Economy, Domestic Economy

Confederation Airs Grievances

Confederation Airs GrievancesConfederation Airs Grievances

Fruit exports have the potential to generate revenues 3 to 8 times higher than a barrel of oil, according to Reza Noorai, chairman of Iran’s Export Confederation.

Noorai told Tasnim news agency that the existing infrastructure and trade policies were “not desirable for non-oil exports” and “the government should always take the lead in exports but it should not take the role in a way that would marginalize the private sector” - leading to subsequent delays currently faced by fruit exporters.  

Since 20 years ago, officials have highlighted the need for refrigerator trucks, better roads and transportation system as a prerequisite for development of exports. However, the government has banned imports of refrigerator trucks despite the small rate of domestic production of certain types of containers. Besides, Noorai said, the engines for those trucks cannot be manufactured domestically.

“After 20 years, we finally managed to convince the Article 1 Commission to remove the ban on refrigerator truck import, however, the first vice-president rejected the proposal without consulting relevant associations,” Noorai complained.

He highlighted the slow progress of developing export relations with Russia and said “the bureaucracy in the government has impeded fast entry to the Russian market. Private sector could take the lead if the government had fully trusted it.” He also added that a lack of preferential tariffs between the two countries is the reason behind the small volume of exports to Russia limiting it to those Iranian products with comparative advantage.

He regretted that associations are busy dealing with export barriers that have been created overnight rather than focusing on the development of a roadmap for export development. He predicted that non-oil exports would rise to $100 million if associations are given the chance to intervene in export matters. However, he noted that those issues leading to current situation should be addressed as soon as possible.

Noorai lamented the significant increase in the tariffs by the Export Development Bank (Tose’e Saderat Bank) “whereas it should act a supporter for exporters.” He considered “export tariffs” and “value-added tax” as serious impediments to export activities. “Exports will not increase as far as officials refuse to focus on export development and production increase, which is the backbone of exports,” he added.

He invited the government to sign more preferential tariff agreements with various countries in order to prevent last year’s experience of apple export to Iraq, which was eventually carried out through Kuwait.

Farmers should be granted permission and facilities to set up warm and cold storehouses and sorting equipment in their farms, Noorai asserted, adding that rural cooperatives should be empowered and balanced production plans should be developed so that every farmer knows the type and volume of crops they are going to plant in the future.

Currently, Iran exports fruits via a third country. The main fruit export destinations are Persian Gulf littoral states, Central Asia, East Asia and Europe. High costs of packaging and shipping has not allowed for a stronger presence in more distant regions, according to Noorai.

Non-oil export is a good alternative to replace oil revenues. Every barrel of fruit generates a revenue 3 to 4 times higher than a barrel of oil, Noorai stated. For instance, “the value of one barrel of cherry is equal to the money made from selling a barrel of oil,” he added.

He said that taking pride in imports is one of the existing economic problems. The demand for basic products such as wheat “should be met domestically”, he said. In this respect, strategic crops produced domestically could be purchased at higher prices compared to global rates so that domestic producers are protected and foreign exchange reserves increase, Noorai suggsted.

He called on the Iranian exporters to stop using traditional methods of export and instead choose modern ones through which production wastes are reduced and share of quality products for exports is increased.