Wheat crisis in Iran

It seems that Iran's economic problems are going to be widened day to day.

After falling the country's oil export by more than 50 percent, increasing USD rate from 13, 000 rials in the beginning of current year to 3620 rials on Oct.3, the obstacles occurred in transaction of exported oil and non-oil commodities' revenues into country. Now Hadi Ghavami, parliamentary Plan and Budget Committee member says that Iran imported much more than a half of its annual wheat from abroad.

Wheat issue is very sensitive for Iran with 75.2 million people. Fars News Agency quoted Ghavami on Oct.2, saying that Iran imported 7 million tons of its 12 million annual wheat demands during last 6 months (Iranian solar year begins in March 20).

Iran had reached self-confidence in wheat sphere several years ago.

Iranian media outlets reported in June, which is the harvesting period of wheat in Iran, that farmers prefer to sell their harvested wheat to the private sector that pays more for the wheat than the government and sells to poultry and livestock firms, which faced rise of other animal food corps' price and want to feed their animals with cheap wheat.

Now in Iran, barley and Soybean Meal are much cheaper than wheat. Then besides humanitarian consumption, Iran faces increasing animal consumption wheat volume.

According to the Food and Agriculture Organization of the United Nation's (FAO) April report, Iran's wheat production will fall to 13.5 million tons in 2012, compared to 15 million tons in 2010. The country's (only human) wheat consumption is expected to be 14.5 million tons in current year.

FAO's report estimated the country's wheat consumption two months before the abnormal situation of wheat trade in Iran appeared. According to this report, Iran's total cereal production including wheat, barley, rice, etc, for current year would hit 20.123 million tons, while total cereal imports, are forecast to remain high at 7.3 million tons, consisting of maize, wheat and rice.

A half of Iranian solar year has passed. All wheat, rice and barley harvesting period for current year has passed.

Regarding Iran's 7.3 million ton cereal storage capacity, it is unclear what the Iranian government has done with 13.5 million tons of produced wheat, while about 7 million tons have been bought and Iran is talking with Pakistan and India to buy respectively one million and three million tons on wheat in near future.

It is unclear how Iran ensiled this huge amount of wheat. Maybe Iran's poultry and livestock farms have bought a huge amount of domestically produced cheap wheat for feeding animals.

For instance, reportedly, Iranian Qom city's farmers sold 17,000 tons of wheat to the government during the last solar year (started on March 19), but as of the current year they have sold only 1,000 tons of wheat and the rest harvest has been sold to poultry and livestock farms which prefer to feed their animals with cheap wheat instead of barley.

The Iranian ISNA agency also reported in late June, citing the manager and director of the government trading company of Iran Abbas Ghobadi that the government has purchased about two million tons of wheat from farmers so far and the purchases continue. However, ISNA reported that the amount of purchased wheat is "so little" compared to last year.