Pistachio is the main foreign exchange – earning agricultural product which ranks third as an export commodity in Iranian economy. The objective here is to investigate the transmission of pistachio price from farm-gate to export and then to world market levels in the priod of 1986-2002. The results of Granger’s causality test indicate that farm-gate and export price changes are not the cause of international price changes. Furthermore, there is no mutual relationship between farm-gate and export prices. The results of empirical model show that price transmission from farm-gate to export market and back is assymetric. Price decreases are more rapidly as well as more completely transmitted from farm-gate to export level than price increases, the elasticity in price decrease being greater than that in price increase. On the other hand the transmission of price increases from export level to farm-gate markets is more rapid and more complete than the transmission of price decreases, the elasticity of price increases being greater than that of price decreases. This bounds the exporter profit from each side. As a conclusion, design of policies to support pistachio exporters is recommended.
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