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Raisins: unsustainably low prices

May 27, 2020 at 12:06 PM , Der AUDITOR

TEHRAN. The coronavirus crisis has not only stalled exports but has also given rise to a bizarre market situation with incredibly low prices for raisins in Iran. Quality is another problem. Traders in the country are convinced that drastic changes are needed.

Coronavirus highlights structural failures

One case in point is Khalilabad in the Khorasan Razavi province. The district is a production hub for quality grapes and for green raisins, which are also exported. Market prices are, however, so low that the farmers have refrained from selling their raisins and store them in traditional warehouses instead, which has a detrimental impact on quality. Estimates state that as much as 1,500 metric tonnes of raisins are still available for export, a figure that is far higher than the supplies that would normally be available for exports at this time of year. Production costs range higher than the current market prices, a problem which persists throughout Iran.

The low market prices are mainly attributed to the coronavirus crisis. This crisis has not only prompted a slowdown in exports but has also disrupted any plans of the rural cooperative organisations to step in and buy raisins form the producers to support the market. Now calls are being voiced to render the market more competitive by cutting production, focusing more on quality and improving organisational structures. Programmes are already underway to improve quality, but market players state that it will take at least another two years until the market will witness any impacts.

Controversial reference prices

The unsustainably low market prices in Iran have sparked some controversy in the international market over the last few weeks. Problem is that the prices offered by individual suppliers tend to range higher than the low market prices that are being promoted for reference. In addition, the devaluation of the Iranian rial has put a cap on prices in the export market. While the prices for sultanas have declined nominally by EUR 0.03 per kg to EUR 1.40 per kg over the last two weeks, an uptick in demand has driven up the prices for golden and for green raisins by EUR 0.13 per kg and EUR 0.09 per kg respectively.

Raisins, premium grade, Iran
Type	EUR/kg
Sundried	1.60
Sultanas	1.40
Golden	1.81
Green	2.02
FOB Iran

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- price chart, raisins, sundried, Iran
- price chart, sultanas, premium grade, Iran
- price chart organic sultanas, grade A, type 9, standard, Turkey
- more price charts

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What are incoterms?

Incoterms are internationally recognized trade clauses that facilitate the trade in goods with the help of standardized contract formulas. They regulate the distribution of costs and obligations and thus prevent misunderstandings and disputes. They must always be agreed by both contracting parties and confirmed by signing the contract.

Overview of the incoterms

Please note that this is only a rough overview of the Incoterms. For a comprehensive description of the Incoterms, please visit the website of the International Chamber of Commerce.

EXW - Ex-Works (ex works)
The seller must ensure access to the goods at another named location (e.g. factory, factory, warehouse, etc.). The buyer organizes the loading and the transport and bears the costs and risks.

FCA – Free Carrier (free carrier)
The seller must deliver the goods to the buyer's carrier at a location specified by the buyer (for shipping or collection). The seller also undertakes the export customs declaration. The buyer assumes the risk from the moment the goods are handed over to the carrier.

FOB – Free on Board (free on board)
The seller assumes all costs and risks until the goods have been loaded onto the ship. The seller is also responsible for export clearance. The buyer takes responsibility as soon as the goods are on board.

CIF – Cost, Insurance And Freight (Costs, insurance and freight to the port of destination)
The seller assumes all costs and risks until the goods have been loaded onto the ship. The seller bears the costs for packaging and postage for export. The seller also takes out insurance against the buyer's risk of losing or damaging the goods during carriage.

DAP – Delivered At Place (delivered named place)
The seller assumes the costs and risks for the transport of goods to an agreed address.

DAT - Delivered at Terminal (delivered terminal)
The seller must make the goods cleared for import available to the buyer at the terminal of the named port of destination at the agreed time.

CPT – Carriage Paid To (freight paid by)
The seller must make the goods cleared for import available to the buyer at the terminal of the named port of destination at the agreed time.

DDP – Delivered Duty Paid (duty paid free)
The seller delivers the goods to a destination at his own risk and expense. He takes care of all the formalities and bears all costs and import duties.

CFR – Cost and Freight (cost and freight)
The seller assumes all costs and risks until the goods have been loaded onto the ship. The seller has to conclude the transport contract and bears the costs and freight for transporting the goods to the named port of destination or import terminal

CIP – Carriage And Insurance Paid To (freight and insurance paid by)
The seller delivers the goods to the carrier or another person named by the seller to an agreed location. The seller bears the costs and risks for the transport to the specified destination, as well as for the freight insurance. The buyer regulates the import handling and import taxation.

FAS – Free Alongside Ship (free alongside ship)
The seller delivers the goods to the carrier or another person named by the seller to an agreed location. The seller bears the costs and risks for the transport to the specified destination, as well as for the freight insurance. The buyer regulates the import handling and import taxation.

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What are incoterms?

Overview of the incoterms