2013-03-21 13:37:13 - New Food research report from Business Monitor International is now available from Fast Market Research
BMI View: Financial sanctions imposed to pressure the Iranian government over its nuclear programme are playing havoc with the country's ability to import goods. Food price inflation is soaring, leading to a serious decrease in meat consumption. The replacement of barter for regular trade can be seen as a feasible, albeit temporary, way of circumventing sanctions to meet demand. Over the longer term, we believe that the continued investment by the government in infrastructure - such as the improvement of irrigation systems - will help the country to turn away from its backward agrarian system and will yield results in terms of better-quality grains. We are especially upbeat in our outlook for grains and sugar production. www.fastmr.com/prod/552326_iran_agribusiness_report_q2_2013.aspx
Full Report Details at
* Wheat production growth to 2016/17: 20.0% to 16.2mn tonnes. Wheat yields are expected to improve owing to the modernisation of technology, including hardier grains variants, greater access to relevant inputs and a larger area of the country benefiting from new irrigation facilities.
* Sugar consumption growth to 2017: 5.8% to 2.6mn tonnes. Sugar demand will remain mild and will be mainly driven by population growth.
* Beef and veal production growth to 2016/17: 6.7% to 410,600 tonnes. Once dominated by small holdings, the Iranian sector has begun to commercialise, which is likely to help to improve efficiency and production volumes. Stronger growth could be achieved were it not for the limitations of grazing room and the beef industry's reliance on relatively expensive grain imports.
* BMI universe agribusiness market value: US$11.9bn in 2013 (up 3.4% from 2012; growth forecast to average 1.2% annually between 2012 and 2017).
* 2013 real GDP growth: 0.5% (up from -3.4% in 2012; predicted to average 1.3% from 2012-2017).
* 2013 consumer price inflation: 33.0% year-on-year (y-o-y) (down from 40.0% y-o-y in 2012; predicted to average 23.2% y-o-y from 2012-2017).
Financial sanctions imposed by the US and EU to pressure Tehran over its nuclear programme are playing havoc with Iran's ability to import goods, including food. Food and consumer items are not targeted by sanctions, but the sanctions make deals and payments between traders difficult. Iran defaulted on payments for rice from India, its top supplier, in 2012. As a result, some exporters to Iran have stopped selling rice to the country with the customary 90 days credit for payment. Even payments considered more secure, via agents in the UAE, are being affected due to currency fluctuations. That said, we believe Iran's imports will be relatively unaffected in 2013, as the country is diversifying its providers, with Argentina exporting to Iran again after a 20-year break.
Food inflation has been a major issue in Iran over the past year or so. According to the latest data released by the Central Bank of Iran, headline inflation came in at 28.1% y-o-y in September 2012, mainly driven by food and beverage price inflation, which reached 38.7% y-o-y that month. We believe food price inflation is unlikely to ease given the renewed international sanctions against Iran, the collapse in the value of the rial, and the end of consumption subsidies for various basic food products. Given the fact that Iran imports large amounts of various key commodities, food price inflation is likely to remain elevated in 2013, weighing on consumption growth of meat, dairy and sugar, for example.
Iranian wheat imports are usually handled by the private sector, but the state has decided to step in to aid purchasing. The government's goal is to secure stocks and limit food price inflation in order to avoid public unrest. The Government Trading Corporation of Iran (GTC), which procures, stores and distributes basic stables including grains, flour and sugar, is stepping up activity and is able to import food despite financial sanctions, as shown by the purchase of 1.1mn tonnes of wheat in September 2012. The GTC is contacting traders directly for offers, bypassing the usual method of official tenders. The government has managed to partially get around payment constraints by using currencies other than dollars and euros as alternative trade finance and by using barter deals involving gold or oil.
About Business Monitor International
Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at www.fastmr.com/catalog/publishers.aspx?pubid=1010
About Fast Market Research
Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.
For more information about these or related research reports, please visit our website at www.fastmr.com
or call us at 1.800.844.8156.