Iran Agribusiness Report Q2 2010 – New Market Report Published

In Our Iran Agribusiness Report for Q210, we take a closer look at
production of wheat, the country’s staple grain. In 2008/09, wheat
production plunged by a third following the drought of 2008. The outlook
for 2009/10 is far brighter. There has been improved rainfall in much
of the country, particularly the northern regions where most of wheat is
grown on rain-fed land. However, it is not all good news. Drought has
persisted in parts of the country and reservoir levels are still well
below historic averages. Consequently, while output growth of 19.7%
year-on-year is forecast, we do expect wheat production to remain low
compared to the levels seen before the drought.

The Iranian grain
sector is highly regulated. Producers receive subsidised access to
input costs such as fertiliser and pesticides, as well as a guaranteed
support price for their crops. Wheat is then sold to consumers at
heavily subsidised rates. Despite the government aid, farmers often
complain that the support price is too low for them to turn an
acceptable profit. The considerable investment in input support has also
allowed inefficient farmers to continue producing wheat when other
activities would have been a better use of capital and labour. This has
inhibited the development of larger, more efficient farms and drained
funds that could have been used to further boost infrastructure,… >>>

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