Plans for a deal under which Russia and Kazakhstan are to supply wheat to Iran have stalled as “no progress” has been made in its financing, the secretary general of the Iran Federation of Food Industry Associations said. Talks on the deal began six months ago. It would see Russia and Kazakhstan supplying wheat to Iranian flour millers, who in turn would supply flour to Iraq — a market dominated by Turkey. Iranian flour millers are operating at 50 percent of capacity and are seeking the wheat to boost sales. Iraq imports about 3 million tons of flour a year, meeting almost half of its demand of 6.9 million tons a year.
“The Iranian side had its condition – if you would like to realize such agreement, you need to finance it. There has been no progress in this process so far,” Kaveh Zargaran told Reuters on the sidelines of a grains conference in September. Under the deal, Russia would supply around 100,000 tons of wheat per month to Iranian private millers, who are not allowed to use domestic wheat for flour exports. Iran was one of the largest markets for Russian wheat until it slashed purchases in 2016 amid Tehran’s self-sufficiency drive.
Iran’s currency has lost about two-thirds of its value this year. Its already weak economy, troubled by difficulties at local banks, has been hit by the reimposition of US sanctions.“We have agreed with many countries to continue our banking relationship,” Zargaran said when asked if banking channels will remain open for Iran, including its humanitarian needs if any, after early November. “We all have very good friends in the region, which are also under sanctions – Iran, Turkey and Russia,” he added.
Latest data released by the Islamic Republic of Iran Customs Administration show a total of 81,638 tons of wheat flour worth $20.49 million were exported from Iran during the first four months of the current fiscal year (March 21-July 22). Iraq, Afghanistan, Qatar and Germany were the main customers of Iranian wheat flour during the period.
We also suggest you to read our previous article titled "Wheat production in Iraq halved due to water shortages".