After producing record-size crops, prices for California almonds, pistachios and walnuts are on the decline or softening as export demand weakens and foreign competition increases.
Still, San Joaquin Valley growers remain bullish on nuts, one of the fastest-growing segments in agriculture, saying a correction in the market was expected.
“We had a good run for five or six years,” says Chuck Nichols, a Hanford grower of almonds and pistachios. “But things have changed.”
What’s changed is a combination of factors, including a general weakening in the economy of some of California’s biggest export markets. All three of California’s major nut crops (almonds, pistachios and walnuts) depend heavily on the export markets – especially China, which has been buying fewer nuts.
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Almond growers and sellers say escalating prices for almonds and the strong U.S. dollar also contributed to the current sluggishness in the market.
“The reality is these are healthy items, but it’s not like bread or butter or milk,” says Jim Zion, managing partner of Meridian Growers in Clovis. “You put the price too high and consumers are going to start looking for other things.”
As sales slowed, prices to farmers also have begun to tumble. Zion estimates prices to farmers dropped about 20 percent to $2.50 to $2.75 a pound. The upside, Zion says, is that as prices drop, ingredient buyers are coming back into the market and buying more almonds for products like trail mix and other snacks.
Twenty years ago, when we produced a 200 million-pound crop, people were scared to death, saying we would never be able to sell that many nuts and would probably end up feeding them to cows or throwing them in the ocean.
Jim Zion, managing partner of Meridian Growers in Clovis
Zion says that while growers may get antsy over lower prices, he does not anticipate a major price drop, even as the industry tries to sell a 1.8 billion-pound crop of almonds and new trees continue to be planted.
Two years ago, almonds replaced grapes as Fresno County’s No. 1 crop with a value of $1.3 billion.
“I am not concerned about bigger crops; we have seen these cycles before,” Zion says. “Twenty years ago when we produced a 200 million-pound crop, people were scared to death, saying we would never be able to sell that many nuts and would probably end up feeding them to cows or throwing them in the ocean.”
Different challenge for walnuts
Walnut growers have faced a different set of challenges. Unlike other nut crops, California’s walnut industry competes heavily against other foreign producers, including China, Chile, Turkey and Ukraine.
Dennis Balint, chief executive officer of the California Walnut Commission, says the world supply of walnuts swelled last year by 140,000 tons to more than 1 million, creating a glut.
“We can handle increases of 20,000 to 25,000 tons and still maintain our markets,” Balint says. “But 140,000 tons is hard to take, the market began to weaken and that continues this year.”
Prices to the growers tanked, falling by as much as 60 percent over the last nine months.
But, like almonds, the lower-cost walnut also has become more attractive to domestic buyers, including food manufacturers.
“That is going to regenerate interest in walnuts and stimulate demand,” Balint says. “That, along with the launch of our domestic ad program, should help us re-establish the market.”
Pistachio market steady
Pistachio growers are perhaps the least worried. Despite weak demand, prices have not declined substantially.
“The market is very quiet right now,” Nichols says. “And prices have only dropped about 10 cents from top.”
Nichols, a longtime grower, doubts that the price drop signals the beginning of a major collapse in the nut industry. He says the biggest limiting factor continues to be the availability of land with access to water.
“The expectation is that the markets are going to be there in the future,” Nichols says. “And I think that is a pretty good assumption.”