Saudi firm’s dumping cripples Iran producers
Dumping by a Saudi holding with a controlling stake in an Iranian vegetable oil company is forcing local producers to shut down, media reports say.
Saudi Arabia's largest food producer Savola, which owns more than 80% of Iran’s Behshahr Industrial Company, has been accused of flooding the market in order to drive rivals out of business.
One producer, quoted by the daily Javan, said Savola Behshahr had started supplying its most famous brands to wholesalers at steep discounts which was only benefiting the middlemen, and not the consumers.
Behshahr Industrial Company accounts for 40% of Iran’s vegetable oil market and Savola’s controlling stake in it “has put the market pulse for a basic commodity under the fingertips” of the Saudis, Managing Director of Hengameh Oil Company Karim Mohammadzadeh-Qanbari said.
Local producers, he said, were planning to go to parliament to push lawmakers on solving their problems and “confronting” the foreign investor.
“Currently, 10 to 15 smaller plants have been driven to the brink of being shut down, with more than 1,000 workers idled,” he said.
The Behshahr Industrial Company defended the price discounts, saying the market had become increasingly competitive and those unable to compete had to leave.
“The vegetable oil market loses steam in the summer. Hence, some factories have to give discounts in order to maintain their share of the market,” Managing Director Hamid Reza Rezaee told Javan.
Several Iranian lawmakers have already called for government and judiciary intervention to address the Saudi holding’s alleged monopoly on the cooking oil market in Iran.
They have warned of risks involved in the Saudi company’s business in Iran given a recent deterioration of diplomatic relations between the two countries.
The Saudi government is reportedly the second-largest single shareholder in Savola through a 10% stake held by a social-insurance board.
The Saudi group, which also operates in Egypt, Algeria, Sudan, Turkey, Morocco, Jordan and Kazakhstan, generates more than 15% of its revenues from business in Iran.
Mohammadzadeh-Qanbari said Savola Behshahr was also opposed to exports of vegetable oil by Iranian producers, especially to Iraq, because the Saudi company's subsidiary in Turkey was a major exporter of the commodity.
Savola bought 49% of shares in Iran’s Behshahr Industrial Company in 2004 before raising the stake to more than 80%.
The firm's revenues from Iran increased by almost a third to $1.17 billion in 2012, which constituted about 42% of its global edible oil sales.
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