Marketing efficiency and price spread for saffron in Iran.

Abstract

This study attempts to examine the marketing efficiency and price spread for saffron in Iran and also to identify the major problems thereof. It is based on the primary data collected from 50 traders (10 local traders, 12 wholesalers, 10 retailers, 11 processors and 7 exporters) in the markets of Mashhad, Torbat Heydarieh and Ghaen were selected randomly. The secondary data were collected from published sources in Iran such as, Ministry of Jihad-Agricultural, Trade Promotion Organisation of Iran, Customs, ITC, European Commission, etc. Apart from using the usual techniques/concepts for analysing the marketing costs, marketing channels, marketing margin and price spread, Shepherd’s Index was used for computing marketing efficiency. The study reveals that the maximum marketing margins were usurped by the middlemen followed by wholesalers in Mashhad for bulk export to Spain, UAE and Italy traders. The packaging and processing companies, which usually performed the task of grading, incurred the maximum marketing costs. The gross price spread was highest (96.25%) in the direct marketing channel namely: Producer→domestic consumer and least (17.76%) in the channel: Producer→middlemen →foreign traders→foreign consumer. Altogether, 11 channels were identified in the marketing of Iranian saffron and the average share of producer in the consumer’s price in the all the 11 channels was 51.23%. The study revealed that there is considerable scope to increase the producer’s share in the consumer’s price if the number of intermediaries is reduced and the government intervenes pro-actively in order to organize and streamline the marketing cooperatives unions so that the farmers use these unions as a profitable channel to sell their product. There is no effective control on intermediaries in the saffron market, at percent. The problem of irregular supply can be solved by forward contracts to be signed between producers and marketing bodies. The prices of saffron witness frequent fluctuations and even day to day fluctuations-causing concern to the farmers.