May 9, 2020

 

Iran eyes to buy million tonnes of grains

 

 

According to Iranian officials and traders, the country is scrambling to purchase millions of tonnes of wheat, corn and soybeans to shore up its reserves, reported Reuters.

 

President Hassan Rouhani asserted that the new coronavirus would not endanger food supplies to the Middle Eastern country worst hit by the pandemic.

 

Iran's bumper grain crops will guarantee citizens ample staple foods to the end of the Iranian year in March 2021 as the impact of the pandemic has not spread to farming, Rouhani told parliament on April 15.

 

But the previously unreported buying spree highlights concern in Tehran of a possible future supply crunch should the pandemic further exacerbate an already challenging environment for Iran to import from international sellers.

 

The urgency has prompted Iran to alter its approach to buying commodities, seeking out direct contracts—rather than announcing international purchasing tenders—with smaller-sized trading houses.

 

Rouhani's office and the government spokesman's office declined to comment on the issue when contacted by Reuters.

 

Iran needs to import four million tonnes of wheat, 1.5 million tonnes of barley, 700,000 tonnes of raw sugar and four to five million tonnes of corn, in the Iranian year ended March 2021, stated a senior agriculture ministry official, who asked not to be named due to the sensitivity of the matter.

 

"These figures could change because of the outbreak," the source said, explaining that import targets could move downwards if exporters curbed supplies on the back of the virus, making Iran's search for grains even more challenging.

 

Competition for international commodities is heating up as governments move to buy more to shore up their reserves, spurred into action by lockdowns which have slowed supply chains and prompted export curbs.

 

Food, medicine and other humanitarian supplies including animal feed are exempt from US sanctions, re-imposed in 2018 after the US pulled out of Iran's nuclear deal with six world powers, but authorities say the step has nevertheless deterred some foreign banks from doing any Iranian business, including food shipments.

 

The effect of sanctions-related financial hurdles on Iran's food buying capability was clearly demonstrated in late 2019, when at least 20 vessels carrying more than a million tonnes of grains piled outside Iranian ports as payments lingered.

 

Those shipments were proof of Tehran's decreased ability to procure life-line commodities, a political risk to Rouhani and clerical rulers, who face intense pressure from US President Donald Trump to curb Iran's nuclear activities and missile programme.

 

Iran has already faced waves of politically-charged protests against economic mismanagement, rampant corruption and scarce jobs.

 

The Islamic Republic is under rising economic pressure as it remains shut out of international capital markets and faces a further finance troubles with the collapse in oil prices, on top of the US embargo targeting its oil industry.

 

Iran's economy is set to fall deeper into recession this fiscal year and foreign reserves could drop to US$73 billion by March, a loss of almost US$40 billion in two years, the Institute of International Finance said in January.