Pakistan has decided to export a million tonnes of wheat to Iran in a barter deal, an official in Islamabad said on Monday, as Western sanctions over Tehran's nuclear programme squeeze its ability to pay for food imports.
Food shipments are not targeted under the sanctions, but Iranian companies have been cut off from much of the global banking system because of the financial measures against Tehran, making payments difficult and discouraging traders.
'The Pakistan government decided in a meeting on Saturday that it is going to export a million tonnes of wheat to Iran through the barter trade system,' Tanveer Alam, a spokesman for the ministry of water and power, told Reuters.
'A delegation will go there next week or in the beginning of April to work out what is possible.'
Iranian officials had asked for one million tonnes of wheat through barter during a visit to Pakistan last month.
Tehran has ordered a large part of its expected yearly requirement in the past month - around two million tonnes of wheat from various sources - paying premium prices to go around sanctions and prevent unrest.
The barter deal with Pakistan is not final yet.
'The only decision so far is that we want to export a million tonnes of wheat. We would prefer to get fertilizer in return but have to see what is on the table,' Alam said.
'There is also a possibility of iron ore being part of the deal.'
Alam did not specify the amount of iron ore that might be part of the barter.
Apart from Pakistan, Iran has approached India, and purchased wheat from Russia, Germany, Canada, Brazil and Australia to build up stocks.
US sanctions are targeting Iran's oil trade and central bank to pressure Tehran to shut down its nuclear programme, which Iran says is for peaceful purposes.
A US advisory group said last month that the sanctions are squeezing Iran's oil exports even before they take effect in June.