Iran-US Nip and Tuck in Pistachio Production

EghtesadOnline: Iran and the US account for 85% of world production of pistachios (dry in-shell basis), Iran Pistachio Association announced.

News ID: ۷۸۲۱۲۸

14 March 2018

As the biggest pistachio producers in the world, the two countries have always had close rivalry throughout the years in production and exports.

Iran and the US have switched places as the world’s biggest pistachio producer over the years, as statistics show Iran has been behind its rival in pistachio production in the last two crop years.

As Iran Pistachio Association's Secretariat told Financial Tribune, Iran produced 225,000 tons of pistachios during the crop year ending Sept. 22, 2017, while the US pistachio output stood at 275,000 tons during the period. As for the previous crop year, Iran’s pistachio production was considerably lower by 256,000 tons compared to US output, Financial Tribune reported.

A strong performance in 2016 has helped the US market recover and led to a moderation in price, the BBC reported back in October.

But Iran has another advantage that helps it in global trade: its location.

“Iran has a transportation advantage. They can certainly take markets away and China is an example of that,” Richard Matoian, executive director of the American Pistachio Growers trade association, was quoted as saying by the British media corporation.

An analysis of pistachio production in Iran and the US in the past 16 crop years (ending Sept. 22, 2017) shows that Iran’s pistachio output reached its highest level at 267,000 tons in the crop year Sept. 23, 2006-7, whereas the US hit a record high of 409,000 tons during Sept. 23, 2015-16.

According to Iran Pistachio Association, the country’s output has had an uptrend in recent years. Annual pistachio production stood at around 180,000 tons on average during the 2001-11, while the average output during the first six years of the current decade 2011-18 is estimated to be 190,000 tons.

> Impediments to Production

In the past, Iran's pistachio production was concentrated in Kerman Province but today the crop is also cultivated in other parts of the country.

Kerman Province in southeast Iran is the country’s biggest producer of pistachio. The province once accounted for 70% of Iran’s pistachio production, but now produces only 30% of all the pistachio grown in the country due to a severe water crisis.

Every year, between 8,000 and 12,000 hectares of Iran’s pistachio orchards are lost due to water shortage and soil salinity.

The association predicts that the current crop year’s output during Sept. 23, 2017-18 will be lower than in the previous year.

The major problems pistachio producers in Iran are dealing with pertain to decrease in quantity and quality of water, employment of traditional farming methods, lack of control over pesticides and fertilizers, low productivity and fluctuations in foreign currency rates.

Referring to reasons why Iran lost its position as the world’s biggest pistachio producer to the US since two years ago, the secretariat said this had been predicted in the past since the pistachio industry in the US has solid foundations with proper principles, as research centers and universities in the US played a key role in the development of the American pistachio industry.

Service providers in the agriculture sector work alongside American farmers. Moreover, American farmers do not have to deal with political, economic and financial problems facing Iranian farmers. The Iranian and American pistachio industries have fundamental differences. Each has their own characteristics and trends.

There is no precise and reliable data on the area of land under pistachio cultivation in Iran, but estimates show yielding pistachio orchards span 300,000 hectares.

Over 500,000 people, directly or indirectly, are involved in Iran’s pistachio production from cultivation, post-cultivation, harvest to processing, transport and sales.

> Market Size, Trade Statistics

Iran’s annual domestic demand for pistachio amounts to 35,000-45,000 tons, accounting for 20% of the total output.

According to the International Nut and Dried Fruit Council, global consumption of pistachio is 600,000 tons per annum.

The secretariat noted that the value of Iran’s pistachio market is estimated to be around $500 million p.a. This is while the global pistachio market is worth more than $5.5 billion p.a.

On average, Iran exports 80% of its total pistachio yields.

Iran exported 120,000 tons of pistachios worth about $1.10 billion during the Sept. 2016-17 crop year.

In addition, during the first five months of the current crop year, exports amounted to 100,000 tons worth around $900 million.

Iran’s average annual pistachio exports during the Mar. 2001-11 reached 148,000 tons while the average was 135,000 tons during the five years to March 20, 2017.

China, Germany, India, Iraq and Kazakhstan are the main customers of Iranian pistachios; Turkey and UAE are its reexport markets.

The secretariat confirmed that 80% of Iran’s pistachio exports go to only 10 countries. Similarly, the US ships 85% of its pistachio to 12-13 countries.

The reason lies in the fact that pistachio is considered a luxury product and that the economic situation of the consumer country has a direct impact on pistachio imports. Regardless of being Iranian or American, pistachio is consumed in affluent countries.

According to data from the Islamic Republic of Iran Customs Administration, Iranian pistachios were exported to 60 countries during the last Iranian fiscal (March 2016-17).

Unfortunately, Iran has not done well in the marketing department despite Iran Pistachio Association's efforts to participate in international exhibitions and conventions.

The end price of American pistachios reportedly stands at $3.5 per kilogram while Iranian pistachios cost $6-6.5 per kilogram.

Iranian pistachios are generally exported in two forms: in bulk and in 50-kilogram bags. Recently, customers showed greater willingness to buy in bags with higher capacities of 500 or 1,000 kilograms. The volume of pistachios exported in smaller packages is very low.

According to the association, high import tariffs for processed pistachios in export destinations are among the main challenges facing Iranian pistachio exporters.