The Wall Street Journal,  Nov 6, 1985

Best Ways to Crack a Shell

By Albert R. Karr,

The Pistachio War: U.S. Growers Fight Imports From Iran --- American Producers Call Nuts From Persia Unpatriotic
Copyright Dow Jones & Company Inc Nov 6, 1985

When Iran's Ayatollah Khomeini told the U.S., in effect, "Nuts to you," he meant it.

Last year, 21 million pounds of Iranian pistachio nuts poured into the U.S. -- four times the 1983 total. And the flood of Persian pistachios, which is continuing at nearly an equal pace this year, is driving U.S. nut growers up their trees.

Most U.S. pistachio producers got into business in the last decade or so. Their trees began producing just in time to take over the U.S. pistachio market from the Iranians when Iran was shut out by President Carter in 1980 during the 444-day hostage crisis. But then the ban on trade with Iran was lifted as part of the agreement that freed the U.S. hostages in January 1981, soon after President Reagan took office.

The result: Iran has recaptured about 45% of the $100 million-a-year U.S. pistachio market, and the prices of both the U.S. and Iranian nuts have plunged. However, U.S. pistachio producers, most of whom are in California, are fighting back. "We're coming at 'em every which way we can," says Ronald Khachigian, the chairman of the California Pistachio Commission, an industry trade group. The ways range from unfair-trade charges and federal nut-labeling changes to a campaign to promote the taste and the quality of U.S. pistachio nuts over the smaller imports from Iranian.

Pistachio patriotism also is an issue. "Here is a nation with total disregard for the United States, and we permit them to violate international trade laws and destroy a U.S. industry," says California Rep. Tony Coelho, a Democrat. "If you can't say 'no' to the ayatollah, then how are you going to do it to an ally?"

But nut importers say the U.S. growers are more interested in profits than patriotism. "If they can keep out imports, they're the only game in town," says Gerald Vogel, the president of J.F. Braun & Sons Inc., a Lake Success, N.Y., importer.

All this furor is over a small, split nut that dates back at least 8,700 years. Until recently, pistachio nuts, which are part of the cashew family, mostly were grown in the Middle East, with Iran a leading producer. Most Iranian pistachios are dyed red to cover blemishes caused when the nuts are allowed to fall from trees and dry slowly on the ground. The U.S. nuts are caught by nets and more quickly machine dried. Most California pistachios are their natural light-tan color, but some are still dyed because Easterners "feel a pistachio isn't a pistachio unless it's red," says Gary Schmidt, the owner of Los Ranchos de Poco Pedro, a pistachio ranch in Chowchilla, Calif.

The pistachio is a tasty, relatively expensive, somewhat prestigious nut. U.S. consumption has climbed to a projected 54 million pounds this year, from about 21 million pounds in 1982, partly because of the lower prices. Pistachios are mainly a snack food, though they are used to flavor ice cream and in cake icing and luxury candies, such as one kernel on top of a bonbon.

About 59 million Americans have eaten pistachios, each downing an average 0.72 pound annually, according to a recent survey done for the U.S. industry by the University of Maryland and Applied Technology Corp. About 59% of pistachio eaters are female, the survey shows; eaters are more heavily concentrated in the 25-44 age group; they are apt to have higher than average incomes and education. Of those surveyed, 31% -- the highest portion -- say the pistachio is their favorite nut, narrowly ahead of cashews and far ahead of other nuts.

Pistachios were introduced into the U.S. about 100 years ago, but the first substantial pistachio plantings, in California's San Joaquin Valley, were in the 1970s, partly for tax benefits. The trees take up to 10 years before they begin growing nuts, and the growers enjoyed their biggest crop -- 45 million pounds -- last year; pistachio trees turn out a sizable crop every other year. But last year's big harvest came just as pistachio shipments from Iran soared, with the Iranians slashing prices.

In the past two years, Iranian nut prices dropped to $1.24 a pound from about $2.27 a pound. To avoid huge losses, the U.S. growers say they have had to slash their own prices. The California growers contend that they have lost more than $21 million in income in the past 21 months.

The California growers have filed petitions with the U.S. International Trade Commission and the Commerce Department accusing Iran of dumping its pistachios at below-market prices. (Yesterday, the ITC issued a preliminary finding that the California industry has been injured by the influx of Iranian nuts.) The Californians are seeking import duties on Iranian nuts, and they also want President Reagan to use his power under recently enacted legislation to ban imports from any country that supports international terrorism.

Representatives of Iran in the U.S. decline comment on the nut situation. But nut importers deny any dumping and claim that the big U.S. crop last year helped drive down prices; the Californians just "want to make a killing" in a market once held by imports, says Mohammad Kazemi, the president of Franklin Trading Co., a Garden City, N.Y., nut importer.

Besides, the importers insist, the smaller Iranian pistachios are sold more in bargain markets, while the large, meatier California nuts do better in gourmet-type sales. Ira Agress, a partner in Zenobia Co., a New York importer, says that Iranian nuts don't really compete with California pistachios, which are bought by "people who want very large, beautiful, unblemished nuts."

But the U.S. growers are coupling new labeling requirements for pistachios with efforts to challenge the quality of Iranian nuts.

Previously, the Iranians could pass off their product as American, and sometimes did. One brand was called Pride of California, and another, the Sun Ranch brand, was advertised with a California address and phone number, says Robert Schramm, a pistachio-industry lobbyist, "but every nut was Persian." So at the Californians' request, the Customs Service in September reversed its ruling that Iranian pistachio packages don't have to be labeled as coming from Iran on grounds that being roasted in the U.S. makes them American. Now the agency will require the made-in-Iran label, starting Dec. 18.

"And now we can start talking about unhealthy Iranian pistachios," says Mr. Khachigian, the grower-commission chairman. Among other image-promoting ploys, his industry plans to start putting people on talk shows to tout California pistachios, he says. Before the new labeling rule, any disparagement of Iranian nuts could work against U.S. pistachios because consumers couldn't tell the difference, he says.

The U.S. growers also contend that because of the differences in handling and processing, Iranian nuts may be more contaminated than U.S. pistachios. The U.S. growers have asked the Food and Drug Administration to tighten its pistacho-inspection rules by no longer allowing inspectors to exclude "obviously inedible pistachio" nuts from their analyses.

These uglies should be included, the Californians say, because many people crack open and eat pistachios without looking at the meat. The industry's claims are based on telephone interviews and a study it had done at the University of Maryland this summer. In the study, subjects were placed in a room and given soft drinks and bowls of pistachios, while researchers watched them on closed-circuit television.

What's more, the shell is more likely to be contaminated than the meat. And the study concludes that "approximately 17.6 million pistachio eaters directly place a non-shelled pistachio nut in their mouths," cracking it with their teeth instead of their fingers.

Credit: Staff Reporter of The Wall Street Journal

[ Home ]