Iran is the only Asian country in the Northern Hemisphere with four seasons, which has led to the best agriculture and livestock production and potentials to export fresh and processed products. Since land and air transit infrastructures are being constructed in Iran and investors can easily export products after processing and receive investment profits. The cultivated areas have grown to 18 mn hectares and there are 20 types of horticultural products which placed Iran between the 7th and 8th rankings in the world. According to FAO, in addition to its food supply, has the potential to supply Persian Gulf countries and there is also 30 to 35% agricultural waste. The agricultural and natural resources sectors account for gaining income and employment, as roughly 90% of the nutrition value and 19% of the employment. The value added of agricultural sector in the year ended March 2017, was estimated at 441,972 bn IRR (14.08 bn USD), at constant prices in 2012, which has increased by 4.2% over the same period of the previous year.
– The increase of agricultural production up to 118 mn tons in the year ended March 2017
– Wheat production self-sufficiency
– About 20% of the total non-oil import is agricultural products
There are 35 mn hectares of usable lands in Iran, 18.7 mn hectares of which are agricultural lands holding 50% share of total lands and 11.5% of total area. Of total agricultural land, 2.3 mn hectares are allocated to the gardens and about 16 mn are arable lands, of which, about 4 mn hectares are not active due to being arid and only about 11.7 mn hectares are used for producing crops. However, about 5 mn hectares are rainfed and about 6.5 mn hectares are irrigated. Despite the 47% rainfed land, the share of this cultivation is less than 10% of total agricultural production.
Over the recent years, agricultural production has had a steady growth, with 21.4% rising from 118.7 mn tons year ended March 2017 compared to the same period in 2014. Arable crops contribute up about 70% of total agricultural production with fisheries and aquaculture share of less than 1% as the smallest agricultural sector.
Consumption & Demand
The annual need for livestock feed is over 9 mn tons, 7 mn tons, 700,000 tons and 5 mn tons for corn, wheat and feed barley. The share of import are 90, 30 and 36%. 90% of livestock and poultry meal are inported. The wheat per capita consumption is 167 kg, which accounts for almost 13.4 mn tons per year, considering 80 mn population., Iran has managed to achieve self-sufficient in the production of 14.6 mn tons of wheat in the year ended March 2017 and there is no need to import this product. The rice per capita consumption is over 50 kg, with an annual consumption of nearly 4 mn tons, which due to 2.4 mn tons the domestic production, 1.7 mn tons inport is required. With regard to per capita consumption of livestock products and compared to domestic production, excluding red meat, Iran is able to provide domestic demand and export livestock and poultry products. With 140,000 tons of surplus production in seafood and fishery, Iran has 10 kg per capita’s consumption in agricultural and food products and achieved self-sufficiency in most agricultural strategic products. Livestock and poultry feed call for import of approximately 70%.
Export & Import
Agriculture has a major share of non-oil export and agricultural crops both in export and import. In recent years, agricultural export accounted for about 13% of non-oil export. (excluding gas condensate).
Horticulture and subdivisions contributed to more than 37.3% of total agricultural export from April to September 2017. The major share of export is dedicated to crops with 29.22% and livestock and poultry with 25.05%. The main export products include pistachio, nuts, fresh fruits, animal products, saffron, raisin, potato, date and aquatic products.
Iraq as the main export destination accounted for 22% of agricultural products in the year ended March 2017.
More than 14.96% of total agricultural import was dedicated to horticultural products, from April to September 2017. Crops and livestock and poultry had the major share of agricultural import with 74.37% and 8.73%. Three major imported products are comprised of feed corn, soybean and rice.
In previous years, wheat has been one of the main imported products, but since March 2016, following the self-sufficiency, Iran had almost no import. In late 2011, the order registration for this product was prohibited at government currency rate and imported only via free currency or import-for-export.
Agricultural commodities constituted 16.71% of Iran’s total foreign trade in in the year ended March 2017. In recent years, foreign trade balance has always suffered a negative level in the agricultural sector. Despite the emphasis on self-sufficiency, agricultural import is considered as the most important sector. The export and import of agricultural products were 1.7 bn USD and 4.7 bn USD, respectively from April to August 2017.
Roughly, 11.7 mn hectares of arable lands are cultivated crops, among which the grains are the main products and over 72% of the total cultivation areas are grains-related crops. Grains only account for 27% of total crop yield, despite that highest level of cultivation areas are related to these products and forage crops own the highest yield, after cereals.
Although having more than 50% of the cultivated areas, wheat possesses only 17.5% of the total crop production.
Wheat production and guaranteed purchase increased from 2013 to 2017 and once again wheat self-sufficiency was experienced, producing 14.5 mn tons and purchasing 11.5 mn tons by government, however import became more limited in the year ended March 2017.
Iran’s horticultural fertility level was 2.39 mn hectares, with the contribution of fertile levels of 10.1% pome, 9.5%, drupe, 12.5% small seed, 28.26% dried, 0.8% cold, 28.6% subtropical, 0.4% tropical and 0.3% greenhouse fruits in the year ended March 2017. Horticultural products were 21 mn tons in the year ended March 2017. Subtropical fruits had the highest volume with 38% of total production.
Iran holds the world total production of saffron about 94%. Despite the significant contribution of Iran to global saffron production, statistics indicate that the average yield of in the year ended March 2017 was 3.2 kg per hectare, which, in this regard, has significant difference with other countries.
Livestock & poultry
Milk and white meat with 68.7% and 14.7% had the largest amount of livestock products in the year ended March 2017.
With over 1 mn tons of aquaculture production, this sector has risen over the past years.
Supportive policies & regulated market in agribusiness
Agricultural products supply, foodstuff and import management have been much considered to balance the total food supply and demand to support domestic production and create strategic reserves by introducing the products to the market, appropriate regulations and tariffs, seasonal import restrictions and support producers in harvesting season. In addition, it is aimed to sustain the production and producers share of market margins, reducing, production costs and eliminate parallelism and mercantilism; support production and services with emphasis on value chains (from farm to table). The following measures have been taken in order to support the agricultural sector and optimize the market:
- Tax exemption as a supportive policy to exempt this sector from VAT exemptions and direct taxes of all agricultural items.
- Guaranteed purchase and pricing as supportive policies will encourage more farmers to continue operations and have self-sufficiency. Guaranteed purchases of non-essential products are subject to acceptance of suitable crop patterns by farmers and producers.
- Tariffs on agricultural import as well as tariff exemptions on import of inputs, agricultural sector.
Import and export control of agricultural products are not limited to tariff restrictions and the government imposes nontariff barriers and restrictions on the basis of the conditions and the amount of production in different years. According to the customs procedures, the export of fruits and vegetables will be carried out after the beginning in November of 2017, only with approved packaging. It will also be possible to carry land and sea cargo to destinations in the buyer’s countries with only refrigerated containers and boats.
Mechanization rate was 1.41 in the year ended March 2016. Both combine and tractor manufacturing had a growth rate of 81.3% and 23.2%, respectively in the year ended March 2017 in comparison with the previous year.
- Diversity in agricultural activities (agriculture, horticulture, animal husbandry and fisheries) and related products
- Agricultural priority in national programs by food security
- Arable Lands
- The potential of natural resources such as medicinal plants, industrial, food and forage production
- The relative advantage of horticultural products
- The lack of development in affiliated and related industries
- Lack of flexible infrastructures to achieve sustainability
- Extreme waste in agriculture and lack of comprehensive management
- Lack of proper use of fertilizers and the mismatch between the chemical, biological and organic fertilizer patterns in the agricultural process
- Low return and high risk of investment in the agricultural sector and inability to compete with other sectors
- Increased desertification and reduced biological power
- Traditional agriculture and low mechanization rate
- Lack of diversity in aquaculture species
- Proximity to export markets such as Iraq, Afghanistan and the Gulf States
- Ability to develop aquaculture and fishing in southern and international waters
- Adequate capacities in mechanization development and conversion and complementary industries
- Reduction the quantity and quality of planned water resources for agricultural use
- Informal and retail markets through official channels led to reduction in effective flow of agricultural products and financial investment.
- Change of agricultural land use
- Increase of soil and water resources pollution
Investment advantages & incentives
- Iran has the highest rankings in many agricultural products which can be a significant factor for the capital owners and increased job opportunities and ranks from 1st to 9th in 35 agricultural products in the world, as being the 1st producer in pistachio, saffron and caviar and 2nd in cucurbits and 3rd in dates.
- The proceeds of all activities of agriculture, animal husbandry, livestock breeding, fish farming and honey beekeeping and poultry raising, fishing, sericulture, reviving pasture and forest, garden, or any kind of land are exempted from taxation and all natural and legal persons (Iranian and non-Iranians) can benefit from the exemption from the beginning of the activity.
- Proceeds from the export of agricultural products, including crops, horticulture, livestock and poultry, fisheries, forest and rangelands and conversion and supplementary industries are exempt from taxes by 100%.
- Agriculture and animal husbandry provide the best opportunity to invest in Iran, because there is a volume of almost 120 mn tons of crops and livestock, in addition to high quality and has unique diversity in conversion and complementary industries. Tax and customs exemptions for the re-export of processed agricultural and animal products have provided incentives to attract investors.
- Iran has a four seasons climate, this has led to the best agricultural and livestock products. Given the proximity to Iraq and Afghanistan and Gulf regional states which lack agricultural potential, the existence of land and air transit infrastructures in Iran has enabled foreign investors to export products after processing and receive investment profits in foreign currency.
- Agricultural export have been important in non-oil sector during recent years, as raw and unprocessed products constitute the major part.
- Processing is among the industries that have a great influence on the agricultural sector. Considering the lack of significant expansion of processing industries in agricultural sector and the policy of the Ministry of Agricultural Jihad toward the processing of agricultural products, processing and complementary industries can be considered as one of the significant investment opportunities.
- Iran is known as a unique and unrivaled producer of saffron in world markets and there are significant capacities to benefit from these conditions, but unfortunately, these products are exported traditionally with the least value added. Spain, due to advanced technologies, cultivates the product 6.5 kg per hectare, while this is 3.8 kg per hectare with less value added than its rivals due to the sale of this product in crude and unprocessed form. Therefore, applying advanced technologies and packaging as well as processing technologies can be good opportunities for foreign investors.
– Production of hybrid maize
– Cultivation of oil seeds
– Vegetable processing and packaging
– Choline chloride Plant (Poultry Feed Supplement) from corn grain
– Project of glucose and starch from corn
– Hybrid maize seeds production
– Construction of maize seeds hybrids processing plant
– Construction of cotton gin advanced equipment production plant
– Organic production
– Cultivation of medicinal plants and related industrial
– Production of edible mushrooms and mushroom processing industry
– Horticultural mechanization machinery
– Pre-cooling device for grapes and strawberries
– Pistachio automatic sorting machine and pasteurization equipment
– Furnishing and optimization of milk collection centers
– Optimization of dairy cattle breeding equipment
– Production of milking machinery and equipment
– Laboratory analysis of milk equipment projects
– Sperm production centers projects (AI)
– The equipment to produce breeder (broilers and layers)
– Incubator equipment projects
– The slaughter of broilers equipment project
– Livestock and poultry feed equipment projects
– Dairy cattle nourishment
– Animal husbandry centers
– Production of veterinary drugs
Conversion & processing industries
– Rating, drying, packaging, processing, freezing, fruits dry powder
– Pasteurization and sterilization projects of Pistachio, nuts and raisin processing
– Dairy products equipment includes sterilized milk, ice cream, milk powder and cheese
– Industrial poultry and slaughterhouse livestock slaughter house projects (Advanced)
– Canned aquatic production projects with modern processing and packaging, e.g. sardines, shrimp etc.
– New technology industry of fish oil and powder projects
– Modern industry of aquatic feed processing projects
– Olive-oil projects
– Leather production
– Pharmaceuticals process from fish oil
– Essence and aromatic substances production by using effective medicinal plants
– Production of extracts from medicinal plants
– Sorting, grading and packaging of saffron projects
– Two-circuit cooling
– Aquaculture nourishing
– Construction and equipping caviar centers for the production of meat and caviar
– The construction and equipping of marine fishery
– Aquaculture feed and its raw materials projects
– The construction of fishing ships and equipment
Agricultural industry in Capital Market
Agriculture and livestock shares traded as agricultural group and related services. Latest P / E ratio is 14.37.