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Livestock:
Challenges And Opportunities
Compiled by Ghanbar Naderi
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Iran should come up with resourceful programs to make optimum use of the new opportunities promoting the quality and quantity of its livestock products in the regional and global markets.
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About 11 percent of Iran’s total land area of 163.6 million hectares is cultivated. Still 63 percent of the arable lands are not farmed.
With 18.5 million hectares of farmlands being used at 50 to 60 percent capacity, and about one-seventh of the total cultivated land sufficient to meet domestic demand, agriculture contributes just over 20 percent to the gross national product (GNP) and provides employment for a third of the workforce.
Indices
The growth in the agriculture sector’s contribution to gross domestic product (GDP) from 21.3 percent to 24.5 percent in the past few years indicates its important role in the national economy. Essential indices of the agriculture sector are grouped to three main issues in Iran.
1. Macro indices including value-added, investment, employment, international trade and productivity.
2. Agricultural production indices including crop production, horticulture production, animal and livestock production and aquatic production.
3. Indices of fundamental resources production including water, soil, forest, pasture and genetic resources.
Appreciating Asset
Livestock provide the poor with an important means of livelihood throughout the developing world. They provide an appreciating asset, a source of income, food, insurance, as well as important farm inputs such as manure.
It also provides high quality nutrients including meat, milk and eggs in areas where malnutrition is common. It also provides employment and stimulates commerce, according to ISNA.
Expansion of the livestock sector to keep up with demand, therefore, is associated with dynamic structural shift towards increased market orientation and integration, geographic concentration and intensification.
National trade in livestock and livestock products is a big business, accounting for about one sixth of the value of all agricultural trade.
Iran, however faces a number of challenges in international markets. Individually, it is less able to exert pressure on other countries, particularly richer countries, to play fair in international trade.
Greater dependence on agriculture for income and employment, and on agricultural exports for foreign exchange, may make the country even more vulnerable to variations in supply, demand and prices in international market.
For instance, chicken meat production has been increasing but the country’s total production in the Middle East is not stable due to problems in coordinating production policies and the elasticity of the region’s market.
Besides, Iran earns less from chicken meat export than do other countries in the region whereas weight-wise it exports more. This may be attributed to low quality chicken meat or poor bargaining power.
Meat exports make up about half the total value of world exports, so Iran should come up with resourceful programs to make optimum use of the new opportunities by upgrading the quality and quantity of its livestock products in regional and global markets.
These programs could include an efficient animal husbandry system, improvement of product quality, promotion of technical knowledge, regulation of market, boosting production, supporting legal syndicates and providing infrastructure for their presence in decision-making.
To sum up, agricultural growth has been highly successful in Iran over the past 15 years or so. The challenge is to sustain and expand its unique economic-enhancing power, especially in rural areas.
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Cooperatives In Gov’t Tenders
Development cooperatives are authorized to participate in government tenders, announced Deputy Cooperatives Minister for supervision affairs, Hossein Rahmaninia.
Based on the previous bylaw, approved in 2002, only the private sector was qualified to take part in project contracts, he said adding that the new bylaw approved by the government allows cooperative sector to take part in bids for such schemes, IRNA wrote.
Rahmaninia said that more than 2,000 cooperatives will benefit from the new bylaw, saying they are authorized to participate in project contracts for building, dam and highway construction, industrial and mining operations, power plant construction as well as projects in the agricultural and service sectors.
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New Ports
For Privatization
Management of Astara and Arvand Kenar ports, located in Gilan and Khuzestan provinces respectively, will be handed over to the private sector in the year to March 2009.
The move is in the line with Article 44 of the Constitution which seeks large-scale privatization, said deputy head of Ports and Shipping Organization for ports and special zones affairs, Alireza Satei.
He told ISNA that preliminary steps have been taken and callups have been issued.
A number of applications have come in from private entrepreneurs, he said, adding, “We are currently studying the proposals to sign the preliminary and final agreements with selected investors in the near future.
The official added that further studies will be conducted on privatization of more domestic ports by next March.
Fereidounkenar Port in Mazandaran province was handed over to the private sector last February.
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Speculators Pushing Up Oil Prices
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Oil prices fell sharply Monday in a move some traders attributed to an ease in geopolitical tensions related to IranŐs civilian nuclear program and a strengthening US dollar.
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President Mahmoud Ahmadinejad has urged the international community to help end the oil monopoly of gullible and greedy corporate giants and speculators.
To control prices oil giants and speculators must be removed from global energy markets, the Iranian president told reporters Monday on the eve of the 6th Summit of the Group of Eight Developing Islamic Countries in Malaysia (D8).
“These greedy corporations not only plunder the resources of nations but also enjoy the political and military support of certain powers,“ he said.
Uncertain Future
Iran’s Oil Minister Gholam-Hossein Nozari said future crude prices cannot be predicted, refuting forecasts that prices could skyrocket.
“Prices for the coming months cannot be predicted,“ Nozari told ISNA in an interview. “Crude prices depend on a range of factors, including weather conditions. Oil producers are not happy with the current situation, though,“ he added, blaming the volatility on the weak US dollar.
“We have never said that rising demand in China and India is pushing up prices. I have always insisted that the unprecedented hike is due largely to the declining US dollar. Moreover, speculators have aggravated the problem. Yet the market is well-supplied,“ the minister noted.
Adjustment
The deputy head of the National Iranian Oil Company (NIOC) said foreign firms such as Shell and Total could do well by adjusting to the existing conditions in the Islamic Republic of Iran.
Hojjatollah Ghanimifard said negotiations on energy investment should be based on mutual understanding. “However, it is not right to attribute all problems facing the energy sector solely to the absence of foreign investment,“ he said.
“Of course, no one expects foreign investors to be oblivious to the issue of profit,“ Ghanimifard noted, adding that Iran signs oil contracts with foreign firms in line with international standards.
“Oil prices will not reach $250 a barrel in the near future. When experts study ups and downs in the international oil market, they first assess which factors should be taken into consideration and whether the processed information spans a long enough time,“ he argued.
“Figures that suggest a surge to $250 are speculation,“ he said. Responding to the chief executive of the Russian energy giant Gazprom, Alexei Miller, who had warned that oil prices could reach $250 a barrel by next year.
Falling Prices
Oil prices fell sharply Monday in a move some traders attributed to an ease in geopolitical tensions related to Iran’s civilian nuclear program and a strengthening US dollar--indeed further proof for the correctness of the comments made by the Iranian officials over the past few days.
New York’s main oil futures contract, light sweet crude for August delivery, slumped a hefty $3.92 to close at $141.37. The contract had earlier fallen over $5 before trimming some of its losses. In London, Brent North Sea crude for August settled down $2.55 at $141.87 a barrel.
Prices cooled after Iran offered to negotiate on its civilian nuclear program over the weekend in its first comments since responding to an international package aimed at ending the standoff.
“Following the news that Iran may be prepared to talk on its nuclear program, oil prices are a little softer,“ said analysts at the John Hall Associates energy consultancy in London.
Traders said the stronger US dollar also depressed oil prices. “The greenback was stronger, extending gains from the end of last week and helping to put more pressure on oil prices,“ said Sucden analyst Andrey Kryuchenkov.
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Industrial Exports at $12b
Director general of the Ministry of Industries and Mines for exports affairs said that industrial exports reached $12 billion last year, indicating a 16 percent increase compared to figure for the previous year.
Hossein Esfandiari told IRNA that export of non-oil commodities, excluding technical and engineering services, stood at $12 billion during the period.
In the said period, the main export markets were the UAE, China, Iraq, India and Japan.
Meanwhile, petrochemical products worth over $804.4 million were exported in the first quarter of the current Iranian year (started March 20), indicating an increase of 82 percent compared to the figure for the same period last year.
Some $33 million worth of agricultural products were also exported, showing a 22 percent decrease compared to last year’s figure.
During the same period, metal products worth over $96 million were exported, indicating a 66 percent increase compared to the figure for the same period the previous year. Minerals worth $12 million were also exported, showing a 69 percent decrease from the figure for the same period the year before.
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Rehab Bond
Deadline Extended
The deadline for the second phase of the sales of participation bonds for restoring urban structures has been extended to July 21, announced deputy housing minister.
Abolfazl Mousavi explained that with the permission of Central Bank of Iran, Urban Development and Revitalization Organization has issued participation bonds worth six trillion rials to renovate dilapidated urban structures, IRIB reported.
People have shown great interest in purchasing such bonds which have been on sale since June 14, the official underlined.
The first phase was well received by the public in 2001, said Mousavi, who is also managing director of Urban Development and Revitalization Organization.
In addition to on-the-account profit, purchasers received 17.3 percent as net profit in the first phase during which all the bonds were sold out, he recalled.
Studies show that 10 percent of the urban areas are dilapidated and the public buy participation bonds to participate in financing major development projects undertaken by the state.
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Sharing Expertise
Iran is ready to share its expertise in telecommunications with member states of Asia-Pacific Telecommunity (APT), Ministry of Communication and Information Technology’s director for international affairs, Kamal Mohammadipour said.
NIOC Appointment
National Iranian Oil Company (NIOC) Managing Director Seifollah Jashnsaz has appointed Ali-Asghar Arshi as the new director of the NIOC international affairs department.
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Wealth Funds to Allay Fears
Sovereign wealth funds that control an estimated $3 trillion in assets will meet in Singapore this week to discuss a code of ethics aimed at allaying western fears that their investments are politically motivated, Reuters wrote.
The International Monetary Fund’s (IMF) international working group of sovereign wealth funds will gather on July 9-10 to thrash out voluntary guidelines that the IMF hopes will be finalized by October this year.
Highly-secretive wealth funds, investment funds owned by national governments, have become increasingly active in buying Western assets in the past year, often armed with cash piles from soaring oil prices and trade.
Several have participated in multi-billion-dollar capital infusions into banks such as Citigroup and UBS, which were reeling from losses from the collapse of the US subprime mortgage market.
Goldman Sachs estimates US and European banks may need a further capital infusion of more than $200 billion. Analysts say banks have already written off $400 billion in bad investments.
But the funds’ growing clout has fuelled political concerns about foreign influence over domestic assets. That could spur protectionism, chilling the climate for foreign investment in the West even as the global economy slows, analysts say.
$2.5b CNOOC Bid for Norway Offshore Co.
China National Offshore Oil Corp.’s oil-services company said it will offer about $2.5 billion for Norway’s Awilco Offshore ASA.
The cash bid represents an 18.7 percent premium over the closing price of Awilco’s stock, CNOOC’s China Oilfield Services Ltd. said in a statement, AP reported.
Shares of China Oilfield were suspended from Monday pending the announcement.
CNOOC is China’s third-largest oil producer. China’s oil companies have been looking to expand in the oil service industry amid rising oil prices and Chinese demand for energy.
China Oilfield said the acquisition would help it increase its number of drilling rigs and tap more international markets.
Awilco, which operates oil and gas drilling rigs, already has a presence in Australia, Vietnam, Saudi Arabia and the Mediterranean region.
Eurozone Backs Rate Hike
Eurozone finance ministers threw their support behind the European Central Bank after it raised interest rates, leaving France isolated in its criticism of the ECB.
Eurozone finance ministers agreed at a meeting in Brussels that ECB was justified in raising the cost of borrowing in the 15 nation bloc in the face of record inflation, which hit an all-time high of 4.0 percent in June, AFP reported.
“The fight against inflation is of the highest importance,“ said Luxembourg Finance Minister Jean-Claude Juncker after chairing the meeting with his eurozone counterparts. He said that ECB took its responsibility and the central bank’s decision was not criticized.
GM Building Solar Station
US automobile giant General Motors (GM) plans to build the world’s largest rooftop solar power station at its biggest factory in Europe, the Financial Times reported.
Its factory in Zaragoza, northern Spain, will be clad in 183,000 square meters of solar panels in a 50 million euro project to provide a quarter of the factory’s power at peak times. The carmaker is working with Veolia Environment of France and Clairvoyant Energy of the US on the project, which is part of a commitment to greater sustainability.
GM is due to install solar panels on its factory in Saint Petersburg next and is looking at whether to roll out the scheme to its other 19 plants across Europe.
Aussie Business Confidence Drops
Australian business confidence fell to the lowest level in seven years in June as cooling domestic demand and spiraling raw-material costs eroded corporate profits, Bloomberg reported.
The confidence index dropped to minus 9 points from minus 4 in May, according to a National Australia Bank Ltd. survey of 335 companies. It was the weakest result since the September 11, 2001, terrorist attacks in the US.
Record oil prices and slower economic growth have damaged global sentiment, with New Zealand companies at their most pessimistic in 33 years and European investor confidence dropping by a record amount. Australian retailer Just Group Ltd. and builder Mirvac Group Ltd. reduced profit forecasts in the past month as interest-rate increases buffet consumer spending, while Qantas Airways Ltd. has cut routes and fired workers.
“The bottom line is for a marked slowdown in Australian economic growth,“ said Alan Oster, chief economist at National Australia Bank in Melbourne. “Activity across interest-rate sensitive areas has moderated significantly.“ Weaker confidence follows figures this week that showed job advertisements dropped the most in almost two years in June and construction work contracted. They all reinforce speculation the central bank has finished raising interest rates.
Cement Market Calm
The government’s plan to remove subsidies from cement has led to an increase in supply and a decline in the price of the construction material.
Cement is readily available in the domestic market. Based on the plan, the price of cement will be liberalized in three phases. In the first phase, the Cement Association will be responsible for regulating the cement market.
Head of the Cement Research Center Mostafa Khanzadi told Iran Daily’s Sadeq Dehqan that based on global research and experiments, governments should minimize involvement in economic affairs and only be responsible for supervision.
He said that the private sector has been more successful than the state in the field of production worldwide. “Cement is a strategic commodity and second after oil in terms of production in the world,“ he said.
“The future of this action (i.e. removal of subsidies) looks promising since it is in the interest of both the producers and consumers,“ Khanzadi noted.
Allocation of subsidy for cement led to entrepreneurs discontinuing investment in the sector because they could not sell their products at the real price.
In addition, the producers, who received subsidies, paid no attention to the state of the cement market.
Middlemen’s activities in the market pushed up prices of cement to 100,000 rials per bag.
He said that annual domestic demand for cement is about 70 million tons, adding that output capacity currently stands at 54 million tons.
Khanzadi concluded that a number of cement plants are under construction and once they become operational, cement production capacity will reach 90 million tons per annum.
10th Economic Power in Developing World
Iran overtook South Africa, Argentina, Egypt, Venezuela and Thailand to become the 10th biggest economic power among developing countries in 2007, the International Monetary Fund said in a report called ’Outlook of Global Economy’.
It said that Iran, with $96 billion GDP, ranked 15th among 150 developing countries in 2000.
Rise in oil prices coupled with the growth in non-oil exports increased the country’s GDP to $294 billion during the seven-year period (2000-2007).
China, with $3,250 billion GDP, was the first economic power among developing countries in 2007, followed by Brazil and Russia with $1,313 billion and $1,289 billion respectively.
The report predicted that Iran’s GDP will hit $452 billion in 2010 and the country will maintain its position as the 10th largest economic power among developing countries.
Investment in Malaysia on the Rise
Iran is the third biggest investor in Malaysia’s industrial sector after Germany and Japan, said Iran’s ambassador in Kuala Lumpur adding that subsequent positions are held by the USA, Singapore, India and China.
Mehdi Khandaqabadi listed the major joint investment projects as construction of 47,000 residential units, two power plants, development of four oilfields and construction of four refineries in Iran, Malaysia, Indonesia, Syria and building railway lines, reported IRNA.
Pointing to the growth in cooperation between Iran and Malaysia in recent years, the ambassador said that most of the legal frameworks for expanding bilateral economic relations have been prepared. “They include inking the deal on supporting the investment, agreement on avoiding double taxation and memorandum of understanding between the bourses of the two countries,“ Khandaqabadi pointed out.
The two countries have signed over 22 documents of cooperation in various sectors.
The value of agreements inked since 2006 has exceeded $50 billion, the ambassador stressed.
Customs, Trade Organization Review Cooperation
Ways of expanding cooperation between Trade Promotion Organization of Iran (TPOI) and Islamic Republic of Iran Customs Administration (IRICA) were reviewed in a meeting of the chairmen of the two organizations.
According to ISNA, head of TPOI, Mehdi Ghazanfari underlined the need for further communications and integrating the computer networks of the two organizations. “In the current competitive market, all entities dealing with exports should help facilitate trade development,“ he noted.
Ghazanfari said that there are ample areas of potential cooperation between the two organizations.
IRICA is expected to make every effort to expedite issuance of facts and figures which would help TPOI put forward more analytical reports on export and import trends.
New head of the IRICA, Ardeshir Mohammadi welcomed the expansion of relations between the two organizations, adding mechanization of customs affairs, enhancement of staff capabilities and coordination with other related entities are among the most important programs of his organization.
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