Tuesday, November 20, 2007

Saffon: Iran's Pink Gold

It is the harvest season for Saffron. This delicate spice extracted from saffron flowers is one of Iran’s classic agricultural products, mainly planted in Khorasan area in north east of Iran. Iranians use saffron in their cooking, distinguishing their cuisines from their neighbors. Saffron, with pistachio, is one of Iran’s traditional agricultural products.

Saffron is extracted from the dried stigmas of the saffron crocus; it takes 75000 blossoms or 225000 hand-picked stigmas to make a single pound which explains. Thus supply is highly restricted and its price is rather high. It is mostly used in gourmets intended for guests. And households keep small amount of it.

Although many Iranians would think that Iran’s saffron is of highest quality, and the writer shares that belief, and Iran share of global market in Saffron is almost 90% but the international market is dominated by Spain in quality. As a matter of fact much of Spanish Saffron is coming from Iran. Iranian saffron is falling behind its competition because of poor marketing and low quality packaging. Although a major producer it does not seem that Iran is a Stackelberg leader in this market[1].

Saffron certainly is a labor intensive product requiring 200 man day per hectare during harvest season. It also constitutes up to 70% of household income in Khorasan saffron plantations. There is no question or doubt that Iran considers saffron a strategic product. In recent years policy makers have become interested in saffron as a weapon in fighting drugs and limiting opium plantations in Afghanistan, but there is no evidence to measure how effective that would be.

There is no doubt that demand for saffron will be increasing in coming years: increasing global preference for natural ingredients and flavors, increasing income and the absence of any discouraging factors as well as positive externalities of using saffron. This makes investing in this product a rather safe endeavor.
[1] I welcome any comment that contradicts this statement based on evidence.
2. Photo is from ISNA.

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