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Report: U.S. walnut production could remain in check

California Walnut Board TNFP0805-CWB-walnuts.jpg
U.S. walnut production is already at record levels and will likely remain in check due to a lack of price incentives, according to a five-year outlook from Rabobank.
Exports should continue to grow over next five years, Rabobank says.

If you graph the growth chart of California walnuts from 2005 thru today, with a couple of very small dips, that production graph has gone continually upward from roughly 350,000 tons to the 2020 record harvest of 780,000 tons (based on 380,000 bearing acres).  How long can this continue?

According to Rabobank research and their 5-year Walnut Market Outlook for 2021, “While global walnut production will likely set a new inshell record during the 2020/2021 marketing year, U.S. production is already at record levels and will likely remain in check due to a lack of price incentives.  U.S. exports will continue to grow during this period, but the challenge of boosting domestic demand will continue.”

Senior Tree Nut Analyst David Magana says total U.S. walnut supplies will be about 836,000 inshell equivalent short tons. “While shipments have been strong, grower prices have been considerably lower compared to prices received during the previous crop year,” he notes.

Rabobank uses a proprietary analytical tool (stochastic partial equilibrium model — aren’t you glad you asked?) involving variables like bearing acreage, yield, age of trees, weather risk and the like that shows the 2020/2021 estimated bearing acreage increasing by only 4.1% — which is the lowest growth rate in the last five seasons.

“We expect that, on average during the next five crop years, bearing acreage may grow at modest rates dependent on pricing,” he says. “It’s also likely current low prices will create incentive to reduce bearing acreage, particularly of lower-value varieties in some areas in years to come.”

The California Walnut Board, the official body that administers the Federal Marketing Order for walnuts, is awaiting results on two fronts — a biennial election for new growers and handlers to serve two-year terms and the USDA/NASS 2021 California Walnut Objective Measurement Report, which last year was announced in late August.

The report considers approximately 1,500 trees randomly selected and sampled from seven hundred plus orchards. Two trees are selected from a random block and an accessible branch is chosen where every nut is counted, and the first of every five nuts is picked for use in sizing and grading.

Numbers rising

Last year’s survey data showed an average nut set per tree of 1,197, up a whole bunch (22 percent) from 2019’s average.

Why the numbers continue to rise is a matter of interpretation depending on what part the respondent plays in the industry. Some on the Walnut Board say the production jump isn’t a surprise and attribute it to increased acreage of densely-planted and heavier-yielding varieties.

One of the major flies in the optimistic ointment comes from the California Farm Bureau Food and Farm News showing that wild temperature swings last fall are believed to have caused widespread freeze damage in some walnut groves. Temperatures dropped from 80 degrees to below freezing in several areas, with the most pronounced swing happening in Butte, Glenn and Tehama counties, according to the Farm Bureau.

University of California Cooperative Extension farm advisors, including Luke Milliron, reported the ‘winter kill’ was severe enough to affect both young and old walnut trees, some of which “were wiped out with minimal spring leaf-out,” he said.

“I wouldn’t expect to see any problems with overall crop numbers because there’s a lot of new acreage coming online, but for some orchards, it may take years of recovery for those blocks,” he said.

TAGS: walnuts
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