Cargill says it's still supplying Iran with grain

GENEVA Wed Feb 8, 2012 11:58am EST

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GENEVA (Reuters) - U.S. agribusiness giant Cargill plans to continue grain shipments to Iran, its vice chairman said, despite signs the Islamic Republic is struggling to process payments as U.S. trade sanctions bite.

"Like all the international companies, we do business there, but you have to be very careful," Paul Conway told Reuters in an interview.

The United States and the European Union have tried to force Tehran to scrap its nuclear program in part by imposing trade sanctions and targeting payments by its central bank. The moves have led some shipping companies to divert cargoes away from Iran and some banks to stop financing trade there in recent weeks.

But Conway said shipments were still possible.

"It's standard methods, in terms of finding banks that will open LCs (letters of credit) and pay you in currencies other than the dollar. Yen, or euros or whatever."

Iran imports around 4.5 million tons of grain a year, including about 3.5 million tons of corn.

Trading with Iran is "somewhat piecemeal," depending on availability, pricing and the logistics of shipping, and the grain might come from any of a variety of countries, Conway said.

"It might be Germany, it might be Brazil, it might be Ukraine. We don't have a specific plan," he said.

"There's a terribly complicated licensing system, depending on where the origin comes from, but it is very difficult because of the payment. and that leads to difficulties in the logistics."

He said Cargill rarely pulls out of a country and cited Syria, currently in a state of near civil war, as a country where the company planned to stay for the long term.

SYRIA NATIONAL SUGAR

Cargill is a minority shareholder in Syria National Sugar Co, which owns a 1 million tons per year sugar refinery 25 km (15 miles) south of Homs, the main flashpoint of violence in the country over the past year.

According to Syria National Sugar Chairman Mohamad Najib Assaf, the refinery, one of three in Syria, has suspended operations because of the security situation.

But Cargill and the other minority owners dispute that, saying operations stopped after they brought legal action against Assaf for trying to push them out of the company.

"I would hope that sense prevails and the dispute can be resolved quickly so that it (the refinery) can start up," Conway said.

"The challenge will be for the business to get access to raw materials to run when it's in this legal (situation). Being in a legal dispute like this with the plant unable to run is not good for anybody."

Although Syria is obviously a dangerous place to go at the moment, there are no plans to pull out, he said.

"What's going on in Syria is an incredible shame, but you have to look at the longer term. If you take Egypt or Libya, food shipments continued to those countries through the crisis. We are talking food here, and people have to eat, whether you're talking Iranian or Iraqi or Egyptian or Libyan or Syrian."

(Editing by Jane Baird)

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