This Is What You Need to Know about How a $2.2 Billion Deal Will Boost the Pine Nut Industry in Afghanistan

This Is What You Need to Know about How a $2.2 Billion Deal Will Boost the Pine Nut Industry in Afghanistan

Despite a few recent setbacks due to the global pandemic, the pine nut is becoming a major Afghan export. Pine nuts are produced by about 20 species of pine trees, which create pine seeds. Pine nuts primarily grow in the eastern mountain regions such as Nuristan, Kunar, and Paktia.

The light-colored, teardrop-shaped seed often are used in making pesto, and they tend to be expensive because they take so long to grow. Pine trees typically don’t produce the seeds until they are between 15 and 25 years old, and it can be many more years before their production peaks. Seeds also tend to be difficult to harvest due to their hard outer shells.

In the past two years, Afghanistan has seen an uptick in pine nut production and its pine nut shipments to other Asian countries, primarily China and the UAE, where the demand for the seed is high. In late 2019, the price of a kilogram of pine nuts in local markets had risen to 2,800 afghani, or about $36.

Expansion Efforts

Efforts also are underway to stabilize and expand pine nut production in the region. As a result, production has steadily increased. In 2019, Afghan farmers collected about 24,000 tons of pine nuts—a 10 percent increase over the previous year.

Afghanistan is expected to export more than 62,000 tons over the next five years. Local officials have planted “hundreds of thousands” of pine nut saplings with hopes that the annual yield will continue to increase.

Officials also want to focus pine nut processing within Afghanistan. Right now, most of the country’s pine nuts are processed in Pakistan, and Afghan farmers are forced to export their raw product.

In late 2019, a venture capitalist announced a $6 million investment in a pine nut processing factor in Paktia, a province in southeastern Afghanistan. The factory will provide as many as 1,000 jobs and is projected to process 500 metric tons of pine nuts every 24 hours. An opening date has not yet been announced.

China’s Interest

Afghanistan’s pine nut industry has been boosted as China continues to show interest in trade along the western border of Afghanistan, especially in the region that borders Xinjiang. In 2019, Afghanistan and China opened an air-freight corridor between Afghanistan and Shanghai. In late 2019, China committed to buy more than $2 billion worth of pine nuts from Afghan farmers over the next five years.

So far, the air corridor has been a success. Afghan officials expect it to facilitate the growing pine nut industry; it could contribute to a $1 million increase in pine nut revenue. The 10 percent increase in pine nut harvest that government officials predicted for 2019 was expected to bring in an extra $800,000 in revenue to Afghan farmers.

China’s growing engagement with Afghan pine nuts, along with other infrastructure projects, could provide stability in Afghanistan. This would be beneficial because the country is still struggling with ongoing issues related to years of conflict.

China’s western provinces, which border Afghanistan and often host a military presence, would benefit, increasing Beijing’s incentive to invest in Afghanistan. Chinese officials already have participated in some negotiations between Afghanistan’s factions and is pushing for a peace process.

Coronavirus Setback

As coronavirus spread through Asia, Afghanistan’s pine nut exports were halted temporarily in early 2020 as flights between the countries became less frequent. Pine nuts collected in Afghanistan were warehoused during the pause.

This was a concern because Afghanistan did not have enough refrigerated warehouses to keep the nuts fresh over time. The pine nut season starts in September and can last as long as three months, which created a backlog in storehouses in Afghanistan.

In early February, however, a Turkish Airlines flight from Afghanistan carried 20 tons of pine nuts to China. The resumption of exports will continue to tie the two countries together; China and Afghanistan signed a contract worth $2.2 billion in 2019 to develop Afghanistan’s global pine nut trade.

Industry Leaders Laud the Agreement with China

The agreement followed several meetings in Kabul between government officials, private sector owners, and members of the Afghanistan National Standard Authority and Khost Pine Nuts Union.

“This is an important step, it means we have found a foot in one of the world’s markets that is important and does trade in hundreds of billions [of] dollars,” said Jan Aqa Naveed, public affairs director of Afghanistan’s Chambers of Commerce, in a media statement. “It is good for our economy, means we will have a flow of foreign currency, and it will boost the economy of farmers, growers and businessmen here,” he said.

Yahya Khan Zadran, president of the union, told the media that the contract, which includes in investment in processing and packaging pine nuts, could provide jobs to Afghan workers. The contract also covered transportation and security issues related to the pine nut export industry.