Iran and Saudi Arabia announced on March 10 to have reached a reconciliation agreement and the restoration of diplomatic relations after a rupture that lasted seven years and stopped trade between the two countries. According to Morteza Khanouki, sales & marketing manager of the Iranian tomato producer Farmerz, this is very positive news.
"This is great news. We are celebrating the reconciliation between two neighbors and two big nations. We have had enough tension, and this agreement is very positive. The resumption of trade and economic relations is the way to a durable peace and is great news for us as agricultural producers," says Morteza.
Iranian exporters of agricultural products have been struggling to reach the Saudi market, says Morteza: "During seven years of severed diplomatic relations, trade has been suspended between the two countries. Officially, there have been no exports, but we know that money always finds a way. Iranian agricultural products have found their way to Saudi Arabia through re-exports via third countries such as Kuwait, but the volumes remain small and difficult to quantify".
Today, the resumption of relations means that trade will soon open up "we still need time to re-establish a trading system. Most likely, there will be negotiations to update customs regulations. But it shouldn't take too long. It's a matter of a few months," says Morteza.
"As a sales & marketing manager, Saudi Arabia has long been a goal for me. We can deliver to Saudi Arabia within a few hours products that they import from far locations. Not only will the products be delivered in less time and at a lower cost, but the products will be of higher quality due to their freshness", says the exporter.
In the tomato sector, Iran is the 7th largest producer in the world, while Saudi Arabia is the 12th largest importer, with volumes exceeding 6 million tons. "That is why this announcement is a game changer for the tomato trade in the region," says Morteza. "We have bigger volumes, and a lower finished cost than any tomato exporter to Saudi Arabia, thanks to our lower energy costs and the geographical proximity between Iran and Saudi Arabia. Not only will our tomatoes cost less to Saudi consumers, but they are of better quality due to the excellent climate in Iran."
"At Farmerz, we produce premium tomatoes in greenhouses, including reddish clusters and cherry varieties. 70% of our exports go to Russia, and 30% to Gulf countries such as UAE, Qatar, and Kuwait. After the reopening of trade, we expect Saudi Arabia to be as important a destination as Russia. And this improvement in the market situation coincides with the investment plans we have put in place to significantly increase our acreage and volumes," adds Morteza.
For the producer, returning to the Saudi market also means access to other markets: "The reconciliation between the two countries opens the way to solving several problems. Having good relations with Saudi Arabia means having good relations with all Arab countries, or at least the Gulf countries, and we know that Iranian agriculture has a lot of under-exploited potential in terms of exports due to political reasons. Of course, this news will not solve all our problems, but it puts us on the right track and strengthens our position in the region," concludes Morteza.
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Mr. Morteza Khanouki