Boston, MA -- (ReleaseWire) -- 03/13/2014 -- Financial sanctions designed to pressure Tehran over its nuclear programme are playing havoc with Iran's ability to import goods. Food price inflation is soaring, leading to a serious decrease in meat consumption. The use of barter in replace of regular trade can be seen as a feasible, albeit temporary, way of circumventing sanctions to meet demand. Although President Hassan Rouhani, who is more moderate than his predecessor Mahmoud Ahmadinejad, will most likely adopt a more conciliatory stance with the West, many sanctions are expected to remain in place. Over the longer term, we believe that the continued investment by the government to improve infrastructure - such as the improvement of irrigation systems - will help the country to turn away from its backward agrarian system and will yield results in terms of better-quality grains. We are especially upbeat in our outlook for grains and sugar production.
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- Wheat production growth to 2017/18: 9.3% to 15.3mn tonnes. Wheat yields are expected to improve in line with the modernisation of technology, including hardier grains variants, greater access to relevant inputs and a larger area of the country benefiting from new irrigation facilities.
- Sugar consumption growth to 2018: 29.9% to 2.6mn tonnes. Sugar demand will be mainly driven by population growth.
- Poultry production growth to 2017/18: 14.1% to 900,400 tonnes. Growth will be driven by domestic demand and the effects of increased investment.
- BMI universe agribusiness market value: US$11.05bn in 2014 (down 2.4% compared with 2013; growth forecast to average 0.7% annually between 2014 and 2018).
- 2014 real GDP growth: 2.8% (up from -3.5% in 2013; predicted to average 3.6% over 2014-2018).
- 2014 consumer price inflation: 26.0% year-on-year (y-o-y) (down from 35.0% y-o-y in 2013; predicted to average 15.0% y-o-y over 2014-2018).
The outlook for Iran's livestock and dairy sectors in the short and medium term is improving. A recovery in farms' profitability will help production to grow in 2013/14 after two seasons of stagnation on the back of skyrocketing feed prices. In the medium term, the lifting of sanctions is likely to boost Iran's economy, paving the way for substantial foreign investment that has been on hold. There has been recent progress in talks between Iran and Western countries to reach an agreement on the former's nuclear programme: Iran and the so-called P5+1 countries - China, France, Russia, the UK and the US plus Germany - on November 24 2013 reached an understanding on the implementation of a deal under which sanctions on some of Iran's trade in goods and services will be suspended.
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