Lessons learned from the experience of many years of the government monopoly in investment permits in the agriculture sector and the small success of this method, along with the globalization of information and the success of many teachings to pay attention to the non-governmental sector holding core activities in various sectors including Agriculture, Industry and Service caused the planners and decision makers to start the strategy of establishing non-governmental Funds to support the development of investment in the agriculture sector and reduce unnecessary government enterprises in this sector. Therefore, SFIDA (Supportive Fund of Investment Development in Agriculture) was set up to legally and geographically stablish the national, provincial and count Funds.
Remarkable increase in exports of agricultural products and industry during the economic development program indicates the potential of these two sectors to provide significant amounts of foreign exchange needed by the country. On the other hand, due to the wide relationship between agriculture and industry, their export can have significant effects and results on the export development of other sector and as a result, the economic development in the country. However, this requires increased investment and reform of the country’s trade structure to help increasing exports.
Setting up the non-governmental Funds to support the development of the agriculture sector with the participation of producers and their capital along with government assistance through SFIDA as a platform with the nature and function of financial-credit institutions is one of the steps to strengthen social capital. A Fund with minimum 51% share of non-governmental producers is formed by them. Funds are run by board of directors who are elected by of the members at the presence of the SFIDA as one of the shareholders, only to enable direct communication with the government institution. Therefore, the main mission and fundamental purpose of these Funds, which are considered as economic enterprises in the social direction of the country is to facilitate and support mobilizing the capital of private sector to invest in Agriculture Development Funds.
The agriculture sector holds an important role in the country’s economy, so that about 15% of GDP, 25% of employment, 92% of foodstuffs, about 20% of non-oil exports and about 90% of raw materials required by the country’s agro-based industries depend on this sector.In general, the importance of the agriculture sector can be described as follows:1. Food supplier2. Supply of raw materials for food industry3. Earning foreign currency through development and expansion of crop exports4. Creating a market for industrial goods5. Employment One of the characteristics of the agriculture sector is the minimum dependence on the public sector. In addition, the smallholding producers are highly active in this sector, so that 98% of the activities of the agriculture are done by the producers themselves.
The existence of these two characteristics on the one hand and the importance of investment in the agriculture sector on the other hand shows the need to form strong institutions and organizations in this sector in order to mobilize resources and facilities for investment development to enable the accumulation of small resources, guidance and optimal allocation of fund. Achieving this requires the help and partnership of the government with the private sector. It can accelerate the growth and development of the country’s economy. By this, while developing investment, it helped to increase farmers’ income and improve the equity distribution of income among the farmers and finally the country. Also, due to the strong relationship of the agriculture sector with other sectors, increasing investment in this sector accelerates economic growth of other sectors.
In this regard, the Islamic Parliament of Iran and the government, by acknowledging this issue, have designed and approved the establishment of non-governmental Funds to support the development of the agriculture sector. In order to implement these decision, the establishment of a specialized parent company to support investment development in the agricultural sector was approved. Accordingly, SFIDA was set up in 2004 .
Laws related to the formation of the SFIDA are as follows:
- Article 12, the Law on the Establishment of the Ministry of Agriculture Jahad
- Article 17 of the Law on Increasing Productivity
- Article 19 of the Law on Increasing Productivity
- Article 84 of the Fifth Development Plan Law
- Article 143 of the Fifth Development Plan Law
- Article 194 of the Fifth Development Plan Law
- Article 224 of the Fifth Development Plan Law
Each of article is described in the following as it is:
Article 12, the Law on the Establishment of the Ministry of Agriculture Jahad
“In order to support the development of investment in the agriculture sector, the Ministry of Agriculture Jahad is obliged to establish Funds along with the participation of producers and private sector. The statute of these Funds will be prepared by the Ministry and will be approved by the Cabinet. The initial capital of the funds will be provided from government grants, the sale of property and surplus facilities of this ministry, which after the sale will be deposited in the total treasury and its equivalent is considered to be allocated up to one thousand billion (1000,000,000,000) Rials equals to USD 120,000,000. A company owned by the Ministry of Agriculture Jahad named “Supportive Fund of Investment Development in Agriculture (SFIDA)” is obliged to establish specialized, productive and regional non-governmental Funds to support the development of investment in the agricultural sector with the participation of producers in this sector.
The maximum share of the Ministry Agriculture Jahad by SFIDA is determined up to forty-nine (49) percent of the initial capital of these Funds.
Article 17 of the Law on Increasing Productivity
By Article (12), the Law on the Establishment of the Ministry of Agriculture Jahad and in implementation of paragraph (d) of Article (18) of the Fourth Economic, Social and Cultural Development Plan, the government (Ministry of Agriculture Jahad) can share up to forty-nine Percentage (49%) to set up the non-governmental Funds and the increment. The government part capital can be allocated from the sale of transferable facilities of the Ministry of Agriculture Jahad and affiliated organizations. The money received by selling the facilities has to be deposited to the Treasury and in compliance with the relevant regulations through the specialized parent company can be transferred to Funds account.
Funds geographically can be set up in county, town, province, national, and also for especial crops.
Article 19 of the Law on Increasing Productivity
In order to increase production and create employment, non-governmental banks, private financial and credit institutions, as well as non-governmental Funds such as SFIDA (geographically established in county, town, province, national, and also for especial crops) are allowed to invest in some projects such as construction of greenhouses, greenhouse complexes, animal husbandry, fisheries, production of Mushrooms, medicinal plants, agro-based industries and private research centers after obtaining the necessary permits from the Ministry of Agriculture Jahad or affiliated organizations. They have to use their own resources and also, if necessary, foreign exchange reserve account (for foreign exchange use based on figures in the annual budgets). They are obliged to hand them over to the applicants with the priority of unemployed agricultural graduates in one of the methods of “selling at cost price” or “renting on the condition of property ownership”.
Article 84 of the Fifth Development Plan Law
The National Development Fund, hereinafter referred to as the Fund, aims to convert part of the proceeds from the sale of petroleum, gas, gas condensate and petroleum products into sustainable, productive wealth and capital, as well as to preserve future generations’ share of oil and gas resources and products is formed.
Article 143 of the Fifth Development Plan Law
In order to maintain production capacity, achieve self-sufficiency in producing basic agricultural and livestock products such as wheat, barley, corn, rice, oilseeds, sugar beet, sugarcane, white meat, red meat, milk and eggs, modify consumption patterns based on nutrition standards, Expansion of industrial and knowledge-based agriculture, provision of food security infrastructure and promotion of added value of the agricultural sector based on annual sustainable development considerations by 7% compared to 2009 will be implemented during the development program.
Article 194 of the Fifth Development Plan Law
By this Article, The government is obliged to provide the necessary support in order to improve the situation of villages through the policy-making, planning, leadership, monitoring and coordination between executive bodies, improving income and quality of life of villagers and farmers and reducing inequalities between rural, nomadic and urban communities.
Article 224 of the Fifth Development Plan Law
The law for preparing the government’s financial regulations approved in 2001 and its subsequent amendments and additions will be enacted with amendments and additions for the Fifth Development Program period.