TEHRAN, IRAN — While Iranian agriculture officials claim the nation is self-sufficient in wheat production, the nation is grappling with soaring prices for bread — a critical part of the Iranian diet — partly due to inflation, increasing demand, and subsidy reforms last spring.
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Table of Contents
Price Surge and Subsidy Reductions
Bread prices increased as much as 40% in some regions, with Iranian television confirming in August price jumps in 13 provinces. In May 2022, the government reduced subsidies for essential food and medicine, causing the price of flour to increase tenfold. This summer, flour allocations to some bakeries had dropped by more than half their quota.
Self-Sufficiency in Wheat Production
Iran’s agricultural minister, Mohammad Ali Nikbakht, said in September that the country is self-sufficient in wheat and will not need to import the grain in the coming year. So far in the first five months of the year (March to August), the state-run Government Trading Corp. (GTC) has purchased 10.3 million tonnes of wheat from domestic farmers.
“We are trying to continue the sustainability of self-sufficiency in wheat production so as not to face problems in unbalanced climatic conditions,” Nikbakht told the Islamic Republic News Agency.
Agriculture’s Significance in Iran
Agriculture is a major economic sector in Iran, providing 11% of gross domestic product and 18% of total employment. It is expected to grow by 4% annually and create 250,000 jobs by 2035, according to McKinsey & Company, a global management consulting firm.
The country is one of the top exporters of agricultural production in the region, partly because many of its neighboring countries lack any agricultural potential. Iran has diverse climate zones along with fertile and abundant soil, but low level and unevenly distributed rainfall means wet winter months are typically followed by long dry summers.
Challenges in Agriculture Sector
While demand is increasing for water, Iran can produce between 80% to 90% of its domestic needs for agricultural goods. Nearly 80% of farmers have land holdings of less than 10 acres with 90% of the sector privately held. However, most of the agricultural output comes from larger farms and is under the control of public or semi-public entities.
Crop Production and Trade
Field crops represent 70% of Iran’s total agricultural production. Total grain production in 2021 reached 17.9 million tonnes, according to the Ministry of Agriculture Jahad. The USDA estimates 2023 production at 20.4 million tonnes.
Wheat is by far Iran’s largest crop with production estimated at 14 million tonnes in 2023, up from 13.2 million tonnes last year, according to the USDA. The use of improved seed varieties over the past five years has boosted the nation’s self-sufficiency in wheat by more than 30%, according to a report from the Tehran Chamber of Commerce, Industry, Mines and Agriculture.
There has been an upward trend in the import and export of agricultural products, according to the Tehran chamber. Iran exported 23.7 million tonnes of agricultural products in 2021 and imported 8.8 million tonnes.
In the nine months prior to March, Iran imported 3.241 million tonnes of wheat, according to the deputy minister of agriculture. In the same period a year earlier, Iran had imported 5.29 million tonnes of wheat.
The Iranian government introduced a new bread program after prices skyrocketed in May 2022, and led to weeks of protests. Under the program, Iranians were issued digital coupons to be used for a limited amount of bread at subsidized prices.
Bakers have said the system has caused many problems, including disruptions in sales when the internet is down and lack of reimbursement by the government.
Despite Iran’s efforts to achieve self-sufficiency in wheat production, the nation faces challenges in stabilizing bread prices due to inflation, demand increases, and subsidy reforms. The Iranian government continues to work towards maintaining self-sufficiency in wheat, which remains a vital component of the Iranian diet. The dynamics of agriculture and wheat trade in the region are also noteworthy, with Iran being a key player.
As the Iranian government seeks to address the rising bread prices and ensure food security, it remains a topic of interest and concern for both domestic and international observers.