Pistachio industry is dying in Iran too little water, too many state rules

September 15, 2023 

The pistachio industry in Iran is dying.  Largely as a result of the water crisis, production is down.  But add to that the impact of US sanctions and of the competition from the American pistachio industry, and Iranian exports have fallen by 80% in the last 15 years.

      The US pistachio industry did not exist before the Islamic Revolution, but grew from nothing during the 1980s, with many California farms being operated by Iranians who fled the revolution.

      But it wasn’t just too much American pressure and too little water.  Pistachio production and exports were halved in the last Iranian year (March 2022-23) due to a wide range of reasons, according to Arsalan Qasemi, the head of the Agriculture Commission of Iran’s Chamber of Cooperatives.

      “We lost more than 90% of the output in Kerman Province [the main pistachio producing region in Iran],” he told state broadcasting.

      Besides problems in the production sector, the export front also faces obstacles, the most important of which is the Iranian government mandate for traders to sell their export earnings to the Central Bank of Iran at prices lower than the market rate, he said.

      Blasting the Central Bank, he said the mandate is the most important obstacle faced by exporters even more harmful than US sanctions and competition.

      Qasemi said “weak economic diplomacy” is another problem when it comes to exports.

      According to the Islamic Republic of Iran Customs Administration, 56,298 tons of pistachios worth $405 million were exported from Iran in the 2022-23 Persian year, registering a 58.4% and 55.7% fall in terms of weight and value respectively compared with the year before.

      Russia with 7,329 tons of imports was the top export destination for Iranian pistachios during the period. India with 7,139 tons came next, followed by Iraq, the UAE, Pakistan, Kyrgyzstan, China, Germany, Turkiye and Tajikistan, respectively.

      Sanctions do not stop Iran from selling pistachios to the United States, as agricultural products are exempt from sanctions.  But decades ago, the Americans imposed a tariff of more than 200% on Iranian pistachios, which killed the American market for Iran.

      Iran’s overall pistachio exports have been on the decline since 2007-08, when exports peaked at 265,000 tons.  Exports are now only 20% of that record high.

      In Kerman, many local farmers say their orchards have dried up due to the acute water crisis and many others have left the province to rebuild orchards in other places across the country, like Saveh and Qazvin.

      The global pistachio market size was estimated at $4.2 billion in 2022, $4.3 billion in 2023, and is projected to grow to $5.4 billion by 2030, according to Research and Markets.

      The world production of pistachios in 2022 exceeded 1.5 billion pounds, with over half of that coming from the United States. Iran, Turkiye, Syria and the EU made up the balance of that production, Farm Progress reported.

      A decade ago in 2012, the US had 57% of the global export share of pistachios. Iran had 42%.

      Last year, the US market share grew to 67% while Iran’s share crashed to 24%.