Iran Eyes Contract Farming in Afghanistan

TEHRAN (Iran News) Mahmoud Siadat, head of the Iran–Afghanistan Joint Chamber of Commerce, said that official recognition of the Taliban government—referred to by its authorities as the Islamic Emirate of Afghanistan—would significantly strengthen commercial relations and provide greater confidence for long-term investments and private-sector engagement.

His remarks followed recent statements by Alireza Bigdeli, Iran’s ambassador in Kabul, who indicated that Tehran may soon formally recognize the Taliban-led administration.

In an interview, Siadat said there is no certainty yet regarding recognition, but noted that Iran’s relations with Afghanistan’s current authorities have steadily improved across multiple sectors.

“Fortunately, relations between Iran and the Islamic Emirate of Afghanistan are improving day by day in various fields,” he said.

According to Siadat, official recognition by Tehran would create greater stability and reassurance for private-sector actors seeking to engage in Afghanistan. This would be particularly important for long-term projects such as railway connectivity linking Iran to China through Afghan territory, as well as major public and private investment initiatives.

“When it comes to long-term contracts and strategic infrastructure projects, recognition would make it easier to rely on agreements and move forward with confidence,” he said.

Siadat described current economic relations between the two countries as strong and friendly, but emphasized that formal diplomatic recognition would further enhance both the perception and practical realities of cooperation.

Citing Iranian customs data, he said Iran’s annual exports to Afghanistan exceed $2.5 billion. However, Afghan customs authorities report even higher figures, estimating imports from Iran at more than $3 billion per year.

In total, Siadat estimated that Iran’s combined exports of goods and services to Afghanistan amount to approximately $3.5 billion annually.

By contrast, Afghanistan’s exports to Iran remain limited, totaling around $100 million per year.

A significant portion of Iran’s exports to Afghanistan consists of technical and engineering services, which Siadat said exceed $500 million annually. However, he acknowledged that there is no comprehensive database tracking these activities.

He attributed the lack of accurate data to insufficient government support and incentives. In the past, Iran’s Trade Promotion Organization provided bonuses of up to five percent of contract values to exporters of technical and engineering services, encouraging companies to formally register their overseas activities.

“Today, not only are there no incentives, but exporters are concerned about potential penalties, taxes, and social security obligations,” Siadat said. “As a result, many prefer not to register their activities.”

He added that Afghanistan’s most pressing needs go beyond goods and include technical services, consultancy, knowledge transfer, and technology—areas in which Iran has considerable capacity but has underperformed in terms of policy support.

Looking ahead, Siadat highlighted agriculture as a key area for expanding bilateral cooperation. He said Iran has already imported cotton, legumes, and certain agricultural products from Afghanistan this year, along with limited quantities of zinc ore, lead, and other minerals.

However, industrial and mining imports from Afghanistan currently face logistical and structural challenges. As a result, Iranian policymakers and business leaders are increasingly turning their attention to agricultural cooperation.

“We are seeking to implement contract farming in Afghanistan,” Siadat said. “Given that more than 50 percent of Afghanistan’s economy and workforce is engaged in agriculture, livestock, fisheries, and horticulture, this sector offers significant potential.”

Under contract farming arrangements, Iranian companies would invest in Afghan agricultural production, providing technology, expertise, and guaranteed purchase agreements. The harvested products—such as legumes, meat, and other agricultural goods—would then be exported to Iran.

Siadat suggested that such cooperation could reduce Iran’s dependence on more distant suppliers.

“Instead of importing legumes from Canada, we can source them from Afghanistan,” he said. “Through contract farming and the transfer of knowledge and technology, we can import agricultural products and meat from Afghanistan in a structured and mutually beneficial way.”

Siadat also noted that remittances sent by Afghan nationals residing in Iran likely exceed the value of Iran’s total exports to Afghanistan. Millions of Afghans live and work in Iran, sending portions of their earnings back home to support their families.

This flow of funds, he said, underscores the deep economic interdependence between the two neighbors.

While formal recognition of the Taliban government by Iran has not yet been confirmed, Siadat made clear that such a move would mark a turning point in economic relations. It would not only solidify existing trade flows but also pave the way for expanded infrastructure projects, agricultural investment, and long-term strategic cooperation.

For now, trade between the two countries remains robust despite the absence of formal recognition. But business leaders argue that a clearer diplomatic framework could unlock further growth—particularly in sectors such as rail connectivity, agriculture, engineering services, and cross-border investment.

As discussions continue, Iran appears poised to deepen its economic engagement with Afghanistan, with contract farming emerging as a central pillar of its evolving strategy.