Possibility of setting a new preferential exchange rate for importing inputs

During the implementation of the preferential exchange rate, the benefits of this policy were transferred from importers to the internal links of the chain, including animal and poultry feed factories, provincial cooperatives and other sectors, and in the worst case, about 8 percent of these benefits remained in the hands of importers in the form of over-declaration.

However, the subsequent links accounted for a greater share of the subsidy waste; so that the country’s livestock farmers also contributed nearly 20 percent to the waste of these resources. This waste was formed through paths such as under-declaration, improper management of resources, low production efficiency and the sale of government inputs at free prices.

It is expected that in the near future, a fixed rate close to the free market will be set as the new preferred currency (about 140,000 Tomans) to help stabilize prices relatively. Economic disorganization could lead to a large supply of foreign exchange in the market in the initial months of implementing the new policies, resulting in a temporary drop in prices.

However, in the medium term, there is a possibility of repeating the experience of eliminating the 4,200 Toman currency, including the elimination of breeding livestock and the culling of breeding chickens in broiler breeder farms, following the reduction in producers’ motivation to continue operating in the meat and egg market and the recession in this sector.