These days, the issue of saffron pricing is hot in Iran. With the start of the new saffron harvest season, the issue of determining the price of saffron has received too much attention. The problems and concerns of farmers in the last one or two years have caused the members of the Iranian Parliament, the Saffron Union and the National Saffron Council to intervene in pricing. In the recent meeting of these representatives, the price of saffron for the new season was determined as follows:
Saffron is a valuable herbs mostly found in Arabic country. Saffron has many benefits towards health. The history of saffron stretches all the way back to the late Bronze Age and back then it had numerous uses just as it does today.
These days that summer begins, the the price of saffron in Iran is hot. Due to the comments of two officials (Rural Cooperative Organization manager and a Member of Parliament) who want to increase the price of saffron in the domestic market. They have prepared and are running programs for achieving this Goal. What do you think? Does saffron price increase?
Frist thing, we should always remember is the effect of exchange rate. Officially, we have 3 exchanges rate for USD in IRAN. All of Iranian Company Must give 50% of their export USD to Nima system, 20 % to Importer companies, 30% to free market from these year (1399). If they do not, they will face heavy fines.
Each one has different Exchange rate. The exchange rate in Nima System is almost 30% below Free market!! It is possible to negotiate with importer companies but the exchange rate usually is 5% below market and the exchange rate in free market is set at 10:30 o’clock every morning. Each one has different Exchange rate. Based on this, the average exchange rate is 18,500 for July 06.
There is 2 market for Saffron in Iran that effect Each Other: Domestic Market & Future saffron exchange Market. Price in Future saffron exchange Market is more than Domestic Market most of time. Pls note that we discuss the price based on Negin Saffron because it accepted as Base in two markets.
Because of the comments of the officials, the price of saffron increased in Future saffron Exchange market in November. People are going to buy saffron and selling in exchange market because of price gap (near 897 – 681 =216 USD per kg).
We should remember, there is rule in exchange market; The closer we get to delivery time, the lower the price. It is very difficult to predict the saffron price in domestic market on November from now. The exchange Rate has big effect on saffron price in November. If exchange rate increase, It means devaluing Iran’s currency and It will reduce the effect of increasing of saffron price on export prices. If the exchange rate is constant (It is impossible), we will have increase in price.
New Update 06 August 2020
The new changes include two sections:
1- The saffron exporter should return 80% of export currency to government unlike previous months!! It means they earn income less than before. It should effect saffron price but not too much. As you see We have a price reduction in two market.
2- In addition to the above factors there is a very important factor that effects saffron price. It is basic export rate of saffron. In the past, saffron exporter should declare 1200 USD per kg to government. it did not important that export price was less than it. the government considered 1200 as a base, then we as a exporter should buy from free market and delivered to government with lees price. This causes additional costs to be, but in August 2020, the government corrected the base price and came close to the market price.
New Update 06 September 2020
New Update 05 October 2020
During the last month, three events affected the price of saffron in Iran that decrease saffron price in USD:
- The depreciation of Iran’s currency against the U.S. dollar
- Increasing the dollar rate in the Nimai system ( Increase in the purchase price of the dollar by the Iranian government from exporters).
- The beginning of a new saffron season.
But another important event happened, which will probably increase the price of saffron by 20% during the next month. read more The price of saffron will be increased by 100% .
New Update 07 November 2020
At this time, we are in middle of saffron new season. More than 50% of saffron flowers are harvested. The price are almost stable but it needs time to become clearly stable. two events have most effect on saffron price:
1- US Presidential Election: It has caused drastic changes in currency fluctuations.
2- Rural Cooperative Organization Intervention: They intend to determine the price floor of saffron. The goal is to increase the price by at least 50% compared to the previous year.
At the end,
As you can see, the two domestic and futures market prices are almost close together. We predict that the price of Negin saffron in different qualities for the new season will be between 600 to 670 USD per kg. Now, we should wait and see what happens in new season.