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U.S. tree nut sales to remain strong in coming years

Growers benefit from export market

POSTED November 25, 2011 9:58 p.m.

U.S. tree nut growers are receiving good news just in time for the holidays. A report issued recently by Rabobank's Food & Agribusiness Research and Advisory group projects nut prices will remain competitive in the coming years. The information arrives as operations are wrapping up another banner harvest for most tree nut varieties.

The report credits China's ongoing demand for almonds, walnuts, pistachios, pecans and hazelnuts as the driving force behind increasing prices and yields in the United States. As China's once largely agrarian country transforms its economy from export-driven to consumer-driven, the country's urban middle class finds itself with more purchasing power to afford premium products like those of U.S. tree nuts. Additionally, an expanding worldwide health and wellness movement has found fertile ground in China, where such nuts play a key role in balanced nutrition.

"The Chinese government is promoting an economy that is favorable for many U.S. exports, especially tree nuts," said the report's author, Karen Halliburton Barber, assistant vice president and senior agricultural analyst with the Food & Agribusiness Research and Advisory group in Fresno. "As the Chinese middle class grows, so will the demand for almonds, walnuts, pistachios, pecans and hazelnuts. This is good news for growers here in the U.S."

The increased demand comes with risks. Those risks include the threat of a strengthening U.S. dollar that could raise the costs of the export items, some of which would be passed on to Chinese consumers who may shy away from increased prices. Barber notes that while this is a concern, premium imported tree nuts are already being purchased by higher income segments of the population who are more likely to be able to absorb the higher prices.

Additionally, the report cautions about the threat of China turning to suppliers from countries such as Turkey, India, Ukraine or South Africa to fill its tree nut needs, especially if the U.S. cannot keep pace with short-term demand. Furthermore, China is strengthening its own production of walnuts and, to a lesser extent, almonds; though increasing numbers of Chinese consumers prefer U.S. walnuts to Chinese-grown, due to taste differences resulting from harvesting and storage practices. Overall, the report signals a good outlook for growers despite these risks; however, U.S. processors face a different set of circumstances.

"U.S. processors face a dual challenge: the rising cost of tree nuts and competition from lower-cost processing in China," said Barber. "Many importers have been reducing their costs buying in-shell nuts directly from growers and shipping them overseas for processing."

The report provides individual outlook profiles for almonds, walnuts, pistachios, pecans and hazelnuts, including each nut's challenges and opportunities. The study also touches on other global export markets and their effect on the short-, medium- and long-term demand for U.S. tree nuts.

 

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