EghtesadOnline: Iran’s private sector representatives and members of Tehran Chamber of Commerce, Industries, Mines and Agriculture held a meeting on Sunday with a visiting Russian delegation from the Chamber of Commerce and Industry of the Republic of North Ossetia–Alania to discuss expansion of grain trade between Iran and Russia.
The meeting was held at the TCCIM headquarters, the chamber’s website reported.
The Russian delegation was headed by CCI President of the Republic of North Ossetia–Alania, Kazbek Tuganov. He was accompanied by managing directors of several local companies operating in the field of grain production.
Agricultural, food and livestock products accounted for 74% of Iran's overall exports to Russia in 2018. These products accounted for 65% of Russia's total exports to Iran, according to Financial Tribune.
Statistics provided by the Islamic Republic of Iran's Customs Administration show Iran traded 2.67 million tons on non-oil commodities worth $1.62 billion with Russia during the past fiscal year (ended March 20), registering a 41.48% and 59.13% growth in tonnage and value respectively compared with the year before.
Exports to Russia amounted to 499,802 tons worth $280.53 million to register a 4.07% and 4.07% decline in tonnage and value respectively year-on-year.
Russia was Iran’s 14th export destination in the whole world during the year.
In return, Russia exported 2.17 million tons of commodities worth $1.34 billion to Iran, up by 59.39% and 84.52% in tonnage and value respectively YOY.
Russia was the eighth exporter of goods to Iran in the world last year.
Major Iranian commodities exported to Russia were kiwi, tomatoes, apples and pistachios.
Russia mainly exported nuclear reactor parts, sunflower oil, field corn and barley to Iran.
The Republic of North Ossetia–Alania is a federal subject of Russia. The agricultural sector of the region is varied and specializes in the cultivation of wheat, corn and sunflowers; horticulture; viticulture; and cattle and sheep breeding.
Trilateral Wheat Deal
The ministries of agriculture of Russia, Kazakhstan and Iran concluded a trilateral memorandum of understanding on the issue of wheat trade in February.
The agreement was the result of negotiations on a temporary agreement leading to the formation of a free trade zone between the Eurasian Economic Union and Iran.
Veronika Nikishina, trade minister of the Eurasian Economic Commission, was quoted as saying that the signing of a memorandum between Russia and Kazakhstan—key suppliers of wheat to the world market—and Iran will be the first step toward the revival of full supply chains of high-quality wheat from EEU to Iran and the whole region.
"We need to consider this event in the context of preparations for the entry into force of the interim agreement signed in May 2018," she said. "We are convinced that cooperation with Iranian partners is promising and ready to continue the dialogue in various directions of trade and economic cooperation. In this regard, we look forward to the imminent completion of the procedures for the ratification of the agreement from both the EEU member countries and Iran."
Iranian President Hassan Rouhani signed into law the agreement on establishing a free trade zone between Iran and Eurasian Economic Union last month.
Iran and EEU are looking to substantially increase trade, as the two sides signed a three-year provisional agreement on May 17, 2018, for the bloc to welcome Iran into EEU. The arrangement is the first step in implementing free trade between Iran and the five members of the union. It lowers or abolishes customs duties, setting off a three-year process for a permanent trade agreement.
In accordance with the memorandum, wheat from Russia and Kazakhstan will be supplied to Iran without customs duties and other fees equivalent to it.
In addition, Iran will allow the transit of wheat through its territory and support the import of wheat as part of the implementation of the swap contracts. It will also ensure that existing or future bans, and restrictions on the use, marketing, supply and sale of wheat to Iran will not apply to wheat temporarily imported into Iranian territory for processing and export.
For its part, the Russian and Kazakh sides will support the development of a mechanism for providing credit lines to Iranian buyers for buying wheat from the Russian Federation and Kazakhstan, and guaranteeing that the wheat delivered to Iran meets its sanitary and phytosanitary requirements.
Parties to the agreement plan to create a joint tripartite working group that will address issues related to the supply of wheat in accordance with the memorandum. It is assumed that the group will meet at least once a year. The memorandum has been designed for five years.
According to Kazakhstan’s Deputy Minister of Agriculture Gulmira Isaeva, the republic has the opportunity this year to supply 500,000 to 1 million tons of wheat to Iran.
In March 2016, Iran imposed a ban on the import of wheat; in subsequent years, deliveries were made only on certain permits and individual contracts.
Prior to this, according to the data of Rusagrotrans JSC, in 2014-15 of the agricultural year, Russia supplied 1.7 million tons of wheat from Iran’s total imports to 6.3 million tons, in 2015-16 1.4 million tons out of 3.5 million tons. In the 2017-18 agricultural year, exports decreased to 131,000 tons from 200,000 tons.