Iran's rice farmers ask where's the money

By Zahra Hosseinian

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.

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"