August 19, 2016
The Islamic Republic announced last week that for the first time in many years it will be exporting wheat this year.
It did not mention that it announced the very same thing last year, but did not actually export any wheat then.
The government also did not say whether it would be selling the exported wheat for less than it costs Iran to grow it. Wheat is an expensive crop for Iran to grow and economists say the land should be used to grow more valuable crops and wheat imported.
But wheat is a very political issue in the Islamic Republic. At the time of the revolution, the Shah was accused of making Iran dependent on imports—and thus dependent on crafty foreigners who might threaten to starve Iran if it didn’t do as they demanded.
So, the revolution pledged to make Iran self-reliant in all major foods. It has failed to that. And that has been a huge embarrassment.
Last Wednesday, Hassan Abbasi-Maroufan, the deputy chief of the Government Trading Corp., the regime’s food importing agency, told the Mehr news agency that wheat production was booming in Iran this year and “we will be looking to export the [surplus] crop to regional markets.”
He said the government had so far bought 10.283 million tons of wheat and it was expected the total crop would reach 12 million tons this year.
He also predicted that Iran would become self-sufficient in sugar within three years. Officials regularly make predictions about self-sufficiency in this crop or that.
Officials last year said Iran bought 8.08 million tons of wheat from local farmers that year, 1.4 million tons more than the previous year. In announcing that, Ali Ghanbari, the deputy agriculture minister, said on the Government Trading Corp.’s website that durum wheat, used to make pasta, would be exported for the first time in years.
“Despite a decrease in rain, thanks to the motivation of farmers and the support given to them, an additional 1.4 million tons of wheat was purchased compared to last year,” Ghanbari said one year ago. The “support” given to them was mainly the high price the government paid them to grow more wheat.
The export announcements last year and this year are not so much a sign of success as of failure. While the regime wants very much to be self-sufficient in wheat for ideological reasons, the crop is expensive to produce and agricultural scientists have urged that much wheat land be used for other crops.
Wheat prices in Chicago, the global benchmark, dropped 17 percent last year with global production exceeding consumption for a third consecutive year. Almost all commodities—like oil, for example—are seeing depressed prices these days.
The Islamic Republic is desperate for ideological reasons to end wheat imports, even though economists say that using more land for wheat means there is less land for other agricultural products and Iran must then import those crops.
The Rohani Administration came into office in 2013 with many agricultural officials dedicated to fighting the ideologues and reducing wheat production. They have clearly lost.
Often the regime just fudges the facts. Last September, the Agriculture Ministry announced that Iran had imported no wheat that Persian year and would buy none in the remaining months. But only weeks earlier, the Reuters news agency reported binge buying of wheat by Iran.
In 2004, the Khatami Administration loudly proclaimed its success in making Iran self-sufficient in wheat production and the country did not import wheat in 2005. But that self-sufficiency only lasted one year before wheat imports had to be resumed—and such imports have continued every year, at least until now.
In 2014, the government announced a new goal: reducing its dependence on imported wheat over the next three years. Deputy Agricultural Minister Abbas Keshavarz said that by the end of President Rohani’s current term in August 2017, Iran would only be importing 5 percent to 10 percent of its wheat needs.
Keshavarz did not say the Islamic Republic was dropping its ideological goal of self-sufficiency. But he did not state that to be a goal, as previous governments have done, and thus implied the regime was abandoning a goal that most economists see as harmful to Iran.
Furthermore, in a response to the water challenge, Agriculture Minister Mahmud Hojati last year said the government would shrink the land devoted to wheat cultivation by 900,000 hectares over the next decade and devote that land to crops that require less water. That can only make the country more dependent on wheat imports.
Wheat is the dominant cereal in the country, accounting for almost 70 percent of total cereal production. Irrigated wheat covers only one-third of the total wheat area, thus the bulk of the wheat crop depends on seasonal precipitation. Most of the rainfed wheat crop is concentrated in the northwest.
A major problem for Iran’s shortage of wheat was the Ahmadi-nejad Administration’s refusal to pay market rate to farmers. As a result, there was a huge industry in shipping wheat to neighboring countries where it often sold for a third more than in Iran. In September 2013, one month after taking office, the new Rohani Administration boosted payments to farmers from 8,000 rials per kilo to 10,500, a 31 percent hike that helped to keep more wheat on the domestic market.
In non-drought years, Iran produces up to 14 million tons of wheat a year and needs about 13 million tons. But drought, which has been the norm in the last decade, has knocked output way down, usually well below 12 million.
As for imports, Iran bought 6 million tons of wheat in 2008, a bad drought year, making it the world’s largest wheat importer that year.
Most years, import quantities are much smaller, but they still make mincemeat of Iran’s proclaimed goal of becoming self-sufficient in wheat production after a half-century of dependency on imports.
In August 2011, the Ahmadi-nejad government proclaimed the country was self-sufficient in wheat and would actually be exporting 2 million tons that year.
But the United Nations reported that Iran was importing wheat that year even while it was telling its people it was self-sufficient. The UN Food and Agricultural Organization (FAO) said Iran imported 1.3 million tons of wheat that year, up from 1.2 million tons the previous year.
Back in the 1970s, the revolutionaries condemned the regime of the Shah for importing wheat and allowing foreigners to throttle Iran because of its dependency. But there have now been more years of wheat imports under the revolutionary regime than under the monarchy.
In 2007, Issa Kalantari, who had been agriculture minister under Khatami, said the Ahmadi-nejad Administration’s drive to make Iran self-sufficient in wheat was cutting the production of potatoes and other foods, driving up their prices and actually requiring more imports.
Kalantari said Ahmadi-nejad’s “obsessive” drive for autarky was self-defeating. He said that as more and more land was diverted to wheat cultivation, the production of cattle feed, cotton, potatoes and other grains suffered, sending prices higher and requiring more imports of those goods.
Mansur Bitaraf, an agricultural economist, told the Financial Times Deutschland, “This [wheat] self-sufficiency drive has been at the cost of other products, like barley, which has lost lands to wheat production. This has indirect impacts on other foods like red meat, because barley is also used as cattle feed.” While the self-sufficiency drive began many years ago and is an ideological lodestar for the revolutionary regime, the Financial Times Deutschland said administrations before Ahmadi-nejad’s “appeared to be pursuing the policy grudgingly” in recognition of the dangers.
But the Ahmadi-nejad Administration set the Agriculture Ministry at full speed ahead on autarky—and not just in wheat.
In 2006, Agriculture Minister Mohammad-Reza Eskandari said Iran would become self-sufficient in red meat in 2006, in barley in 2007, in maize and rice by 2009, in sugar by 2010, in vegetable oils by 2011. None of that happened. (And, as mentioned above, Abbasi-Maroufan, last week pledged self-sufficiency in sugar by 2019.)
In January 2006, Supreme Leader Ali Khamenehi pressed farm leaders to make Iran self-sufficient in—all foods so the Islamic Republic is not subject to pressure from “bullies.”
“Today, when our country is the subject of ill will and vindictiveness from the bullies of the world,… the country needs to have food security—for its bread, for its daily food, for its cooking oil, for its meat—not to be dependent on other countries, not to be dependent on those who can demand its honor in exchange for these goods.”
Khamenehi said that under the Shah other countries, unnamed, tried to make Iran dependent on them for food in order to have markets for their wheat and other products.
Many agricultural specialists say self-sufficiency in most agricultural fields is not even a reasonable goal for Iran given its frequent droughts and erratic climatic conditions. Economists also almost universally scoff at autarky as an economic principle discredited centuries ago. They stress inter-dependence with countries exporting those goods for which they have a natural advantage and importing those goods for which others have a natural advantage.
The United States barred all exports to Iran, including food briefly, in the mid-1990s, but soon lifted the food ban. As a practical matter, economists say, food embargoes are meaningless because too many countries produce food for export; if Country A stops wheat sales to Country Z, then Countries B thru J will swiftly line up to supply Country Z, so that Khamenehi’s horrific vision is not logical.
Despite that, autarky has a popular appeal with citizens in many countries—including the United States, although officials in the United States do not advocate autarky and just brush off its vocal advocates.