Iranians Forced to Forgo Meat Staples as Prices Soar
Contributor Report, Bourse & Bazaar
May 8, 2019
Working class Iranians could look forward to a hearty meal of meat stew or kabob at least once a week. But with meat prices soaring to all-time highs, Iranians are having to cut back on their consumption in yet another example of falling living standards as Iran’s economy falters under the pressure of sanctions and mismanagement.
As of the first week of May, a kilo of beef sold for prices ranging from IRR 950,000-1,200,000 rials (USD 22-28) in butcheries across the capital Tehran. In October, prior to the reimposition of US secondary sanctions on Iran, the price of meat was just USD 11. By comparison, the minimum monthly wage of a menial worker in Iran has been set at approximately USD 361 dollars for the current Iranian year. An Iranian worker wanting to purchase one kilo of meat each week for their family would need to spend a staggering one-third of their monthly salary.
The rapid increase in the price of meat has been blamed on a variety of factors, including from corruption, profiteering, and misuse of hard currency subsidies granted to importers. The Iranian government has so far failed to slow the price increases as inflation continues to rise. Inflation has been driven by the sharp devaluation of the rial over the past year, accelerated by the reimposition of US sanctions on Iran after President Trump withdrew from the Joint Comprehensive Plan of Action (JCPOA) last May.
Iran has never been fully self-sufficient in meeting demand for beef. In the past decade, the country's meat industry suffered a significant decline in its cow population, which fell from 18 million in 2010 to just eight million in 2018, most of which are dairy cows. Widespread droughts in the past two decades have also diminished pastures and significantly dwindled domestic livestock food supplies, requiring greater reliance on imported feed and making animal husbandry less profitable than ever.
In order to try and limit the impact of devaluation on the price of imported foods, the Iranian government decided last August to subsidize imports of 27 "essential products.” Under the new regulations, importers of those commodities would receive allocations of foreign exchange at the official rate of IRR 42,000 to the dollar, a rate far below the free market rate, which climbed as high as IRR 185,000 in October. Meat products and feed for livestock were included on the list as part of the government push to help alleviate the economic burden on Iranian households.
But the price of meat and other key foodstuffs has continued to rise, suggesting the foreign exchange subsidies were a failed policy. Disruptions in the importation of both animal feed and meat products added costs for importers and created constraints on supply. But more damagingly, the falling value of the rial and the availability of foreign currency at an artificially low price lured many importers into smuggling out livestock or imported food in significant quantities to neighboring countries, where they found a lucrative market, causing shortages back in Iran. In countries such as Iraq, smugglers could sell livestock and double their investment. In one reported case, a network led by an unassuming middle-aged woman collected sheep from villages in the southwestern Khuzestan province, loading them onto trucks and smuggling them to abattoirs across the Persian Gulf. Profiteering has also come to include hoarding. Iran’s state broadcasters have aired videos of raided warehouses, where tons of meat are shown stored, with owners waiting for prices to increase further before bringing the meat to market.
An investigative report by Iran Newspaper, and republished by the ISNA news agency, points to the existence of a “meat mafia” which has caused much of the turbulence in meat markets...
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