Following the successful implementation of the plan for offering barley and corn in Iran Mercantile Exchange (IME) at guaranteed price instead of the guaranteed purchase of these grains by the government, which brought satisfaction for both farmers and the government, Iran carried out this plan also for wheat.

The pilot plan on barley and corn was implemented in two provinces in the Iranian calendar year 1394 (March 2015-March 2016). The corn produced in the southwestern Khuzestan Province and the barley cultivated in the western Kermanshah Province were offered in IME at guaranteed prices.

The fruitful results achieved in those provinces resulted in implementation of the guaranteed-price plan for the barley and corn produced in the whole country in the following year 1395. 

And the achievements obtained in terms of barley and corn led also to replacing the guaranteed purchase of the wheat by the government with offering the product in the IME at guaranteed price in the current Iranian calendar year 1396.

The pilot plan on offering the wheat produced in four provinces at guaranteed price in the IME was declared on June 10 and the first offering was done in mid-July.  

Now, successful implementation of the plan in the central Markazi Province and northeastern North Khorasan Province as well as Ardebil Province and Zanjan Province, both in the northwest of the country, has prompted the government to apply the scheme in other provinces, as Agriculture Minister Mahmoud Hojjati has announced that the plan will be implemented in the whole country in the next calendar year (starting on March 21, 2018).

In the framework of the guaranteed-purchase scheme, instead of paying the whole price to the farmers based on the guaranteed purchase, the government pays them just the difference between the base price and the price offered in the IME. In this way the financial burden on the government is reduced noticeably, as Yazdan Seif, the managing director of Government Trading Corporation of Iran, says that offering wheat in the IME decreases the financial burden on the government by half compared to the guaranteed purchase.

Guaranteed-price plan also brings more satisfaction for the farmers as they receive the payment sooner. Iranian Parliament (Majlis)’s Agriculture Committee spokesman Ali-Mohammad Sha’eri says: “Through adopting guaranteed-price policy in the whole country since the next year we will witness improvement in the farmer’s condition.” 

And the other advantages of this plan, as mentioned by Mojgan Khanlou, the director for commercial and financial affairs in the Management and Planning Organization, are creating transparency in the trades and also offering the products based on the specified standards in the IME which leads to promotion of their quality.

Also, Ali Akbari, a member of Majlis’s Agriculture Committee, believes that in this plan prices are set fairly because the dealers are omitted from the chain of sales.

He says the guaranteed-price plan meets the interests of farmers, government and agriculture sector and its implantation for wheat will start a big evolution in promoting agriculture sector.

Now, while the government is determined on replacing the guaranteed purchase with the guaranteed price via IME, the experts believe that the farmers should be informed about the advantages that changing the policy in this due will bring for them.

Javad Kazem-Nasab, a member of the Majlis’s Ad hoc Budget Review Committee, says: “Implementation of this plan (guaranteed price) depends on the farmers’ familiarity with the mechanism of IME; therefore, besides establishment of trade infrastructures in a way that the farmers can offer their products easily in the IME, necessary training should be offered to them.”

Deleting the dealers from the scene, IME is a safe place for trading agricultural products and if this policy is adopted completely in the IME it will be in the farmers’ interest, he emphasizes.

Taking all the above mentioned into account, the guaranteed-price scheme, reducing the financial burden on the government and downsizing the government, while meeting the interests of farmers and bringing more order and discipline to the market of agricultural products, is a fruitful measure to support the farmers and develop the agriculture sector and experts believe that such approach should be also adopted in some other sectors of the country.