Flour Supply Chain Under Dual Pressure: Global Costs and Domestic Policies

Wheat pricing for Iran’s industrial sector has become one of the key challenges facing the flour and food industries, as rising global costs, changes in subsidy policies and growing pressure on millers’ working capital continue to affect the balance of the supply chain.

The price of Type 3 industrial wheat is currently set at 530,000 Rials per kilogram, while the €285 ceiling for imported wheat requires a more flexible mechanism that can adjust according to global wheat prices, transportation costs and insurance expenses to ensure a stable supply of raw materials for food industries.

Changes in subsidy policies have further complicated market conditions. The government subsidy for wheat used in the pasta industry has increased from around 40,000 Rials per kilogram last year to 290,000 Rials this year, while a similar subsidy has been allocated for industrial and free-baking bread wheat. Without a clear framework, such changes could create new price gaps between different consumer segments.

Higher wheat prices have also placed significant pressure on flour mills’ liquidity, making working capital support, banking participation and supply-chain financing tools increasingly important for maintaining production continuity.

Alongside wheat, the restructuring of the bran market has become another key issue. Offering bran through the Bazargah trading platform could improve transparency and market balance, provided that supply and purchasing processes operate smoothly and prevent product accumulation at mills.

For Iran’s flour industry, the main challenge is not only wheat pricing, but also achieving a balance between global costs, support policies, producers’ financial capacity and supply-chain resilience — a balance that plays a direct role in maintaining food security.