Iran is the home of the pistachio. Pistachio is one of the most important agricultural plants grown and exported from Iran. Iran has the ideal climate for pistachio production: short cold winters, long and very hot summers, low humidity and the possibility of infrequent irrigation. Iran’s pistachio has a very high source of protein, nutrition and energy. It also has a high percentage of potassium, calcium and phosphorous in it. Iran exports 150,000 to 200,000 tons of pistachios annually. Presently, Iran accounts for more than 50 percent of global pistachio production. Pistachios grow in over 360,000 hectares of land in Iran and Kerman province procures 77 percent of the country’s pistachio needs. The province is viewed as the most important region in the world for growing pistachios. Other areas of the country wherein pistachios are grown include Yazd, Khorasan, Fars, Semnan, Baluchistan, Qazvin, Isfahan and Qom.
An embargo was put in place on the Iranian nut in the wake of the Iran hostage crisis of 1979. This has allowed American farmers an opportunity to grow a crop that is thriving in the worldwide marketplace. American pistachio was once a very small industry back in the 1970s. It has since grown into a mega industry covering over 200,000 acres of American soil. From 1.5 million pounds a year in 1976 to 400 million today, the pistachio industry is a mainstay and vital player in the US agricultural economy.
Back in the early 1900s, the United States Department of Agriculture sent a plant breeder into Iran, to search for varieties of pistachios. He spent about 6 months there, collected several different varieties of the seed and planted them in a research facility in Northern California. Over the course of several years, they found that one variety that would be suitable for mass production. It is called the Kerman variety, named after the Iranian city of its origin. Since 2008, the United States has surpassed Iran to become the largest supplier of pistachios in the world. This is quite an accomplishment for American farmers, considering the short amount of time that pistachios have been grown commercially in the States.
In the free-trade market, dumping occurs when an imported good is sold at less than the good’s domestic fair market value. Anti dumping is the legal framework countries use to place duties, or import surcharges, on products determined to be “dumped.” The process of anti-dumping and countervailing duty works as such: A company that believes it is being injured by import dumping files a petition with the federal government requesting that protection—in the form of duties—be applied to the imported good in question. Once the petition is filed, an investigation is launched by two federal offices. The Department of Commerce (DOC) determines whether goods were sold below cost or at less-than-normal market value, and the International Trade Commission (ITC) calculates whether the imported goods wreaked “material injury” on domestic industries. Both have to find in the affirmative for duties to be imposed.
The ITC received notices of intent to participate in anti dumping proceedings against the Iranian pistachio industry from several domestic private parties including the Cap-Pure Pistachios, Inc., California Pistachio Commission and the American Pistachio Growers (APG). These organizations created a unionized effort to attain court standing and lobby for the enactment of an anti dumping law on “raw in-shell pistachios from Iran.” In 1986, the Department of Commerce issued an antidumping duty order on imports of raw in-shell pistachios from Iran. Following a five-year review by DOC and ITC, effective January 3, 2006, DOC issued a continuation of the antidumping duty order on imports of raw in-shell pistachios from Iran. The ITC is now conducting a second review pursuant to section 751(c) of the Act, as amended (19 USC 1675(c)), to determine whether revocation of the order would be likely to lead to continuation or recurrence of material injury to the domestic industry within a reasonably foreseeable time. The ITC will assess the adequacy of interested party responses to this notice of institution to determine whether to conduct a full review or an expedited review. The Commission’s determination in any expedited review will be based on the facts available, which may include information provided in response to this notice. The vast majority of APG members are either growers or processors of pistachio in the United States. The ITC’s second review will direct interested parties to provide a statement on the likely effects of the revocation of the antidumping duty order on the domestic industry and to include discussion of the various factors specified in section 752(a) of the Act (19 U.S.C. § 1675a(a)), including the likely volume of subject imports, likely price effects of subject imports, and likely impact of imports.
Ironically, the voice of free trade—the United States—is anti-dumping’s largest historical user. But as free trade has expanded, other countries have discovered the utility of anti-dumping laws in protecting home industries from global competition and have copied the U.S.’s recipe. The use of both anti-dumping and countervailing duties has skyrocketed in the last few decades, coincidental with increasing trade liberalization around the globe, and born from protectionist tendencies that most countries have toward their home industries. “The way they define anti-dumping so broadly, it’s almost meaningless,” said Thomas Prusa, a professor of economics at Rutgers University.
Thirty years later, consumers will pay three times as much for Iranian pistachios than they do for their US grown counterpart. The rationale behind this tariff was to create a “level playing field.” It was alleged that the Iranian government subsidized pistachio farmers in their country and hence Iranian farmers would be able to offer their crop for much less. Although more than 30 years have elapsed since the Order was imposed, the basic economic demand and supply conditions that generated the increase in Iran’s exports to the United States have not changed significantly. In the prior sunset review, the Commission found that “available data indicates that there would be a high degree of substitution between domestic in-shell pistachios and the subject imports.” The Commission Staff also found a high degree of substitution, and estimated an elasticity of substitution in the range of 5 to 10.2 percent. There have been no changes since the prior sunset review that would indicate the degree of substitutability between U.S. and Iranian pistachios has decreased, and that would limit the ability of imports from Iran to compete in the U.S. market absent the Order.
Nevertheless, Iran’s industry executives are confident exports will increase thanks to the sanctions relief. “The transactions will definitely be easier [and more stable] and works are done smoother,” said Mahmoud Abtahi, deputy head of Iran’s Pistachio Association.
American farmers are starting to realize that the tariff may not be in place forever, and when lifted, it can be harder for them to sell their crop. Even so, due to global market efficiencies in recent years, the American industry would not be severely impacted by the competition. Even if Iran brought in 1 million pounds of pistachios to the United States tomorrow, it would mean that there’s a million pounds out there somewhere that didn’t get sold in China or Europe. In the end, American farmers can sell their crop to those places instead and continue to make the same profits. Pistachio consumption in non-U.S. markets has steadily increased, as have Iran’s exports to those markets. Iran’s capacity and production have increased significantly since the last ITC investigation, and they are looking to increase their market share in the U.S. and around the world.
The Spanish based World Nut & Dried Fruit Congress is hosting this event in San Diego on May 30-June 1. Furthermore, Iranian farmers may try to prove that they are not subsidized by their government and thus not in violation of dumping laws in a meeting with the U.S. International Trade Commission this Summer. Therefore, Iranian pistachios might enter the US market sooner than you think.
 Sheibani, A. (1995). Pistachio production in Iran. Acta Hortic. 419, 165-174
 Gandhi, Manasi. “Banned Iran Pistachio To Come Back: US Pistachio Growers Worry After Iran Sanctions Lifted.” Inquisitr, February 22, 2016.
 “History of American Pistachio Growers.” 2016. Retrieved from http://www.americanpistachios.org.
 Romero, Ezra D. “Oh, Nuts! U.S. Pistachio Growers Worry About Competition From Iran.” National Public Radio, February 19, 2016.
 Wirtz, Ronald A. “Antidumping: The Free-Trade Antacid.” Federal Reserve Bank of Minneapolis, December 1, 2001.
 Khalaj, Monavar and Terazono, Emiko. “Pistachio Market Faces Return Of ‘King of Nuts’ From Iran.” Financial Times, January 28, 2016.
 United States International Trade Commission. International Trade Commission. Raw In-Shell Pistachios From Iran. By Stephen Koplan, Deanna T. Okun, Jennifer A. Hillman, Charlotte R. Lane, Daniel R. Pearson, and Shara L. Aranoff. N.p., 1 Dec. 2005. Web.
by Nima Sadeghian, ITA Legal Associate