Improving Iran's share of the U.S. pistachio market
March 1, 2002
On January 18, the Import Administration Office of the U.S. Commerce Department
sent a questionnaire to the Iranian Interests Section in Washington D.C. to inquire
about the role of the Iranian government in the pistachio industry and other public
programs, such as direct or indirect agricultural subsidies.
The Iranian government has until March 29 to respond to this rather comprehensive
questionnaire that is part of the U.S. commerce review of Tehran Negah-Nima Trading
Company in Iran. This is an excellent opportunity for the Iranian pistachio industry
to crack a hole in the existing 317 percent tariff against Iranian pistachio imposed
Partial removal of sanctions on exports by the Clinton Administration on March 5th
2000 opened the way for export of agricultural products such as pistachios to the
United States. But as a result of high U.S. tariffs, Iranian pistachio has continued
to stay out of the U.S. market.
Recent victory by Tehran Negah Nima Trading Company in getting the approval of the
Import Administration Office to launch new administrative reviews of both the antidumping
and countervailing duties has come after a fierce opposition by California Pistachio
industry and should not be taken lightly by the Iranian government.
A victory by Nima Trading Company, particularly on the countervailing duty side that
involves the role of Iranian government in the pistachio industry, would most likely
pave the way for other Iranian pistachio exporters to successfully argue their cases
in future. Therefore it is incumbent upon the Iranian public and private officials,
particularly Ministries of Agriculture, Commerce, Foreign Affairs, and Tehran Association
of Nut producers, to coordinate their efforts and make sure that the questionnaire
is properly answered and filed by the requested deadline.
With this introduction in mind let's have a brief look at the state of Iranian pistachio
exports from a global perspective and briefly reflect upon the increasing threat
of international competition for the future of this industry.
The most recent Food and Agricultural Organization data on production and export
of the Iranian pistachio indicates that average production for the five-year period
between 1991-1995 has declined from 2299 million tons to 1306 million tons between
1995-2000 period by 43 percent. At the same time, the export of pistachios has dropped
from a peak of 140 million tons in 1996 to as low as 57 mt in 1997 and 78 mt in 1998.
Some argue that the small size of the lots prevent economies of scale to reduce average
cost. There are others who believe mismanagement and lack of long-term vision by
the leaders of the pistachio industries have resulted in significant loss of exports,
and therefore a reduction in the rapid rate of growth that started in the early nineties.
Whatever the reasons behind the reduced level of production, there is overwhelming
evidence that Iran is rapidly loosing its dominance in the international market,
particularly in Europe. Therefore, according to Hossein Ketabi, president of one
of the largest European pistachio importing companies, "In the year 2000, Iranian
pistachio represented only 40% of the European market, which was more than a 50%
drop in sales and market share."
Ketabi believes it would be very difficult to gain these markets back this year.
In order to do so, he argues it would require heavy discounts, compared to other
exporters. It may take a long time to gain back the business and confidence of pistachio
importers in Europe, he said. This comes when this year's world pistachio crop is
expected to be at a historical high meaning that Iran faces the risk of further loses
of its markets share.
In his report, he emphasizes that: "Iranian pistachios have been rapidly loosing
market shares worldwide against other origins (USA, Turkey). Indeed, due to lighter
crop in Iran expected for this season, most growers have been holding on their stock
since last May, anticipating a short crop. Also, growers retained products to force
the cooperative RPPC to announce the highest possible minimum purchase price.
"Therefore the price of pistachios in Kerman and Rafsanjan was far above world
market from June 2001 to October 2001. Unfortunately this is the major purchasing
time. In previous years, following the aflotoxin issues in Europe, Iran was controlling
approximately all European consumption. The fact of being away from this market for
more than 5 month, plus the aflotoxin scare on Iran pistachios, forced most large
pistachio users to switch origin to American pistachios."
At this time, among the most important competitors Turkey, Syria, and the United
States, U.S. pistachio industry seems to pose the greatest threat to Iranian pistachio's
place in the world market. According to FAO, from 1979 to 1986, U.S. pistachio production
grew from 7,802 ton in 1979 to 85,280 metric tons in 1998.
This rapid rate of growth was particularly enhanced after 1986, when for the first
time antidumping and countervailing orders was imposed on the import of Iranian pistachio,
the U.S. output has grown from 1.5 million pound in 1976 to 251.1 million pounds
in 2000 -- almost 30 times. It is expected that this year's world crop will be at
a historical high record, and U.S. production crop will be almost half of the Iranian
Introduction of new technological innovations in production, processing, and distribution,
along with strategic thinking and planning in protecting and expanding the U.S. domestic
market, fierce attempt to compete in the traditional international markets such as
Japan and Europe, and intensive effort to penetrate new potential international markets
such as those of South Korea, India, and China, are among the few successful steps
taken in the course of the last decade.
In the meantime, Western Pistachio Association (WPA) has been aggressively trying
to keep the Iranian pistachio of the U.S. markets. It has further mobilized its resource
to take a big bit of Iranian share of the world markets. The (WPA) is a major reason
for the success of California growers. It acts as the political and legal arm of
American pistachio growers.
The WPI lobbies the U.S. government and members of Congress in order to keep current
U.S. tariffs on Iranian pistachio. They are currently asking the U.S. government
to put pressure on the Mexican government to enforce NAFTA laws, which allow U.S.
products to have no duties compare to those from other origins, and avoid under-invoicing
techniques that is alleged to be used by the Iranian exporters.
The WPI is asking the U.S. government to put pressure on the Israeli government to
avoid Turkish pistachio that they argue originated in Iran. The U.S. government is
asking China, which recently became a member of the World Trade Organization, to
enforce new high tariff protection against countries which are not members of the
WTO, including Iran.
The three-day "Pistachio 2001" conference sponsored by Western Pistachio
Association was convened in Washington D.C. between October 28-31. When I asked about
the purpose of inviting Iran's U.N. Ambassador and Iranians who represented the interests
of Iranian pistachio exporters, Bob Schuram, chief lawyer and fundraiser for the
WPA, responded that he believes American and Iranian growers share a strategic interest
in opening new world markets and lowering existing tariffs of countries like India
and South Korea.
Although, at first this assertion seems to be quite hypocritical and misleading,
it has some economic ingredients of truth and logic that are as follows:
a. Increased international competition is not all that bad for Iranian growers and
exporters. There are positive aspects even in seeing the U.S. pistachio industry
increasing international demand by "shifting the demand". This is what
is known among economists as "shifting the demand curve", by encouraging
consumption through advertisement and other promotions and institutional changes.
Thus, for example, within recent years American consumers have been much more exposed
to pistachio as a delicious, affordable nut.
b. There can be cooperation between the Iranian and U.S. growers in expanding international
markets such as those of South Korean and India. This is exactly what was conveyed
to me by Mr. Schuram.
c. There can also be an exchange of technology and technical know how in increasing
yield and fighting diseases, particularly aflatoxin. Unfortunately, the above arguments
could make sense only when the WPI drops its complaint in the U.S. Commerce Department,
and let Iranian pistachio enter U.S. market at a zero or more reasonable tariff rates.
There are various U.S. importers that are quite supportive of the current initiative
to tackle U.S. tariffs and enable American consumers to enjoy lower prices at the
In the meantime, as long as the WPA prevents Iran from fair play in the U.S. market,
rhetorical statement of shared long-term interests by WPA officials can only be taken
as good and calculated move to, perhaps, divert energy and resource of Iranian exporters
away from the real issue -- that is taking proper action in filing requests at the
U.S. Commerce Department to review their case.
Iranians in both public and private sectors of the pistachio industry must devote
proper and immediate attention to timely responses to U.S. commerce questionnaires.
This is a golden opportunity that may not come along again in the foreseeable future.
The leadership of the pistachio industry should reevaluate current policies in favor
of a long-term strategies.
Mehrdad Valibeigi is a professorial lecturer of economics at the American
University in Washington, DC.