Iran buys wheat from American – is this significant?

The recent purchases of wheat by Iran from Ameican sources has generated some comment.  Here are the available facts, plus some analysis of its geopolitical effects.

  1. Iran needs grain
  2. We have wheat for sale
  3. Conclusions
  4. Another perspective, by M. Simon

1.  Iran needs grain

IRAN: 2008/09 Wheat Production Declines Due to Drought“, US Dept of Agriculture, 9 May 2008 — Excellent graphics!  Excerpt:

This year’s projected shortfall in winter grain production could lead to a significant increase in grain imports, with the government already reported to have sanctioned the importation of 2.0 million tons of wheat.

… Owing to the severity of current conditions and the breadth of areas impacted, wheat production in 2008/09 is forecast by USDA at 12.0 million tons, down 3.0 million or 20 percent from last year. Wheat harvest activities generally occur between May and August, with the rainfed crop being the earliest to mature. Given the continuing development of the drought, and its intensification in recent months, even later maturing winter grain crops are potentially in danger. Seasonal rainfall typically falters after April, so only crops with adequate irrigation reserves will survive to produce near-normal yields this year. Losses to winter grain production are expected to be substantial enough to have serious ramifications in the domestic food and feed grain market during the 2008/09 marketing year.

… Wheat production prospects in the 2008/09 growing season are expected to be the worst since the 1999-2001 period, when total production fell to between 8.0-9.5 million tons. Region-wide drought was prevalent in the Middle East during these years, with Iran’s subsequent wheat import needs rising to record high levels of 6-7 million tons each year.

… In 1999/00 when Iran suffered from extreme drought, total wheat production declined approximately 3.3 million tons or 28 percent from the previous year.

… As long as irrigation reserves are adequate in most provinces, Iran has the capability of producing at least 10.0 million tons of wheat on a regular basis. The expansion of irrigated crop area had the general benefit of providing relative self-sufficiency in grain production, but has not completely insulated the grain economy from significant setbacks during years of extreme weather.

Result:  “Iran allocates $820m to import staples“, Tehran Times, 10 August 2008

2.  We have wheat for sale

(a)  Iran was a regular buyer of US wheat until its last purchase in 1981/82 of 728,000 tonnes.

(b)  So far this year, Iran has purchased aprox 1.5 million tonnes of wheat (source).

(c)  We do not know much they will buy.  “Iran’s government has said it will import 5 million tonnes , while unofficial sources have put the total as high as 9 million tonnes.” (source).

(d)  “In addition to 1 million tons of U.S. wheat, Iran is believed to have purchased 1.5 million tons of Canadian wheat, 1.5 million tons of Black Sea wheat and 1 million tons of European wheat, traders said. … The U.S. government prohibits virtually all trade with Iran except for carpets, dried fruit, nuts and caviar. However, there are additional exceptions for humanitarian aid, medicine and food.” (source)
 
(e)  “Iran denies importing wheat from U.S.“, Xinhua, 24 August 2008.  That is odd, even for Iran.

3. Conclusions

  1. Buying wheat from the US might give Iran some friends in the US, who will be hostile to a US attack at Iran.  But probably not, at least not on a significant scale.
  2. No leverage to the US; using food as a weapon is might no longer be acceptable.  And looks bad.
  3. Net geopolitcal effect of these purchases:  probably nil.

4.  Another perspective, by M. Simon

Hunger Stalks Iran“, M. Simon, posted at Classical Values, 22 August 2008 — Excerpt:

This is the first time since ’81 – ’82 that Iran has bought wheat from America. At that time it was under a million tons. This year’s purchase is expected to run 5 million tons.

So what happens when you have to buy food from your enemy to keep going? Obviously bellicosity has to decline. And you pull in your cats paws like Hizballah. No point in upsetting the grain cart when there are no other sellers. Another humiliation for the poor dears. It just points further to the Iranian Government’s mismanagement of the Iranian economy. My guess is that drought is an excuse not a reason.

Investing in missiles and atomic bombs does not feed the hungry. Water projects should be taking priority.

Some thoughts on Simon’s post.

  1. The post’s title is a bit over the top (I should know, with so many like that on this site).
  2. Although the total purchase is expect to be 5 million tonnes, US exports will be only a piece of that.
  3. Why is importing food a bad thing?  Ricardo, free trade, and all that.
  4. Why should Iran care where they get it?  Pride and trade are poor bedfellows, as Iran may be learnign.
  5. His last line is indisputably true, and good advice.  We too should better use the money now spent on weapons.

Also see “Discussing geopolitics with the famous M. Simon (of the “Classical Values” blog).”

Please share your comments by posting below (brief and relevant, please), or email me at fabmaximus at hotmail dot com (note the spam-protected spelling).

My posts about a strike at Iran by the US

  1. 4GW at work in a community near you  (19 October 2007) — Propaganda warming us up for war with Iran.
  2. War with Iran   (9 November 2007) — Why Iran is not necessarily our enemy.
  3. Is Iran dangerous, or a paper tiger?   (13 November 2007)
  4. The new NIE, another small step in the Decline of the State  (10 December 2007)
  5. Will we bomb Iran, now that Admiral Fallon is gone?   (17 March 2008)
  6. More post-Fallon overheating: “6 signs the US may be headed for war in Iran”   (18 March 2008)
  7. A militant America, ready for war with Iran  (6 May 2008)
  8. Another step towards war with Iran?  (7 May 2008) — About Andrew Cockburn’s article in  Counterpunch.
  9. “War With Iran Might Be Closer Than You Think”  (13 May 2008) — About Philip Giraldi’s 9 May story in The American Conservative (see below).
  10. The most expensive psy-war campaign – ever!  (13 July 2008)
  11. ISIS: “Can Military Strikes Destroy Iran’s Gas Centrifuge Program? Probably Not.”, 8 August 2008

Here is the full archive of my posts about a possible strike at Iran by Israel or the US.

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8 thoughts on “Iran buys wheat from American – is this significant?

  1. “Hunger Stalks Iran“ ?? is he serious?

    the author is clearly lacking any insight into the Iranian economy , if this year Iran is facing drought that would be the government fault?

    ok let’s strike a REAL example of hunger : Egypt , the US ally where bread has become a luxury. and how is Iran this year different than Saudi arbia, UAE , Kuwait , Iraq, and Jordan over the last 50 years! the only arab country that is truly sufficient in food is…… Syria

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  2. Bread is subsidised in many places, the subsidies will be a drag on the economies as the world price continues to rise. It could continue to climb for a long time considering world food was at an all time low by some measures.

    Gasoline subsidies will be dificult to sustain also I should think.
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    Fabius Maximus replies: Good question about food subsidies. I will look into this.

    Fuel subsidies: Perhaps not, as seen in this excerpt from “The Energy subsidy debate”, Johathan Anderson, 12 August 2008:

    “Of the 20 or so countries that do keep domestic fuel prices visibly below world levels, all but 3 (China, India, and Pakistan) are oil exporters.

    “This is important, since the idea that price controls represent “hidden” inflation hinges on the view that rising net subsidies eventually put an unsustainable burden on government budgets, and that at some point prices have to give. But for net oil exporters this is clearly not the case… in China’s case at least the national budget has rarely been in better shape than it is today, with little sign of undue stress from subsidy costs.”

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  3. M Simon said: “buy food from your enemy”

    Iran doesn’t consider the US to be an enemy. There is no evidence that it does. If it did, it might consider offensive military action to secure its wheat supply, as the US does for its oil supply. Perhaps some gunboat diplomacy; that always works. But they don’t. There is no evidence that Iran “invest[s] in atomic bombs,” either.

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  4. ‘Net geopolitcal effect of these purchases: probably nil.’

    Perhaps in the short run. But in the long run, establishing trade can’t be a bad thing. At the very least it opens a dialogue between the two parties. Perhaps 10 or 20 years from now, we’ll speak of the ‘Grain Purchases of ’08’ like we talk of the Ping Pong Diplomacy of Nixon.

    But perhaps not. We lose nothing by exporting wheat. We look like bullies to the Iranian people if we don’t.
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    Fabius Maximus replies: To speak of the ping pong diplomacy as significant confuses cause with effect. Both nations wanted closer ties, and used cultural and sports exchanges to begin the process.

    If Iran wants to improve their relationship with the US, this might be a signal. But the signal has no effect by itself, which was my point. I agree with your other points.

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  5. Free trade, and profits from trade, helps increase resistance to military actions which would disrupt the trade (and profits).

    Trade is good, just as was said.

    M. Simon is probably more correct about Iran’s reduced animosity to the US, but Fab is more importantly correct that it doesn’t matter very much.

    It seems likely that Climate Change (not Global Warming, per se), will be seen most acutely in water changes–droughts and floods. Barcelona is also having a drought, and Spain is building desalination plants, rather than take Aragon water for Catalan — competing Spanish regions. (Folk in Aragon don’t want a pipeline built)
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    Fabius Maximus replies: Your last point I consider important. The last half of the 20th century had benign weather; the first half of this century might have bad weather. That’s normal variation.

    Also, watch the progress of Solar Cycle 24. It is too soon to say, but we might have a cold cycle coming!

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  6. ” His last line is indisputably true, and good advice. We too should better use the money now spent on weapons.”

    Although Iran may look like a nemesis , it is only spending 3.5% of GDP on military which is LESS than the 3.9% (without supplement funding for war in Iraq and Afganistan) so it is not possible to expect a smaller military budget. Israel spends 10% 10% 10% 10% !! on military , so why don’t you keep your advice for Israel

    Iran a country that has large foreign exchange reserves and diverse oversees government investment is a Long way from hunger. importing Wheat is not criteria to starvation or weakness of economy. On the opposite, Ahmadi-najad redistribution of oil revenues to the population have led to large increase in consumption and leading to an inflation. So the author rushed to the conclusion of “Hunger” because Iranian purchasing power exist.

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