Azernews.Az

Friday March 29 2024

Iran looking for Russian markets

12 September 2014 09:03 (UTC+04:00)
Iran looking for Russian markets

By Sara Rajabova

Russia's closest ally Iran plans to take advantage of Moscow's ban on food imports from the European Union, United States, Norway, Canada and Australia.

Iran is determined to take Europe's place in Russian food market. Iran's Trade Promotion Organization Deputy Director Mir-Aboutaleb Badri has recently said as Iranian merchants are seeking to boost export of fruits and vegetables, fish and poultry to Russia.

Is Iran's export substantial enough to meet the needs of the Russian market and would Tehran take advantage of the current situation?

Professor of economics at U.S. Northeastern University, Kamran Dadkhah told AzerNews that Iran can benefit from this ban but its export will not be substantial and may not last long.

Noting that Russia imports a substantial amount of its food from abroad that is, Europe, the United States, Canada, and Latin America, Dadkhah said the ban on food import from Western countries gives other countries the opportunity to increase their exports to Russia.

"Iran can export some food items to Russia including fruits and vegetables," Dadkhah said, adding that Tehran can compete with other countries in the Russian market.

Chairman of Iran's Chamber of Commerce, Gholamhossein Shafei has recently said the Russian market welcomes Iranian citrus fruits, kiwi, pomegranate, and grape, as no Central Asian country raises citrus fruits. He also added that Iran has established a special working group aimed to find new markets in Russia and boost food exports to the country.

Dadkhah noted that Iran can effectively compete in the Russian market for three reasons. "The first, some items that Iran produces are of high quality. Second, Iran can transport its products to Russia via Caspian Sea and thus have a lower transportation cost. Finally, the recent sharp drop in the value of the Iranian currency (the rial) against the dollar and other currencies has made the prices of Iranian products more competitive in international markets."

Dadkhah added that Iran has the benefit of additional export.

However, he noted that the amount of exports would not be substantial enough and Iran definitely cannot "replace" Europe in Russian market.

There are some reasons for that, he believes. "Iran's agriculture is in a bad shape because of water shortage. Indeed, recent reports indicate that some rice grown in Iran had used sewage water. Such products don't meet health standards."

He also went on to say that Iran needs to expand its agricultural and food products especially the items that can be exported to Russia in order to benefit from the ban on imports from Europe.

"Such an expansion takes several years and substantial investment. But it is not clear how long the dispute between the West and Russia and consequently the ban on Russia's food imports will last," Dadkhah said.

Since the imposition of Western sanctions on Russia, Tehran and Moscow have boosted the cooperation in other fields.

Tehran and Moscow signed several projects worth of seventy billion euro to develop their trade and economic ties during the 11th round of Iran-Russia trade cooperation commission on September 8.

The two countries also signed new deals to boost cooperation in oil and gas, petrochemical industry sector.

Iranian officials say that by signing these agreements, the two countries will open a new chapter in bilateral cooperation.

Besides, Russia plans to build eight new electricity power plants in Iran.

Russian Energy Minister Alexander Novak said the two sides have already agreed on the issue, adding Russia will also participate in reconstruction of four old power plants in Iran.

Iran-Russia trade currently totals $5 billion a year. Iran's oil minister said the volume of bilateral trade between the two countries has the capacity to be increased more than tenfold within the next two years.

Loading...
Latest See more