Russia, Kazakhstan and Iran have signed a memorandum of understanding for cooperation in wheat trading, taking another step towards setting up a free trade zone.
The document was signed in Moscow Tuesday, bringing the countries closer to the free trade zone between Iran and the Eurasian Economic Union, which Russia has established with its neighbors.
“The memorandum is an integral part of the free trade zone agreement signed between the Eurasian Economic Union member states and Iran last year,” Kazakhstan’s Deputy Minister of Agriculture Gulmira Issayeva said.
Under the deal, Iran will import wheat for its private millers who will produce flour for export, her Iranian counterpart Ali-Akbar Mehrfard said.
Iran, he said, has enough wheat harvested inside the country to cover its needs but it can export Russian and Kazakh grain to other countries. Iranian private millers are not allowed to use domestic wheat for flour exports.
“In Iran, there is suitable infrastructure in the flour industry, which is twice as much as domestic demand. In addition, Iran’s wheat silage is at a good level, and we now have 5 million tonnes of flour trade,” Mehrfard said.
Kazakhstan has welcomed using Iran’s transit and logistics network to deliver its agricultural goods to customers, he said, adding the two countries are also working on wheat swap arrangements.
No volume has yet been set, with Mehrfard saying the issue is up to the private sectors to decide. He also said the memorandum does not specify the currency to be used but the countries can trade in their national money.
Last year, an Iranian official said the country was negotiating importing around 100,000 tonnes of Russian wheat per month to increase flour exports to neighboring Iraq.
“We have a little financial problem to resolve but after it we will be able to go through with the deal,” secretary general of the Iran Federation of Food Industry Associations Kaveh Zargaran said.
A Russian official said at the time that the talks were part of broader negotiations about a free trade zone between Iran and Russia.
Iran is in advanced talks about creating a free trade zone with the union, known as the EAEU.