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Kazakhstan & Russia Halt to Supply Iran with Wheat

Monday 10 September 2018

ALMATY (IrTAK) — Plans for the deal, within which Kazakhstan and Russia should supply wheat to Iran, have stalled because of problems with financing this line, the Iranian Telegraph Agency (IrTAK) reports.

As noted, the deal, negotiations on which began six months ago, involves the delivery of wheat to Iranian flour producers by Kazakhstan and Russia, which, in turn, will deliver flour to Iraq, to the market where Turkey now dominates.

“The Iranian side had its own condition — if you want to implement such an agreement, you need to finance it. So far, there has been no progress in this process”, the secretary of the Iranian Food Manufacturers Association, Kavé Zargaryan, said, quoted by Reuters at the margins of a conference in Moscow this week.

In particular, within the framework of this deal, Russia should supply about 100,000 tons of wheat per month to Iranian private flour producers who are not allowed to use domestic wheat for flour exports.

Iran was one of the largest markets for Russian wheat, has not yet reduced purchases in 2016 amid its self-sufficiency in production, recalls Iran.ru. “If there were funding, a significant number of Iranian flour producers would be interested in working on this scheme. At the moment, only those millers who regularly export flour to Iraq are interested in this”, K. Zargaryan said.

According to IrTA, Iran’s private flour mills asked for 180,000 tons of wheat as part of supplies from Kazakhstan and Russia in 2018, but so far only 80,000 tons have been delivered. Z. Zargaryan specified that Iran has enough wheat harvested inside the country to cover its needs until next year. ‘We import wheat only for export of flour. This is temporary importation. Imports of wheat for real use are suspended’, he added.

According to K. Zargaryan, Brazil recently offered a $1.2 bln credit line for the development of trade with Iran, and “Russia can also do the same for Iran, since such financing is very common in the world.” “We have agreed with many countries to continue our banking relations”, Z. Zargaryan said, answering the question whether the banking channels for Iran, including for humanitarian needs, will remain open after the beginning of November.

The latest data released by the Iranian Customs Administration shows that during the first 4 months of the current 1397 Iranian fiscal year (March 21-July 22, 2018), a total of 81,638 tons of wheat flour was exported from Iran for a total of $20.49 mln The main consumers of Iranian wheat flour in this period were Iraq, Afghanistan, Qatar and Germany.

On March 4, 2018 Kazakhstan, Russia and Iran signed a memorandum on wheat trade, providing for its supply at the level of 1.5 mln tons. At the same time Iran has established only 3 variants of import of wheat from Kazakhstan and Russia: swap operations, transit and temporary importation. However, Russian and Kazakhstani traders are hoping for a predictable drought in Iran, which can open this market. The opening of the Iranian market will increase the supply of Kazakh wheat from 500,000 tons to 1 mln tons per year.

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