Week in Brief 17.05.2019

For a week or so canned tuna fish was disappeared from the shelves of several supermarkets. A week later, shelves were full of new cans, with new prices which were doubled.

The same holds for pasta. Until recently, a 180-grams can of tuna fish had a cost of 80 to 10 thousand rials (less than a dollar). Today it costs between 150,000 to 200,000 rials. A 700-gram pack of pasta was previously around 30,000 rials. Now it costs 55,000 rials.

The Minister of Industry and Trade, Reza Rahmanian, explains that the government has increased its purchasing prices for wheat from 9,000 rials a kilogram to 18,500 rials. Every year, the government buys the harvest of wheat producers at a fixed price and then distributes it among the industries. This rise in the wheat price has forced the pasta producers to increase their prices as well.

Mr Rahmani also mentions that the demand for tuna fish at Iranian market is annually 200 thousand tones where half of it has always been imported. The tightening of the US sanctions has made it very difficult to import tuna fish and therefore the shortage in supply has shot the prices up.

The Association of Rice Importers (ARI) warns that the annual ban on the import of rice might cost the low-income families dearly.

Since five years ago, during the period of rice cultivation in Iran, the government has banned the import of rice for five months in order to support the local producers and force the market to purchase more of the Iranian rice.

While many consumers believe that the Iranian rice has definitely a much higher quality with respect to Indian or Pakistani rice, its higher prices make it unaffordable for low-income families.

Currently a kilogram of Iranian rice costs 250,000 rials, while a kilogram of imported rice costs about 80,000 rials.

The Head of ARI, Masih Keshavarz, claims that 50 million people out of 80 million are not able to purchase Iranian rice and if the government is going to ban the import of rice like the last years, prices will be lifted and this part of the society will go under further pressure.

Last year, 2.2 million tons of rice was produced in Iran and 1.5 million tons was imported. According to Iran Chamber of Commerce, annual consumption of rice per capita in Iran is about 40kg. (For the author of this newsletter perhaps around 4kg per year!)

The import of automobile parts has dropped dramatically and the only reason is the return of the US sanctions. The same holds for the export of the auto-parts to neighboring countries as it becomes more difficult to have the raw material needed for manufacturing them.

According to Iran Custom Office, during the first month of the Iranian calendar, Farvardin, the import of automobile parts has decreased nearly 60 per cent with respect to the same period a year ago.

Also the import of cars has dropped; in the month of Farvardin 1398, only 335 cars were cleared at Iranian Custom Offices; while this number a year ago reached 1026 cars. i.e. one-third.

Donyay-e Eghtesad writes that this decrease in import of automobile parts had a direct and heavy impact on the production of the private auto-manufacturers who mainly assembled Chinese cars, where their production has dropped by 92 per cent too.