To Avoid a Currency Crunch, Iranian Automakers Are Trading Nuts for Bolts

In a typical year, 10 out of every 100 dollars that Iran spends on Chinese goods goes towards car parts. While the China-Iran trade relationship has languished under sanctions, China has remained a critical supplier for the Iranian automotive industry, which continues to produce over one million automobiles annually.

But over the last year, Iranian automakers have struggled to keep the parts flowing. Parts imports from China totalled $653 million in 2024, a precipitous 43 percent decline when compared to the previous year.

The fall in imports has led to a shortage of car parts in Iran, with consumers facing long wait times and soaring prices. The impact has been most acute for Iran’s private sector automakers, who mainly assemble cars using complete knock-down kits imported from China. Whilst Iran’s state-owned automakers are supported by a large ecosystem of domestic parts manufacturers, private-sector automakers remain heavily dependent on Chinese imports to keep their customers’ cars on the road.

The main cause for declining imports has been a lack of access to foreign currency, a consequence of US secondary sanctions restricting Iran’s banking relations with China. Even though Iranian oil exports to China have rebounded in recent years, they have not alleviated Iran’s foreign exchange crisis. Iranian companies seeking to import goods from China have struggled to receive timely allocations of renminbi through the Central Bank of Iran’s foreign exchange market.

As the currency bottleneck grew tighter over the course of 2024, imports continued to fall, and by the summer, the situation was being described as a “crisis.” In September, imports of car parts from China hit a nadir, with just $26 million worth of parts departing for Iran that month—a 65 percent year-on-year drop.

The outlook for the Iranian automotive industry looked dire until Iranian automakers stumbled upon an unexpected solution. In need of a new source of renminbi, many Iranian automotive firms turned to the pistachio business. Like oil, pistachios are a valuable commodity in which Iran is a world-leading producer. Unlike oil, pistachios are exempt from secondary sanctions.

Iranian automotive companies began purchasing pistachios from growers and leveraging their logistics networks to ship them to China. As a result, Iranian pistachio exports to China quickly surged to historic highs, enabling a modest recovery in car parts imports. In the last six months of 2024, Iran exported $195 million worth of in-shell pistachios to China—more than 2.5 times the volume achieved in the same period in 2023.

Pistachio growers and wholesalers, however, were not happy. Many Iranian pistachio wholesalers had given up on exports—leaving the Chinese market open to new entrants. The requirement to repatriate export earnings through the centralised foreign exchange market made margins unattractive for many agricultural firms. But for automotive companies, profit from pistachio sales was never the primary objective. Selling nuts provided a quick way for them to earn the foreign currency they needed to import car parts, which could then be resold in Iran at much higher margins. By October, industry leaders were complaining of “chaos in Iran's pistachio trade” as automakers turned into “inefficient competitors of Iran's real pistachio exporters.”

Pistachio exporters are reportedly seeking an understanding with the automakers who edged onto their turf. They plan to sell their foreign currency to automakers at a rate agreed with the supervision of the Central Bank of Iran, ensuring sufficient margins to incentivise them to prioritise exports once again.

Sanctions have not crushed the Iranian economy, but they have made pistachios more valuable than oil, forced importers to become exporters, and pushed automakers into competition with farmers. In adapting to sanctions pressure, the solution to one crisis can beget another, leaving a country trading nuts for bolts.

Photo: IRNA

Californian Farmers Waged 'War' on Iranian Pistachios and Won

The great pistachio war began—unintentionally—fifty years ago. In 1971, the United States changed its tax codes to eliminate loopholes exploited by almond and citrus farmers, “setting off a rush to plant pistachios,” which had been left out of the new rules. One year later, the Shah of Iran mandated that “small packets of protein-rich pistachios be given to schoolchildren as part of a free breakfast program,” reducing Iran’s exports of the nut. Just as American pistachios farms began to “come into serious production,” cultivating trees bred from Iranian cutting brought to California, Iran was thrust into its 1979 revolution.

Eager to win marketshare first in the US and then abroad, Californian pistachio farmers considered the chaotic situation in Iran to be “opportune.” Among them were Stewart and Lynda Resnick, an entrepreneurial couple who had stumbled into pistachio farming as a safe haven from inflation and taxes. But as journalist Yasha Levine and filmmaker Roman Wernham detail in a forthcoming documentary entitled Pistachio Wars, the “shrewd” Resnicks, “quickly realized that there was an opportunity” to be seized in growing the humble pistachio.

The documentary, which just surpassed its initial fundraising goal on Kickstarter, explains how, more than anyone else, the Resnicks have been responsible for both making the pistachio into a ubiquitous snack food in the US while also eating away at Iran’s global marketshare. They have become billionaires in the process.

The Resnicks’ enterprise, The Wonderful Company, is the largest producer of pistachios in the US with annual revenue of around USD 4 billion. The company also produces POM Wonderful, a pomegranate juice, and Fiji Water, a luxury spring water, among other food and beverage products.

Levine first learned of the Resnicks while reporting in what he calls, “Oligarch Valley,” a 450 stretch of irrigated farmland bounded by Silicon Valley in the north and Los Angeles in the south. As the name suggests, Oligarch Valley is home to some of the largest and most lucrative agricultural operations in the US, including 90 percent of the country’s pistachio production. The California pistachio crop was valued at USD 3.6 billion this year.

For Levine, his time driving down Interstate 5 was eye-opening. “When people think of California, people tend to focus on Hollywood or Silicon Valley as the state’s most powerful industries. That’s where they think the action happens. No one thinks about farmers,” Levine says. Yet farmers own the water and the land and “nothing happens in California without those two things. Farmers are in a lot of ways the true power brokers in California.”

Levine’s experience with powerful elites dates back to his time as a journalist chronicling the roaring years in Russia after the fall of the Soviet Union, when rapid privatizations and a bonanza of foreign investment collided to create a new class of oligarchs.

Drawing a comparison between oligarchs in Russia and the US, Levine notes that while there are “differences between the oligarchic power structures,” these details “are almost irrelevant when you consider the root political problem: state policy being crafted by and for the benefit of a tiny elite.”

The idea that pistachio farmers can rise to the political and business elite will not surprise Iranians. Asadollah Asgaroladi, one of Iran’s richest men, built his fortune as Iran’s leading exporter of pistachios and nuts. Former Iranian President Akbar Hashemi Rafsanjani was born to a wealthy family of pistachio farmers in Kerman Province.

Surprising as it may be, American pistachio farmers are no less politically ambitious. Led by the Resnicks, they have sought to bend policy to suit their interests. One of their main efforts, as documented by Levine and Wernham, has been to exert control over water resources, by undermining environmental protections and pushing the Californian government to commoditize water in a marketplace which they can dominate. To achieve this, they have become major political donors. Levine explains that while the Resnicks “cultivate a liberal, progressive image,” notably through their association with celebrity comedian Stephen Colbert, they are “not party purists because business comes first.”

Southern California generally votes democrat, but California’s farmland lies in Republican enclaves, in part because of the Republican candidates are “pro-big business, pro-agriculture and always in favor of projects that direct more water to California farmers,” says Levine. Over the years, the Resnicks have donated to three Republican congressmen: David Valadao, Kevin McCarthy, and Devin Nunes.

All three politicians have been outspoken opponents of the Joint Comprehensive Plan of Action (JCPOA), the nuclear deal which granted Iran sanctions relief. Nunes believed that the JCPOA “open[ed] the door for the IRGC to exploit the global economy to finance the growth of the IRGC’s web of terrorism to every corner of the planet.” Valadao argued that sanctions relief would provide Iran financial resources that would be used to “make the Middle East even less stable and increase the likelihood of war in the region.” McCarthy praised President Trump’s withdrawal from the nuclear deal earlier this year.

The Resnicks have also donated to prominent Washington lobby groups and think tanks which advocate a confrontational stance on Iran, including the American Jewish Committee and the Washington Institute on Near East Policy, where Reza Pahlavi, son of Iran’s deposed Shah, recently gave a speech calling for a policy of regime change.

Over the years, US sanctions on Iran have been good for the Resnicks. As Levine describes, “the US pistachio industry as a whole is very aware that its success has been born out of the sanctions against Iran.” In his travels in Oligarch Valley, Levine met farmers who were “openly angry about diplomatic measures like Obama's Iran nuclear deal.”

Back in 1986, American growers shored their newfound dominance of the domestic market by successfully lobbying for a 300 percent tariff of pistachio imports from Iran. From that point, American growers began to turn their attention to international markets.

The US became the leading exporter of pistachios to the European Union in 2005, before international sanctions on Iran were tightened. In the years since the imposition of sanctions, Iran’s pistachio exports have remained flat, while US exports have since more than doubled.

Trade in pistachios is not subject to US sanctions for non-US persons if they avoid using the US financial system to conduct the trade. But general restrictions in banking and logistics services suppress the ability of Iranian growers to get their products to market. Add to this the aggressive marketing and business development activities spearheaded by The Wonderful Company and it is clear that American growers have an edge over Iranian counterparts, even if the Iranian product is widely considered to have a superior taste.

Can Iran fight back in the pistachio war? Iran continues to be a leading producer and a significant exporter of the beloved nut. A few years of poor harvests in California and some better export promotion by Iranian growers could see Iran claw back some of its lost marketshare, especially in Europe. No doubt, the Resnicks will remain vigilant.

Photo Credit: The Wonderful Company