EghtesadOnline: First Vice President Es’haq Jahangiri said a total of 122 million tons of goods were handled at Iranian ports during the first 10 months of the current fiscal year (March 20-Jan. 19).
Speaking during a visit to Imam Khomeini Port in the southern Khuzestan Province, Jahangiri didn’t say how the volume of throughput fared compared with last year’s corresponding period, Fars News Agency reported on Saturday.
A total of 9.13 million tons of goods were loaded and unloaded at Iranian ports in the ninth month of the current Iranian year (Nov. 21-Dec. 20, 2020), indicating an 18.8% decline compared with the same month of the year before, Tasnim News Agency cited the Ports and Maritime Organization of Iran as reporting.
Loading and unloading of essential goods, however, increased by 23.4% during the month under review to stand at 1.84 million tons.
Those of metals increased by 21.2%, while those of construction materials and minerals decreased 17.5%, machinery 35.8%, fertilizers and chemicals 28.4%, leather 9.4%, containerized cargo 85.98% and petroleum products 4.6% year-on-year.
Jahangiri described Imam Khomeini as “one of the most important ports of Iran and the main hub of essential goods imports”.
Imam Khomeini Port recently saw the inauguration and ground-breaking ceremonies for 18 investment and development projects worth a total of 15.79 trillion rials ($65 million).
The inauguration was attended by Minister of Roads and Urban Development Mohammad Eslami and CEO of the Ports and Maritime Organization of Iran Mohammad Rastad.
Among the most important inaugurated projects were four multipurpose warehouses, oil product reservoirs and a mechanized grain terminal.
Two projects for the construction of edible oil refineries also came on stream.
Other projects were the overhauling of some of the wharfs and railroads inside Imam Khomeini Port premises, dredging operations, fixing breakwaters and providing proper lighting for the port’s launchers.
Close to 90% of Iran’s demand for livestock feed raw material, as well as 79% of grains, are imported through this southern port.
Last year (March 2019-20), the port handled nearly 15.7 million tons of essential goods.
Director General of Khuzestan Province’s Ports and Maritime Organization Adel Deris has told IRNA that Imam Khomeini Port enjoys 40 wharfs, 140 kilometers of railroads within its premises and is equipped with the latest loading and unloading facilities.
In the last fiscal year (March 2019-20), 3 million tons of goods were transported from this port via 53,000 wagons.
Also known as necessity goods, essential goods are products consumers will buy, regardless of changes in income levels.
“A total of 4 million tons of essential goods were imported to Iran during the 10 months to Jan. 19,” Amir Talebi, an official with Government Trading Corporation of Iran, said.
“Since the beginning of the current Iranian year [March 20], 194 vessels carrying essential goods docked and unloaded at ports of the country. Imam Khomeini Port located in the southern Khuzestan Province accounted for 45% of imports, Bandar Abbas, a southern port city in Hormozgan Province, constituted 31%, and Chabahar in Iran's southeastern province of Sistan-Baluchestan, accounted for 17% of total imports; the remaining volume entered the country via northern ports,” he was quoted as saying by IRNA recently.
Commission Votes for Raising Subsidy Rate
Majlis Joint Commission recently decided to change the exchange rate for imports of essential goods from 42,000 rials to 175,000 rials per dollar, suggesting that the prices of essential imports would be set in accordance with exchange rates of the so-called secondary FX market, known by its Persian name Nima.
The real market price of the dollar is about 60% higher.
According to Rahim Zare’, the spokesperson of commission, the move aims at unifying the exchange rates and preventing the supply of imports at free market rate by importers as well as fighting corrupt and rent-seeking practices.
“Importers used to sell their products at prices determined by the free market despite the government’s allocation of subsidized forex at the rate of 42,000 rials per US dollar,” he was quoted as saying by IRNA.
The government’s revenues are projected to increase by 400 trillion rials ($1.6 billion), provided that the commission’s proposal is approved by the parliament during its open sessions.
Majlis Joint Commission, composed of representatives of all specialized parliamentary commissions, is responsible for reviewing budget bills as well as five-year development plans proposed by the government before they are put to a vote by MPs.
Overall Decline in Imports of Essential Goods
Despite the rise in imports of essential goods in the month under First Vice President Es’haq Jahangiri, their overall imports, except for corn, have seen decline this year compared with last year, Domestic Commerce Commission of Iran Chamber of Commerce, Industries, Mines and Agriculture reported, citing figures released by the Central Bank of Iran.
Over nine months to Dec. 20, the central bank paid less than $4.42 billion at the exchange rate of 42,000 rials per US dollar for provision of essential goods, registering a 41% decline compared with the corresponding period of last year, Ashraf Mortezaei, an expert with the commission, said.
“Order registration for imports of essential goods stood at $12.24 billion during the nine-month period, posting a 17% year-on-year decline. Since the beginning of the Iranian year [March 20] to Dec. 20, a total of $9.25 billion have been allocated to essential goods, which is $500 million less than last year’s similar period.”
The official noted that the value of discharged essential goods stood at $6.23 billion in the nine months to Dec. 20, indicating a 30% drop compared with $8.9 billion of the last year’s same period.
On five essential goods that have the highest impact on households’ livelihoods, namely corn, soybean meal, unprocessed oil, oilseeds and barley, Mortezaei said these items accounted for half the value of subsidized currency allocated to imports of essential goods during the period, which shows a 5% decrease YOY.
“The government planned to allocate $6.4 billion to import these five items during the fiscal 2020-21. By Dec. 20, a total of $4.75 billion were allocated and $4.3 billion were paid, showing that the government has to pay the remaining sum of $2.1 billion by March 20, 2021,” Otaghiranonline.ir quoted her as saying.
According to the official, over $3.08 billion were provided for importing corn, soybean meal and barley in the nine-month period, showing a 14% YOY decline.
“Prices of raw oil and oilseeds and, accordingly, vegetable oils saw between 15-25% growth in the current year. Over the last nine months, 702,000 tons of raw oil worth $559 million were discharged from customs. Imports of oilseeds stood at 1.7 million tons worth $807 million, indicating a 15% rise in weight but a 7% decline in value YOY. Altogether, customs clearance of oilseeds and raw oil imports indicates a decline of 22% in weight and 7% in value YOY,” he said.
According to members of Domestic Commerce Commission of ICCIMA, challenges facing the supply of essential goods in the next year (March 2021-22) include government intervention, misguided policies regarding market regulation, hurdles in the way of timely allocation of foreign exchange, lack of transparency about the country’s strategic reserves, barriers facing transfer of currency, inflation and decrease in demand due to the shrinkage in people’s purchasing power, and problems regarding production as a result of the burgeoning money supply.
As per the budget bill for the next fiscal year (March 2021-22), the government will provide $8 billion for provision of essential goods. But the correlation between the sum of allocated forex and the exchange rate has not been stated and the budget fails to indicate how long the government would keep the cheap imports policy.
On the other hand, there is not enough transparency regarding subsidized forex allocation and pricing. The level of essential goods reserves by March 20, 2021, and the next year has not been specified.
Imports of essential goods and market regulation policies, as well as the government’s policies, to protect and promote the economic wellbeing of households are ambiguous.
Kaveh Zargaran, chairman of the commission and secretary of the Federation of Iranian Food Associations, believes that the government is likely to rid itself of subsidized import policy completely by the end of the current fiscal year (March 20), given Industries Minister Alireza Razm-Hosseini’s approach.
“As such, prices will increase to some extent and demand will decline and a relative recession will come eventually. Food and related industries are likely to experience a relative recession by the end of the year and the beginning of the new Iranian year,” he said.
“The flow of imports has all but stopped by the importers of raw materials and essential goods who are unwilling to take risks, given the pressure of sanctions and the state of government’s budget and the central bank.”
The industries minister recently said that as the representatives of producers and economic operators, the Ministry of Industries, Mining and Trade is looking for a unified foreign currency exchange rate and expects the parliament to take a revolutionary decision in this regard.
“A total of 17.46 million tons of essential goods worth $8.76 billion were discharged from Iranian customs during nine months to Dec. 20,” said Rouhollah Latifi, the spokesperson of the Islamic Republic of Iran Customs Administration.
“Overall imports stood at over 25 million tons during the same period, of which 70% were categorized in 25 groups of essential goods,” he added.
A total of $26.8 billion worth of goods were imported into Iran during the period.
“Five essential items, namely corn, barley, oilseeds, raw oils and soybean meal, were subsidized imports weighing 12.29 million tons worth $4.14 billion. They accounted for 49% of the country’s overall imports and 70.5% of overall essential goods imports in terms of weight,” he was quoted as saying by IRNA.
Corn imports stood at 7.24 million tons worth $1.77 billion during the period under review. It was the top subsidized imported commodity both in terms of weight and value.
It was followed by 1.84 million tons of oilseeds worth $949.75 million, 756,121 tons of raw oils worth $627.86 million, 1.1 million tons of soybean meal worth $461.74 million and 1.34 million tons of barley worth $326.83 million.
Among other essential goods imported during the period were pharmaceuticals and medical equipment worth $1.23 billion, rice worth $707.87 million, wheat worth $696.51 million, raw sugar worth $357.23 million, manufacturing machinery worth $327.27 million, dried tea worth $221.18 million, heavy duty tires worth $206.24 million and paper pulp worth $144.25 million.
According to the official, publication paper worth $142.6 million; fertilizers worth $123.78 million; pulses worth $111.36 million; frozen red meat worth $104.73 million; technical pesticides worth $58.43 million; livestock pharmaceuticals worth $47.02 million; butter worth $38.47 million; fresh red meat worth $28.61 million; print paper worth $3.79 million; and chicken worth $203,408 were the rest of essential imports during the period under review.
March 20-Dec. 20 imports of essential goods indicate a 2% decline in weight compared with the same period of last year, Latifi said, “During the one-month period to Dec. 20, over 2.13 million tons of these goods were imported to the country, which is nearly 200,000 tons more than the current year’s monthly average and 450,000 tons more than the previous month [ended Nov. 20].”