U.S. sanctions against Iran have negatively affected pet food imports
into the country, causing price spikes and low supplies
While the U.S. Trump administration’s sanctions against Iran that went intoeffect in November 2018 impacted the country in many different ways, for thedomestic pet food market, they turned into a true disaster.
Pet food sales in Iran were booming in the first half of 2018, with importsreaching all-time highs, and all forecasts were projecting further fastgrowth, according to Savis Ansani, director of the local consulting agencyPersian Pet International. Yet, it didn’t take long for import limitations toplunge the market into chaos.
U.S. sanctions affected pet food imports into Iran
First, when the sanctions were announced, they caused a downward rally in theexchange rate of the Iranian rial. The domestic pet food market was rathersensitive to the rate, since almost all pet food was imported, primarily fromthe European Union.
Then, in a bid to constrain prices, the government banned import of a range ofluxury goods, surprisingly including pet food, Ansani said. “This causedsoaring prices for pet products as the stocks of these goods began to depleteinside the country. Pet owners were completely baffled and desperate, notknowing what would happen next. In the midst of this, some people tried tosmuggle pet goods with low quality as well as some fake products into thecountry. Some people tried to produce these [pet food] products in Iran butwith sub-standard methods and poor quality.”
In 2019, the Iranian government re-authorized pet food import into thecountry, although the unprecedented decline of the national currency resultedin the average retail price of pet products climbing three or four timeshigher compared to pre-crisis times, according to Ansani. The new pricesdidn’t kill demand completely, but it is not comparable with what was seen ayear ago.
Impact on Iranian pet food importers
Pet food imports into Iran are impacted in different ways, including by bothinternational and internal sanctions, said Dr. Jalaleddin Mirfakhrai, directorof J.M. Vet Group, the biggest importer in Iran’s pet food market.
“Some goods are forbidden to be imported to Iran, and even for the goods thatare not forbidden, most of the European companies are afraid of doing businesswith Iran. And if they do so, they may find themselves on a U.S. blacklist,though according to their governments, there are no restrictions to workingwith Iran,” Mirfakhrai said.
Even for goods allowed to be imported by the local government, the authoritiesare placing many barriers to make the import process as difficult as possible,Mirfakhrai added. This practice is intended to make the domestic currencystronger, by reducing demand for dollars and euros, but it also results insignificant costs for importers to overcome the barriers.
In addition, there are not only legal costs, but also what used to bedescribed as black costs – in other words, unofficial payments – the importersmust make to import some products into the country.
Domestic pet food production
The import restrictions, however, have created a strong impetus fordevelopment of the domestic pet food industry in Iran. Dr. Navid Nasirian,director of local manufacturer Nutripet, said his company managed to nearlytriple production over the past year and expects further growth. Nasirianadded that a few small-scale pet food manufacturers emerged in the country andbegan to replace imports.
“This year we plan to produce 3,000 [metric] tons of pet food. We have 23different product lines, and every three months we introduce one or two newproducts,” Nasirian said, adding
that the overall demand for pet food in Iran is estimated at 7,000 metric tonsper year.
Source: PetFoodIndustry.com
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