Impact of the Coronavirus on Iranian Exports and Imports

Raisin (Dried Grape)

Vegetables

Turkiye

Fresh Garlic

Turkmenistan

Published Mar 16, 2020

Prices of saffron, raisins, dates, pistachios, and various fruits and vegetables are expected to rise in the Middle East as countries have halted trade with Iran due to the coronavirus COVID-19 pandemic. Prices are expected to stabilize as they start importing from alternative regions such as the US, Turkey, and India.

Prices of saffron, raisins, dates, and various other fruits are expected to rise in the Middle East as trading borders between Iran and its neighboring countries have been temporarily closed due to the coronavirus pandemic. Currently, trading between Iran and its biggest export markets such as Iraq, Turkey, and Afghanistan has been temporarily suspended.

Furthermore, Russia, an export destination worth USD 387 million, has also recently decided to suspend trade with Iran as well. This is expected to further decrease Iran’s agri-food exports, which had already recorded a deficit of USD 5.78 billion in the last Iranian year from March 2019 to January 2020. Iranian exports of all products have already recorded a decrease of 35.5% in the first two weeks following the outbreak.

Impact on Iranian Exports to Neighboring Countries

Prices of food products such as saffron, raisins, dates, pistachios, watermelons, kiwifruits, and various vegetables are expected to rise in the Middle East as Iranian borders to Pakistan, Turkmenistan, Georgia, Armenia, Turkey, Iraq, and Azerbaijan have been closed. Iran is the biggest producer of fruit in the Middle East and North Africa, shifting between 8th and 10th in terms of global fruit production.

This is also expected to affect one of the most popular export products for Iran, saffron, for which Iran is the biggest worldwide exporter at USD 351K in 2018. This is especially impactful for sellers as it is currently the prime time for selling saffron, with harvest season ranging from November to March.

Expected Price Increase of Various UAE Food Products

While the United Arab Emirates is still receiving food shipments from Iran, imports are expected to decrease in the near future, especially with the Ramadan period approaching, during which demand for food is usually very high. This is estimated to lead to price fluctuations, as Iranian food imports of approximately USD 130 million (2018) to the UAE will be delayed. This has led local retailers in UAE to stock up on food imports in anticipation of a shortage. As a result, prices of pistachios, saffron, raisins, dates, and various fruits and vegetables, key import products from Iran, are projected to rise.

Decreases in Watermelon and Kiwifruit Stocks in Turkey

Iranian exports to Turkey have also been impacted. Turkey acts as Iran’s gateway for European exports and is also Iran’s third-largest importer. Shipments of Iranian watermelons and kiwifruits, which are normally exported to Turkey from February to April, have currently been halted. This is expected to cause a shortage in Turkish stocks as Turkish watermelons are not available until May or June.

Ukrainian Garlic Supply Disrupted

Iranian exports of garlic to Ukraine have also been disrupted, causing a shortage and increasing prices. According to the Ukrainian Fruit and Vegetable Association (UPOA), Chinese and Iranian garlic accounted for more than 80% of Ukrainian garlic supply in 2019. Furthermore, there is almost no inventory of garlic from the 2019 harvest left in the domestic market, making Ukraine completely dependent on imports. As the new batch of garlic is expected to be produced in Ukraine in five to six months, prices are expected to continue rising if the country does not turn to alternative sources, such as Egypt or India.

Effect on Iranian Imports: India

The closing of borders has also impacted Indian exports to Iran. Iran is the biggest importer of Indian basmati rice, accounting for approximately 30% of exports. The halt in exports is troubling for suppliers especially as production for 2019/2020 was higher by 9.67 metric tons than the five-year-average of 107.80 metric tons.

According to the Basmati Export Development Foundation, while they expect a maximum export decrease of about 5%, they are hopeful that their diverse export markets of 140 countries are going to ease the situation. However, this has not lessened concerns for suppliers as prices have been decreasing in the Indian domestic market by 10% over the past month and a half.

Increased Freight Costs for Turkey and Pakistan

Additionally, with the route to Iran blocked, freight costs for neighboring countries have increased, affecting trade for Turkey and Pakistan. Turkish fresh produce exporters transport shipments to Central Asia via Iran, especially when shipping to Kazakhstan and Kyrgyzstan. As this route has now become blocked, Turkish suppliers are taking an alternative route through Azerbaijan, doubling freight costs. Pakistani traders have also resorted to taking sea routes in exporting to Iraq and Azerbaijan instead, increasing shipping costs.

Prices Expected to Stabilize as Countries Source from Alternative Regions

While prices are expected to rise and fluctuate due to the shortages, traders in the Middle East estimate prices to stabilize as imports from alternative regions such as Turkey, India, and the US increase. Spain, as the second-biggest exporter of saffron, is expected to see an increase in sales, while date sales from Tunisia might also see a boost.

US pistachios, which have traditionally competed with Iranian products, are also expected to see a demand hike with the decrease of Iranian exports. Production is at an all-time high this season as 1 billion pounds of pistachios are expected to be harvested this year. With US-Iran trade tensions high as well, US suppliers are expected to aim for countries that have traditionally purchased Iranian products such as India and Pakistan, along with other Middle Eastern markets.