Nuts! How Recently Lifted Sanctions with Iran Will Affect the Pistachio Market
In 1986, following sanctions imposed following the Iranian Revolution of 1979, the United States of America imposed sanctions against Iran, embargoing the sale of many Iran-made products that the U.S. once imported. One of these products is the crackable, delicious pistachio, a nut that, prior to the sanctioning, was almost entirely imported from Iran with very few pistachio growers existing in the United States. The world pistachio market was dominated by Iran. Following the sanctions, however, pistachio farms began to pop up all over California. By 1990, California’s pistachio grove acreage more than doubled, and by 2014, it multiplied ten-fold since the sanctions were imposed to over 294,000 acres; they now produce approximately 98% of the total pistachio crop in the United States. Pistachios became one of the top ten agricultural commodities grown in California with 65% of the crop being exported to areas like China, Europe, and Canada. With the U.S. being the world’s second largest supplier of pistachios with 20% of the market, following only Iran with 50%. In short, following the sanctions, the United States pistachio industry boomed.
However, this may soon change since, as of January 2016, Iranian sanctions have been (sort of) lifted, meaning that many Iranian exports, including caviar, carpets and – you guessed it – pistachios, will soon be sold in United States markets. This has California pistachio growers worried, especially after 2015’s terrible growing season amid a multi-year drought. Pistachios require a lot of water to grow, so without it the green, meaty nuts that consumers love have become dry and small, leaving almost half of the shells harvested in 2015 hollow and empty.
Even with the recently lifted sanctions and the California drought, there is another obstacle to the Iranian pistachio reintroduction into American markets: the 300% tariff the United States government imposed back in 1986. The tariff is in place because Iran’s pistachio industry is subsidized by its government, and means that, even though Iranian pistachios can be sold in the United States, they will cost 3 times as much for an American consumer as they would for someone in Iran. This should stave off the market competition for the time being, but in early July 2016 the U.S. International Trade Commission (USITC) met with pistachio farmers who intended to prove that their crops and businesses were not subsidized by the government. The USITC voted to conduct a five-year review on the antidumping duty order (read: tariff) on raw-in-shell pistachios imported from Iran before determining whether or not to lift it.
Iranian pistachios will likely not damage the market in 2016, 2017, or even 2018, but once the five-year review is complete, California pistachio farmers may be faced with some stiff and globally-dominating competition. However, amidst the worry, some pistachio farmers don’t seem too ruffled by the recent developments.
“This is a global market nowadays,” says Brian Blackwell who manages over 10,000 acres of nuts in southern Tulare County. “So if Iran brought a million pounds of pistachios into the United States that just means there’s a million pounds out there somewhere that didn’t get sold in China or Europe” – places where United States growers could sell their crop instead. Fellow pistachio worker Jim Zion from Clovis, Calif. agrees. “I’m not that concerned to be honest,” says Zion who markets around 60 million pounds of pistachios and other nuts on behalf of farmers each year. “It doesn’t matter whether I sell this product to someone in Chicago or someone in Singapore. It’s all the same for me.” For now, California pistachio growers can breathe easily when it comes to Iranian exports and instead focus their attention on a better crop yield for 2016.