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Ample Opportunities for Foreign Investment in Iran’s Pistachio Industry

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Pistachio Exports Fetched $1.2 Billion

But Iran Facing Crisis in the New Crop Year

Iran has been and continues to be the world’s biggest pistachio exporter. In the previous crop year (September 2017-July 2018), the pistachio industry brought in US$1.2 billion for Iran. The industry provides work for hundreds of thousands of people, mostly in the eastern half of the country.

Pistachio lovers from America to Europe and from Africa to Asia have all got used to the delicious taste of Persian pistachio. That’s one important reason why Iran’s iconic snack is popular and is eaten all over the world.

Iran produced around 230,000 tons of pistachios in the last crop year, mostly cultivated and harvested in southeastern Iran. Some 130,000 tons of the popular nibble were exported and the rest were consumed domestically. Iranians are big lovers and consumers of pistachio themselves.

Pistachio exports provide a small but important pipeline for foreign currency revenues at a time the hardline administration of U.S. President Donald Trump seeks to squeeze Iran economically.

Pistachio cultivation is the main source of income for one fifth of the population in Kerman, a province of 3.1 million people famed for its delicious pistachio. Kerman is the largest province of the 31 provinces of Iran.

The pale green nuts are one of Iran's top export commodities outside the oil sector. In the list of Iran’s non-oil exports, pistachio is even a more profitable product than Persian carpets and saffron.

However, earning $1.2 billion from pistachio exports is a fraction of $47 billion Iran earned from non-oil exports last year (21 March 2017 to 20 March 2018), according to the head of Trade Promotion Organization of Iran Mojtaba Khosrotaj. Yet, the beloved pistachio is an attractively reliable earner.

China is the main importer of Iranian pistachios while other major buyers of the nut are European countries, Brazil, India, Southeast Asian countries and Arab states.

Pistachio Origin, Uses & Benefits

Pistachio is derived from the Persian name “pisteh” or “pesteh”. It’s a deciduous, long-living, slow-growing small tree originating from Central and Western Asia. Kerman Province in southeastern Iran is the hub of global pistachio production.

Other parts of Iran where pistachios are currently grown include the provinces of Yazd, Khorasan, Fars, Semnan, Sistan and Baluchestan, Qazvin, Isfahan, Tehran and Qom, mostly in central, southern and eastern Iran. The United States, Turkey and China are other major pistachio producers.

Pistachio trees are planted in orchards and take about seven to ten years to reach significant production. The tree is alternate bearing, or biennial bearing, meaning that they crop heavily in one year and then produce less the next.

Pistachio tree is dioecious. That means male and female flowers are borne on separate trees. A female tree planted alone will not produce nuts unless a male tree is growing nearby. Therefore, both male and female trees are required to produce nuts.

The male trees bear the pollen and the female trees bear the nuts. Pollen from male trees must travel through the wind to reach female trees. One male tree produces enough pollen for eight to 12 drupe-bearing females. That’s why farmers ideally place one male pistachio tree in the center of every 9 or 10 female trees. Male pistachio trees can be easily recognized since they are usually taller and more robust than the female trees.

Male trees don’t produce fruits. Only female trees do. Pistachios grow in clusters, like grapes, on the tree.

Pistachio trees generally produce good yields from the 7th year of its age and reach the peak of production in the 50th year. Its productive life can reach 100 years or more.

Pistachio fruit develops in late spring. The pistachio kernel develops during the months of June and July. It ripens in August or September. So, September is the annual harvest season when growers anxiously anticipate the fruits of their labor.

After harvest, pistachios are hulled, meaning that the outer shell is removed mechanically within a short period of time to avoid shell staining and product deterioration. Then, the nuts are washed, dried and separated by size. The drying is critical in maintaining the quality of pistachio and bringing moisture to a standard level. The drying process cannot be rushed nor can it be delayed.

In the next stage, they are sorted in terms of shape, size and type. Good pistachio nuts split open while on the tree before harvest but some 20 to 30 percent of the nuts don’t split. Open shell pistachios are separated from closed-mouth shells.

Opened-mouth shells are either consumed raw or are roasted and salted before being sold, depending on the demand of customers, or processed by special machines to produce pistachio kernels. The closed-mouth nuts are not sold in the market. Instead, they are opened by machine and the kernel is sold. Pistachio nuts are sold both in bulk and packages.

In Iran, there are many local names for pistachios, each name representing a shape or quality type. But they are categorized in three main groups: Long Pistachio (divided into Akbari and Ahmad Aghaee categories), Jumbo Pistachio (Kale Ghuchi), and Round Pistachio (Fandoghi). And each pistachio type is subdivided into different grades in terms of shape and quality. Kernel Pistachio and sliced kernel pistachio are offered and exported separately.

Pistachio shells are not edible and there is no way a person could chew pistachio shells. The edible part is the seed or the kernel, covered by a hard, thin, clear brown shell named pericarp.

Pistachio is intertwined with Iranian culture and is present in many aspects of Iranian life. They are as linked to the Iranian national identity as apple pie is to Americans or feta cheese to Greeks.

Pistachio nuts have got a mention in all Iranian literature, stories, traditions and ancient festivals such as Nowruz, or the Persian New Year, and Yalda Festival _ or Chelleh Night _ an ancient tradition where families gather on the longest night of the year telling stories, listening to poetry and discussing current events.

Pistachios are widely used in Iranian food or eaten independently as nuts at formal evening meals, parties, weddings and funerals. No festivities and feasts are complete without pistachios as well as other nuts like walnuts, almond, raisin, dried fig, dried berries and hazelnuts.

Iranians celebrate Nowruz by eating sweets, fruits and pistachios as well as drinking tea and other beverages. They cook special dishes at family gatherings, formal parties or during national holidays and decorate them with pistachios.

Pistachios are also widely used in various Iranian treats such as “Gaz”, one of the most popular souvenirs of the historical city of Isfahan in central Iran. The beloved pistachios give an unforgettable taste to ice creams. They are also popular ingredients in confections such as baklava and halva (traditional sweets), chocolate, pudding, desserts and even salads.

The same way, pistachios have found an important place in global cousins and various treats around the globe from biscuits to cookies. That’s why the iconic snack is of strategic significance for Iranian producers of agro products.

Although Iran exported 130,000 tons of pistachios in the last crop year, agro experts believe that global demand for pistachios are rising and the global market can even absorb over a million ton if promoted and marketed adequately.

“Pistachio consumption is on the rise, thanks to global awareness about the health benefits of pistachio, the advance of technology and production of pistachio-derived products,” pistachio expert and investor Mohammad Jamalizadeh told the Iran Europe Business Digest (IEBD).

Pistachio is not only tasty and delicious but healthy and fun to eat. It’s one of the main nutrients containing great healthy fat and being a good source of protein, fiber and antioxidants. It’s also good, according to scientists, for weight loss, heart and gut health.

2018 Is Infertile Year in Iran

Mahmoud Abtahi, the head of Iran Pistachio Association, told the IEBD in an exclusive interview in September that the trend of pistachio production is not stable for various reasons.

“It’s very difficult to accurately forecast the size of annual pistachio crop. Since pistachio production is alternate bearing, the harvest is heavier in alternate years. We expect a drop in production since the current crop year is the infertile year,” he said.

Abtahi said Iranian pistachio can be distinguished by its taste.

“There is no doubt that Iranian pistachio has the best taste because of Iran’s geographical location, special climate and soil. The world-famous taste of Persian pistachio is unrivalled. And the taste is enhanced by roasting pistachios. Roasting pistachios is an art and Iranians are the best experts on this. Additionally, Iranian pistachios offer various advantages such as higher meat content that others don’t.”

Iran’s pistachio chief said producers and exporters expect Iran’s Foreign Ministry and Iranian embassies abroad to help them capture new markets for the beloved pistachio.

“We need to expand our marketing and enlarge the list of our customers. But the private sector needs assistance from Iranian embassies in target countries to achieve its goals,” he said.

Farmers began to harvest in September but it was already evident that Iran’s national snack was facing a hard time in 2018.

Mehdi Tabibzadeh, the head of Kerman Chamber of Commerce, Industry, Mine and Agriculture, spoke of a “crisis” in pistachio production in Iran this year and predicted that exports are expected to sharply drop to may be just $100 million.

“The big difference between export of over $1 billion pistachios last year and prediction of $100 million in the current year represents the outbreak of a crisis,” he told a meeting of the chamber on 10 September 2018.

Overheat, Drought & Pests Are

“Axis of Evil” for Iran Pistachio

Global warming, continuous drought and pests attacking orchards are the main damages to Iran’s pistachio production.

Despite more lands going under pistachio cultivation in Iran, production has not increased accordingly.

“Global warming or climate change is a universal phenomenon. A gradual increase in the overall temperature of the earth's atmosphere harms not only pistachio production in Iran but the entire world. It is damaging and downgrading human life. It’s a fact that adverse weather conditions have impacted pistachio output. Shortage of water and continuous below average rain is another challenge for Iranian farmers. And in recent years, orchards in parts of Iran have been attacked by pests, all contributing to a drop in pistachio production,” Jamalizadeh said. “They are the axis of evil for Iranian pistachio.”

The expert, who manages large pistachio orchards through joint venture agreements, said farmers did not see a cold winter last year. Freezing temperatures in winter, he said, kill fungal diseases and bacterial infection in trees. Pests don’t die when winter air doesn’t fall below the freezing point. That means the diseases remain and subsequently weaken trees, leaving them vulnerable to another disease or insect attack. And pests or insects become resistant towards pesticides after the first or second use. This disastrous trend impedes pistachio production and takes a devastating toll on the industry.

Likewise, hot or freezing temperatures during the flowering can also damage the crop. Spring weather is usually cool and wet during the bloom period. But this year pistachio orchards in Iran faced unusually high temperatures in April, thus damaging the flower buds. Flowers fell due to overheat when the bloom was taking place. In the same way, spring frost can also damage the flower buds.

Hossein Rezaei, a senior local agriculture official in Rafsanjan, a small town in southeastern Iran, told reporters on 18 June 2018 that a combination of climate change and lack of rain should be blamed for a sharp drop in this year’s production.

“Pistachio orchards experienced a warm winter. Temperatures didn’t reach even freezing point, causing damage to pistachio orchards. When it doesn’t snow or rain, heat settles in. In April, there was no rain, causing flower buds to fall from trees. Heat exhaustion created troubles. Temperature fluctuations, unprecedented in the past four decades, have caused problems. Many orchards (in Rafsanjani) don’t have a single pistachio,” the semi-official ISNA news agency quoted him as saying.

He said Rafsanjan produced 65,000 tons of pistachio last year but production won’t exceed 5,000 in the current year.

For Iranian pistachio farmers, the most pressing problem is the crop failure in 2018 at a time of growing demand from consumers in countries such as China and Russia.

Drought is causing more and more damage to the life of pistachio farmers in Iran, leading to many jobs being lost. And a drastic fall in Iranian pistachio production means there will be a drop in pistachio supply and thus a likely increase in prices for the popular commodity in the coming months, at least in the domestic Iranian market.

“Temperature fluctuations and fierce heat exhaustion in April is the main reason behind a sharp fall in pistachio production in the new crop year. Nature was not kind to us this year but we will do better next year,” Jamalizadeh said.

The Iranian government is already pursuing plans to promote modern agriculture technology and tools. It’s providing funds to farmers to change irrigation system, encouraging them to switch to drip irrigation and buy modern equipment but changing ingrained attitudes can’t happen overnight.

 US-Iran Pistachio War

The United States and Iran are the world’s largest pistachio producers. The two arch rivals overwhelmingly dominate the universal market in the nut. Together, they account for about 80 percent of the total global production.

Political tensions as well as economic rivalry have affected pistachio business for many years. The hard battle over pistachio has been an endless confrontation between Tehran and Washington.

However, contrary to general perceptions that the re-imposition of unilateral U.S. sanctions against Iran in the wake of the Trump administration’s abrupt exit from the multilateral nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA), will affect Iran pistachio exports, rising tensions are not expected to undermine Iran’s pistachio trade. Overheat, drought and pests have damaged Iranian pistachio rather than the belligerent neoconservatives in the Trump administration.

Why?

“Because Iran has had no pistachio exports to the U.S. for more than three and a half decades,” Abtahi said.

Even after the 2015 nuclear deal lifted sanctions on Iran, Iranian pistachios didn’t flood the American market. The U.S., according to Abtahi, had imposed 300 percent tariffs on Iranian pistachio imports back in 1983. The decision more than tripled the cost, thus leading to a halt to Iranian pistachio exports to America. That U.S. policy remains unchanged today.

In recent years, the U.S. has ousted Iran as the world’s largest producer, taking Iran’s place as the top global leader in pistachio production. California is the heart of U.S. pistachio orchards.

Although areas under pistachio cultivation in the U.S. are much less than Iran, American farmers harvest more crops, primarily because of their technological advantage, advertising tools and financial power. And water shortage in the U.S. is not as acute as in Iran. Unlike Iran, the U.S. didn’t face heat exhaustion during flowering in April.

U.S. pistachio growers reportedly produced over 272,000 tons from their 2017 crop season while Iran produced around 230,000 tons. But the U.S. is not the world’s top exporter.

“The Americans have surpassed us in terms of pistachio production but not in exports because of their large population and high domestic consumption,” Abtahi said.

Iran’s pistachio boss admitted that Americans harvest more than Iran does in each hectare of land.

“Because of their technological advantage, the Americans harvest up to 3.5 tons of pistachio in each hectare of land while in Iran we harvest 1 ton for the same hectare,” he said.

Jamalizadeh, the pistachio expert and investor, says Iran will never lose its share of the global pistachio market and is already shifting production to other parts of Iran where there is more water, for example in the west.

“There are fertile lands with suitable weather conditions in the western half of the country. Farmers have already begun to create pistachio orchards in Khuzestan, Varamin in the outskirts of Tehran, and Qazvin. By doing this, there will be no fear of American domination of the pistachio market. The current crop year is an exception because of climate fluctuations in April,” he said. “American pistachio growers might use water and land more effectively than us but nobody can rival the delicate taste of Iranian pistachios.”

Abtahi, the pistachio boss, said global pistachio production doesn’t yet meet the increasing global demand. So, all the products can find a market.

Opportunities for Foreign Investors

Iranian experts and industrialists argue that there are ample opportunities for foreign investment in Iran’s pistachio industry.

Setting up pistachio-related processing industries, according to Jamalizadeh, can be a profitable business for foreign investors, specifically Europeans.

“Italy, Greece and Spain are pistachio growers although their production is very limited. But they possess advanced technology to produce products obtained from pistachio such as pistachio oil and pistachio butter,” he said.

Pistachio oil is extracted from pistachio nuts. It’s not ideally suited as cooking oil but it’s used as a sauce or vinaigrette to give food a nutty flavor. Pistachio oil is widely used as seasoning in salad dressing and more. Pouring pistachio oil over grilled fish makes it delicious.

But more than anything else, pistachio oil is used in the cosmetics industry and skin care products since it’s a great moisturizer due to its antioxidant and hydrating qualities.

And pistachio butter is considered one of the healthiest types of butters although it’s pricier. The powerful nutrition and delicate flavor of pistachio butter makes it worth the price. It’s low in calories and fat but rich in protein.

Pistachio butter is seen as a great, healthy breakfast or evening meal.

“So, there are abundant opportunities for foreign investment. For instance, Italians can set up industrial-scale pistachio butter production lines in Iran, something Iranians are weak at. It will be profitable to Italians. At the same time, production of pistachio butter and oil are smart ways to increase the added value of pistachio,” Jamalizadeh said.

He said foreign investors, specifically Europeans, can also invest in Iran’s pistachio farming and irrigation systems since it will help Iran improve its agriculture and crop cultivation efficiency and at the same time allow foreign investors gain profits.

Jamalizadeh concluded that entering into partnership for commercial cultivation of pistachio trees and orchard management is another opportunity available to Europeans in Iran since growing pistachio trees commercially can be a major source of income in the long term.

 

 

 

Iran-Europe Business Digest (IEBD) magazine has been launched to facilitate and promote business between Iran and Europe. 

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