Food industry

Iran’s food industry is one of the oldest industries in Iran, which has historically been mainly managed by the private sector, and therefore has a higher degree of competitiveness than other mainly state-owned industries. Industries active in this field have equipped themselves with the latest technologies in the world to compete harder with competitors.

The peak of acceleration of the establishment of food industry factories in its modern form, like many other industries in the country, goes back to the wave of modernization and urbanization in Iran, ie the first and second Pahlavi era, because in this period traditional food production methods no longer meet the needs of citizens. The requirements of urban life were not in line, so the spread of modernization in Iran caused investors to follow the advanced patterns in Western countries and due to the country’s high potential in agricultural production to build food factories in different parts of the country.

Although the construction of many Iranian food factories, which are still among the most successful and large factories in the country, dates back to the 40s and 50s, but in the decades after the Islamic Revolution due to policies aimed at independence and reducing dependence on Western countries, imports Food products were widely restricted to the country, many food industry factories were established in the country during this period, and previous factories were able to expand their activities and in addition to meeting the needs of Iran’s growing population, export their products to other countries.

However, the continuation of this policy and focus on the domestic market with the aim of independence and cutting dependence on foreign countries and not paying enough attention to exports in recent years has accompanied the growing trend of the country’s food industry with challenges that we will discuss later.

High value-added employment

The latest statistics published by the Statistics Center of Iran on active industrial workshops in the country in 1394 show that there are 2,540 food industrial workshops with 10 employees and more active in the country, which have added 144,000 billion rials to the Iranian economy. , Which accounts for more than 12% of the value added of the entire industrial sector.

Industries such as the production of animal and vegetable fats and oils, the production of dairy products, the production of cereals and legumes, the processing and protection of fruits and vegetables from corruption, the production of sugar and the production of bread and biscuits, among the food industries with the highest added value It is located. The number of employees in Iran’s food industry has increased from 166 thousand people in 1385 with a significant growth of 30% to more than 216 thousand people in 94, while the number of people employed in the entire industrial sector of Iran in this period has increased by 18%.

Statistics show that the largest share of employment among the various sectors of the country’s food industry is allocated to the production of dairy products, as these industries have played a share of more than 48,000 people in creating employment in the country’s food industry. Sugar industries, production of bread, sweets, biscuits and cakes, processing and protection of fruits and vegetables from corruption, slaughter of livestock and poultry, flour industry, production of animal and vegetable oils and fats, and processing and protection of meat and meat products, respectively. They are in the next ranks of job creation in Iran’s food industry.

Iran’s food industry accounts for 17% of the employment of the industrial sector, which will definitely increase considering agricultural chains, food transportation, distribution and market. The number of workshops active in the country’s food industry, however, like the number of workshops in the entire industry in the period 1384 to 1394 has decreased and has increased from 2,682 industrial workshops to 2,540 workshops.

Production capacity of Iran’s food industry
Despite this aggregation of statistics related to production capacity in the country’s food industry shows that investment in the Iranian food industry has reached a capacity of at least 150 million tons for this industry, which unfortunately due to lack of planning and attention to production capacity in agriculture in The country and the amount of waste in this sector, about half of this capacity has remained unused and empty, which has become one of the challenges of the Iranian food industry over the past years and has affected the productivity of this job-creating industry. The experience of food producing and exporting countries in the world shows the investment and focus of these countries on strengthening the food industry with the aim of increasing productivity, production and export of higher value-added products.

For example, Turkey has become the largest exporter of flour in the world today with the extensive transit of wheat from countries such as Russia. And higher employment to be considered.

2.5 times the growth of exports
Despite high vacancies, however, Iran’s food industry in recent years has been able to experience significant growth in exports, so that the value of exports of this industry from 1 billion and 24 million in 1387 with a growth of 175 percent to 2 billion and 824 million dollars per year. It has risen in 2017, which indicates an increase of more than 2.5 times the export value of the products of this industry.

A look at Iran’s customs export statistics shows that dairy products, sweets and chocolates and biscuits, tomato paste, saffron, juice and concentrate, animal feed, poultry and aquaculture and pasta have often been the main export products of Iran’s food industry during this period. Iran’s food industry products are exported to more than 120 countries, with neighboring countries, Central Asia, the Persian Gulf and European countries such as Spain, Germany and Poland being the main export destinations of the industry’s products.

But it is noteworthy that according to the latest statistics, more than half of the country’s agricultural and food exports are to Iraq, Afghanistan and the United Arab Emirates, which shows the failure of the Iranian food industry to gain a higher share of other countries’ markets and over-focus on markets. Neighboring countries are expected to continue to focus on the markets of neighboring countries due to the return of sanctions to the country.

In terms of imports, but as mentioned before, according to the policies pursued by the government, the country’s food imports are mainly limited to basic goods whose domestic production does not meet domestic needs and consumption, such as rice, corn. Livestock, soybeans, meat, barley, soybean meal and vegetable oil are among the major food imports, which were given 4,200 tomans in government dollars after the return of economic sanctions last year.

According to the latest analysis of the National Center for Strategic Studies of the Iranian Chamber of Commerce, the import of agricultural and food products last year amounted to 20 million 485 thousand tons of agricultural products and food industry worth 10 billion 841 million dollars, which is 25% of imports Has occupied the country. The point is that more than 90% of the value of the country’s food imports is allocated to the basic goods of corn, rice, oilseeds, vegetable oil, soybeans, barley and various fruits. Of course, the government has eliminated the government currency for importing goods such as red meat, butter, beans and tea, and these goods should be imported in half currency.

Food security in terms of international indicators
The issue of food security is one of the most important and strategic issues that is especially important during the period of economic sanctions, as the supply of basic goods has become a priority in government programs during the contraction of foreign exchange earnings. One of the most important international indicators in the study of food safety is the Global Food Safety Index (GFSI), which looks at issues beyond hunger in food security and in addition to food availability, affordability and product quality; Three indicators that can be affected by economic sanctions.

The sharp rise in the exchange rate in the early days of last year has led to a decline in purchasing power and demand for food. According to the latest statistics of the Central Bank of Iran from the urban household budget survey in Iran in 2016, the share of urban household food expenditures in total urban household expenditures was about 23%, which is certainly due to the average increase of more than 100% food prices and no increase in household income. Proportionately, the share of food costs in the total expenditures of Iranian households has also increased significantly. Not only has this posed a threat to household food security, but it has also challenged the Iranian food industry to reduce demand.

The availability of food is also one of the indicators of food security that was faced with risks during the period of economic sanctions due to factors such as reverse smuggling of food abroad and the challenges of supplying raw materials, the overcoming of which requires the adoption of macro policies It is an economy with long-term approaches and considering all the effects and aspects of these policies.

Iran’s competitive advantages
The existence of rich natural resources is one of the most important competitive advantages of the Iranian food industry; 51 million hectares of arable land, variety of crops, horticulture and fisheries, climate diversity and young labor are among the undeniable advantages of the food industry in the country. Iran’s growing population, especially in the 1960s and 1970s, has created a large consumer market of 80 million people for this industry, and the existence of large consumer markets, such as Iraq, which is one of the largest food importers in the world, has also affected investment attractiveness in this industry. . However, foreign investment in this industry has not grown in proportion to its competitive advantages, which can be mainly attributed to the insufficient security of investment in the country.

High appreciation of food products compared to raw materials (agricultural products), relatively easy access to technology due to simplicity and lack of military sensitivities even during economic sanctions, the possibility of empowering some production lines and machinery in the country, large and expanding halal market In the world, the country is located in the five main corridors of international transit and transportation, increasing the country’s political system to pay attention to non-oil exports and efforts to facilitate and expand it, change food patterns by expanding urbanization and more people welcome food products and The need for less investment than other manufacturing industries are among the comparative advantages of our country’s food industry.

Despite such comparative advantages, the government enters the country’s food production chain and creates challenges such as changes in trade regulations and the application of non-tariff barriers to the import of industrial raw materials, pricing of food products, island performance of government agencies in charge of food, implementation of guaranteed purchase law In a country that has led to an increase in the price of raw materials required by industry and ultimately an increase in the cost of production in the food industry, insufficient control over pollution in agricultural products as raw materials produced in the food industry in terms of residual toxins and nitrates in these products and Improper methods of supporting the agricultural production chain of the food production chain in a way that has led to a conflict of interests between the stakeholders of the chain, has caused the Iranian food industry to remain far from its real position.

Challenges of sanctions for the food industry
Perhaps the first and most important effect of inflation on the Iranian food industry is to reduce the demand for the products of this industry following the increase in inflation and the reduction of people’s purchasing power, which makes producers inevitably reduce their profit margins to maintain domestic markets.

Challenges related to the use of international banking services such as letters of credit and credit opening are other problems of food industry activists during the economic sanctions, which have made it difficult to import raw materials, machinery and production equipment, because sellers who are willing to trade with Domestic producers have avoided long-term sales, which has left producers with liquidity problems.

Increasing the cost of transporting raw materials and production equipment is another challenge facing food industry producers during the sanctions period, which leads to an increase in production costs, as shipping companies that are willing to transport food shipments to the country’s ports have higher amounts. Demand from suppliers.

Another of the most important challenges for Iranian food industry activists during the sanctions era is the problems and obstacles in securing foreign exchange; Consecutive foreign exchange directives, from various changes in the list of goods subject to government currency to the directive on the need to pay the exchange rate difference for the clearance of goods from the country’s customs, which eventually led to the deposition of food products and their exposure to customs warehouses. Nima and the long process of providing foreign exchange in this system has become the main challenge for producers to supply raw materials; Consecutive directives that deprive these economic actors of decision-making power even for a short period of time.

The instability of the price of raw materials due to the impossibility of concluding long-term contracts for the purchase of goods is also one of the cases that have fueled the price fluctuations of raw materials required by producers, because sellers tend to trade in cash under sanctions.