Exclusive: Iran eyeing Iraqi flour market via Russia wheat deal

DUBAI (Reuters) - Iran is negotiating a wheat import deal with Russia that would allow it to increase flour exports to neighbouring Iraq, the secretary general of the Iran Federation of Food Industry Associations told Reuters on Saturday.

The deal would involve importing around 100,000 tonnes of Russian wheat per month for private millers who would then produce flour for export.

Kaveh Zargaran said talks were ongoing and he expected the deal to be finalised in a couple of months.

“Last week we were in Moscow to negotiate about it and after we are done we will start in a few months,” Zargaran said.

“We have a little financial problem to resolve but after it we will be able to go through with the deal,” he said without elaborating.

The Eurasian Economic Commission, an organization for a free customs zone which Russia shares with its neighbours, is leading the negotiations, a member of the talks later confirmed to Reuters.

Arkady Zlockevsky, head of Russia’s Grain Union, a non-state farmers’ lobby group, said the talks were part of broader negotiations about a free trade zone between Iran and Russia. Russian private firms are considering wheat supplies to Iran as part of the talks, he said.

“Russia is ready to start supplies in the nearest days. The question is on the Iranian side and how quickly their firms will manage to adapt to the processing regime, because Iran was not buying our wheat since March 2016,” Zlockevsky, who is taking part in the talks, said.

Iranian private millers are not allowed to use domestic wheat for flour exports.

Russia, among the world’s largest wheat exporters, has ample supplies waiting for the deal. “They are negotiating with the Iranian private sector,” Zargaran said.

Iraq’s flour imports are currently dominated by Turkish supplies.

“It will be difficult for Iranian flour to compete because of the kind of quality of Turkish flour which the Iraqis are used to, that is why they have to import high-protein Russian wheat in order to make flour that will sell in Iraq,” an industry source said.

Iran has exported some of its durum wheat this year from an ample domestic crop to Oman, Italy and Iraq. But Zargaran said this was not a trend that was expected to grow.

“Our policy is not really to export, though, it is for self-sufficiency,” he said.

Reporting by Maha El Dahan; Additional reporting by Polina Devitt in Moscow; Editing by John Stonestreet and David Holmes