Food safety and food imports in Europe: the risk of aflatoxins in pistachios

The United States has surpassed Iran as the largest pistachio exporter to the European Union. Both lower prices and a less frequency of aflatoxin contamination have contributed to the success of the US pistachio industry. Using EU monthly imports and food safety alerts data, we estimate EU demand for US and Iranian pistachios. We find that EU demand for US pistachios is price-inelastic but the demand for Iranian pistachios is price-elastic. We also find that the income effect is positive for US nuts but negative for Iranian nuts. Most importantly, we find that EU imports of US pistachios decrease with aflatoxin alerts traced back to the US but increase with contamination incidents originated from Iran.