Bringing the world to Iran
UAE and Iran, 28 September – 9 October 2015
In October 2015 GIFT conducted a ground breaking leadership programme in Iran. Global executives from a dozen countries applied their business experience and problem-solving skills to create a new business model in the agriculture sector.
At the invitation of local government including the Isfahan Mayor's Office and Chamber of Commerce, participants travelled to Isfahan city and the nearby Semirom region which is famed for its apples.
Islamic Republic of Iran
Iran is one of the Middle East’s largest countries, with one of the region’s largest populations and economies.Sanctions have severely limited the Iranian economy to foreign trade and capital - Iran is not barred from exporting and importing but payment remains heavily restricted due to sanctions. Thus, resolving the nuclear dispute — and relieving the sanctions — is one of the Iranian government’s main priorities. At present it is widely expected that this may take place following the nuclear accord as early as 2016.
Iran's economy is the region's second largest after Saudi Arabia, and is dominated by a large hydrocarbon sector. The agriculture industry comprises 9% of Iran's GDP and 16% of the labour force by occupation.
According to the World Bank, over 60% of Iran's population is estimated to be under the age of 30. As a result some 750,000 youth are estimated to enter the labour market every year. It is estimated that some 150,000 Iranians with teriary education leave the country every year.
As the former capital of the Safavid Empire, Isfahan is one of the centres of Persian culture and history. However, it is also one of Iran’s most important industrial regions, second only to Tehran. The region is mostly focused on textiles, basic metals and mineral products industries. In terms of agriculture, most arable land is centred on the Zayandeh Rud Valley.
Semirom is the capital of Semirom County, located at the southern tip of Isfahan Province. In the 2006 census, the county's population was 23,200 – approximately 5,419 families. Approximately 45,000 hectares of land is currently under cultivation in Semirom of which almost half is used for the cultivation of apples.
Iranians are enthusiastic about the possibility for foreign expertise and investment: an openness backed by the Foreign Investment Promotion and Protection Law. Iran has liberal tax holidays for investments in Less Developed Regions and Free Zones, and has expansive customs exemptions for production machinery. There are also no limits on foreign shareholdings, capital repatriation, and investment volume, and there is no difference in treatment between foreign and domestic investors.
GIFT announces MOU with Isfahan Chamber of Commerce
As sanctions are lifted and as international engagement with Iran grows, GIFT is excited to play a constructive role in supporting mutual understanding and benefit given the undoubted opportunities ahead for Iran and Isfahan Province.
GIFT Founder & CEO Chandran Nair signing MOU with ECCIMA President Mr. Sahl Abadi during GIFT’s current Global Leaders Programme in Isfahan, Iran
Semirom - the "Roof of Iran"
The high altitute of 2,000 meters above sea level gives apples produced in Semirom region their characteristically sweet taste, aroma and color.
Apple production collapsed in 2008-2009, in part due to the implementation of sanctions and the resulting contraction of the Iranian economy. Iran’s agricultural sector is lagging behind in terms of infrastructure, technology and expertise and access to capital and markets.
There is a real market opportunity for Semirom apple farmers to capture value for themselves by engaging in local processing. Processed apple products, such as apple chips, apple vinegar and apple juice are higher-value products that will command higher revenues.
The apple industry in Semirom is characterised by large numbers of smallholder farmers, those with 1 to 2 hectares of land. Although smallholder farmers account for almost 80% of the apples produced in the region, they lack the necessary tools and information to optimise production and sales of produce. It is estimated that up to 30% of production is either lost to waste or sold on at cost for various uses such as for animal feed.
300,000 tonnes of apples per year, or 10% of Iran’s total apple production, comes from Isfahan Province, specifically Semirom County.
Semirom’s apples are famed for their high quality. However, Semirom farmers have been unable to capitalise on this brand both within Iran and to foreign markets.
A local farmer shows participants from ORIX Corp. and NEC around an apple orchard. While in Semirom, the group visited the apple orchard of Mr. Mousavi, who blamed the region’s production issues on a lack of access to high quality fertilisers and inputs.
The group met with Mr. Arjmandi , Semirom’s largest fruit and vegetable exporter. The Arjmandi group buys approximately 60% of the apples grown in Semirom and exports the highest grade apples to countries in the Middle East including the UAE and Turkey.
The group met with Mr. Afshari, former parliamentary representative of Semirom County and key advocate and ally of the project. They discussed the issues facing local farmers across the apple supply chain.
The Semirom Farmers Union is the only group that represents apple farmers collectively in the region. A lack of effective organisation has been cited by both farmers and the Union for Semirom’s lack in productivity, as farmers cannot bargain collectively for higher market prices or better quality inputs.
Losses Across the Value Chain
Developing countries lose more in the earlier end of the supply chain, such as before the harvest or during processing. In contrast, the developed world loses far more as consumption losses (food that perishes before it can be consumed).
Planting Fresh Ideas in Iran
The current lack of any prominent apple brand in Iran and the growing demand for healthier products have combined to create an opportunity for an apple business producing and processing fresh apples and healthy apple products.
A new brand proposed by participants, representing the uniqueness and quality of Semirom apples, to market and sell fresh apples in the short-term and apple products including chips and juice as the business expands. The Semirom Seeb Company includes “seeb,” the Farsi word for apple.
Through meetings with government officials and community and business leaders, and through frank and open discussions amongst themselves, participants learn to navigate conflicting and contradictory views to transform concepts and theories into realities on the ground.
The GLP uses real-world field projects to hone the practical skills needed to manage diverse teams in unfamiliar situations. Participants challenge business models to create new ideas to solve practical issues.
Participants considered novel ideas in order to ensure the benefits of the Semirom Seeb Company would travel to ordinary farmers. Farmer’s Cooperatives will have joint ownership of the Semirom Seeb Company. In exchange for commitments on quantity and production, co-ops will have “sweat equity” alongside private investors in the SSC.
The Semirom Seeb Company would be active in the collection, sorting, processing, packaging, sales and marketing of fresh apples and apple products. The SSC will work with government and universities which provides co-operative members with information about market pricing, water management, and other agricultural data.
The Semirom Seeb Company would begin by processing lower-quality Grade 3 apples into apple chips. It would also move towards renting cold storage and additional transportation to help local farmers. The SSC would plan to begin producing apple vinegar within seven years, and apple juice within ten years.
The historic Abbasi Hotel welcomes international business leaders
Over 200 business, community and government leaders attended the public forum where participants presented their business plan. Guests include representatives from the Isfahan Governors Office, board members of the Chamber of Commerce, farmers and local officials from Semirom and agricultural students.
Thomas Birk, BASF
"Changing one's point of view on the world and considering issues from different angles is definitely one of the major advantages of the GIFT program."
Hengameh Bahrami, Iranian entrepreneur
"I knew that achieving my goals was possible but the GLP helped me to understand how. This experience was a turning-point in my life because it changed my view of the world."
Kenji Wakasugi, NEC Corporation
"I learned what leadership is and what skills need to be developed to be a global leader. The program is an experience of a lifetime."
Please contact Karim Rushdy for more information about the Iran GLP, and future projects held by the Global Institute For Tomorrow.