IRAN: AGRICULTURAL OUTLOOK

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000600050045-3
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 7
• Document Creation Date: December 16, 2016
• Document Release Date: October 19, 2004
• Sequence Number: 45
• Publication Date: May 9, 1975
• Content Type: MEMO

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CO
CENTRAL INTELLIGENCE AGENCY
WASHINGTON, D,C, 20505 1
25X1
9 May 1975
25X1
MEMORANDUM FOR:
Non-Communist Area Staff'
Office of Poli'.:ical Research
Iran: Agricultural Outlook
25X1 1. in response to your, request,
has prepared the attached brief summary for ransmitta
25X1 to
2. Please c.ntact this office
25X1
25X1
Attachment:
As stated above
25X1
Distribution: (S-Project
Orig. & 1 - Addressee
1 -
25X
08327)
' CO J iDE'NT1AL
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CONFIDENTIAL
Iran: AgricultUra.l Outlook
I. Present Situation anri Recent Trends
Agricultural production in recent years has
barely kept up with population growth and has fallen
substantially behind overall demand for consumer and
industrial agricultural products. Officials indicate
that demand is rising by 11.5% annually while a declining,
rate of growth in output over the past decade has averaged
somewhat below 4%. Although Iran was once a net agricultural
exporter, the widening gap between domestic supply and
demand has been met by imports. It is estimated that
food imports, responding to a sharp rise in income
and government subsidization of costs of major food
items, grew some six-fold in 1974. Exports of agricultural
products in 1973, amounting to about $300 million consisting
primarily of co'-ton and fruits, were exceeded by some
$450 million worth of imports, of which food represented
abcut 70%.
The poor performance of agriculture is attributable
to earlier investment neglect and basic institutional
problems, only some of which
lare susceptible to change
CO~NHbEN:TIAL
25X1
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uO'JF .) i'~l!I\
in the short run. Promising'ih the short terra are the
efforts to assist farmers through expanded rural credit
and eervi:;es (roads, distribution, and training).
II. Factors Contributing to,the Food Gan
The rise in food aemand is not only a function
of population growth but mcre importantly of changes
in incomes and the urban/rural composition of the population.
Per capita incomes in the past two years rose b~ 50%
annually in current prices, and effective demand was
expanded by an emerging middle class of managers, businessmen.,
and other elements of the Iranian "nouveau riche".
With the expansion of income there has been shift
to better quality food -- more rice and :neat and follow-on
luxury items.
The major supply constraint on domestic production
has been inadequate investment in facilities to assure
stable water supplies. It will be some time before
dams and irrigation systems now underway bring improvements.
Reliance on rainfall for some: 60% of the annual crops
is a vulnerability that Iraniian farmers will continue
to face. Expanded credits toi the small farmers, extended
use of technology, and improved marketingand prices
may have a more immediate impact. Present inefficient
PON
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0NF DEN T I A L
marketing and distribution systems result in high
transportation costs, large whblesale and retail margins,
and low producer prices. The q overnment has the funds
available to carry out ileedec. reforms and has the mechanism,
in the cooperatives and farm corporations, to promote
better distribution. The Iranian bureaucracy moves
slowly, however, and no quantum jumps in agricultural
output are likely over the next several years. Goals
for expanding agricultural output by 71 annually and
food output by 9% yearly are not real i.stic.
III. Outlook for Imports 1975-78
Agricultural imports are expected to accelerate
in 1975. Imports rose from about $133'million in 1971
to some $800 million in 1974 an annual growth rate
of well over 50% (about 40% when adjusted for price
increases). All signs point to a level of imports over
$2 billion annually over the net five years.
with merchandise. Internal distribution
9,s complicated
by inadequate storage, road, and rail service facilities.
Physical problems rather than foreign exchange
limit Iran's ability to meet it;; food import needs.
Port and rail nets, strained y a combination of industrial,
military and civilian imports, are presently backlogged)
..c...
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I' 1 oh`V 5 ~ P.~'r-~~'~T;A
Some sho::'~'.-?term measures at imlDroving customs procedures,
and more efficient port management will b 'ing partial
relief, 'out the more basic, chahges needed to permit
free flc)w of imports will not be achieved for another
three ;years. These include construction of new port
facili,~:ies, electrification of the railroads, and large~
scale building of new roads. Storage facilities capable
of handling some'2 million tons of wheat will be in
place: by 1978, expanding capacity to 211 times its present
500,000 tons.
IV. Import Demand for Selected US Agricultural Product
Iran has indicated that its imports of food
supplies from the US alone could reach $10 billion over.
t'-,e next five years. The US supplied roughly one-quarter
o!.- Iran's agricultural imports until 1974 when the proportion
r7rew to 67%. Wheat, rice, and vegetable oils, in that
carder, have been the major food exports from the US to
Iran.
Iran, however, seeks to expand alternative
sources of supply for many ofd the commodities that it
normally imports from he US., On the othe ir hand, the
US has a comparative advantage in lines o~l technology
and in provision of agricultural equipment, areas
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that Iran is emphasizing and
markets for export by the US.
,which would offer wide
CIA/0ER
8 May 1975
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CO \ FI D . TIAL
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