Document Type : Original Article
Author
Expert of Economic, Social and Extension, Agriculture and Natural Resources Research Center of South Khorasan Province, Agricultural Research, Education and Extension Organization (AREEO), Birjand, Iran.
Abstract
Introduction: Iran, with its diverse climate and fertile soil, plays a significant role in the global production of agricultural products, including saffron. Saffron is one of the most valuable agricultural commodities in Iran, contributing substantially to the country's non-oil exports. Despite being the largest producer of saffron globally, Iran has struggled to maintain a competitive position in the global market. This study aims to analyze the structure of the global saffron market, focusing on Iran's position and the challenges it faces in maintaining its market share. The importance of saffron in Iran's agricultural sector cannot be overstated. It not only provides livelihoods for thousands of farmers but also contributes significantly to the country's foreign exchange earnings. However, the global saffron market is becoming increasingly competitive, with countries like Spain and Afghanistan emerging as strong competitors. This study seeks to provide a comprehensive analysis of the market structure using the Herfindahl-Hirschman Index (HHI) and offer recommendations to enhance Iran's competitiveness in the global saffron trade.
Materials and Methods: This study utilizes export data from saffron-exporting countries, obtained from the International Trade Center (ITC) website, covering the period from 2003 to 2023 (1383 to 1402 in the Persian calendar). The Herfindahl-Hirschman Index (HHI) was employed to measure market concentration and determine the structure of the global saffron market. The HHI is calculated by summing the squares of the market shares of all firms in the market, providing a comprehensive measure of market concentration.
Results and Discussion: The analysis of Iran's saffron exports over the past two decades reveals that Iran remains the largest exporter of saffron by value, but its market share has declined in recent years. In 2022 (1402), Iran's share of global saffron exports was approximately 42%, down from previous years. The HHI analysis indicates that the global saffron market is moving from a monopolistic structure towards a more competitive one, with increasing participation from countries like Spain and Afghanistan. Additionally, the increase in saffron cultivation in countries like Afghanistan has intensified competition, further eroding Iran's dominant position.
The HHI analysis reveals significant changes in global saffron market concentration over the study period (2003-2023). Key findings include:
The HHI score declined from 0.55 in 2003 to 0.17 in 2023, indicating a shift from tight oligopoly toward competitive market structures
Iran's market share dominance decreased from 74% to 42% of global exports by volume
Spain emerged as the volume leader in 2023 (38% share) despite minimal domestic production
Afghanistan's share grew from negligible to 12%, showing the fastest growth rate among competitors
Conclusion: The study reveals that while Iran remains the dominant global producer of saffron, its market position is increasingly challenged by structural weaknesses in the value chain and growing international competition. The HHI analysis confirms a significant shift from monopolistic toward competitive market structures, with Iran's export share declining to 42% despite maintaining 85-95% of global production. This paradox stems primarily from three factors: (1) reliance on bulk exports that enable value capture by competitors, (2) inadequate processing and branding infrastructure, and (3) emerging low-cost production in countries like Afghanistan. The data particularly highlights how Spain's sophisticated repackaging and marketing strategies allow it to command 3-5x price premiums for essentially Iranian-origin saffron.
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