Secretary General of Iran Federation of Food Industry Associations Kaveh Zargaran said Tehran is negotiating a wheat import deal with Russia that would allow it to increase flour exports to neighboring Iraq by private sector. The deal would involve importing around 100,000 tonnes of Russian wheat per month.
Iran is holding talks to import 1 million tons of wheat from Russia to export as flour to neighbors Iraq and Afghanistan, Iran Federation of Food Industry Associations Secretary General Kaveh Zargaran said. Iranian flour millers are operating at 50 percent of capacity and are seeking the wheat to boost sales, Zargaran told Reuters. Officials from the Iran Food Confederation and Iran millers met with the Russian agriculture ministry in Moscow last mont to discuss the trade, he said. Iranian official is expecting the deal to be finalised in a couple of months. He reiterated that this contract will empower Iran to increase its flour export volume to the neighboring Iraq
Arkady Zlockevsky, head of Russia’s Grain Union, said the talks were part of broader negotiations about a free trade zone between Iran and Russia. “Russia is ready to start supplies in the nearest days. The question is on the Iranian side and how quickly their firms will manage to adapt to the processing regime, because Iran was not buying our wheat since March 2016”.
Iran is already one of the biggest suppliers of flour to Iraq. Iran’s wheat consumption will be a record 18.35 million metric tons in the 2017-18 marketing year, exceeding domestic production of 15 million tons, according to the U.S. Department of Agriculture. In Iran, wheat imports for domestic use are currently banned to support local farmers.
Iraq’s flour imports are currently dominated by Turkish supplies. “It will be difficult for Iranian flour to compete because of the kind of quality of Turkish flour which the Iraqis are used to, that is why they have to import high-protein Russian wheat in order to make flour that will sell in Iraq,” an industry source told Reuters. “Turkey, the biggest shipper of flour to Iraq, is facing a smaller wheat crop, and the government may lower its import duty on the grain to maintain flour and pasta exports, according to Veysel Kaya, founder of Sunseedman, an Edirne, Turkey-based brokerage and consulting company.
Iraq imports about 3 million tons of flour a year, meeting almost half of its demand of 6.9 million tons a year, according to the Trade Ministry. Two flour mills were authorized to start production for the private sector for the first time since 1990, starting in April, according to Taha Yassin Abbas, general manager of the General Co. for the Manufacture of Grain, which operates the government’s 17 flour mills.