Most powerful industry in the Iranian private sector

The food industry is Iran’s largest non-oil-based industry, with an annual turnover of around $100 billion. It is also the most employment-generating industry, accounting for 16.8% of all industrial jobs.

There are 15,000 active production units in the food and processing industry in Iran, making it the third largest industry after the oil and petrochemical industry, with the potential to supply the domestic and export markets with a wide range of products.

The food industry is the most important private sector, with over 80% of the country’s economy being in state hands.

The history of Iranian food exports goes back 3,000 years. The sector is developed and advanced, and Iran’s vision for 2025 is to have a production capacity of over 300 million tons.

Iran produces about 83% of its annual food needs domestically. Although the country is undergoing one of the fastest-growing urbanization processes in the world, the agricultural sector, which accounts for 12.2% of the gross domestic product, continues to play an important role in the country’s economy.

The export of food industry products represents one of the pillars of non-oil exports due to the potential available in the country and certain advantages such as increased added value and the creation of new jobs.

Over the past decade, Iran’s food exports have increased more than tenfold and now stand at over ten billion dollars. They account for 11 percent of the total value added of Iranian industry.

Wheat and rice are two of the most important foods in Iran and the country produces a significant portion of these two staple foods.

Up to 99 percent of food production is carried out by the private sector, but the sector is entirely managed and regulated by the government, which decides everything from production requirements to setting the guaranteed purchase rate of agricultural products and import tariffs.

As Iran has been subjected to the cruelest sanctions in recent years, the leader of the Islamic Revolution, Ayatollah Seyyed Ali Khamenei, has proposed a plan for a resistance economy.

A resilience economy in the area of ​​food security involves efforts to create a sustainable food and nutrient supply system, involving all development sectors and making maximum use of the country’s capacities, with the aim of producing sufficient and healthy food, reducing waste in the sector and supporting agriculture through the consumption of local food.

Despite the impacts of climate change and the stranglehold of sanctions, Iranian agriculture proved resilient in 2023 and showed relatively positive macroeconomic development.

A promising area was the state purchases from farmers at guaranteed prices. Thanks to the implementation of a plan to supply farmers with fertilizers, pesticides and technical services, 10.5 million tons of the strategic crop were purchased throughout the country.

Self-sufficiency in strategic agricultural products such as wheat is a cornerstone of Iran’s economic policy. This achievement was achieved in 2020 under the government of former President Hassan Rouhani, when Iran imported more than 3 million tons of wheat worth $3.8 billion.

Wheat is Iran’s main crop, accounting for about half of the country’s cultivated land and 70 percent of the country’s grain production. The country consumes about 15.5 million tons of wheat annually, but supplies fluctuate from year to year due to fluctuating domestic production.

Due to its vast land area, Iran has enormous capacity to produce agricultural products and basic goods. While water shortages pose a major challenge, experts believe that by conserving and adopting new methods of irrigation and protecting water and soil, a leap in agricultural production is possible.

The main obstacle is that there are elements in the executive branch that stubbornly oppose Iran’s pursuit of self-sufficiency, which they believe depletes the country’s resources.

They are also stubbornly opposed to domestic agriculture and support imports, including genetically modified foods.

In recent years, Iranian media has extensively reported on irregular imports at the expense of domestic production by market monopolists who have access to foreign currency at the lower government exchange rate, creating an unofficial black market and a new generation of nouveau riche.