Food: Most Powerful Industry in Iran’s Private Sector

Date: 11 August 2024 - 21:43

News ID: ۱۳۰۳۳۹

TEHRAN - The food industry is the biggest non-oil industry in Iran, with an annual turnover of around 100 billion dollars. It is also the biggest job provider among the industries, accounting for 16.8% of the total industrial jobs.
There exist 15,000 active production units in the food and processing industry in Iran, which makes it the third largest industry after oil and petrochemicals with a potential to supply an assortment of products to the domestic and export markets.
The food industry is the most important economic sector managed by the private sector where more than 80% of the country’s economy is in the hands of the government.
The history of Iran’s food exports goes back to 3,000 years ago. The sector is developed and advanced, where Iran’s 2025 Vision has set a production capacity target of more than 300 million tonnes.
Iran produces about 83% of its annual food needs domestically. While the country has been going through one of the fastest-growing urbanization processes in the world, the agricultural sector, accounting for 12.2% of the gross domestic product, is still playing an important role in the economy of the country.
The export of food industry products is one of the pillars of non-oil exports due to the existing potentials in the country and certain advantages such as higher added value and job creation.
Over the past decade, Iran’s food exports have increased more than 10-fold to over $10 billion, constituting 11% of the overall added value in the country’s industry.
Wheat and rice are two of the most important nutrition data-x-items in Iran’s food basket and the country produces a significant portion of the two staples.
Up to 99% of the food production is managed by the private sector, but the sector is entirely run and regulated by the government which decides everything from production requirements to determining the guaranteed purchase rate of agricultural products and import tariffs.
With Iran being subject to the harsh sanctions in recent years, Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei has proposed a resistance economy plan.
A resistance economy in the field of food security includes efforts to create a sustainable food and nutrition supply system with the cooperation of all development sectors and maximum use of the country’s capacities with the aim of producing sufficient and healthy food and reducing waste in the sector and supporting agriculture by consuming local foods.
Despite climate change fallout and the sanctions’ stranglehold, Iran’s agriculture showed resilience and relatively favorable overall economic performance in 2023.
One promising area was the state purchases from farmers at guaranteed prices, where 10.5 million tonnes of the strategic crop was bought across the country thanks to the implementation of a plan provide farmers with fertilizers, pesticides and technical services.
Self-sufficiency in strategic agricultural products such as wheat is a cornerstone of Iran’s economic policy. The achievement was snapped in 2020 during the administration of former president Hassan Rouhani when Iran imported more than 3 million tonnes of wheat at a cost of $3.8 billion.
Wheat is Iran’s most important crop, accounting for about half of its cultivated acreage and 70 percent of its grain output. The country consumes around 15.5 million tonnes of wheat a year, but supplies vary over years due to erratic domestic production.
Iran has a huge capacity to produce agricultural products and basic goods due to its vast land. While water shortage is a major challenge, experts believe a leap in agricultural production is possible with conservation and application of new methods in irrigation and water and soil protection.
The key hurdle is the existence of elements in the executive body, obstinately opposed to Iran’s self-sufficiency drive which they believe drains the country’s resources.
They are also doggedly opposed to indigenous agriculture and support imports, including genetically modified foods.
In recent years, Iranian media have extensively reported on irregular imports at the expense of domestic production by those who have a monopoly in the market and access to foreign currency at the lower government rate that has created an unofficial black market and a new generation of nouveau riche.