Pistachio Market - Will Iran Become a Threat for the U.S. Pistachio Export Now That the Sanctions are Lifted?

Other Tree And Bush Fruits And Nuts February 18, 2016
Author: Inara Tsenina
Account Manager

pistachio market

The sanctions imposed on Iran in 1995 were partially lifted this year on January, 16. Despite the toll taken on the Iranian economy by years under these measures, the country was able to maintain its world's highest rates of pistachio production, doubling that of the United States.

Iran was likely the first country to start growing pistachios, and the centuries-long practice of cultivation has ensured Iran's prominent position in the global pistachio trade.

According to data provided by IndexBox Marketing, Iran accounted for a fifth of all global exports on the pistachio market, even while being suppressed by the embargo. The period from 2007 to 2013 was marked by an impressive increase in gross collection of pistachios, with average growth rates amounting to 7,2% annually.

Global Pistachio Market Value - At Producer And Import/Export Prices, 2007-2013
(current million USD, % to previous year)

Source: FAO, UN DATA

Exports Of Pistachios, In Value Terms, By Country Of Origin, 2013
(%, based on tonnes)

Source: UN DATA

The global pistachio trade has expanded at a slow pace of 0,5% a year. China, Germany and Italy emerged as major exporters in 2013. As for consumption, China's volumes stood at 142,8 thousand tonnes, the U.S. at 60 thousand tonnes, and Russia at 27 thousand tonnes. The main exporters' prices grew steadily by 11% a year during the period from 2007-2013.

Production Of Pistachios, In Physical Terms, Iran, 2007-2013
(thousand tonnes)

Source: FAO

Imports Of Pistachios, In Physical Terms, By Country Of Destination, 2007-2013
(thousand tonnes)

Source: UN DATA

Despite their comparable pricing, the presence of Iran and the U.S. in the main local markets has been uneven. Iran generally holds the runner-up position in the global import structure to the U.S., yet Iran is Russia's major importer and will undoubtedly strengthen its role as such after Russia's decision to inflict economic restrictions on Turkey.

Imports of Pistachios into Main Markets, In Physical and Value Terms, By Importers, 2014

Source: UN DATA

Imports of Pistachios into Main Markets, In Physical and Value Terms, By Importers, 2014

Source: UN DATA

Although Iran can expect a boost in pistachio exports now that the sanctions against the country have been lifted, it will not take over the market leadership position held by the U.S. However, it is quite possible that Iran's capacity for exports is significantly underrated. The official consumption rate stands at 5 kilograms per person a year, which seems inflated - even for a country that includes pistachios in every dish.

Per Capita Consumption, By Major Consuming Countries, 2013

Source: UN DATA, IndexBox analysis

Undocumented exports are a much more likely case, and they could range from 185 to 300 thousand tonnes a year, depending on how over-estimated the local consumption is. This can, to a certain extent, be explained by the 300% additional tax charged for Iranian pistachios exported by sea to EU countries and the U.S. This policy will remain active for an undetermined amount of time, which is at the root of Iran's expansion obstacles.

The global pistachio market will not show drastic changes, but Iran's exports, if legitimized, are likely to illustrate relatively large increases.

Aside from now being able to perform international transactions with less effort (Iranian banks have been restored in their access to the SWIFT system), the Iranian agriculture sector derived little benefit from the recent concessions. There are still pending restrictions and political issues yet to be resolved. It will take another 2 or 3 years for Iran to fully shake off the remaining sanctions and recover.

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Find out more in World: Pistachios - Market Report. Analysis And Forecast To 2020