According to EastFruit analysts, military actions by Israel and the US against the Iranian regime have led to serious consequences for the fruit and vegetable market in the region, including Russia, which in recent years has sharply increased its dependence on Iranian fruit and vegetable supplies.
Iran, which ranks among the top 20 largest exporters of fruits, vegetables and nuts in the world by revenue, is known for exporting its products at incredibly low prices. Iran’s low prices are a consequence of the population’s impoverishment during years of ayatollah rule and, as a result, low labor costs, which is an important component in the cost of growing fruits and vegetables.
It is precisely the low price that enables Iranian fruits and vegetables to find new markets in the Middle East, Asia and Russia. At the same time, the quality of these products remains consistent with the price, i.e., relatively low. However, for less wealthy countries such as Russia and other Central Asian countries, cheap Iranian products are a very important component of food security.
Iran ranks among the world’s largest exporters of fresh apples, pistachios, tomatoes, dates, dried fruits, grapes, oranges, kiwi, onions, watermelons and several other fruits and vegetables. Moreover, exports from Iran in recent years have significantly shaped prices for apples, pistachios, grapes and a number of other vegetables and fruits in the Russian market. However, at this moment Iran, which is Russia’s closest partner in aggression against Ukraine, cannot ensure product supplies. The country’s banking sector is paralyzed, there is practically no cell phone connection and internet, it is difficult to buy diesel fuel for trucks, and there are many other logistical difficulties.
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Therefore, Russian importers are forced to urgently seek replacements for cheap Iranian products in other countries. However, this is simply impossible, since all other suppliers have almost always sold products at higher prices. In addition, Russia has banned itself from importing fruits and vegetables from most European countries and many other leading exporting countries, which now puts it in a certain food deadlock.
This is bad news for the Russian economy, where one of the main problems is high inflation. Even according to official data, inflation in the aggressor country exceeds 10%, and according to independent experts’ estimates, it approaches 30-40% per year. Currently, stocks of last year’s produce in the RF are close to zero, early produce, which is always expensive, is just beginning to be harvested, and for seasonal fruits such as cherries, peaches, apricots, blueberries, raspberries and others – Russia is almost completely dependent on imports. Accordingly, it is quite likely that vegetables and fruits in Russia in June, when prices for these products usually begin to decline, will provide an additional impulse for inflation growth.
In this situation, exporters of vegetables and fruits from Uzbekistan, Tajikistan, Turkmenistan, Georgia, Azerbaijan and Armenia are doing quite well, reporting growth in export prices for several vegetables and fruits by 30-60% compared to annual averages. However, this increases prices for local consumers, which is not well received by the public.
Produce prices in the low segment in the countries of the Middle East are also unusually high. Some shipments from Iran do get through but the volumes are not sufficient to cover the usual demand.
Iran, meanwhile, will most likely face a long-term problem of restoring fruit and vegetable export volumes, because producers, who were already in an extremely difficult financial situation, are now losing huge amounts of money. This could lead to deterioration in orchard quality and reduced production capacity in vegetable production, as well as decreased exports in subsequent seasons.
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