The Rise and fall of Iran horticulture.
Updated: Nov 2, 2022
If you're an Indian consumer of fruits, there is a 99% chance that you have tasted the variety of fruits that have been imported to India from Iran. That is the scale of expansion the Iran fruits have gained into the Indian market. But this might not be the case a few years back. This has been a very recent trend. Today, we will analyse how the Iranian producers were able to capture the Indian market even during the time when there is high competition from the Indian producers.
The India-Iran agri trade has been bidirectional in nature. India exported goods valued at around $1687M to Iran in 2014-15. These include commodities such as sugar cane, barley, oil cake, etc. As we see in the figure above, the imports stood at $126M only. These included both dry fruits and fruits. But as of 2021 the figure stood at around $200M for fruits alone. There has been a 5x rise in fruits being imported to India from Iran from the year 2015.
The North Indian season
The Indian apple season runs from late June to early January, Thanks to the latest storage facilities that makes the apples available for such a long period of time. It starts with variety of fruits being cultivated in the region of Himachal Pradesh from early may including fruits like cherries, apricots, plums, etc. Then there is a gradual shift to apples being cultivated in the region of Himachal Pradesh. The peak in the Himachal apple season can be seen the month of August. The apples are sold in the retail market for the prices as cheap at Rs. 80-100/kg. The Himachal season comes to a decline during late September when we see a rise in apples from Kashmir. The reason for this shift is the freshness of the produce. The wholesalers prefer to sell Kashmir apples from late September as they face quality issues from Himachal apples during that time. The Himachal producers tend to store their produce in controlled atmosphere (CA) cold storage facilities during this time. The Kashmir apple season peaks during October. Both the Himachal and Kashmir producers tend to store a proportion of their produce in CA storages so as to sell at a higher price during the coming months when there is less production and high demand.
The supply gap and the rise of Iran
The months of Nov-Jan are a very tricky time frame in the Indian fruit calendar. During the month of November we see a decline in the production of apples in Kashmir. I would like to call this time period as a 'supply gap'. The Indian producers who have stored their produce in the CA Storages start selling at very high prices due to high demand and low production. The apples which costed Rs. 80-100/kg will now cost the consumers Rs. 140-160/kg. The Indian Import season usually starts with produce coming from Turkey. But they cannot compete with the Indian apples as they are priced very high due to high import duties and high cost of production incurred by the Turkish producers. The Turkish apples at this time cost the consumers around Rs. 200-220/kg.
This is where the Iran producers made their fortune. They understood the problem of 'supply gap' and converted this problem into an opportunity. They used cheaper means of production for producing apples which in turn reduced their selling price. This allowed the Indian importers to sell the Iran apples in competition with the Indian apple producers. Iran apples will cost the consumer around 140-160/kg. It is important to note that the Iran and Turkish apples are fresher during this time while compared to the Indian apples which are actually stored earlier in CA Storages. The customers preferred consuming Iran apples as they were fresher than the Indian apples and much cheaper compared to the Turkish apples. The Iran producers reduced their costs further by using cheap means of packaging. These techniques of cost reduction was highly successful for the Iranian producers became of the difference in logistics time. A container from Iran can reach India in 2 weeks but a container from Turkey will at least take a months time to reach India via sea. This has been the major reason for the rise of Iran apples being imported to `India.
The decline of Iranian fruits is not necessarily seen in apples in India. But the Iranian apple producers face huge challenges ahead. The Indian producers have raised demands with the Indian Govt. to ban the import of Iran apples at least until January so that they can sell their produce. They have complained about huge losses they had to face due to the Iran apples. Many farmers have stopped producing apples in India due to the entry of Iran apples. The Iran apples have already faced bans in countries like Russia due to its inability to compel with the laws required. The major decline in India is seen in the import of Iran Kiwis after the Indian Govt. banned it due to lack of compliance with the laws put forward by the Govt. It was a bumming news for the Iranian farmers as India was a major market and the sudden ban put them in the risk of huge losses. They are now under the threat of apples also being banned. With Turkish farm houses finding new ways of reducing their production cost, Iran farm houses face a major threat of alienation in most of the markets including India.
The way ahead for the Iran Farm houses
The Indian wholesalers are always in the favour of the Iran fresh fruits producers because of the competitive rates at which they sell their produce. Although there has been a ban on Iran kiwis, the Indian importers have been caught smuggling it into the country using various means. This is because the Indian fruit market is highly competitive and importers find new ways to survive by providing at competitive rates. But the Iran farm houses must understand that keeping the importers happy will not be sufficient for them. They have to improvise the ways they produce the fruits. They have to take measure to compel with the laws put forward by the government. There is a risk of consumers refraining from consuming Iran fruits as they fear about their health. The Iran government must also take measures to educate its farmers. A ban on Iran apples might have a very huge impact on the economy of Iran.
Views presented by: Naufil Kalam
This article is a personalised view of the author and in no way represents the company's stand.