June 27, 2008 / 12:02 AM / in 9 years

Iran's rice farmers ask where's the money

CHALUS, Iran (Reuters) - From the lush paddy fields of northern Iran to the dusty grain bazaars of Tehran, the pain and paradoxes of the global crisis spawned by rising food and fuel prices are starkly on show.

<p>Freshly planted rice seedlings are seen on a field near Amol, 220 km (137 miles) northeast of Tehran, May 6, 2008. REUTERS/Caren Firouz</p>

Rice prices have more than doubled in Iran since March but farmers working from sunrise to sunset in the rice-growing northern region around Chalus, a city on the Caspian Sea, say little of that money goes into their pockets.

“Traders bought our rice very cheap. They have put it in storage and now capital investors are selling it for a high price ... We did not make a profit but traders did,” Baqer Kefayati said at his farm in Dasht-e Nesha.

Capital investors are rich traders who buy rice wholesale from farmers. Dealers buy rice in small amounts from capital investors and sell it to shops. They act as brokers and tend not to make large sums of money.

Some brokers also blame the Islamic Republic’s government, saying its tardiness in importing rice this year helped fuel the price rise by creating a vacuum that could be exploited.

Rice is a staple in Iran, a country of 70 million people straddling Asia and the Middle East and the world’s fourth-largest oil producer.

Iran is at once a beneficiary of the oil boom, that has seen prices rise to nearly $140 a barrel, and a victim -- high oil prices are one factor behind rising inflation that is punishing the country’s poor.

Economists blame profligate spending of windfall oil revenues by President Mahmoud Ahmadinejad’s government for stoking inflation, which rose to 25.3 percent year-on-year in May. World food prices -- which have risen on supply fears and export restrictions -- have also contributed.

Iranian newspapers in May said popular smoked rice had jumped to 50,000 rials per kg (about $5.40) from 19,000 rials. The price of another Iranian variety rose to 45,000 from 18,000 rials. Some other types have tripled in price, say shopkeepers.

The prices remained at almost the same levels in June.

The price pain has political consequences, even in tightly controlled Iran. In southern Tehran and some other cities, lower income Iranians protested against inflation and higher prices, some newspapers reported.

Some people are already blaming Ahmadinejad, who came to power in 2005 promising to spread Iran’s oil wealth to the people. He faces re-election in 2009.

“Ahmadinejad promised to bring the oil money to our tables but instead he is taking away the rice from our table,” said Masoumeh Nayyeri, a mother of five and cleaner in Tehran.

“Rice and bread were the only things we could afford. How will I feed my children now? Life becomes harder every day.”

“PLENTY OF RICE”

Asian rice prices almost trebled to their highest ever this year as export restrictions by leading suppliers fuelled insecurity over food supplies. Prices have since come off highs on signs of larger harvests and export curbs being lifted.

As a rice importer, Iran has been hit hard, especially as very cold winter weather followed by drought affected harvests of domestic rice, further boosting prices for consumers.

Earlier this month, the commerce minister was quoted in the English language Iran News paper as saying Iran needed to import 1.7 million tonnes of rice in the year that ends in March 2009 to supplement forecast domestic production of 1.5 million tonnes.

Consumption is estimated at 3.2 million tonnes. For the past few years, Iran has been trying to become self-sufficient but because of various issues, including this year’s drought, the Islamic state has not been able to achieve its goal.

Iran has delayed buying rice on world markets -- for example from traditional supplier Thailand -- because of high prices, but to ease public concern over shortages, Iranian state TV announced in May that at least 100,000 tonnes had been bought from Pakistan. Prices dipped but they still remain high.

Just as speculators on world markets have been blamed for inflating oil’s rally and adding to volatility, so the traders known as capital investors in Iran have been charged with manipulating the retail market.

Iranian officials have said some traders tried to capitalize on the drought and the reduced availability of imported rice to make a profit. Local media reports have said several traders in different cities have been arrested for stockpiling rice.

“Traders hid their rice as soon as they heard there was less rain this year and that global prices were rising. There was plenty of rice in the market but traders used the opportunity,” said Ali Asghar Tezval, 66, a dealer in a grains bazaar in southern Tehran.

A dealer for more than 50 years, Tezval buys rice from capital investors in the north and sells it to shop owners in other cities.

“For us, high prices make no difference. We buy rice at higher prices from major traders and we sell it to shops at a higher price too,” Tezval said, pointing to sacks of rice in storage near his office.

The traders’ role angers farmers and their workers in the three northern provinces of Gilan, Golestan and Mazandaran, where most of the rice farming takes place.

“The price of rice has really gone up but who benefits from it? Certainly not us working for more than 12 hours a day,” said Banafsheh Yousefi, laboring in a field near the Caspian Sea, her sleeves rolled up and her black plastic boots deep in water.

“We had less rain this year but it is traders who have pushed prices up,” the 33-year-old said, looking at her two children playing nearby.

She is one of many farm workers whose salary is not affected by the price rises.

Next to her, workers sang a song asking God to bless the fields with enough rain.

CHANGING TASTES

Rice dealer Siavosh Shirinvash, who works near Rasht in the north, says the lack of imported grain pushed up prices by allowing traders to exploit supply fears.

“Some (capital) investors bought the rice a few months ago. They store the rice and wait until there are circumstances like now, including the lack of rain and the rise in global prices, to raise the price,” he said. “People are not able to afford such expensive rice.”

Tezval agrees the government’s delay in importing rice contributed to the price rises.

“The government did what it could but it would have helped if they imported the grain sooner. The government should have the pulse of the market in its hands.”

Price rises are also changing people’s eating habits -- a situation mirrored elsewhere as rice becomes too expensive for the world’s most vulnerable. In West Africa, people are replacing rice with manioc paste, manioc leaves or bread, while in Bangladesh, the government urged people to adopt potatoes as a staple food.

“Rice is becoming a luxury for many of the poor, just like meat and chicken,” said Sharifeh, who did not give her last name and who was working in a field near Namakabroud in Mazandaran.

“Let’s pray for good rainfall, less inflation and plenty of rice,” she said with a smile.

Additional reporting by Saeed Komeijani, editing by Clar Ni Chonghaile

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