Iranian Pistachios Regain Competitiveness with Ongoing Price Decline

Production Disappoints

With the Iranian pistachio harvest concluded, a more subjective estimate for the crop can be made and current projections are mostly disappointing. The Iran Pistachio Association (IPA) lowered their crop estimate to 180,000 metric tons (mt) for 2023, down from initial estimates of 210,000 mt. This is mostly due to the poor nut fill and a high number of blank nuts. The poor fill has been attributed to the intense summer heat and irrigation water scarcity in some regions. Yields are disappointing considering that it is an on-year in the biannual production cycle of pistachios and the very poor crop in 2022 allowed trees to “rest.” The IPA’s estimate for bearing area is 336,700 hectares (ha), which would amount to yields of 535 kilograms (kg) per ha. In the past, yields often surpassed 700kg/ha in on-years, but due to several factors, such as climate change, poor water management, illegal wells for irrigation, and other socio-political hurdles, production is following a decreasing trend.

Exports Increase as Prices Become More Competitive

A higher price throughout the 2022/23 marketing year (MY) led to weak exports for most of the year. The 2022/23 MY, which ended on September 22, saw exports of only 56,000 mt, compared to the five-year average of 107,045 mt. While Iranian pistachios encountered difficulties in maintaining competitiveness in the global export market, there was a measure of relief through increased purchases from Russia. Notably, Russia constituted a significant portion, representing 15% of total exports, attributed to limitations or constraints in importing from other origins.

However, prices have decreased significantly since Sep-23 as the crop came in. This led to Iranian pistachios regaining some competitiveness in the export market and a sharp increase in exports in the first two months of the Iranian pistachio MY. Exports in the first two months of 2023/24 (from September 23 to November 22) amounted to 26,361 mt, double the volume exported over the same time in the previous MY, but still 13% lower than the five-year average.

Prices to Continue Declining

With the decline in prices, Iranian exports experienced a surge, although they remain comparatively higher than those of other major exporters, such as the United States (US). Renowned for their distinctive flavor, Iranian pistachios possess a comparative advantage in certain niche markets. Nevertheless, further price reductions would be necessary for effective competition in the snack market. Iran will have an estimated 130,000 mt of pistachios available for export during 2023/24. Globally, a record crop of more than 1.0 million mt has just been harvested and consumer demand has not kept pace with the increase in global production. This would require Iranian prices to decrease even further to boost its exports during the rest of the 2023/24 MY. Especially in Far Eastern markets, some importers increased their purchases as prices decreased. However, importers could consider delaying their purchases, with a further decrease expected in prices.