bringing in more than is needed. Some experts blame the excessive imports on government mismanagement. Others, however, suspect the policy is deliberate, and suggest the government is storing strategic commodities such as sugar and rice to avoid facing a food crisis if tensions with world powers over the nuclear programme intensify.
FT Syndication Service
THE government of Mahmoud Ahmadi-Nejad brags about the Islamic Republic's self-sufficiency in wheat, holding it up as a source of security and a cause for pride.
But while Iran no longer needs to rely on wheat imports, the pursuit of self-sufficiency has had hidden costs, creating shortages in other produce and raising the government's import bill.
The distortions are seen by regime critics as an example of the waste and economic mismanagement that has bedevilled the Iranian economy for decades and has been exacerbated by the policies of the current government.
"The government's agricultural policies and its obsessive focus on wheat while ignoring other products has disrupted the agriculture sector," says Issa Kalantari, former minister of agriculture and now head of the top nationwide farmers union.
It was in 2004, under the previous reformist government of Mohammad Khatami, the moderate president, that Iran first celebrated self-sufficiency in wheat production.
The Khatami government, however, appeared to be pursuing the policy grudgingly, as if to show that Iran could be independent but without ruling out a continuation of imports. By contrast, Mr Ahmadi-Nejad's administration, which has faced escalating tensions over Iran's controversial nuclear programme, has been a vigorous supporter of self-sufficiency, on both nationalist and security grounds.
But as more and more land has been diverted to wheat cultivation - 500,000 hectares on top of the 2.2m hectares that were already in use - the production of cattle feed, cotton, potatoes and grains has suffered, sending prices higher and pushing the government to increase its imports.
"This self-sufficiency (reached in 2004) has been at the cost of other products, like barley, which has lost lands to wheat production," said Mansour Bitaraf, an economic analyst. "This has indirect impacts on other goods like red meat, because barley is also used as cattle feed."
The Iranian regime sees wheat as a strategic commodity and always stores at least three months of consumption, which currently stands at 11.2m tonnes per annum.
Wheat is also highly subsidised in a country where bread and rice constitute a main part of daily food. According to Mr Kalantari, the government buys wheat from farmers at $200 per tonne and sells flour at $50 per tonne to bakers.
Iran's ministry of agriculture was not available for comment. But according to government newspaper reports Iran used to import about 2.2m tonnes of wheat a year, with the purchases reaching a peak during the drought in 1999, when 6.6m tonnes were imported.
Mr Ahmadi-Nejad, however, recently said that thanks to a drop in wheat imports, Iran has saved $4.0bn during the past two and a half years.
Yet, food imports as a whole have doubled to more than $3.1bn during the past Iranian year (ending March) and food supply is now 10 per cent dependent on imports, according to the government, though experts put the figure at 25 per cent.
Moreover, prices of grains and potatoes have gone up by an estimated 200 per cent in the past two years, with potatoes now being imported for the first time.
The ballooning agricultural import bill has sparked controversy in Iran, with economists complaining that the government is bringing in more than is needed. Some experts blame the excessive imports on government mismanagement. Others, however, suspect the policy is deliberate, and suggest the government is storing strategic commodities such as sugar and rice to avoid facing a food crisis if tensions with world powers over the nuclear programme intensify.
FT Syndication Service