Spend Matters welcomes a guest post from Fawaz Luna of Mintec.
Back in July, we wrote about the world pistachio market and how restrictions imposed by countries had been affecting the global trade of pistachios. Now that it's been seven months since then, we will take a look at how the recent nuclear agreement between Iran and the US ( the two major producers of pistachios), which ended numerous trade restrictions, has affected the world pistachio market.
In September 2010, the US sanctioned a ban on Iranian pistachio imports, as a part of its programme to pressure Iran into nuclear talks. This in turn gave Californian growers, which produce 95 percent of all US pistachios, the chance to improve their market share and solely service the domestic US market valued at $700 million. Some European countries followed the US lead and imposed restrictions on Iranian pistachios, meaning European buyers began sourcing from the US as well, leaving mainly China and India to source from Iran. Production increased as a result, and the US ended the year of 2011 with production of 236,000 tons and exports of 150,000 tons.
The nuclear agreement between Iran and the US led to the removal of these trade restrictions; however, in the first half of 2013 the Iranian government banned their own exports. The Iranian export ban was introduced to cap rising domestic prices. But backlashes from pistachio growers forced the government to lift the ban just weeks later. This sequence of events rippled over the global market as importing nations redirected contracts from Iran to the US to avoid any disruptions in supply.
This couldn’t have happened at a worse time for Iran as the US was busy taking over as the top producer of pistachios with production reaching 300,000 tons in 2013, up over 27 percent in two years. Coupled with higher demand due to the Iranian ban, US prices have risen 19 percent since July of last year. In contrast, Iranian prices have decreased 9 percent, displaying a widening gap in both prices and production.
At present, the US is the top supplier of pistachios to the global market. However, now that import restrictions have been removed, and with demand rising from emerging markets, it seems that this could be an eventful year for the pistachio market.