Pistachios from Iran: Demand chases production

Gerhard H. Breuer talks to Amirali Asgarowladi, Managing Director, Green Diamond Tree, Tehran

The 2017/18 pistachio crop was very large, but producers and traders were not happy. How come?

The average size was smaller. It’s not so easy to understand, and that’s why I’d like to explain the facts to you. For us, 31 is the usual export size for the Fandoghi variety, i.e. 31 pistachios per ounce (28,35g). This is not particularly large, but it is the standard size for Iranian pistachios. Our large sizes start at 28/30 and 30/32, and in 2016 size 31 was as large as 32/34 this year.

What I‘m saying is that this year’s pistachios have less density. The fruit looks the same from the outside as in 2016/17 and it has the same size, but in 2017/18 it has a lower weight. In international trade, the benchmark is the number of nuts per ounce. Our customers buy 28/30 or 30/32 from us, but they actually get 34/36 or 32/34. It is not about the outer dimension. Buyers all over the world fear small calibers. This crop resulted in a large quantity of „light“ pistachios.

Why was that?

Weather conditions. In 2016/17 ideal conditions prevailed. The winter of 2017 was not cold. And the crop volume was too large. The

trees couldn‘t feed so many fruits mainly due to water shortage.

Has the problem affected the whole of Iran?

All growing areas except Khorassan in the east. Khorassan has been an exceptional region since 2016. The poor conditions particularly affected the traditional areas such as the province of Kerman, as well as Yazd, Sirjan and Zarand. In all these regions pistachios were lighter.

What do you expect for the upcoming crop in autumn 2018?

2018 is an „off“ year, and our forecasts predict maximum 100,000 t, that is half of 2017. Although density will not be a problem in 2018, the volumes are smaller. Basically, everyone is unhappy: exporters and farmers. Both are worried because their profits are dwindling while the costs remain the same.

Maybe the „new“ growing areas in Khorassan are the solution for a small crop in 2018/19?

That’s true. The traditional regions in the south have a really small harvest. We will achieve a crop volume of 100,000 t mostly because we have Khorassan and other new areas.

Is your company active there?

We operate a purchasing office in Mashhad. Our own production is limited to Yazd where we have 1,000 ha of land, 500 ha of which is dedicated to pistachios. Depending on the crop year, 1,000 t of nuts are produced. We process between 5,000 and 10,000 t. Also worth mentioning is that we are currently opening a new plant in Kerman.

On the Zangi-Abad-Road, the ring road around Kerman?

Exactly there; we call it the Pistachio Road. Total investment amounted to EUR10 m including EUR5 m for land acquisition. We didn‘t rent the land, we bought it. The amount includes the construction of the buildings. It seems difficult to get a return on such an investment from pistachio exports.

The factory employs 150 people on 24,000 square meters, where machines of all manufacturers are installed. This factory stands for all additions to capacity to be realized in the next ten years, i.e. 20,000 t. If sanctions are lifted, we will also buy machines in the US. We process in-shell nuts and kernels in Kerman, and we can supply both sun-dried and machine-dried goods. But as we see the future, the majority of nuts will probably be machine-dried.

Because of the increased labor costs in Iran?

This is no doubt one of the reasons. You see, the amount of land required for sun drying is enormous. The industry trend is very clearly towards mechanical drying. More and more state-of-the-art equipment is being used. We have color sorters and lasers. Processors and exporters are very serious about eliminating aflatoxin and foreign material from the goods.

When I look at the equipment we and our colleagues are operating, I see great progress. By the way, we were the first in Iran to be certified according to IFS and BRC five years ago. The certificates may not mean much, but they are door openers to many markets.

What about the 100% guarantee of freedom from aflatoxin?

The 100% guarantee of freedom from aflatoxin seems bold to me. What our company says is: We supply pistachios with a low risk. The next question my customers ask me is: What kind of risks do you see and how many recalls have you had because of increased values? I say: none in the past two years.

Is this related to the use of state-of-the-art machines?

No, not directly. The low risk is due to a different management.

Can you explain that?

It is important to know what the individual machines can do, but for me it is crucial to have an overview of the entire process from start to finish. If you compare California with Iran, the industry in the US consists of relatively few large producers, while we still have around 100,000 producers. Each producer uses his own method, perhaps for a ton of pistachios. What I’m saying is that the large number of small producers makes control difficult. As far as raw material inspection is concerned, we are far, far ahead of California.

We have much more practical experience.

It’s quite easy: we get raw material that is contaminated and we want to export it non-contaminated to Japan or Europe. I take the example of a doctor in Afghanistan or Iraq. He has much more experience than one in the US or Europe. He examines a hundred, two hundred patients a day, but in Europe or the US he sees perhaps fifteen.

How do you handle quality control?

The aflatoxin tests are carried out in-house with an HPLC device (high performance liquid chromatography), which costs about US$100,000. Not only the device is expensive, but also the staff who must be experienced and able to operate the device. In our factory, we focus on aflatoxin analysis, which is why we had to invest in the device. And we use it, too. We do about 100 tests a week.

Depending on the circumstances, we test a batch up to 40 times. In addition to aflatoxin, we test for moisture content and mould, as well as physical inspections such as color, size and defects.

How is demand for pistachios developing?

With rapid strides and faster than we ever thought. The same is true for production. If the current crop volume currently averages 200,000 t, we will achieve 300,000 t in ten years. In the US this development is much faster and it is said that they are targeting a crop volume of 1 million t.

If you are now observing demand, you see that it is developing faster that production. As we know, there‘s a brake somewhere. If, driven by the demand, prices reach US$15 per kg, demand will decline. It‘s like a law of nature.