After nearly achieving agricultural self-sufficiency in the 1960s, Iran reached the point in 1979 where 65 percent of its food had to be imported. Declining productivity was blamed on the use of modern fertilizers, which had inadvertently scorched the thin Iranian soil. Unresolved land reform issues, a lack of economic incentives to raise surplus crops, and low profit ratios combined to drive increasingly large segments of the farm population into urban areas.
Since 1979 commercial farming has replaced subsistence farming as the dominant mode of agricultural production. Some northern and western areas support rain-fed agriculture, while other areas require irrigation for successful crop production. The 1979 Revolution sought self-sufficiency in foodstuffs as part of its overall goal of decreased economic dependence on the West. Higher government subsidies for grain and other staples and expanded short-term credit and tax exemptions for farmers complying with government quotas were intended by the new regime to promote self-sufficiency. But by early 1987, Iran was actually more dependent on agricultural imports than in the 1970s.
By 1997, the gross value of products in Iran's agricultural sector had reached $25 billion. In 2000, the Construction Jihad Organization and the Ministry of Agriculture were merged by national legislation, to form the new Ministry of Agricultural Jihad.
The 1999-2000 drought reduced overall GDP by about 4.4%, and resulted in decreased non-oil exports, increased food imports, and a rise in inflation. In 2003, a quarter of Iran's non-oil exports were agricultural based. In 2014 an agricultural bourse started trading agricultural and related products in the country. Iran's agricultural sector contributed 11 percent of the GDP in 2014 and employed a third of the labor force.
Benefiting from 123,580 square kilometers of land suitable for agriculture, the agricultural sector is one of the major contributors to Iran's economy. It accounts for almost 13% of Iran's GDP, 20% of the employed population, 23% of non-oil exports, 82% of domestically consumed foodstuffs and 90% of raw materials used in the food processing industry (2014).
The focus areas for agriculture are:
- Financing and low-interest loans for investment in agriculture and agro-industrial projects.
- Ensuring self-sufficiency in the provision of national food requirements.
- Budgets for agro-industrial projects in the food processing, packaging and irrigation sectors.
- Provision of agricultural machinery and equipment with emphasis on local production by making transfer of technology a required clause in foreign contracts. Foreign loans and investments in the agro sector exceeded $500 million in 2008.
- Allocation of government loans and financing for agro-industrial projects.
In 2014 seven hundred agricultural complexes were under construction on 60,000 hectares of farmlands across the country. Chicken farms, animal husbandries, fish farming pools and greenhouses are built in these complexes.
Mechanized agricultural has had a slow but steady growth in Iran. Industrial facilities in Tabriz and Arak are Iran's largest producers of machinery and equipment for the agricultural sector. 12,000 combine harvesters and 300,000 tractors are currently used in the sector (2014). Tabriz Tractor Manufacturing Company, which was founded four decades ago, employs almost 10,000 people. It produces 30,000 tractors annually, a large part of which is exported. Iran declared self-sufficiency in irrigation and agricultural machinery in 2010.