Ministry to Streamline Apple Production Chain

EghtesadOnline: The Ministry of Agriculture has listed eight agro products under its export promotion policy and is currently in the process of forming a unified production and supply chains for each.

News ID: ۷۸۰۴۴۸

15 November 2017

From among the eight products, the apple chain formation is in its final stage.

The other products are pistachio, saffron, dates, raisins, citrus fruit, kiwi and greenhouse products, Abbas Pakpour, deputy head of Export Promotion Office with the Ministry of Agriculture, told Financial Tribune.

“Based on figures released by the Food and Agriculture Organization of the United Nations, Iran is the ninth biggest producer of apples worldwide. In exports, the country ranks ninth in terms of weight and 14th in value. As such, we account for 1.87% and 4.05% of the global production and exports respectively,” Financial Tribune quoted him as saying.

Iran follows China, the US, Poland, India, Turkey, Italy, Chile and Russia in apple production in a descending order.

Considerable Production

The Agriculture Ministry has put last year’s (March 2016-17) apple production on over 217,300 hectares of orchards at more than 3.43 million tons, registering a 1.5% decrease compared with the previous year.

The three main provinces producing apples in Iran are East and West Azarbaijan and Tehran.

In the first half of the current Iranian year (March 21-Sept.22) close to 41,700 tons of the fruit worth more than $12.6 million were exported, registering a 75% and 78% fall in weight and value respectively year-on-year. The reason for this decline is said to be the fact that almost all the stored apples were exported last year and there was not much left in warehouses across the country.

The UAE, Iraq, Afghanistan, India, Pakistan, Turkmenistan, Kuwait, Oman, Bahrain, China, Qatar, Russia, the US, South Korea, Switzerland and France were the main export destinations for Iranian apples.

Pakpour said Iran’s apple production is considerable and enjoys high quality.

Yet, before President Hassan Rouhani took office in 2013, the Ministry of Industries, Mining and Trade was responsible for agricultural trade, but there were no proper plans for organized exports. In 2013, the responsibility was delegated to the Agriculture Ministry as it was put in charge of agro trade and market affairs on top of production.

“Since then, we have taken measures to fulfill the goal of increasing exports. In this regard, we started designing [unified] production and supply chains last year. The cycle of these chains covers everything from pre-harvest, harvest  and post-harvest processes, production standards, logistics, cold storage and warehouses, packaging, transportation and marketing right up to the final stages of domestic consumption and exports,” he said.

Chains to the Rescue

The unified chains, he said, help us produce as per the plans and give us standards to follow.

“This will help us find sustainable foreign markets that will help balance prices in the domestic market where more often than not, farmers incur losses since surplus production makes them sell their products at much lower prices compared with the production costs,” he said.

“Another very important matter we pursue in forming production and supply chains is brand creation. All the people engaged in apple production will be working as one large-scale unit by selling their products under one brand. This will help solve many of our export problems.”

The official explained that under a brand, producers will have to abide by standards and qualities, and issues such as sorting, packaging and proper transportation will be taken care of.

One of the main hassles in export destinations is what Pakpour refers to as “negative competition” of Iranian merchants, that is Iranian businesses compete with one another rather than those of other countries.

“Since our presence in foreign markets is unorganized and haphazard, and we offer products of different qualities and prices, we have unfortunately rooted ourselves out of most of these markets. This is not how global trade works. In almost all cases, our foreign customers demand a large quantity with a certain quality and a fixed price be supplied to them based on a specific timetable throughout the year. This is while due to unplanned production and domestic market conditions, our exporters fall short of meeting this demand,” he said.

“The number of Iranian exporters in foreign markets is unreasonably high. At present, almost anyone tries their hand at exports and offers just any kind of quality to their foreign customers. By doing so, they are in fact ruining the market for businesspeople who have produced high-quality products for exports specifically and have well-defined plans for their foreign trade activities.”

The establishment of an organized chain, he added, will help merge small-scale businesses into large export units, which demand specific requirements.

“Therefore, all activities that culminate in the production of apples, as well as the other seven agro products, will come under one unified management and promote targeted activity,” he said.

Pakpour also said the formation of these production and supply chains will eventually help increase exports.

“When carried out, Iranian exporters can supply goods to foreign chain stores and meet their contract terms. This way, foreign customers will gradually put their trust in Iranian merchants and believe that they are as good as their word,” he said.

“This is significant in that on many occasions, Iranian exporters have failed to sign long-term contracts with their foreign partners and are unable to gain a foothold in the markets on which they spend so much to enter since it is not possible for them to comply with their demands.”

The official said global trade has requirements and standards that these chains can help domestic exporters meet them.

Building the Business Culture

The subject of production and supply chains is not a new thing in the international arena, says Pakpour, adding that major companies have been treading this path for years and created many successful brands in the process.

“Though the project is novel to us, it is gladdening to know that the government has eventually realized the importance of integrating modern global traits of trade,” he said.

Yet, it seems that the Agriculture Ministry has a long way ahead in injecting discipline into the unruly state of local agricultural production and export sectors.

The official noted that a big part of this strenuous project is building the culture for streamlining the activities of farmers, merchants and businesspeople.

“In our market, which is still traditional, production takes place with no or little amount of knowledge about the domestic market, let alone the international market. We need to identify and gather people involved in different stages of the chain and train them, inform them of market demands and help them work together as a team,” he said.

Pakpour concluded that the chain is designed to find solutions for every shortcoming, yet it has to be closely monitored so that drawbacks are rectified.