Domestic Economy

Iranian Exporters Continue to Vie for Russian Market Share

Iranian Exporters Continue to Vie for Russian Market ShareIranian Exporters Continue to Vie for Russian Market Share

A list of licensed Iranian traders has been sent to Russian customs officials so that the so-called “Green Corridor” scheme can be piloted.

By implementing the scheme, the two sides are seeking to facilitate the export of Iranian food, agricultural and horticultural products to Russia.

The clearance process for cargo exported by the designated economic players in the list will be expedited and they will be exempted from physical inspections in the Russian customs offices, IRNA reported, citing the Customs Administration of the Islamic Republic of Iran.

The idea of establishing a green corridor for transporting Iranian agro-food products to Russia mainly through the Caspian Sea was first put forward by Russian Minister of Agriculture Alexander Nikolayevich Tkachyov, during his visit to Iran back in January.

The initiative sought to replace Turkish exports of agricultural products to Russia primarily by Iranian goods, according to Tkachyov’s deputy Sergei Levin. He has said the corridor will become operational “at full strength” by the end of 2016.

Relations between Russia and Turkey deteriorated following the downing of a Russian Su-24 attack aircraft over Syria by Turkish fighter jets on November 24, 2015. In December, Russia imposed sanctions on the import of agro products from Turkey in response to the incident.    

Recent developments point to a thaw in Moscow-Ankara relations and a possible reentry of Turkish exports on the Russian market.

Turkish President Recep Tayyip Erdogan sent a letter to his Russian counterpart Vladimir Putin last week calling for the restoration of “traditional friendly ties”. The two leaders had a phone conversation on Wednesday with Putin ordering the Russian government to take steps toward normalization of relations.

  Unprecedented Request

Head of Agriculture, Water and Food Industry Commission at Tehran Chamber of Commerce, Industries, Mines and Agriculture, Kaveh Zargaran, said the Russian government’s official request of Iran to supply its food market in the absence of Turkey was an unprecedented move that Iranian exporters failed to capitalize properly.

“At first it seemed there was complete coordination between the government and the private sector in this respect, yet very soon obstacles emerged in the way of replacing Turkey in the Russian market due to deep-rooted problems in the Iranian economy,” TCCIMA news portal quoted Zargaran as saying.

He said a main reason for this failure is that the government was slow in facilitating trade with Russia for the private sector.

“Other hampering factors in agro trade with Russia include the high end-price of Iranian products, unhealthy rivalry between Iranian merchants and the fact that some products did not manage to successfully pass veterinary tests or standard qualifications in the Russian Federation for obtaining the requisite licenses,” he said.

Zargaran called on the government to restore export subsidies for Iranian traders to be able to compete with other countries in the Russian market.

Head of the Center for Contemporary Iran Studies in Russia, Recep Safarov, believes businesspeople from both sides are unaware of bilateral capacities for cooperation, and therefore trade between the two countries failed in becoming significant.

He said high tariffs and tax rates, transportation and infrastructure deficiencies, problems in banking interactions as well as Russian stringency in setting standards that need to be met by Iranian products played a role in complicating the situation.   

“Since their entry in the Russian market, Turkish traders have established strong bonds with local managing bodies and by means of lobbying, they are effectively preventing the activity of economic players from other countries,” he said.

He believes Iran is still among Russia’s main trade partners and that there is still hope for Iranians to be able to gain a stronger foothold in the Russian market.    

Presently, Iran is one of the biggest exporters of horticultural products and vegetables, including cucumbers, watermelons, bell peppers, cauliflowers and kiwis to Russia.

According to the head of the Department of Trade and Services of Moscow, Alexei Nemeryuk, Iran’s cucumber exports to Russia doubled in the first three months of the current Iranian year (started March 20) compared with the similar period of last year.

According to a report by the Islamic Republic of Iran Customs Administration, Iran exported 57.8 million tons of goods worth $46.94 million to Russia in the first quarter of the current Iranian year. The figure shows a 4% decline compared with last year’s corresponding period.