TEHRAN: Iran’s wheat imports are expected to slow in coming months after a spate of buying boosted stockpiles of food commodities, with buyers now waiting for the outcome of Tehran’s nuclear talks, a leading Iranian flour miller said.
Towards the end of last year Iran went on a major buying spree, snapping up over half a million tonnes of wheat from world markets.
Buying extended into the early part of this year, but has tailed off in recent months.
“There will be lower imports because they have a lot of stocks and we do not know how the (nuclear) negotiations will go,” Merzad Jamshidi, chief executive of privately-owned Khousheh Fars Flour Mills, a major wheat processor, said.
“They have been boosting reserves of every major food item. So, the imports will be lower – maybe, 3 million tonnes of wheat imports (into March 2016),” he told Reuters on the sidelines of a conference in London this week.
Jamshidi estimated Iran imported about 5 million tonnes of wheat in the Iranian fiscal year to March 2015.
The International Grains Council (IGC) estimated Iran’s domestic wheat production in the 2015-16 year at 13.8 million tonnes versus 13.0 million tonnes in 2014-15. The IGC estimated wheat imports in 2015-16 at 6 million tonnes, at the same level from 2014-15.
Iran and six world powers are seeking to overcome remaining differences with a looming self-imposed June 30 deadline to reach a deal over Tehran’s disputed nuclear programme. The timing of sanctions relief for Iran are among the disputes holding up an accord.
Jamshidi said there was still uncertainty over the nuclear talks and prospects for trade. “Everybody is hopeful but no one is sure.”
Iran was never barred from buying food under Western sanctions over its disputed nuclear programme, but EU and U.S. sanctions have made trade more difficult by hindering payments and ocean shipping.
“Everything to do with Iran is problematic,” Jamshidi said. “A lot of banks and companies simply decided to walk away.”
KFF Mills, which is located in Fars province, has about 4,000 customers across Iran ranging from bakeries to restaurants. Despite expectation for lower overall imports into Iran, the firm expected to buy more foreign wheat to blend with local wheat.
“We have a shortage of water, which is a huge problem in Iran,” Jamshidi said. “We think the best way to feed this mill is to concentrate on imports rather than local wheat.”
Jamshidi said KFF Mills had boosted flour milling capacity.
“We will do about 800 tonnes a day, which works out at 250,000 tonnes of flour a year. Previously it was 120,000 tonnes of flour,” he said.
Jamshidi said there were over 300 licenced mills in Iran and the government subsidised the sector to ensure stable supplies. Subsidies will be removed gradually.
“A lot of the mills are running under capacity because they get huge protection and leverage from the government,” he said.
“We think when the government lets go of this protection system, there will be real competition.”
