[LONDON] 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 US to be the biggest pistachio grower.
As with oil, Iranian sales of pistachios to the US 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 US Administrative Committee for Pistachios.
For nut lovers, more supply would be good news: prices have risen 40 per cent 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 US 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 US, he said.
The US pistachio crop was worth about US$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.
The US has banned Iranian pistachios intermittently over the last three decades. The first embargo dates from 1979 following the takeover of the US 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 US again.
"Currently, you cannot import into the US Iranian-origin pistachios," said Erich Ferrari, whose Washington-based firm Ferrari & Associates has lobbied the US 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.