November 19, 2021
by Warren L. Nelson
The Iranian government has announced that it will have to import 8 million metric tons of wheat this year, the largest volume of wheat that Iran has ever imported by far, undermining the regime’s ideological goal of making the country self-sufficient in wheat, the country’s most important food.
Yazdan Seif, the chairman of the Government Trading Corporation, the agency that imports wheat and many other necessities, blamed the need for such hefty imports on the ongoing drought, underscoring the water problem for the many who not believe Iran has a water problem.
Seif pointedly did not say anything about US sanctions. Many officials have been saying for three years that the US sanctions bar Iran from importing either food or medicine, although US sanctions exempt both of those categories and Iran imports both.
Seif said November 3 that Iran has already imported around three million metric tons of wheat since the start of the calendar year in March. He said Iran would need to import another five million tons of wheat until the end of the current calendar year. He said the government had only been able to buy 4.5 tons of domestically-grown wheat by the end of the harvesting season in September. The country consumes 12 million to 14 million tons a year and the government expected to buy 11.5 million tons of domestically-grown wheat this year.
Reports in the media and statements by government sources suggest that Russia has been responsible for the bulk of wheat imported by Iran this year.
The irony of the huge imports is that one of the goals announced by the revolution four decades ago was to make the Islamic Republic self-sufficient in wheat and other necessities. It said that other countries could throttle Iran by refusing to sell it wheat if it did not become self-sufficient. But economists have always said that was nonsense; there are many wheat exporting countries in the world and they could never get together to throttle one country, especially given the lack of support for embargoes on food, including in the United States.
The revolutionaries justified overthrowing the Shah in part because he lost Iran’s self-sufficiency in wheat and started importing large volumes of wheat in the 1970s. This was one of his major failures, the revolutionaries said. But immediately after the revolution, wheat imports soared. In 1983 wheat imports were 3.7 million tons, well over double the 1.5 million tons imported in 1977, the record year for imports under the Shah. In fact, imports never fell below 1.5 million until 2003.
The Islamic Republic has managed to grow enough wheat for its needs in only two years since the revolution, but it still imported wheat in those two years to build up the country’s stocks in anticipation of a wheat crop failure in the near future.
The concept of autarky or self-sufficiency was a common goal in the 19th Century, but 20th Century economists ridiculed it as self-defeating. The accepted philosophy for almost a century has been that each country should emphasize producing that which it can create most efficiently and then import what others can produce more efficiently. In the case of wheat, another issue for Iran is that it consumes water that Iran has little of.
The record wheat imports for Iran prior to this year was 6.8 million tons in 2008. The anticipated imports this year of 8.0 million tons pushes the regime’s dreams of self-sufficiency much further into the future.
But the media hasn’t reported that. News outlets have reported just the simple fact that imports are anticipated to reach 8.0 million tons without mentioning what that means for the revolution’s goal of self-sufficiency.
The problem facing the regime is not just a loss of face for its ideological failure. The price of wheat is also very high right now, so the government will face an added budget crunch from imports. The price of wheat as of November 12 was $8.17 per bushel, a very high figure historically, although not a record. For the last half-century, wheat has normally sold in the range from $2.50 to $6.50 per bushel. But it has spiked above $8 in 2008, 2011, 2012 and this year.
What’s more, prices for other imported foods are rising. Masud Mirkazemi, chief of the Plan & Budget Organization, told the Majlis, “Oil seeds that we were buying for $433 a ton last year now cost $697. Cooking oil that was $746 last year costs $1,460 now.” He said Iran had planned to spend $8 billion on importing essential goods this year, but the price has now jumped to $18 billion—“which is an impossibility for the government.”
The wheat crop problem will make Iran one of the largest importers of wheat in the world this year. At 8.0 million tons, Iran is expected to rank fifth in the world behind Egypt (which is the largest importer almost every year), Turkey, Indonesia and China.
Mohammad-Javad Asgari, vice chair of the Majlis Agriculture Committee, said in July that the country was facing a shortfall not only of wheat but also of such other major crops, such as maize, soybeans and barley and would also have to import more of those crops.
The Raisi Administration is not re-thinking the policy of economic autarky or self-sufficiency. Instead, it is doubling down on it, despite failures. On November 4, just one day after Seif revealed the need for record wheat imports, President Raisi told a news conference, “The most important manifestation of anti-arrogance in the economic field is to achieve economic independence from foreigners and to adopt prosperity strategies and remove barriers to production. Just as military power can create deterrence against arrogance, so that the enemies cannot conspire, at the same time efforts in the economic and agricultural sectors can also contribute to the independence of the country.”
Raisi said, “Today, producers, economic activists, workers and farmers, given how much they try for the independence of the country in the field of production of basic goods, are confronting Arrogance.”