Raisi's Government Defends 15,000 Toman Wheat Purchase Rate; Iraqi Brokers Buy at Double the Price

With the government of Ebrahim Raisi setting the price of 15,000 tomans for purchasing one kilogram of wheat and insisting on this decision, reports indicate that 'Iraqi brokers are entering the Iranian wheat market' and are ready to buy 'wheat from Iranian farmers at a price close to 30,000 tomans.' Meanwhile, Mohammad Soleimani, head of the Stone-Baking Bakers Union, announced a '50 to 60 percent reduction in flour quotas for bakers' to ILNA news agency, stating that they have kept bakers satisfied with 'patience' to continue their operations. According to news agencies and websites, after the price of 15,000 tomans was set for purchasing each kilogram of wheat from farmers on May 7, concerns about wheat supply issues, increased imports of this agricultural product, bread shortages, and potential price hikes have risen. According to Tejarat News, farmers who were forced to sell their produce to the government at 11,500 tomans last year have declared a reasonable price for guaranteed purchases this year to be between 20,000 to 23,000 tomans. Nevertheless, the government of Ebrahim Raisi continues to insist on its announced price for wheat purchases. Among them, Mohammad Aghamiri, head of the Ministry of Jihad Agriculture, said on Tuesday, May 15, that wheat is the basis for pricing 32 goods in Iran and that 'non-expert pricing,' without considering its implications, will lead to price increases in other goods. This government official did not specify which items would become more expensive with the increase in wheat purchase prices. Aghamiri's remarks came at a time when, according to Tejarat News, the government imported each kilogram of wheat last year at prices ranging from 22,000 to 30,000 tomans; significantly higher than the guaranteed purchase price for domestic farmers this year. Additionally, according to 'Eghtesad Online,' a study from the government’s Institute for Trade Studies and Research shows that Iran ranks 'fourth in the world in food inflation.' According to this research, Lebanon, Zimbabwe, Argentina, Iran, and Turkey are the five countries with the worst food inflation rates globally. The institute's research indicates that the most significant factors contributing to high food inflation in recent years are 'climatic change conditions, the COVID-19 pandemic, the effects of the Ukraine-Russia war on grain and oilseed markets,' and also 'the use of some grains and oilseeds for biofuel supply.' The research states that in countries like Iran, Egypt, Lebanon, and others in the Middle East and North Africa, high food inflation is largely due to a severe dependency on imports for essential goods. Meanwhile, despite the government's claims of self-sufficiency in wheat production, price controls that do not compensate production costs for the guaranteed purchase price will lead to either stockpiling or smuggling of produced wheat, forcing the government to import this product at higher costs. In this context, one can refer to the statements of Attaollah Hashemi, head of the National Wheat Farmers Foundation, in an interview with 'Nod Eghtesadi,' who said, 'Iraqi brokers are willing to buy Iranian farmers' wheat at prices close to 30,000 tomans.' Tejarat News also reported that several farmers said, 'These brokers are even willing to sign contracts and pay a deposit, settling payments in cash upon delivery of the product.' According to this report, 'anti-production government policies and the lagging guaranteed purchase price for wheat behind inflation indices' have led farmers to show little willingness to cooperate with the government; some have turned to other jobs, and others have stopped their production altogether. This is while, according to the state news agency IRNA, based on the outlook document, Iran must achieve the first position in West Asia and North Africa in various fields, including agriculture, in the coming years, with wheat holding a special strategic position. In this regard, according to the House of Nation, belonging to the Islamic Consultative Assembly, Jalal Mahmoudzadeh, a member of the Agriculture, Water, Natural Resources, and Environment Commission, said on Tuesday, May 16, that each kilogram of wheat costs farmers about 15,000 tomans to produce, and if cultivating this product is not economically viable for them, they will refrain from planting it again in future years. Additionally, according to the Mehr news agency, some wheat farmers 'are holding onto their wheat and selling it to livestock farms in the fall because barley must be purchased at 20,000 tomans per kilogram; moreover, cultivating wheat at rates lower than 25,000 to 30,000 tomans is not economically justified.' This news agency reported that protesting farmers emphasize that 'to support farmers, products should be purchased in line with inflation and dollar prices and question how the government is willing to subsidize traders to import wheat but is not willing to support its own farmers?' The consequences of the disproportionate situation regarding wheat have led to subsidies being paid to countries like Iraq, flour being rationed for Iranian bakeries, and people in some provinces, including Sistan and Baluchestan, having to wait for hours in line to buy bread. In this context, Jalal Mahmoudzadeh, a member of the Agriculture, Water, Natural Resources, and Environment Commission, pointed out that there is currently a need for at least 11 million tons of wheat, adding that if the consumption of bakeries and fancy bakeries is added to this amount, Iran's need will increase to 13 million tons. He stated that with the price announced by the government, the amount of guaranteed purchases will not reach five million tons, and the country will have to meet its needs by paying several times more from other countries. This is while, according to this parliament representative, Russia has announced that it will not sell wheat, and some European countries are also facing drought. ILNA news agency quoted the head of the Stone-Baking Bakers Union as saying that 'the flour quota for bakers decreases every ten days,' and 'the governorate and no agency' considers itself obligated to respond to bakers. Meanwhile, amid speculation about the potential increase in the prices of various types of bread, the Ministry of Economic Affairs and Finance announced on Tuesday that the government has no plans to increase the price of bread and bakery flour this year. Previously, in past years, various governments have denied price increases, but after a while, the prices of food items, consumer goods, and fuel have risen. Wheat smuggling has intensified, and bakery flour quotas have decreased by 60%; the alarm for 'bread' has sounded. The dispute over the guaranteed purchase price of wheat continues; a parliament representative stated: the pricing council is 'obliged' to hold a meeting. The government's insistence on the approved price and the ongoing opposition from wheat farmers; the meeting to 'reassess the price of wheat' was not held. The government's price: 15,000 tomans for each kilogram of wheat; farmers are not selling. The controversy over bread in Iran; stone-baked bread costs 5,000 tomans in person, 25,000 tomans online. Criticism of Raisi's government pricing for wheat purchases; 'illegal' and 'unjust.'