Despite the claims made by Iran’s regime economic authorities regarding the increase in non-oil exports, official statistics reveal a continuous decline in the value and volume of Iran’s food industry exports over the past six years, with a significant drop observed in the last year.
On Tuesday, September 19, 2023, the Eco Iran website reported that, based on official statistics, the value of food exports peaked at $2.717 billion in 2017. However, this upward trajectory began to reverse in 2019, culminating in a steep decline by the end of 2022, with exports plummeting to $1.921 billion.
When considering the weight of these exports, it’s worth noting that the highest growth in food exports was recorded in 2020 and 2021. In 2019, the exported weight stood at 1.88 million tons, while in 2020, it reached 1.81 million tons. However, from 2017 to the close of 2022, food exports decreased by 2% in terms of weight. A worrisome sign is that during the first five months of 2023, exports amounted to only 790,000 tons, indicating a likely continuation of this declining trend by year-end compared to previous years.
On September 18, a group of food industry stakeholders convened at the Iran Chamber to address the dire situation of food production and trade. One of the focal points of this meeting was examining the reasons behind the decrease in the export value of food producers.
Mohsen Amini, the Vice Chairman of the Food Industry Commission at the Iran Chamber, elucidated the challenges faced in this sector, stating, “After the introduction of foreign exchange contracts, the realization of export goods’ value became a significant factor in the export statistics’ decline. This decrease doesn’t reflect an actual reduction in export volume, but is rather due to the change in how export values are calculated.”
According to Amini, the proliferation of conflicting circulars issued in recent years and the absence of strong export consortia have hindered export growth within Iran’s food industry.
One unanimous resolution at the meeting was the government’s necessity to establish a ‘mandatory exchange rate,’ which, according to participants, could alleviate a significant hurdle to food exports.
Prominent figures within the country’s food industry advocate for the implementation of a ‘fixed exchange rate for export earnings,’ a move that they believe could enhance conditions for non-oil exports.
Iran’s food industry holds a pivotal position as one of the country’s largest industrial sectors, currently operating at 60 to 70 percent capacity due to various challenges.
According to Mohammad Hossein Azizi, Chairman of the Board of Directors of the Food Science and Industry Association, Iran’s food industry ranks third in the country in terms of investment and job creation. It is estimated that approximately 15% of job creation in Iran comes from this industry, encompassing approximately 15,000 workshops and both small and large factories.
Azizi identifies the multitude of regulatory authorities overseeing the food industry as a major obstacle faced by industry players. Ministries such as Agricultural Jihad, the Ministry of Industry, Mine and Trade, Health and Treatment, the Standards Organization, and even the Ministry of Guidance and Tourism all have a say in the food industry, further complicating matters.
Compounding the issues faced by food industry producers in recent years is the labor crisis, which some producers regard as a factor contributing to reduced production. Hamid Soleimanzadeh, a board member of Ham Food Industries, contends that with a steady labor force, production facilities can secure their working capital. However, like many other food industry producers, this complex has struggled to attract the necessary workforce over the past year.
The inability of economic groups to raise wages, combined with issues related to insurance and contracts, has dissuaded workers from accepting positions at wages below their minimum subsistence requirements. Simultaneously, industrial owners are cognizant that many workers cannot afford their requested wages, creating a cycle that leaves labor-intensive industries facing recruitment challenges despite elevated unemployment rates in the country.
Industry owners and labor representatives attribute these conditions to the absence of pricing licenses that reflect recent cost increases and inflation. Nevertheless, the inability to procure raw materials, maintain equipment, and access regional markets due to sanctions triggered by the regime’s malign activities are the foremost factors exacerbating the crisis in Iran’s food industry.
