Journal

Journal of Applied Horticulture, 8(1): 82-84, January-June, 2006

Appl

Constraints in production and marketing of pistachio

in Iran and concerned policies

Reza Sedaghat and S. Suryaprakash1

Iranian Pistachio Research Institute, Iran, 1Department of Agricultural Economics, University of Agricultural Sciences,
Bangalore, India.

Abstract
Pistachio is one of the most important agricultural crop in Iran. The country earns sizable income from pistachio export. To be globally
competitive, the production and trade of pistachio must be economically viable especially in long run. This paper aims to analyze the
constraints in production and marketing of Pistachio in Iran. Necessary data were collected through personal interview of randomly
selected sample of farmers and exporters/ processors. One hundred farmers and ten processor/ exporters interviewed in Kerman
province and Tehran city (Iran), in the crop year 2003-04. The Garret ranking technique was adopted to identify the constraints.
Farmers and traders were asked to rank the problems considered. Farmers ranked 14 problems into 9 different categories. Differences
between scores adopted for different categories were low and they varied from 74 to 87, indicating that all the problems are important
from producer’s point of views. On the other hand, traders ranked only 12 given problems among 17. They classified each and every
problem into a distinct category. Score variations were comparatively high varying from 19 to 60 indicating that there is significant
difference between different categories of problems. The results of tabular analysis of export data showed that pistachio industry of
Iran was facing a negative growth rate of production, productivity, export quantity and export value during the period 1991-2002.
Key words: Pistachio, Iran, export, production problems, productivity, economics

Introduction Methods and materials

Pistachio is cultivated in dry areas of Iran, where precipitation Study area: Pistachio is produced in different provinces, but
is quite low and no other crop could be produced economically. Kerman is the major province of pistachio gardens in Iran (with
Currently pistachio export earnings stand next to petroleum. 270,000 hectares, accounting for 71 percent of total area under
Around 10 percent of non-petroleum export value is being pistachio across the country). Kerman province is located in
realized from pistachio. The average size of pistachio gardens south east of Iran bounded by Fars, Yazd, Hormozgan, Sistan
is around 2.5 hectares. Pistachio cultivation alone provides and Khorasan provinces. The climate in this province tends
employment to over 7, 60,000 people. Considering the people to be very warm in summers and very cold in winters. The
who were employed in pistachio processing, marketing and temperature ranges between -10oC to and 48oC. The average
export, the employment adds up to over one million. Hence, rainfall is around 150 mm per year. Rafsanjan city in Kerman
pistachio is a crop of great importance in Iran’s economy province was purposefully selected for this study. More than 50
(Sedaghat, 2002, 2006). According to the Agricultural Ministry percent of pistachio gardens are located in this area. Moreover,
Data (2002), pistachio is cultivated in 3,80,000 hectares in most of the processing industries and exporters are operating
Iran, with 70 percent bearing and 30 percent nonbearing from Rafsanjan.Iran’s Pistachio Research Institute and Pistachio
gardens. Pistachio production was 3,20,000 metric tones, with Producer’s Cooperative are also located in Rafsanjan. Thus, this
the yield bearing 1.2 tones per hectare in bearing gardens. city is well known all over the world as the most important region
Foreign exchange earnings from the export of pistachio have of pistachio production.
been around 350 million US dollars per year during the last
five years. Iran stands first both in production and export of Database: Rafsanjan consists of five districts, viz., Kabootarkhan,
pistachio in the world. According to the data from FAOSTAT Noogh, Anar, Koshkooeya and Hoome. By using a multistage
Information Bank, Iran accounted for 52.89, 58.00, 64.79 and random sampling technique, 20 sample farmers were chosen
65.84 percent of world production, cultivation area, export and from each district. The sample spread across the three major
export value, respectively during the last decade (FAO, 2003). varieties of pistachio in the province (Fendoghi, Kaleghoochi
and Akbari). Also, a sample of 10 main traders/exporters was
To be globally competitive, the viability of production and
interviewed for the purpose of the study. Farmers and traders
processing should be attained in long run. Otherwise loosing
were questioned about their challenging hindrances and were
the current position is expected in future. This study aimed
asked to rank the problems.
at identifying the main obstacles and bottlenecks faced by
producers and exporters of pistachio in Iran. Also the feasibility Methods of analysis: Tabular analysis was used to identify the
of a contract system was assessed as an alternative system, to growth rates of production, harvested area, yield/hectare, export
reduce the current problems. quantity and export value during the period 1991-2002.
 Constraints in production and marketing of pistachio in Iran and the policies concerned 83

Garret’s ranking technique (Garret and Woodworth,1969) was The score variation was very low varying from 74 to 87. Lack of
adopted to analyze the factors considered . The respondents adequate agricultural water received rank I, unsuitable domestic
were asked to rank the factors. The orders of merit, assigned by market structure, inter and intra year fluctuations of prices and
the respondents were converted into ranks using the following low price of pistachio in the market all together received rank
formula: II. Lack of appropriate chemical fertilizers received rank III.
Traders ranked only 12 factors out of 17 identified ones and
Percent position of each rank = 100 ( Rij - 0.5) / Nj
they sorted them into 12 distinct classes (Table 3). No factor has
Rij= Rank given for ith factor by jth individual
been given the same score by the traders. The score variation
Nj= Number of factors ranked by jth individual
was comparatively high varying from 19 to 60. Aflatoxin
The percentage position of each rank then converted into scores contamination, inappropriate and changing governmental policies
referring to table given by Garret and Woodworth (1969). For and rules in export and irregular supply of product to market
each factor, the scores of individual respondents were added during the year received ranks I , II and III, respectively.
together and divided by the total number of respondents for Table 2. Constraints in production, processing and marketing of pistachio
whom scores were added. These mean scores for all the factors from the producers’ point of view in Iran
were arranged in descending order, ranks were given and the Constraints Score Rank
most limiting factors were identified.
Lack of appropriate agricultural machinery 79 7
Results and discussion Lack of adequate agricultural water 87 1*
Lack of appropriate pesticides 81 5
Growth rate of production, harvested area, productivity and Lack of appropriate chemical fertilizers 83 3*
export in Iran compared to other major pistachio producing
Lack of extension and advisory services 79 7
countries: The mean growth rate calculated for the first 2 years
Inadequate credits for production 82 4
and the last two years during 1991-2002, are presented in Table
1. The reason to use 2 years average is the alternate bearing Inadequate processing plants 78 8
habit in pistachio. The growth rates for all the variables, except Unsuitable domestic market structure 85 2*
harvested area, were negative in the case of Iran. The growth Inter and intra year fluctuations of prices 85 2*
rates of production, productivity and harvested area were negative Low price of pistachio in the market 85 2*
but that of export and export value were positive in the case of High discount rate in domestic market undertaken by 80 6
Turkey. The growth rates were positive for all the variables in the buyers
case of USA. As already mentioned, Iran’s situation for the above Paying late by buyers 78 8
mentioned variables is not satisfactory. It is worth mentioning High cost of production 82 4
here that if the current situation remain consistent, the future of Others 74 9
pistachio industry will become worse.
*The most important problems
Table 1. Growth rates of pistachio production, harvested area, yield and
export for major producing countries during (1991-2002) Table 3. Constraints in production, processing and marketing of Pistachio
from the Traders’ point of view in Iran
Particulars Iran USA Turkey
Constraints Score Rank
Production
Share in first 2 years (%) 56.5 15 13.00 Lack of extension services to the producers and - Not Ranked
Share in last 2 years (%) 46.5 24 10.75 processors and low quality of final product
Change in share (%) -17.7 60 -17.30 Lack of modern pistachio processing plants 20 11
Harvested area Domestic market structure 47 4
Share in first 2 years (%) 55 7.5 10.00
Share in last 2 years (%) 66 9 9.00 World market structure - Not Ranked
Change in share (%) 20 20 -10.00 Inter and intra year fluctuation of prices in world - Not Ranked
Yield / hectare market
Share in first 2 years (%) 102.5 199 130.25 High discount rate in domestic market 44 6
Share in last 2 years (%) 71 278 120.50
Change in share (%) -30.73 39.7 -7.48 High and increasing trend for cost of production 19 12
Export quantity Low productivity (yield per hectare ) 43 7
Share in first 2 years (%) 73 8 0.40 Lack of credit to marketing agencies 46 5
Share in last 2 years (%) 57.5 12 2.37
Change in share (%) -21.23 50 493.75 Low and constant trend of prices in world market - Not Ranked
Export value In appropriate and changing Government policies 53 2*
Share in first 2 years (%) 71 7.7 0.67 and rules for export
Share in last 2 years (%) 61 12 3.36
Change in share (%) -14.08 55.84 401.86 In adequate transportation system 28 9

Source: FAO (2003) Inadequate of packaging industries 24 10

Irregular supply of product to market during the 51 3*
Problems faced by producer and traders in Iran: The ranking year
results of the factors considered by the producers and traders are Aflatoxin pollution 60 1*
Poor quality of product in international market 37 8
depicted in Tables 2 and 3, respectively. Farmers ranked all the 14
factors and they classified them in to 9 categories (Table 2). Some Others - Not Ranked
of the factors have been given the same rank by the producers. *The most important problems
84 Constraints in production and marketing of pistachio in Iran and the policies concerned

Nature of the problems and how to reduce them with applying producers either in ethnic or economic aspects, (v) Existence of
a contract system: Based on the information discussed in the quasi- monopsony market system for pistachio, (vi) The need
previous sections, it could be obviously revealed that the Iran’s to provide and control the credit to the farmers in the region
pistachio industry suffers from many hindrances which could be especially at the peak season (vii) Political importance of the
divided in two major categories: those pertaining to producers crop, (viii) To transfer and adopt the technology required and to
and those concerned to traders. Both type of the problems and offer the services for the farmers (ix) Pistachio being the only
constraints exist due to inappropriate policies in production, product in the region and hence all the inputs and services go
marketing and export of pistachio in Iran. to the commodity.
As a part of the existing system, inputs and services are mainly Despite a good position in world pistachio production and
provided through government channels which are not the product trade, Iran’s share of global production, productivity and export
buyers, Pistachio cooperative and some private agencies buy the has declined during the last decade. Productivity of pistachio
product from the farmers. As a result, those who are providing gardens in Iran is low compared to other competing countries.
services to the farmers are not much bothered about the timeliness Cost of production has increased significantly in recent years.
and cost effectiveness in the availability of the inputs and The prices received by the farmers do not compensate for the
services. Again those who are the buyers of produce don’t have effect of low productivity and increasing production cost. As
any mechanism to provide services to the farmers at proper time, a result, profitability of production has come down and it may
though the safety and quality of product is very important for further decline if the current situation continues. There are many
them. This has created an inconsistency in the production and constraints and bottlenecks faced by both farmers and exporters,
marketing system of pistachio in Iran, leading to the problems/ mainly due to inappropriate managerial system for pistachio
constraints already explained. industry in Iran. These problems exist due to an inconsistency in
the market. Experience achieved over the last three decade reveal
For betterment of the pistachio industry, a well managed that, government interference in the production and marketing
contract system can be applied with an equal right for all the of pistachio was not efficient. On the other hand, the existing
stake holders. condition is not fully ready for running a free market system. In
Contract farming refers to a system where a central processing or such a situation, contract system can play a major role to bring
exporting unit purchases the harvests of independent farmers and efficiency and profitability to the system and benefit to both the
the terms of the purchase are arranged in advance in a contract producers and traders. Since there is a need for new contract laws,
base approach. The terms of the contract vary and usually regulations as well as new policy perspective, it is suggested
that government take the responsibility of policy making of the
specify how much product the contractor will buy and what
contract schemes for effective operation of the system than a
price they will pay. The contractor frequently provides credit,
direct participation.
inputs and technical advices. Contracting is fundamentally a way
of allocating risk between producer and contractor; the former
takes the risk of production and the latter the risk of marketing
References
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has got many characteristics that encourage undertaking a Education, Vakils, Feffer and Simons Pvt. Ltd., Bombay. p. 329.
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