SYDNEY, Oct. 22, 2015 /PRNewswire/ -- In 2015, to reduce economic dependence from oil & gas, Iran's government announced a new road map for several manufacturing sectors expected to have key roles in Iran's economic development. The plan outlines increasing capacities of some industries within the next ten years in order to improve the sector and derive more high value products as well as boost GDP. One of these is the agri food and beverage sector.
Iran's Economy Mission 2025 includes various strategic steps, among them, adopting advanced manufacturing technologies to increase efficiency, becoming a member of WTO to increase share of global trade, developing international trade through liaising with foreign companies, increasing the share of medium and high technology products, increasing direct foreign investment, privatisation and removal of barriers, assessing international markets for trade and investment opportunities and focusing on joint ventures and foreign partnerships for key industries and export based products.
Ali Mirmohammad, Senior Consultant and Business Development Manager – Iran, Frost & Sullivan, said, "While the Iranian government will use these incentive plans as well as remove export duties and grant export funds, innovation, efficiency and quality are three key concerns in the manufacturing sector and this is where the government would like to attract foreign partners in order to import new technologies and standards."
Iran has a population size of almost 79 million and is one of the largest food and beverage markets in the Middle East. In 2014-15, based on constant prices, gross household expenditure on food and beverages reached US$8,900 compared to US$1,750 in 2005 (CAGR 20%). In 2014, the annual growth for agriculture was recorded at 3.8% and is expected to go up to 7% within the 6th development plan (2016-2020). The agro products and animal husbandry export market is expected to increase from US$5.4 billion in 2015 to US$12 billion by 2025. Also it is expected that the total export market of processed food and beverages will increase from US$1.48 billion in 2015 to US$5 billion by 2025. In 2015, processed food and beverages generated about 3% of total GDP (7.4% of total GNP) and is expected to grow at a CAGR of 11.2% over the next ten years.
"Due to droughts over the past decade, Iran cannot meet supply demands for crops such as wheat, corn and oil seeds locally. In 2014-15, Iran imported over US$10 billion (21 million tonnes) of agri-products and food and beverages, over 6 billion of which (16 million tonnes) were various crops including wheat, corn, rice and oil seeds. Because of the lack of oil seeds, as well as weakness in utilising oil extraction technologies, of these total imports, over US$1.2 billiion (1.1 million tonnes) was crude edible oils and about US$0.4 billion ( 0.7 million tonnes) was unrefined sugar. The market is also heavily dependent on animal feed imports to supply the required meals and supplements for livestock and poultry," said Mirmohammad.
84.5% of Iran's total land (more than a fifth of the total 165 million hectares of land) has arid and semi-arid climates. 15.5% has humid and semi humid climates. Over 20% of Iran's total land, equivalent to 35 million hectares, is suitable for agricultural purposes; but currently, less than 18.75 million is identified as agricultural land. Of this, over 4 million hectares is inactive due to aridity or fallow. Yet Iran has the 15th largest agricultural land and largest irrigation land area in the world. However, Iran's agricultural sector suffers from low efficiency of water and soil utilisation, lack of diversity in crops, obsolete and traditional technology and equipment in both cultivation and harvesting, inappropriate distribution channels and lack of downstream industries. Iran's agricultural efficiency is less than 40%; and in 2014-2015, out of nearly 74 million crops and 16.5 million garden products, 30% were wasted. In order to increase the agricultural economy as well as boost production the government has called for many initiatives which requires technology, engineering and know-how."
In 2015, over 2.7 million hectares of land was under gardening and 12 million hectares under cultivation. Annually, Iran receives almost 413 billion cubic metres of rainfall (rain, snow & hail), 72% of which evaporates because of the arid climate. Despite the fact that Iran has over 4600km of transboundary waters, currently, total available water is less than 120 billion cubic metres. Over 2.8% of total consumed water in Iran (95 billion cubic metres) goes into agriculture, while the average world standard is not more than 70%. This is mainly due to lack of appropriate irrigation systems as well as low productive soils as a result of low quality fertilizers. Iran's government plans to increase the current water efficiency of 36% to 70% by funding modern irrigation technologies across the country. The over 30% wastage in agricultural products means that over 12 billion cubic metres of water is wasted as a result of the lack of appropriate agro processing industries as well as poor harvesting. Iran is among 24 countries which face water crisis, and will face water stress by 2025; and the new Iranian government aims to review the agricultural policies to manage this.
Through Iran's Agricultural Policies in the 6th Development Plan, out of the 18.75 million hectares of land, Iran plans on increasing total agricultural products from 90 million tonnes in 2015 to 170 million tonnes in 2025, and fruit and vegetables from 16 million tonnes to 30 million tonnes in the same period.
Why Australia?
Australia also has an arid climate, acidic and salty soil and lack of water resources but has effectively managed these challenges to avoid negative impact on agricultural land and is experienced in managing drought using innovative methods and modern irrigation systems to produce more agro products with the lowest water usage. Iran plans on importing technology and engineering in order to produce downstream products, and Australia is well experienced in both areas. Australia utilises modern technologies in irrigation systems, and, produces biological fertilizer and pesticide which are all areas Iran has earmarked to develop. While Iran is heavily dependent on imports of animal feed and supplementary products, both are big, established, home industries in Australia.
Agribusiness holds a significant place in the Australian economy as the second largest business after mining. Australia has a variety of botanical products, and over 25,000 plant species, and is among the five largest agricultural based countries in the world, producing crops in various grades and producing intermediate products like essential oils. A combination of innovative techniques, scientific developments in areas such as plant and animal breeding, management of crops, livestock, land, water and pests and application of sophisticated machinery and information technology has developed smart farming in Australia - a view Iran is looking to advance toward. Iran is looking to improve the quality of its products and Australia has a good reputation in the world for offering clean, green and fresh products with few pests in crops and diseases in livestock.
Whereas Iran is a major importer, Australia is one of the world's largest producers of crops, cotton, wool, sugar cane, meat and leather. Iran plans to progress its dairy market and stands to gain much from Australia, renowned for its dairy products and boasting many large, famous and reputable brands like Devondale, Dairy Australia and Fonterra. Iran has big plans to enhance its farm exports which are currently less than US$4.1 billion, versus Australia, which has an export market worth over US$37.9 billion (FY 2014-2015).
Mirmohammad concluded, "Because of its similarities, Iran could benefit greatly from Australia's advanced experience and because of its vast need, Iran holds many business opportunities for Australian companies looking to share their expertise."
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