May 5, 2012


Iran, Pakistan wheat discussions end



Discussions of Iran and Pakistan over the wheat price have ended in a one-million-tonne barter deal to get round Western sanctions against Tehran, a senior Pakistani commerce ministry official involved in the negotiations said on Wednesday (May 2).


Talks held in Tehran ground to a halt when Iran offered US$265 per tonne for the wheat but Pakistan was asking for international pricing of US$312 per tonne, the official told Reuters, requesting anonymity.


"We told them that the minimum rate in the international market is US$277 per tonne, and our private exporters are sending their wheat at around US$312 per tonne," he said. "So US$265 was unworkable. That's where we were deadlocked."


In March, Pakistan agreed to export one million tonnes of wheat to Iran in a barter deal as Western sanctions over Tehran's nuclear programme squeeze its ability to pay for food imports.


Food shipments are not targeted under the sanctions, but Iranian companies have been cut off from much of the global banking system because of the financial measures against Tehran, making payments difficult and discouraging traders.


Tehran has ordered a large part of its expected yearly requirement in the past two months - around two million tonnes of wheat from various sources - paying prices over world market levels to get around sanctions and prevent unrest.


Tehran also started talks about major wheat barter deals with India and Pakistan but progress has been slow.


"We finally decided that we're going to go back to our respective governments and see what kind of flexibility we have on pricing," the commerce official said. "The Iranians will look into going above US$265 and we'll see if it's possible to lower our end."

If the two sides reach agreement, Pakistan would receive around 600,000 tonnes of urea and 200,000 tonnes of iron ore.


The official said he didn't know about the rates the Iranians wanted to offer on ore and urea because they had no mandate to negotiate prices.


Apart from Pakistan, Iran has approached India, and purchased wheat from Russia, Germany, Canada, Brazil and Australia to build up stocks.


US sanctions are targeting Iran's oil trade and central bank to pressure Tehran to shut down its nuclear programme, which Iran says is for peaceful purposes.


A US advisory group said in February that the sanctions are squeezing Iran's oil exports even before they take effect in June.