کسب و کار کشاورزی درایران-سه ماهه چهارم2011

BMI View: The government's announcement of a reduction in its food subsidies should have a relatively wide impact on domestic consumption and production. On the demand side, ending government food subsidies will result in price increases for basic food items such as bread, triggering slumps in domestic demand. On the supply side, food producers such as milk farmers will most likely find it difficult to sustain levels of production, as the government has stopped purchasing their products at higher prices than markets. Therefore, even though we see the country as a good place to invest in agricultural production owing to its relatively low yields, large arable land space and the government's intention to eventually expand the sugar sector, we see multiple challenges for the country's sector in the coming years. Indeed, with sanctions in place and potentially more on the way, Iran will struggle to meet even its most basic food needs over our forecast period.

Key Forecasts

Rice production growth to 2015: 15.1% to 1.7mn tonnes. Demand growth and forecast shortterm increases in global prices will encourage some domestic rice farmers to try to compete with imports. The government has been making some attempts to restrict imports through tariffs, but political wrangling appears to be scuttling any significant progress.

Corn consumption growth to 2015: 17.6% to 6.6mn tonnes. This will come mainly from the growth of the livestock sector and the growth of domestic meat consumption, as the percentage of corn production used for human consumption is very low.

Poultry production growth to 2015: 16.7% to 1.9mn tonnes. Poultry production will grow as feed prices moderate in coming years and domestic demand for meat, especially chicken, increases.

2011 real GDP growth: 1.2% (compared to 1.6% in 2011; predicted to average 2.0% from
2010 until 2015).

Food price inflation: 25.3% y-o-y in April 2011 (down from 13.8% y-o-y in March 2010).

Industry Developments

Sugar from Pakistan is being smuggled into neighbouring states owing to the low retail price for sugar in the country (at PKR75/kg) compared with Iran (PKR110/kg) and Afghanistan (PKR105/kg). While the smuggling of sugar into Iran increases supply on the country's domestic market, thus reducing the need for imports, it also discourages Iran's farmers from boosting domestic sugar production. The price difference for sugar in the three countries is due to higher food price inflation in Iran, as the government gave up on food price subsidies for products such as bread and sugar.

Dairy producers have launched protests against the government's subsidy reform plan in front of the Iranian Ministry of Commerce. The Iranian government used to pay a subsidy to milk producers, purchasing 2mn litres of their products at a higher price than the market. However, the government unilaterally stopped paying this subsidy at the beginning of 2011, leaving milk producers short. This, combined with severe droughts in the country, has resulted in milk production falling by almost 30% since the start of 2010/11, according to industry sources. We maintain our forecast for Iranian milk production to increase 0.9% to 8.0mn tonnes in 2010/11 but see downside risks to that forecast.

Rice farmers in Iran mainly use traditional methods of cultivation in the absence of larger-scale mechanised methods of production. The government has been active in the local rice market, exercising control over production and imports so as to control prices. However, the government's involvement is not viewed as sufficient to incentivize producers; consequently, the country's import dependency continues to grow. Import tariffs are used to prevent cheaper rice inflows from completely flooding the local market and wiping out the domestic production industry. Yet with Iran reliant on imports and with rice an important staple, the government must balance these tariffs with the need to keep rice affordable without having to dramatically increase subsidy spending.