Medicinal plants hold key to Iran’s drought-resistant revenue

Iran’s agricultural sector faces mounting pressures from water scarcity, international sanctions, and the urgent need to reconfigure production and export patterns.

Farmers are increasingly being pushed toward crops that require less water, deliver higher added value, and can compete in global markets, with medicinal plants emerging as a strategic opportunity for the Iranian economy.

These crops are suited to Iran’s climate, and they offer multiple economic and environmental benefits, including water management, foreign currency earnings, expansion of non-oil exports, and employment generation in rural and underdeveloped areas.

Iran’s climatic diversity, extensive rangelands, and historical experience in growing and using medicinal plants provide significant potential. With the right policy frameworks, the country could position itself as a key player in global markets.

Contrary to common perceptions, medicinal plants in Iran are not limited to dried herbs. The sector encompasses a wide array of products, including industrial derivatives, essential oils, extracts, herbal teas, distillates, and high-value strategic crops such as saffron.

Demand for these products is growing in international markets, and profitability is substantially higher than for many conventional crops. Despite these advantages, structural and policy barriers continue to hinder expansion of the sector.

Foreign sanctions and banking restrictions complicate direct access to end markets, increasing logistical and financial costs. Weaknesses in processing, packaging, and branding mean that a significant portion of Iranian products are sold with low added value through intermediaries.

Complex bureaucracy, lack of targeted financial incentives, and limited access to modern agricultural technologies further restrict the sector’s development and reduce investment motivation.

With ongoing drought and shifting rainfall patterns, revising agricultural and trade policies has become increasingly urgent. Medicinal plants, being well-suited to Iran’s dry and semi-dry climates and requiring far less water than conventional crops, could play a substantial role in revising cropping patterns and easing pressure on water resources.

The current value of medicinal plant exports is estimated at around $600 million annually, with projections suggesting growth to $700 million. These exports account for roughly 9 to 10 percent of Iran’s total agricultural exports.

Recent sanctions have concentrated exports toward intermediary markets such as the United Arab Emirates and Turkey, limiting direct access to final markets, although opportunities for expansion remain. Strategic markets include Central Asia, Eurasia, and China.

Saffron is the largest export item in this sector, representing approximately 40 percent of total medicinal plant export value and over 90 percent of global production.

Other significant export items include Rosa damascena and its derivatives—rose water, extracts, and buds—liquorice extracts, mint, thyme, and gums such as asafoetida. Severe drought over the past two years has significantly reduced production and export of certain products, particularly thyme.

Many medicinal plants are low-water crops that can grow under rainfed conditions or with less than 3,000 cubic meters of water per hectare, compared with 10,000–15,000 cubic meters per hectare for traditional crops.

Developing the medicinal plant sector would allow the reallocation of irrigated lands to lower-water crops, conserving billions of cubic meters of water. For higher-water crops, alternatives include targeted imports and overseas cultivation in water-abundant regions.

Western sanctions remain a major barrier, restricting market access and raising costs of money transfer and logistics by 30 to 40 percent. Consequently, a significant portion of exports is channeled through intermediaries with lower profit margins.

Policy measures to enhance exports include activating economic diplomacy, easing banking sanctions, reducing bureaucratic hurdles, streamlining licensing, investing in modern processing and packaging, providing low-interest credit to exporters, focusing on global branding of strategic products such as saffron and rose water, and expanding contract-based and overseas cultivation.

Medicinal plants in Iran are largely perennial, rangeland, and forage species that grow naturally in forests and open areas. Their growth depends mainly on rainfall rather than irrigation, making water use negligible compared to conventional crops.

In cases where medicinal plants are grown on arable land, high planting, maintenance, and harvesting costs, along with slower yields, make irrigation a less attractive option.

Watering, when applied, must match the needs of each plant. Some farmers cultivate medicinal plants in rangelands under permits, relying on rain-fed water.

The changing rainfall patterns have reduced the availability of regulated water stored in underground aquifers, dams, rivers, and lakes. Much of the rainfall now evaporates rather than replenishing aquifers or generating river flow.

According to the Ministry of Energy, out of an annual 400 billion cubic meters of rainfall, nearly 232 billion cubic meters are lost to evaporation, more than double total water consumption, which is estimated at around 100 billion cubic meters.

Under these circumstances, relying on natural rainwater for growth is essential. Rainwater can only be effectively used if plants are already in the soil; otherwise, water evaporates rapidly.

Iranian government policies, including subsidies and broader agricultural frameworks, have not prioritized crops that can be produced rain-fed or with minimal irrigation.

Both rain-fed cultivation and medicinal plant development have received insufficient attention, even though these areas could provide sustainable and secure production alongside the use of rangelands for edible plant harvesting.

Leveraging these capacities has potential benefits for domestic consumption, export revenue, and supplemental income for farmers, nomads, and rural populations.

Medicinal plants offer high potential for increasing foreign currency earnings, expanding non-oil exports, and reducing water pressure.

Iran’s climatic advantages and its position in producing strategic crops, particularly saffron, place the country in a position to revise cropping patterns toward high-value, low-water products.

At present, sanctions, banking limitations, weak processing infrastructure, and administrative bureaucracy constrain full exploitation of these resources.

Targeted development of medicinal plants could provide a practical response to the country’s agricultural and export challenges, provided policies focus on easing exports and strengthening the value chain.

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