• Primary dairy industry
• Primary poultry industry
• Floriculture
• The vegetable sector
• The potato sector
• Food processing industries
• The Fisheries sector
• The soft drinks industry

Primary dairy industry

Vegetables are popular in the daily diet of most Iranian households and some crops like mini cucumbers and watermelons are consumed as fresh fruit as well. Vegetable production is practised in many different areas of the country but the level of modern know-how, especially in open field plantations is lacking. There are 596,000 hectares of vegetable plantations including 4,000 hecatres under plastic tunnels. Thses figues are up from 300.000 hectares of open field and 2200 hectares of greenhouse vegetable plantations in the country at the end of 2003. The latter sector has grown almost 200% in acreage over the past year but greenhouses remain at the local technology level. The total output of the sector rose by half a million tonnes and reached 13,495,000 tonnes mainly consisting of cucumbers, tomatoes, paprikas, onions, melons and watermelons, and cantalopes. This figure accounts for about 25% of Iran's total agricultural production. The main import demand of the sector is certified seeds. Iran imported 4.3 million USD worth of vegetable seeds from the Netherlands in 2004 which was about 1 million USD more than in 2003. The main suppliers of vegetable seeds to Iran are the Netherlands, the US (via third countries like Italy), France and Japan, but Dutch and American varieties are most popular. Imports of specific fertilisers have also been on a specific increasing trend. In this field, the main suppliers are Dutch, Belgian, Japanese, German, and Spanish companies, but there are no official statistical data available. As Iran is trying its hands in vegetable exports with some success in the Persian Gulf region and Central Asia, the industry is gradually becoming interested in grading and packing machinery as well. A cholera outbreak in August 2005, led the Iranian government to ban the production and distribution of green vegetables across the country. This development had considerable economic impacts on farming communities with about 55.5 million USD in income losses for farmers and nearly 100 million USD of losses to exporters mainly to the neighbouring Arab markets who have in turn lost their trust in this year’s Iranian crop for the same fears. The government has, however, promised to compensate these losses to the affacted staeholders, butit remians to be seen if concrete and timely action will be taken to help the sector.

Floriculture

The acreage under plastic tunnels for flower and plant production has increased by 295% since 1996. This is unparallelled in other sub-sectors of Iranian agriculture and is an indicationof the viability of domestic and international markets for floricultural produce. This is while the total surface area of open field plantation has reamind almost stagnant over the last seven years despite the unique cliamtic diversity of the country. Higher yield and better quality of the end product have encouraged investors to focus more on protected floriculture rather than open field production. The total national acreage under flower and pot plant cultiavtion in 1997 was 2898 hectares which increased to 4267.5 hectares in 2003, an increase of 47.3%. The total surface area of greenhouses in this sector has risen from 948.5 hectares in 1997 to 2323.9 hectares in 2003, an increase of 145%. The total production of cut flowers also increased from 750 million stems in 1997 to 1304 million stems in 2003, an increase of 73.9%. Pot plant production rose from 30.2 million pots in 1997 to 41.1 million pots in 2003, a growth rate of 36.4%. Ornamental trees and shrubs produced in 1997 totalled 50.5 million which rose to 118.2 million in 2003, an increase of 134%. Official figures of exports from the sector over the past few years have remained fairly stable at around 0.5 million US dollars annually. This is while there is considerable unofficial export of flowers and plants to Central Asia, Turkey and Arab countries. The Customs Administration of Iran reported that in 2003, Iran exported 1.2 million USD worth of flowers and plants. High domestic prices have been a hindering factor for the sector to become more export-oriented. Imports of cut flowers from South East Asia were allowed for the first time in that past three decades since early 2004. It is still impossible to import flowers and plants as consumer products from the Netherlands pending an official phytosanitary agreement between the two countries but the LNV Bureau in Tehran and the Dutch Plant Protection Service are seriously following up the matter with relevant Iranian authorities. As of 2002, foreign greenhouse contractors are allowed to co-operate directly with the Iranian private sector over glasshouse projects supported by funds made available by the Bank of Agriculture. Already a few Dutch companies are trying to enter the market with some relative success. The major controversy in this particular area was the hefty import duty set by the Ministry of Commerce for glasshouses and equipment which stood at 50%. After a long and breath-taking follow-up by the LNV Bureau in Tehran over a two-year period, the Customs Administration of Iran agreed to decrease this import duty gradually from 50% to 45. At the moment, the duty is around 8% on an aggregate basis. As for propagation material, Iran is almost entirely dependent on imports from the Netherlands which increased significantly from 1.1 million USD in 2003 to 2.6 million USD in 2004. But with the rapid development of the greenhouse industry this figure could potentially rise sharply by the end of 2005. The sector would have to invest in sorting, handling, packing and storage facilities as well in its drive towards further internationalisation. This could in turn create an additional market niche for Dutch businesses. Four flower auctions have also been planned for construction by the end of 2006. These will be located in Tehran, Central, Mazandaran and Khuzestan Provinces. The construction work for the auction in Tehran (with a digital clock) has been underway for the past few months.

The vegetable sector

Vegetables are popular in the daily diet of most Iranian households and some crops like mini cucumbers and watermelons are consumed as fresh fruit as well. Vegetable production is practised in many different areas of the country but the level of modern know-how, especially in open field plantations is lacking. There are 300.000 hectares of open field and 2200 hectares of greenhouse vegetable plantations in the country. The latter sector has grown almost 500% in acreage over the past year but greenhouses remain at the local technology level. The total output of the sector is over 13 million tonnes of mainly consisting of cucumbers, tomatoes, paprikas, onions, melons and watermelons, and cantalopes. This figure accounts for about 22% of Iran's total agricultural production. The main import demand of the sector is certified seeds, which at the moment amounts to nearly 4000 tonnes annually. The main suppliers are the Netherlands, the US (via third countries like Italy), France and Japan, but Dutch and American varieties are most popular. Imports of specific fertilisers have also been on a specific increasing trend. In this field, the main suppliers are Dutch, Belgian, Japanese, German, and Spanish companies, but there are no official statistical data are available. As Iran is trying its hands vegetable exports with some success in the Persian Gulf region and Central Asia, the industry is gradually becoming interested in grading and packing machinery as well.

The potato sector

The total acreage of potato farms in Iran rose from 161,500 to 190,000 hectares in the course of 2004. The average national yield per hectare is 22 tonnes. Iran produced a total of 4,180,000 tonnes in 2004 up frrom 3,750,000 tonnes in the previous year. The sector is significantly dependent upon imported seed potatoes, but the government only allows imports of Elite and Super Elite classes of seeds. The sector used 190,000 tonnes of seeds in 2004, 3603 tonnes of which being imported seeds from the Netherlands again up from 2684 tonnes in 2003. The Netherlands dominates the market almost entirely and in view of the steady development of the processing industry, the demand for seed varieties suitable for processing is increasing. Nonetheless, average yield per hectare is rather low despite a 7-tonne/ha increase over the last year, which is mainly owing to the lack of modern planting and harvesting machines. Harvest and post-harvest losses of Iranian potatoes are estimated to be around 30%. Modern cold stores are also nowhere to be seen in the country. The government is, however, encouraging farmer unions to import their demands for machinery directly, thus trying to decentralise machinery imports for the sector.

Food processing industries

Meat processing
Three main factors have contributed to the expansion of the food processing industries in Iran in the course of the past decade: rapid population growth, extensive urbanisation and the gradual institutionalisation of food quality standards based on Codex Alimentarius criteria. At present, the total meat processing industry (including processed red meat, poultry meat and seafood) comprises of 177 factories with a total capacity of 2.480.000 tonnes. Apart from basic slaughterlines, the whole industry  relies on imported machinery for further processing, packing and preservation technologies. As the industry is striving to create greater added value and face export challenges more efficiently, investment in new machinery and delicacy ingredients has become more justifiable. This is particularly conspicuous in the poultry and seafood processing sectors. The import market for red meat and seafood processing has been traditionally dominated by Italian and German companies but the Netherlands has a strong position in the poultry processing industry in Iran and this position is developing. Currently, there are about 110 industrial poultry slaughterhouses active in the country, which are all in dire need of renovation or total modernisation. As the domestic market for fresh poultry meat is also being satiated, these companies are being forced by the market to invest in further processing. Meanwhile, Dutch companies have faced little competition in this sector so far. It is expected that in the course of 2006 the industry will pay greater attention to quality standards towards HACCP accreditation thus becoming better enabled to play a role in export markets.

Dairy processing
This sector is composed of 25 major processing plants. Almost half are state-owned and the rest fully private and fairly younger. The main dairy products of the country include: sterilised and/or pasteurised milk (6.316 million tonnes received by the processing sector in 2004) in a wide assortment of packing material and styles, feta cheese (216,715 tonnes produced in 2004 up from 213,660 tonnes in 2003), butter, yoghurt, milk powder and ice cream. Except for butter and milk powder, the country is self-sufficient in all of these products. Based on seasonal demands, the government issues import licences for dairy processors or private dairy traders to import these two products, butter being imported in bulk form for later packing in retail sizes. As for occasional butter imports, Dutch and New Zealand companies have been close competitors, but for dairy processing machinery Dutch and Danish businesses have been traditional suppliers of the market. Butter imports from the Netherlands have been increasing steadily.  By the end of 2004, Iran imported 10,976 tonnes of bulk butter from the Netherlands while in 2003 this figure stood at 4329 tonnes. As fresh milk prices have been rising steadily in the past couple of years, feeding dairy calves with milk replacers has become a better economic option for dairy farmers. As a result, new investments are being made in the processing sector for the local production of calf milk replacers while imports of the finished product in limited shipments are also allowed. This development is creating a new market niche for Dutch businesses, especially as far as machinery and dairy-based concentrates are concerned.    

Fruit & vegetable processing
The total capacity of the sector to produce canned fruit and vegetables, pickles and tomato paste is about 560,000 tonnes as compared to 420.000 tonnes in 2003. There are 127 factories active in the field, all small- or medium-sized ones except for a handful few. New investments have been made in the sector that can potentially create an estimated added processing capacity of 35,000 tonnes. The machinery used by the sector are either very old and outdated foreign makes, especially originating from Italy or new lines manufactured by local companies. However, import licences are issued to the private sector for imports of new technologies for the production of new delicacies within the sector again with a view to better export opportunities of the end products.  

Potato processing
This sector has experienced very rapid expansion in recent years, mainly thanks to imports of new processing lines from the Netherlands. At the moment, the total processing capacity of the sector is standing at around 98,000 tonnes up from 60.000 tonnes at the end of 2003, as the sector continues to import machinery from major Dutch suppliers.    

Vegetable oil
Iran produces 110.000 tonnes of vegetable oil and imports another 890.000 tonnes to meet the total demand of its market for this group of products. Total oil seed production in the country amounts to 400.000 tonnes and imports of the same commodities can be as high as 1.200.000 tonnes per annum. The Ministry of Agriculture has extensive plans underway to promote the cultivation of the newly introduced canola seed across the country as a high-yielding alternative for more traditional oil seed types. In a period of 10 years starting from March 2004, the Ministry has aimed at increasing local oil seed production by 40% and vegetable oil by 63%. Currently, over 25.000 hectares along the Caspian Sea are under canola cultivation which yielded as high as 150,000 tonnes of canola seed in 2004, 30,000 tonnes higher than in 2003.

Sugar
In Iran, sugar production mainly relies on sugar beet which is processed in 34 factories. Meanwhile, the Ministry of Agriculture has been following up a massive and scandal-ridden sugar cane production and processing project since the early 1990s. The project is only 70% complete and the government has found it rather difficult to fund the remaining phases of it. At the moment, Iran produces 770.000 tonnes of sugar from sugar beet and another 400.000 tonnes from sugar cane. As a result, the country has annual imports of up to 800.000 tonnes of sugar from Latin America, especially Cuba. While opportunities exist in the State Sugar Cane Development Project for Dutch exporters of processing machinery for sugar and its by-products, the sugar beet processing sector is also expected to grow both quantitatively (because of higher beet production and farmers' complaints about low absorption capacity of the processing sector) and qualitatively (because the machinery under use at the moment is more than two decades old now). In a joint initiative, the Ministry of Agriculture and the Ministry of Industries have approved of sizeable financial assistance to sugar beet processing factories specifically for the renovation of their processing lines. The processing industry faced a major financial crisis in 2003, as imports of cheap sugar made it impossible for the local industry to sell nearly 400.000 tonnes in the market. Many sugar factories went nearly bankrupt and failed in turn to pay for the beets they had bought from farmers earlier. This problem has abated to some limited extent in 2004 as no new imports of sugar have been made but the economic challenge for the whole industry continues to make both farmers and processors suffer. Iran breeds some local varieties of monogerm sugar beet but also imports over 120.000 units of monogerm seeds from mainly the Netherlands and France.