An outcome that spurs food trade
Aug. 11, 2015
For a deal that is frequently described by both its friends and foes as the most important international negotiation of this era to have come this far without much, if any, attention to its implications for food and agriculture may actually neglect one of the major consequences along this tortuous path. Of course, the reference here is to the so-called nuclear deal with Iran. So far as agriculture is concerned, one of the benefits promised Iran is easing the longtime embargo on food trade with Europe and the United States. Assuming the deal receives the blessing of Congress, which is questionable, then it may be possible to open trade where in return for Iranian caviar and similar delicacies, America would be among suppliers of wheat to a country that at times has been a major importer.
Such a possibility is clouded by the same questions the deal itself will have to face to gain approval. Yet, opening Iran’s wheat purchases, which are estimated near a recent low of 2 million tonnes this season and have been as high as 6 million tonnes, is a positive coming to a global market where American wheat has not been priced competitively. Indeed, there is scant reason to think U.S. wheat would replace supplies that have come from such nations not limited by embargo as Russia, Kazakhstan and Ukraine. Russia has been Iran’s “friend” in negotiation of the nuclear deal.
Prior to ruling out any effect from having Iran as an important force in global wheat trade with a potential for influencing the price of wheat flour in mid-America, it is helpful to look at that nation’s domestic food situation. First, Iran has a population near to 80 million, more than double Iraq’s size and three times Saudi Arabia. It is a fast-growing population with a quarter of the total younger than 15 years of age. Adult literacy, at 85%, is among the world’s highest. Urban dwellers account for 70%. Its economy has been largely driven by oil production, creating the buildup of foreign reserves to near $150 billion that have been blocked by the embargo and would be released if the nuclear deal takes effect.
No facts are more meaningful for understanding Iran’s food situation and its global potential than the total domination of the Islamic revolution and the existence of desert covering huge swaths of the nation’s land. Reflecting the desert, which has been expanding as urbanization grows, hardly 10% of the country’s land is now arable. Food availability in Iran closely matches Muslim religious practices, with no public sale of alcohol. Like most Arab countries, bread is central to the diet, with annual consumption of 9 million tonnes of bread-making wheat and 2 million tonnes of durum for pasta.
A modern flour milling industry provides the main ingredient used by Iran’s bakers producing a range of products. It was fairly recently that Iran first joined the ranks of countries that import wheat while also engaging in flour exporting. According to the International Grains Council, Iran in 2015-16 will export 950,000 tonnes of flour in wheat equivalent on top of 800,000 the year before when it started large flour shipments. At the pace indicated for this crop season, Iran is the fourth largest shipper, with its outgo surpassed only by Turkey, Kazakhstan and the European Union. Its flour outgo this year is more than three times prospective U.S. shipments.
Even in guiding one of many nations striving for self-sufficiency in food production, Iran’s leaders have sought to spur farmers to pursue advanced biodiversity built on sustainable development. Less input-intensive practices are favored and praise is heaped on climate-smart agriculture. In pressing for such a course, Iran is following a path that may conceivably include open and fair trading. Doing that at the same time the nuclear race shrinks is a wonderful outcome for what presently appears hugely difficult.