Trade Minister Todd McClay last week led a business delegation to the country of 80 million people, which, over the past two years, had been cautiously welcomed back to the international fold after more than two decades of isolation from the West.
Meat companies were eagerly eying the potential of Iran, which along with Iraq took a third of New Zealand’s lamb exports in 1980-81.
Silver Fern Farms chairman Rob Hewett said those historic links in sheep meat and a growing appetite among its younger consumers for beef meant it could again be a significant market.
“But it is going to be a slow burn. It is certainly not going to be this season – maybe next season, if you were optimistic.”
Standing in the way were a number of hurdles ranging from an absence of modern meat export protocols between the two countries to strict Shia-based Halal slaughter requirements and banking difficulties.
Although the West began lifting sanctions last year the US Treasury was yet to lift sanctions on Iranian banks.
A banking source said Australian-based banks were anxious they could be blacklisted if they settled transactions for meat company clients through Iranian banks with connections to political organisations such as Hezbollah, linked by the US to terrorism.
“It is certainly something that NZ companies will want to do due diligence on before they start trading because it is all very good making the sale but if you can’t get the money then it is all a bit academic really,” Hewett said.
That could include finding out how, in the face of sanctions, the dairy industry had maintained Iran as one of its biggest butter markets.
One source said as well as doing a significant chunk of its business one step removed from its Iranian customers Fonterra had resorted to generous credit terms, which, in one case, put off payment for two years.
Fonterra’s global stakeholder affairs director Philip Turner was reluctant to detail the “work-arounds” used to trade with Iran other than to say the co-operative had complied with all relevant sanctions.
“The sanctions haven’t stopped us doing business but have made it more difficult.”
Turner said a large and young population with a liking for dairy products combined with the reintegration of resource-rich Iran into international oil and gas markets could lead to a super-charging of its consumers’ buying power, largely untapped for the past two decades.
“To the extent that those trends are going to be reinforced by the opening up of Iran to the rest of the world there is potential for the economy there to take off and dairy demand to take off with it.”
However, looming over those bright prospects was the impending presidency of Donald Trump. He railed against Iran’s rehabilitation and threatened to rip up last year’s nuclear agreement and re-impose sanctions.
Hewett said SFF would continue to work on re-establishing contacts in the Iranian market with a view to resuming business there regardless.
“Progress is going to happen one way or another irrespective of current sanctions or what the American government thinks.
“There are too many countries that want to deal with them. The trade will eventually happen.”
