TBY talks to Dr. Mohammad Talebi, President of Bank Keshavarzi.
TBY What is the state of Iran’s agriculture, and how is education figuring in this growth story?
DR. MOHAMMAD TALEBI Total agricultural production in 2009 rose to 100 million tons from 25 million tons, and this does not include the production of the food industry, which is equal to 30 million tons. This all indicates the remarkable growth and development of Iranian agriculture. Another indicator is the number of university students and graduates of agriculture and other associated majors, which amounts to 200,000 individuals nationwide. The number of universities in different cities that run special courses or offer specialized degrees in areas related to agriculture has also been on the rise. There are also many research centers around the country focusing on increasing agricultural products and productivity, and today they have entered the agriculture sector and their applied scientific findings are being utilized.
How do you support scientific research in the agriculture sector?
The bank announces topics of interest for scientific research and in return receives proposals, which are taken into consideration; it then finances a number of selected research projects. Most of the topics are, as expected, related to agriculture and economics. We use the research findings to improve the status of production, and support and direct individuals involved in the agriculture sector. In addition, by entering the agricultural sector, researchers and graduates provide traditional farmers with engineering services so that the farmers increase the quantity and quality of their products. The graduates also get the opportunity to directly operate greenhouse and livestock breeding projects, as well.
What agricultural development projects has your bank been supporting?
In Iran, there are 4.5 million individuals, with their family members making up 25 million of Iran’s total population of 74 million, who are active in the agriculture sector. Iranian agriculture, and consequently Bank Keshavarzi’s activities, is focused on micro-agriculture. In micro projects, we provide farmers with banking services so that they can improve their production. We have also designed special schemes for special conditions. For example, we finance farmers’ working capital specifically in the fall. We provide financial facilities worth $300 for every hectare of cultivatable land. The bank also provides inexpensive financial facilities aimed at improving types of center-pivot irrigation systems and other forms of agricultural machinery.
Iran is a country in which you can experience four seasons at the same time. This, of course, has a positive effect on agricultural production and the consumption of agricultural products. The agriculture sector’s share in GDP is around 13%, though its share in employment is around 21%. Agricultural products make up 36% of non-oil exports, including different types of fresh fruit, vegetables, and processed food products.
Are there any opportunities for foreign investment in Iranian agriculture?
Iran’s Fifth Five-Year Development Plan aims to attract foreign investment to Iranian agriculture. For instance, we are very much interested in investment that would improve our irrigation networks. Iran has renewable water resources of 130 billion cubic meters, and surface water resources of around 92 billion cubic meters, while some 83.5 million cubic meters of water is being used in agriculture. This is a very good opportunity to invest, because the resources we will allocate to the improvement of the irrigation systems in the upcoming five years amount to $30 billion.
Another field of activity is investment in improving the level of mechanization in agriculture. Currently, the level of mechanization is around 1% and we aim to increase it to 3%. The resources we will invest in this project will amount to $15 billion in the upcoming five years. Bank Keshavarzi is in charge of financing these projects, and we invite foreign companies to take part.
In the past, Iran was a food importer. We have now achieved self-sufficiency in agricultural production and can increase our export of agricultural products substantially and constantly, especially the export of meat, poultry, and dairy, because national production volumes have increased and the country is surrounded by appropriate export markets. As you know, exporting these products entails some requirements, such as in terms of transportation. If these requirements are met with the assistance of foreign investment, then products can easily be transported to markets around Iran.
Where is Bank Keshavarzi positioned in the banking market, especially with regard to rural development?
Bank Keshavarzi is the only specialized financial institution in Iran that focuses on agriculture. The bank has 77 years of experience and is currently entering its 78th year. It runs 1,900 branches nationwide, and has nearly 17,000 members of staff. Its main mission is agricultural development. In other words, the bank’s duty is to contribute to agricultural activities and cooperatives. It was a small institution before the Revolution with total assets of just $20 million. Today, the bank has assets of a more sizeable $20 billion. This also indicates the high growth trend of Iranian agriculture.
Do you also run other banking services in non-agricultural sectors? What are your priorities in these other services?
We know that we have a special mission for the Iranian economy, which is agricultural development. But we also know we have to operate a fully fledged bank as well. Our electronic banking services are among the most developed in the world because we have managed to make the modern systems of global banking comply with Islamic banking practices.
In addition to our customers in rural areas, we have many large customers in cities as well. We are using the extent of our electronic banking services to attract major customers in urban areas. We then use the resources we have mobilized via these customers for our special mission in the agriculture sector.
We also have specialized services for younger Iranians. As a bank, we are very much interested in adding the next generation to our customer group from an early age. Thus, we spend a considerable amount of time on disseminating knowledge about the services banks offer. For example, we conduct training workshops in elementary and secondary schools. We also invite groups of students to our Children and Youth Branches, and these are specifically designed to introduce the banking sector in general and banking services and products in particular.
What was the impact of the global economic downturn on the Iranian economy?
As you know, the present economic crisis has affected all parts of the world, but it has differed widely from one country to another. However, it is believed that it had a lesser impact on Iran as compared to many other countries. Iran, as the holder of a diversified portfolio of foreign currency reserves, was affected less than those countries that held their assets mainly in only one unit of foreign currency. In addition, investors who managed their portfolios through investment banks were severely affected by the crisis. But, as the rate of return offered by our banks is still very high, many investors have placed their investments in Iran, which is another factor making us more immune to the effects of the global economic downturn.
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