GIEWS Country Brief: Iran (Islamic Republic of) 19-February-2016

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  • Favourable conditions for winter grain planting and establishment

  • Above-average wheat crop harvested in 2015

  • Wheat import requirements decreasing in 2015/16

Inflation rates ease

Planting of the 2016 winter grains started in September. Planting of wheat concluded in early November, while that of barley in mid‑January. Weather conditions remained relatively favourable for land preparation and planting. Following a consistently warmer‑than‑normal autumn, below‑normal temperatures in December eased winter wheat and barley toward dormancy across much of western and northern Islamic Republic of Iran. Soil moisture and irrigation reserves remain favourable for winter grain development.

Above-average 2015 wheat crop harvested

The 2015 wheat harvest concluded in mid‑July. Favourable weather conditions prevailed throughout the growing season. The Government estimates the 2015 wheat production at 11.5 million tonnes, 8 percent above the 2014 harvest of 10.6 million tonnes and 16 percent above the five‑year 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 west and 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 10 million tonnes, consisting of maize (5.3 million tonnes), wheat (2.2 million tonnes), barley (1.4 million tonnes) and rice (1.2 million tonnes), about 35 percent less than last year and some 12 percent below the average of the last five years.

At the same time, the Islamic Republic of Iran is emerging as a large wheat flour exporter, accounting for 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 programme reform progressing

The Central Bank has maintained the fixed subsidized rate of about IRR 25 000 (Iranian Rial rates) per US dollar, introduced in early July 2013. Lately, the difference between the official and unofficial market rate is decreasing.

The latest official information available from the Central Bank indicates that in the period from 22 November to 21 December 2015 (Azar 1394), the food and beverages price inflation index stood at 2.2 percent on monthly and 5.3 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 more prudent policy‑making.

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 by 20 percent and subsidized 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).