Export rivals and frost cut Iran’s harvest cash

Maryam Sinaiee, Foreign Correspondent

• Last Updated: November 16. 2008 11:45PM UAE / November 16. 2008 7:45PM GMT

TEHRAN // Iran’s revenues from pistachio and saffron exports are going to plunge by US$550 million (Dh2m) and $50m respectively this year as a result of growing foreign competition and a poor harvest caused by heavy frosts in April and a nationwide drought over the past year.

After oil, pistachios are Iran’s biggest export item followed by saffron and, until 2007, the Islamic republic was the world’s top exporter of both.

While still managing to retain its place as the world’s top saffron exporter, for the first time ever Iran is being overtaken as the top pistachio exporter by its arch-foe, the United States.

Revenues from pistachio exports make up around eight per cent of the country’s non-oil revenues. Exporting 207 tonnes of pistachios earned the country over $1 billion of hard currency last year.

Iran’s pistachio markets gradually shifted from western European countries to East Asia in recent years following rows with the European Union over the degree of aflatoxin contamination of Iranian pistachios.

Aflatoxin is a carcinogen produced by fungus growing on the soft outer skin covering the nut and its shell.

China is now Iran’s biggest pistachio market, followed by European countries and Russia. China imported more than 60 tonnes of pistachios from Iran last year.

Iranian pistachio exporters are worried about the drop in the country’s pistachio supply, as well as the chance that the nearly two-fold increase since last year in the price of Iranian pistachios will cause them to lose Chinese and other East Asian markets to US suppliers.

There was an increase in US pistachio production this year, which enabled US exporters to drop their prices below that of their Iranian competitors, said Mohammed Hossein Karimipour, the head of the agricultural committee of the Iranian Chamber of Commerce, quoted by the Sarmayeh economic newspaper.

While the US produced 190 tonnes of pistachios in 2007 and Iran produced a record high of 270 tonnes, Iranian output this year fell to 90 tonnes, according to Mr ­Karimipour.

In some cities, such as Rafsanjan in Kerman province in eastern Iran, the April frosts destroyed nearly all the year’s crops. The province produces more than 70 per cent of Iran’s pistachios.

“In Rafsanjan between 90 and 95 per cent of the population depends on pistachio farming for their livelihood, directly or indirectly. This year’s crops yielded only about one fifth of last year’s production,” said Ahmad Hassani, a pistachio exporter from the province and a member of the Iranian Pistachio Association’s board of directors.

“Between 70 to 75 per cent of all crops in Kerman province were destroyed. This has given rise to a serious unemployment problem in the region,” he said.

While pistachio exporters are worried about US rivals, it is the thought of the Afghan presence in the international saffron market that is troubling Iranian saffron exporters.
Some Iranian saffron exporters allege Afghanistan is re-exporting Iranian saffron.

“They are buying it in bulk and re-exporting it to Spain in their own name,” an Iranian Agricultural Cooperatives’ official was recently quoted as saying by Khorasan newspaper.

Bulbs of the saffron crocus are said to have been smuggled from Iran to Afghanistan six years ago in great quantity and saffron is now extensively cultivated by Afghan farmers.

Saffron farming is greatly encouraged by the Afghan government as a substitute for opium poppy farming, but the country’s production is still only a fraction of what is produced in Iran.

Iran used to produce more than 90 per cent of the world’s most expensive spice, which is also known as “red gold”. But in recent years saffron production and exports have dropped consistently.

Drought and the April frosts this year destroyed 40 per cent of the bulbs of the saffron flowers.

In 2007 the value of saffron exported by Iran was down to $50m from $95m in 2004.
Analysts say the skyrocketing price of saffron – which has increased nearly seven-fold from 2004 – arising from the poor harvest as well as high labour costs, has also led to a fall in exports.

Saffron farming is labour-intensive. Every flower has to be picked by hand and every single thread of saffron has to be pulled out of the flower by hand immediately after the flower is picked.

One hundred and fifty of the purple saffron flowers yield only about one gram of the red stigmas known as saffron threads.

A kilogram of saffron is now traded for 2.3 million Iranian rials (Dh830) in the domestic market.

Moreover, a drop between 30 per cent and 40 per cent in Iran’s non-oil exports in the second half of the Iranian calendar year (the year began on March 22) is expected as a result of the international financial crisis, Hamid Hosseini, a member of the Tehran Chamber of Commerce, was quoted by Mehr News Agency as saying.

As well as pistachios and saffron, the crisis will affect exports of such luxury goods as Persian carpets and caviar, he said.

msinaiee@thenational.ae