Iran is ready to return to the global commodities market, flooding it with fresh supplies and risking a slump in prices.
Oil? Possibly, but there’s a second industry that could be even more disrupted by a nuclear pact between Iran and the west: pistachio nuts.
Iran has far more clout in the market for cocktail nibbles than it does in crude trading. While it ranks only as the world’s seventh-largest oil producer, the Middle Eastern country vies with the U.S. to be the biggest pistachio grower.
As with oil, Iranian sales of pistachios to the U.S. and Europe have been hampered by sanctions. As the talks between Washington and Tehran to resolve the decade-long nuclear dispute head toward the June 30 deadline for a final agreement, traders are predicting lower prices.
“The new supply will have an impact,” said Hakan Bahceci, chief executive officer of Hakan Agro DMCC, a grain, nuts and pulses trading house based in Dubai.
The biggest losers may be Californian farmers who have doubled pistachio acreage over the past ten years despite drought conditions. Pistachio production in California started in earnest in 1979 and output hit 513 million pounds last year, more than triple the harvest in 2004, according to the U.S. Administrative Committee for Pistachios.
Nut Lovers
For nut lovers, more supply would be good news: prices have risen 40 percent over the last five years due to supply shortages.
Yet, so far, the California pistachio industry is unconcerned. Bob Klein, manager of the Fresno-based Administrative Committee for Pistachios, said Iran would struggle to sell into Europe and the U.S. because of high levels of contamination from aflatoxin, a toxic chemical caused by fungus.
“I am not hearing a great deal of concern within the industry about the return of Iran,” he said in an interview. Even if prices decline a bit, farmers will still thrive in California.
“Prices had been good. Pistachios are among the most profitable perennial crops” in the U.S., he said.
The U.S. pistachio crop was worth about $1.3 billion last year. For Iran, the crop is worth more or less the same, but has more importance for the country because it’s the second-largest export of the country, behind crude oil.
Hostage Crisis
The U.S. has banned Iranian pistachios intermittently over the last three decades. The first embargo dates from 1979 following the takeover of the U.S. embassy in Tehran and the hostage crisis. The ban was lifted four years later, but re-introduced in 1987 during the Iran-Iraq war before it was lifted again in 2000.
Ten years later, President Barack Obama approved legislation that effectively blocked imports of Iranian pistachios into the U.S. again.
“Currently, you cannot import into the U.S. Iranian-origin pistachios,” said Erich Ferrari, whose Washington-based firm Ferrari & Associates has lobbied the U.S. government on behalf of commodities traders on Iran.
Other Western sanctions, designed to stop oil and gas trading, are also limiting Iran’s ability to sell pistachios in Europe because of restrictions on banking and shipping, traders said. China, India and Turkey remain big buyers, and some Iranian pistachios are finding their way into the European market from Turkey.
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Now Reading:California Imposes Mandatory Restrictions to Ease Record Drought
A worker is seen picking asparagus at the Del Bosque Farms Inc., in Firebaugh, California. The drought has forced farmers in the nation’s top agricultural state to fallow millions of acres while some rural communities are running out of water. Photographer: David Paul Morris/Bloomberg
California regulators approved rules that for the first time require mandatory water reductions across the state as a historic drought gripping the region enters its fourth year and conservation efforts fall short of targets.
The state’s 411 urban water suppliers must cut use by 8 percent to 36 percent, with some of the deepest decreases imposed on wealthy communities that haven’t reduced their consumption enough. Those cities that have already cut back the most would face smaller restrictions.
The drought has forced farmers in the nation’s top agricultural state to fallow millions of acres while some rural communities are running out of water. The cost to drill wells has tripled because of demand and the below-ground aquifer in some parts of the state has sunk to the lowest level ever. The price of water is on the rise as utilities increase rates to make up for lost revenue.
“We know we’re not asking people to do things that are easy,” Felicia Marcus, the chair of the California State Water Resources Control Board, said before the board approved the rules on Tuesday. “It is better to prepare now than to face much more painful cuts should it not rain in the fall.”
Governor Jerry Brown, a 77-year-old Democrat, last year called for a 20 percent voluntary reduction. Yet the state hasn’t been able to meet that goal. Residents reduced water use by 3.6 percent in March compared to the same month in 2013 and by 8.6 percent since June, when officials began tracking conservation data.
Brown’s Order
Brown in April issued an executive order calling on the California State Water Resources Control Board to draft restrictions that would cut use across the state by 25 percent.
Water suppliers that don’t conserve enough would face a daily penalty of as much as $500, with the fine increasing to as much as $10,000 if the agency issues a cease-and-desist order.
The rules will take effect on May 15 after they’re approved by the Office of Administrative Law. Each water supplier will be required to report data from June through February for comparison with the same period in 2013 to measure reductions.
Some of the state’s wealthiest communities, including Beverly Hills, the San Francisco Bay Area town of Hillsborough and the Southern California town of Montecito will face restrictions of as much as 36 percent. Some of the state’s poorest communities, including East Palo Alto and Compton, will face restrictions o
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