Iran to Export 2 Million Metric Tons of Wheat, Minister Says

Iran plans to export 2 million metric tons of wheat in the current Iranian calendar year after a cut in government subsidies reduced domestic consumption of the grain, Economy and Finance Minister Shamseddin Hosseini said today in an interview.

Iran had no wheat exports in the previous year and forecasts an increase in output beyond the 15 million metric tons produced last year, he said without giving an amount.

"Our agricultural sector will experience a better situation," Hosseini said in Jeddah, Saudi Arabia, where he was attending the annual meeting of the Islamic Development Bank. "We increased the price of wheat 30 times. Previously, lots of wheat and flour was destroyed and wasted in the country" or was smuggled out, he said.

Iran is grappling with international economic and financial sanctions over its nuclear development and the implementation of a five-year program that began in December to phase out energy and food subsidies.

Iran is targeting economic growth of 6 percent in the Iranian year that began March 21, he said. Inflation will continue to accelerate until November, from 14.2 percent last month, though there are no immediate plans to further reduce the subsidies for consumers, he said. Non-oil exports will increase, he said.

`Forecast Is Real'
"The forecast is real, yet cautionary," and includes the impact of oil on the economy, he said. He said crude prices are "definitely" going to move higher in 2012, staying above $100 a barrel. Non-oil exports will continue to grow, Hosseini said. Iran is the second-largest producer in the Organization of Petroleum Exporting Countries.

Iran will import goods totaling $65 billion this year, Hosseini said, without giving details or the previous year's figure.

In April, the International Monetary Fund estimated that Iran's average inflation will accelerate to 22.5 percent in 2011 from 12.5 percent last year. The IMF has predicted zero economic growth for Iran this year compared with 1 percent in 2010.

`Much-Needed Reform'
"Growth in 2011 is expected to stall temporarily as subsidies for energy and other products are phased out -- a much-needed reform that will yield benefits in the medium term," the IMF wrote in its World Economic Outlook.

Iran's domestic wheat consumption is expected to drop to 6.4 million tons in the current Iranian year from 8.7 million the previous year, following a cut in subsidies in December, the Donya-e-Eqtesad newspaper reported last month, citing Deputy Commerce Minister Hamid Alikhani.

The government paid some 40 trillion rials ($3.7 billion) a year in bread subsidies, Alikhani said, according to the Tehran- based newspaper. The start of a five-year plan to phase out subsidies including on wheat will increase competitiveness in flour and bread production and reduce bread waste, he said.

Source: BLOOMBERG