Iran’s food industry is under severe stress. Organizations representing food producers and manufacturers report a severe shortage of raw materials as well as cash flow adding that this could lead to the closure of many food-related production units.
Meanwhile, as Iranians are celebrating winter solstice known as Yalda night, citizens are complaining about the rising prices of food items that are famous for consumption on this night: namely pomegranate, watermelon, as well as dried nuts and fruits.
Donya-ye Eghtesad, Iran’s leading economy newspaper has compared the prices of good between Yalda night of 2017 and Yalda night of 2018.
Pomegranate prices saw a 29% increase and were selling for around 10-20 thousand tomans per one kilogram. Red apples saw an increase of almost 78%, watermelon 50%, oranges 40%, baklava and most pastries between 100 to 130%, pistachio, almonds and other nuts between 150 to 215%.
Producers have been pressing the government to issue them permits to further raise prices. However, the rising price of food products rather than remedy the situation has led to a fall in consumption.
While the US sanctions do not directly target transactions involving food, they have affected the Iranian food industry and security. The new round of US economic sanctions on Iran led to a sharp fall in the value of the Iranian Rial which led the government to issue a ban on the import of some commodity items. Part of Iranian oil exports is being paid for in kind.
Rice farmers are demanding that the government stop the import of rice. But the government has not heeded this demand as India is one of Iran’s chief oil customers and they do not want to jeopardize trade relations by limiting the import of Indian rice.
Chairman of the Union of Food Distribution and Sales Cooperatives has raised the alarm about recession in the food industry. Mehdi Karimi states that the rise in the price of imported materials for food production will lead to the elimination of many jobs in this sector. He believes the government can support the industry by providing foreign currency at lower exchange rates to producers and by increasing the areas of arable land.
However, it is questionable whether it is even possible for the Iranian government to increase agricultural land in order to meet its food needs. Iran has been facing a serious water crisis, with many water resources drying out and straining agricultural activities all across the country. The water crisis is making Iran more and more dependent on imported food.
Meanwhile, the fall in the value of the national currency has made the price of imported goods skyrocket, with the Islamic Republic’s Statistics Center announcing an inflation rate of 49.5% on food items in November. This has resulted in a serious reduction in the purchasing power of the people who are clearly opting to cut off many items from their shopping lists.
The new round of US sanctions on Iran kicked in on November 4. The US government has announced that it aims to bring Iran’s export of oil down to zero. They insist that food and drugs are not under sanction. However, it is evident that the adverse effects of the sanctions on the people’s jobs in the food industry and their access to food in the country have been immediate.