Pecan Report: Short Crop and Increased Demand has Prices Reaching Record Highs
News of a short crop and increased worldwide demand has Pecan Prices reaching record highs.
The Louisiana Growers Pecan estimate was released this past June, which indicated an on year crop of 246.5 million in shell pounds. If the crop is this small, it would be the smallest on year crop in at least 25 years. It was widely expected that the 2011 crop would be much larger, and with this news prices have risen yet again.
Over the last few years, pecan prices have nearly doubled. Worldwide demand for pecans continues to increase and with a limited supply of nuts, this increase in price is showing no signs of slowing.
Most of this new demand is coming from China. As you can see from the chart below, the Chinese have taken some nuts from other export markets, but they have largely reduced the number of nuts sold domestically, which has in turn driven up the price.
In 2005, China only imported a few million pounds of pecans. Due to a global walnut shortage and a record pecan harvest, consumption in China nearly doubled in 2007. Last year, China bought over 80 million pounds of pecans, an amount equaling all of the pecans grown in Georgia for the same year. To put that into perspective, the U.S. produces 80% of the world’s pecans and Georgia leads the nation in pecan production.
Chinese importers mainly buy in-shell pecans from the U.S., import them to China where they are often cracked by hand one at time, and then are marinated in flavoring brine, roasted and sold in the partially cracked shell as a popular snack, particularly during the Lunar New Year.
This demand has been a blessing to growers, but has presented new challenges to shellers and consumers. Traditionally pecan growers would sell to shellers in the US, who would then process the nut and sell it to food companies, grocery stores and consumers. All that changed after 2007.
After the spike in Chinese import, shellers became concerned that selling premium nuts to the Chinese would hurt their business domestically and in Europe, and they held back orders. China responded by going directly to the growers, and has not looked back. This has left many shellers facing higher prices and supply issues, as they struggle to get the nuts they need before the Chinese buy them.
This demand from China has elevated prices for pecans and gives growers a more-diversified market for their crops. Pecan growers have launched marketing campaigns throughout Asia and into India where the nut is making some headway.
Hilton Segler, executive director of the National Pecan Growers Council, says that with India’s burgeoning middle class, it could prove to be a stronger market than China.
“Three years from now, we’ll probably be moving as many pecans, if we can produce them, in India,” Segler says. “There are 1.3 billion people in China. There are 1.1 billion people in India.”
Segler says right now pecans are a great investment and more consistent than the stock market.
The next subjective 2011 crop estimate will be from the Texas Growers later in July. Will prices continue to climb or will they start to level out as we get closer to harvest? What are your thoughts?
- The Albany Herald, http://albanyherald.com
- The Wall Street Journal
- The Farm Press
- Nature’s Finest Foods