World Grain - March 2016 - 34

FEATURE: A REGION THAT CRAVES WHEAT

200,000

150,000

100,000

50,000

0
2015-16*

* Projected
North Africa
Sub-Saharan Africa

2014-15

(in 1,000 tonnes)

2013-14

CONDITIONS IN IRAN
The conference was held before a recent deal paving the way
for increased trade with Iran. Jamshidi and Ali Ghane, who is
head of all foreign procurement, bi-lateral trade and business
development at Overseas Trade Development Corporation,
with one of the largest crushing plants in Iran, talked about
the impact of the deal.
Jamshidi explained that his company has 4,000 customers
in Iran.

Middle East/Africa wheat imports

2012-13

like U.S. hard red but due to price it doesn't look too attractive.
"Australian wheat is very popular, but for a lot of reasons
we don't get as much as we used to."
He explained that wheat purchases account for more than
80% of the typical costs of an average mill, although that varies from country to country.
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"What is important here is the value of the wheat we buy. It relies
on three values: price, quality, service. The key value is based on
the mills demand, current performance and geopolitical factors.
"Most important is the price of the wheat, the fob price, of
course. There has never been a more critical need for a clear corporate understanding of where value lies in wheat purchasing."
The value of wheat to a buyer is a function of the price and
the quality received from, and service given by, the seller and
focused on the overall cumulative value of the wheat to the mill.
"Millability is extremely important to us," Jamshidi said.
"Also, what we have to think about is the end user quality. Are
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What it boils down to is the economic viability of the wheat
that you buy, he said.
"The cheapest wheat is not necessarily the best wheat for a
mill. In pasta, a lot of hi-pro soft wheat is being used. A lot of
Black Sea is used. They need to use improvers.
"White wheat is preferred in the region. In the Gulf
Cooperation Council (GCC), all the Indian subcontinent white
wheat is considered the best quality or superior wheat."
A large Indian population in the GCC means that Indian
bread and hence white wheat were popular there.
He noted increasing consumption in sub-Saharan Africa, up
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attributing it to "rising income, growing population, and, of
course, the declining price of wheat."
Consumption is expected to increase at an even faster rate in
the future, with the potential drivers of demand including rising incomes, growing populations and urbanization. Women's
participation in the labor force and the opportunity costs of
time are also likely to play a part, as is food aid in the form of
wheat. The declining price of wheat relative to other staples
in countries such as Kenya and Nigeria also had the potential
to push up demand.
"What is unique and sad about our region is the lack of water," he said. That means that more wheat must be imported.

Middle East
Middle East/Africa total
World wheat exports

Source: U.S. Department of Agriculture

"We have imported our own wheat rather than milling the government's wheat," he explained.
Because of the sanctions that Iran had been facing, a lot of
companies have been scared off by the way the U.S. has gone
after banks.
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to do business with Iran."
He expects international banks to be cautious, but he noted
there are advantages to dealing with Iran. It has great infrastructure and opportunities.
"The Rohani regime is about improving the economy, opening
markets and rejoining the international community," Ghane said.
"It's quite important that we remember that we deal in humanitarian trade. You can never sanction pharmaceuticals or food."
"We have been importing a lot of wheat this year, simply
because the government has a policy of protecting farmers
with exaggerated prices," Jamshidi said. "This government
sits on wheat, but the private companies are still importing."
In the future, Ghane expects the role of the government to
be limited with the private sector becoming more important.
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"The largest trading houses never left Iran. They never will."
The industry is there for the long term, he said.
"This is a 5,000-year-old industry," he said. "We have one
of the highest higher education rates in the world. There's 4.5
million tonnes of crushing capacity a year. The biggest asset
is the geographical location of Iran. It is the crossroads of Asia
and Europe."
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however.
"Iran has a huge water problem," he said. "We have farms
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