Total investment in the sector will be 10 per cent higher than the last Iranian year, when $7.7bn was pumped into farming.

About $7.5bn of the total will come from loans by domestic banks, most of which are state-owned. The government will invest an extra $1bn using money from its foreign exchange reserves.

According to the UN Food & Agriculture Organisation, Iran will have to import 2 million tonnes of wheat in 2008 after dry weather in May resulted in the smallest harvest for six years (MEED 8:8:08). President Mahmoud Ahmadinejad’s policy of supporting small farmers using state aid had led to record wheat production of 15 million tonnes in 2007.

Khalilian said the government would increase investment in agriculture by another 13.5 per cent in the next Iranian year, which begins on 21 March 2009.