Oilseeds

Saffron and Pistachios: “The US sanctions are the biggest problem”

December 30, 2022 at 1:00 PM, Der AUDITOR
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SEEHEIM/TEHRAN. What kind of new challenges did the year 2022 provide? How do buyers deal with the sometimes significant price increases and what are the expectations for the coming year 2023? We were talking to one of our business partners from the Iranian market, who kindly answered all our questions. Read the complete interview here.

Which were the major difficulties faced by the Iranian saffron and pistachio markets in 2022? Were they mainly caused by the ongoing threat of the Ukraine war and the resulting energy crisis and inflation, or do you think they would have occurred in a calmer year as well?

The biggest problems of Iran's saffron and pistachio market in terms of trade were the continuation of US sanctions against Iran, especially financial and banking sanctions. These sanctions have caused problems in the financial and banking transfers of Iran's pistachio and saffron trade. Also, these sanctions and the halt in negotiations between Iran and the United States to return to the 2015 nuclear agreement will cause fluctuations and a sharp increase in foreign currencies. This price fluctuation and its instability in the market, which directly affects the price of Iran's pistachios and saffron for export to the world markets, is one of the other problems for trading these two products in the coming year. The continuation of the war between Russia and Ukraine will also have a great impact on the market of these products next year because a large amount of Iranian pistachios are exported to these countries, especially to Russia. The continuation of the protests against the government in Iran can also have a significant impact on the export markets of these products.

In agriculture, the decrease in pistachio production this year will tighten the number of available products in 2023. Undoubtedly, this will also have a great effect on the trade of Iranian pistachios in the coming year. This is true for saffron to some extent, but the effect of conditions on this product is much less than for pistachios.

The existing problems related to the war in Ukraine were part of the problems of trading Iranian pistachios and saffron this year. In addition to the war in Ukraine, most of these problems are related to Iran's foreign policy and problems caused by drought and climate tensions.

Which effects of the coronavirus pandemic are still noticeable?

Trading Iranian pistachios and saffron with China is facing restrictions due to the continued epidemic of this virus in China, which is one of the main customers of Iran's pistachios and saffron, as it has caused a ban and difficulties for traveling to this country. This issue has caused problems for many Iranian and Chinese businessmen. Considering the sharp decrease in the daily number of coronavirus patients in Iran and the removal of almost all the restrictions related to the coronavirus epidemic, it seems that there will be no problem with the epidemic in Iran next year. If a new variety of this virus spreads again, some factors will cause obstacles to the trade of saffron and pistachios in the markets. These threatening factors include travel bans, the closure of markets and the closure of customs and other custodian institutions in the export sector.

In most markets, prices for feed and food commodities have increased significantly over the past year. Your products are no exception here. Do you think that buyers will have to adjust to these higher prices in the long term, or do you expect prices to decline again?

In 2022, the demand for Iranian pistachios and saffron increased due to the reduction of the coronavirus epidemic after people were vaccinated. However, the problems caused by drought and damage to the products caused the supply to be less than demand.

After the coronavirus epidemic, the demand of many customers changed. Many of these changes in demand have returned to the previous conditions after the epidemic subsided. However, some of these changes remained. For example, the demand for premium varieties of pistachios and saffron has not returned to the level before the coronavirus. Due to the pandemic of this virus as well as business and political conditions, buyers of pistachios and saffron in Iran are adjusting their demands according to the current conditions, including quality and price, financial and banking transfer conditions, and political and social conditions.

Furthermore, climate change and crop problems are real and pose a threat to all types of food and feed around the world and will most likely continue to do so. How would this affect the Iranian saffron and pistachio markets in the future and what could businesses in this industry do to improve this situation?

As mentioned, drought and climate change have caused many problems for Iran's pistachio and saffron market in recent years. Iran's pistachio production has been reduced by half or even more in the past few years. Saffron production also decreased a lot due to the climatic conditions in 2022. However, there is hope that the production of this product will increase a little in 2023. Also, the quality is affected by the weather conditions. These issues caused a decrease in the export of these products this year. If these problems continue and the production and quality decrease, this trend will certainly continue in the next year as well.

Businesses related to pistachios and saffron should provide more marketing and export of these products by turning to the cultivation of goods that are more resistant to climate stress. Also, the export of these products in the form of packaging in a way that adds more value can be effective in this matter. Creating a new market for lower-quality products can also help improve the export conditions.

Considering the current crises (pandemic, energy, wars, climate change, etc.), what do you think the Iranian saffron and pistachio markets have to prepare for in the coming year? Are there any major consequences to be expected for the 2023/2024 season in terms of supply and demand?

Next year, Iran's saffron and pistachio markets should be prepared for the continuation of US sanctions, especially in financial and banking transactions. Undoubtedly, due to the continuation of these sanctions and problems caused by money transfers, many customers of Iran's pistachios and saffron prefer to purchase from markets where it is possible to use LC or other safe money transfer ways, and don't get into trouble for transferring money. Moreover, the exchange rate changes are one of the things that market players should be prepared for the next year. The continued decline in production and the lack of high-quality products for export are among the important issues in the coming year. The continuation of the war in Ukraine and the protests against the government in Iran are also important factors affecting the market.

All the mentioned factors affect the supply and demand of Iranian pistachios and saffron. The continuation of sanctions and the problems of financial and banking transfers, exchange rate changes, and the ongoing war in Ukraine are affecting the export demand for these products. The decrease in production, the continuation of the protests against the government in Iran, and the conditions of the coronavirus epidemic also affect the supply of these products.

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