Upswing in Iran’s Food Exports to Russia

Iran’s exports to Russia are slowly gaining momentum after a declining trend that saw the value of Iranian shipments to the northern neighbor declining from about half a billion dollars in the March 2012-13 fiscal year to a record low of 173 million in the fiscal 2015-16.

Last year’s (March 2016-17) exports rose 26% compared to the year before to stand at $218 million, the Islamic Republic of Iran Customs Administration’s data showed.

Kaveh Zargaran, the head of Tehran Chamber of Commerce, Industries, Mines and Agriculture’s Agriculture, Water and Food Industries Commission, attributes the turning point to an increase in the export of dairy products and raisins, TCCIM’s news portal reported.

“Last year, we exported nearly $152 million worth of food products to Russia, indicating a 55% and 38% growth in tonnage and value respectively compared with the year before. Yet, Iran’s share in Russia’s $27 billion food market is still meager,” he said.

According to the official, the main hindrances in the way of Iran’s exports to Russia include difficulties in money transfer and the higher price of Iranian products compared with those of foreign counterparts in the Russian market, which is a result of high production costs in Iran.

In order for Iranian exporters to secure a successful presence in Russia, the government needs to decrease transportation costs and allocate subsidies to exports.

“Last year, at the discretion of the Agriculture Ministry, export subsidies were allocated to dairy products and we saw a hike in their exports. But unfortunately, we don’t see such supportive measures taken in the case of other products in which we have a comparative export advantage,” he said.

In fact, dairy products had the biggest share in Iran’s food exports in the last Iranian year (ended March 20, 2017).

According to Zargaran, last year’s dairy exports earned $773 million, of which yogurt topped the list with $218 million, followed by cheese with $187 million, powdered milk with $129 million, and cream and ice cream with $120 million.

Some 300,000 tons of dairy products were exported from Iran during the first three months of the current fiscal year (March 21-June 21), registering a 70% increase compared with the corresponding period of last year.

“Our main export destinations over the period were Russia and some Eurasian and European countries,” deputy agriculture minister, Hassan Rokni, was quoted as saying by IRNA.

Iranian exports to Russia fell from a high of $499 million in 2012-13 to $317 million and $287 million over the following two years.

“This performance in my opinion is not defensible. Exports to Russia accounted for 1.5% of Iran’s total exports in the fiscal 2012-13. The figure decreased to 0.5% last year,” Zargaran concluded.