Iran Dashes Hopes of Increased Trade with New Import Duty on Wheat

In an act that dashed hopes that a nuclear deal would lead to increased trade with Western powers, Iran has imposed import duties on wheat and barley, according Iranian government documents.

The wheat duty, imposed for the next year, is set at 1,500 rials per kilo, or about $45 to $50 a ton, and makes wheat imports not feasible, commercially, at this point in time. A European trader cited in Hellenic Shipping News said the duties indicate that “…Iran does not have a pressing import need and is in a relaxed enough supply position to support its farmers by reducing imports.”

Another trader indicated that, with the exception of possibly some Russian wheat, imports are unnecessary now due to a strong Iranian harvest but will be likely in later months. For now the Iranian government seems to be protecting its farmers from cheap imports. Because imported wheat is generally $50 a ton cheaper than the price Iranian farmers get from the state purchasing program, the duty should facilitate more local wheat purchases by Iranian flour mills.

Despite being largely self-sufficient in wheat a decade ago, Iran is now one of the world’s biggest wheat importers, importing 6.3 million tons in 2014/15. And while harvests have stagnated around 14.0 million tons annually, the country is expected to reach a record high 18 million tons in 2015/16.

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