EghtesadOnline: Land under wheat cultivation in Iran has reached 6 million hectares in the current cultivation season (started late September of 2019), according to latest data released by the Agriculture Ministry.
Ali Qoli Imani, the head of National Wheat Farmers Empowerment Foundation, says the Agriculture Ministry’s data show this year 2 million hectares of the grain have been cultivated on irrigated land and 4 million hectares on rain-fed land, Young Journalists Club reported.
This year, land under wheat cultivation almost equals the area that went under cultivation last year, which means production will likely remain the same as last year, according to Financial Tribune.
Previously, officials had warned that due to the small rise in guaranteed purchase prices for wheat, which did not measure up to the annual inflation and didn’t cover production costs, farmers are reluctant to plant the staple food.
“The government’s wheat purchases from local farmers have declined by 3 million tons this year. Therefore, the government decided to import this amount of the staple food to replenish its strategic reserves,” Imani said in November.
Iran bought up to 1 million tons of wheat in recent weeks on international markets, trade sources said in the dying days of 2018.
Suppliers are expected to include Russia and some European Union countries, including Germany, they said.
Two Panamax bulk carriers loaded with Russian wheat will be leaving a major Russian port for Iran next week, a source familiar with the schedule told Reuters.
“I expect the bulk of the 1 million tons to be supplied by Russia and other Black Sea regions,” a trader said.
“About 100,000 tons from Germany could also be supplied, if payment can be sorted out. There are also issues with the levels of bug (insect) damage in Russian wheat.”
Most of the purchases were believed to have been undertaken by Iran’s state purchasing agency the Government Trading Corporation of Iran, with private buying reported from across the Caspian Sea.
“The decrease in purchases is not an indication of decline in production and there is good evidence that farmers have stored the wheat they haven’t sold to the government. Yet, the decision was made, since the government wants to make sure there is enough bread to meet domestic demand. If farmers deliver their stored wheat to state purchase centers, the need for imports will be eliminated,” Imani said.
Last year and after prolonged discussions, the government set the guaranteed price of 17,000 rials (around $0.15) per kilo for local wheat purchases. The price did not, by any means, satisfy farmers since it neither covered their production costs nor their living expenses. Therefore, they abstained from selling all their harvest to the government.
Experts warn that if guaranteed purchase prices remain low and do not rise on par with the annual inflation and rising production costs, farmers will do the same during the next harvest season and the government will face a bigger problem.
Every year, the government buys strategic crops, including wheat, from local farmers at guaranteed prices to regulate prices in the domestic market and fill its strategic reserves.
Imani noted that the government bought around 8 million tons of the grain worth 132 trillion rials ($1.16 billion) during the last wheat cultivation season.
According to Food and Agriculture Organization, Iran is the 11th biggest wheat producer in the world.
Prior to the recent import, Iran had been self sufficient in meeting its domestic demand for wheat since 2016.