MercoPress. South Atlantic News Agency

Uruguay to benefit from agreement reached by Iran with world powers

Rice exports could again become direct deals with the Iranian government

The agreement reached by the world powers with Iran regarding its nuclear plans could have a positive impact for Uruguay, (and the region) since the regime of Teheran has been for years a strong client of Uruguayan rice and other products.

 “If Iran can resolve its problems and lift international bans, this can be beneficial for Uruguay”, according to Jaime Cardoso CEO of Uruguay rice mills association since “this would give us a greater trade stability”.

Cardoso revealed that the issue of trade with Iran has “been quite well resolved” since the end of last year with the implementation of a system by which debtors of the Iran government, basically foreign corporations that purchase oil, are responsible for the payment of the rice shipments.

The big issue is avoiding the Iranian government qne because the buyer of the rice is the government the letters of credit from the Iranian central bank are not confirmed by any international bank, European or from the US, this undoubtedly complicated very much the operation of rice with Iran.

Even when this problem has now been resolved, Cardoso said that if an agreement is finally reached lifting some of the bans and allows direct payments “it will be beneficial”.

According to Uruguay Customs reports so far this year Uruguay has exported to Iran grains and other foods for the value of 52.2 million dollars, of which 43.5 million (83%) is rice. This was followed by wool tops with 5.2 million dollars.

The positive effects could be even greater if trading becomes more fluid. Teheran's negative to abide to the world's powers demands regarding its nuclear power development drastically limited exports to Iran from Mercosur and the region. The Iranian currency, Rial also lost half its purchasing power and unemployment in the country soared.

Less purchasing power plus complications relative to payments strongly limited exports, mainly from Brazil. For example regarding Brazilian beef, sales in 2010 averaged 16.000 tons a month but so far this year have dropped dramatically to 3.558 tons.