Economy, Domestic Economy

Food Export Challenges to Russia

Food Export Challenges to RussiaFood Export Challenges to Russia

The export of meat and dairy products to Russia is facing numerous challenges even if Russia Federal Service for Supervision of Consumer Rights Protection and Human Well-Being approves of importing Iranian products; Forsat Emrooz newspaper quoted president of Iran-Russia joint chamber of commerce as saying.

“Iran is struggling with four long-pending hurdles of transit, visa, tariffs, and foreign exchange to implementing trade agreements with Russia,” said Asadollah Asgaroladi.

According to him, shortage of refrigerated trucks and freighters for transporting food and meat products is the first big hassle as well as dilapidated railways that are unfit for export.

Russia’s reluctance to pay in dollars is another problem as the exchange process to rial is continuously affected by currency fluctuation.

The chamber official asserts that trade visa validity must be extended to one year for Iranian businesses in Russia, adding that Russia is selective in setting tariff rates as they stand at 20 to 25% for Iran while Kazakhstan, Uzbekistan, and Kyrgyzstan pay nothing.

Given that Iran exports to Russia stood at $600 million in 2014 while imports amounted to $100 million, Asgaroladi believes that the target of $3 billion in exports for the next fiscal year seems hard to reach under the current circumstances.

“Russia had previously asked to inspect our seafood industry before trade under the impression that our standards may not meet theirs or the global benchmarks. However, the impresion proved wrong and we signed agreements,” the chamber official said.

He clarified that Russia has repeatedly postponed a second trip to Iran to inspect dairy and meat production units which was originally scheduled for December 2014. He assured however, that the quality of Iranian products is not an obstacle between the two countries.

Fatemeh Moghimi, another member of Iran-Russia joint chamber of commerce, added that such inspections are common and profitable in international business arena.

“Meetings are good to discuss trade problems as well as new possibilities between sanction-hit Iran (over its nuclear energy program) and other countries,” Moghimi stated.

She also noted that results depend on where the negotiations are headed and cannot be predicted.

Russian officials will come to Iran this week to inspect their companies of choice based on their national standards. If they approve, both parties will discuss procedural conditions and technicalities regarding meat and dairy exports to Russia.

According to secretary general of the Association of Food Industries of Iran Kaveh Zargaran, 43 billion rials ($1.25 million at market exchange rate) worth of food product were exported to Russia in the ten months of the current Iranian calendar year (to end March 20). The figure accounts for 15% of the entire non-oil based revenues.

According to information published by the World Trade Center, Russia imported $40 billion worth of food products in 2013, $4.3 billion of which pertain to dairy products.