There are few global industries that haven’t seen an economic impact due to the coronavirus pandemic, and nuts, as it turns out, are no exception. Healthy eating trends and diets such as keto and paleo have skyrocketed demand for tree nuts like almonds and walnuts, in particular, over the past decade. Now that farmers have finally caught up with the supply, the demand has simply vanished out from under them.
There are several very simple explanations for this. By their very nature, tree crops can take several years to grow and mature. From 2007-2019, the total acreage of all tree-nut varieties bearing fruit grew from 1 million to more than 2 million acres—which means that many of these crops planted to increase supply are just now producing nuts.
In addition to the increased acreage, ideal weather conditions and advances in technology have also helped to boost the 2020 crops. As such, the U.S. Department of Agricultural’s annual outlook report—which was published in October 2019, before the coronavirus pandemic broke out—said that almonds were forecast to reach a three-year low in the 2019-2020 season. Since almond prices have dropped so much, farmers now qualify for the Coronavirus Food Assistance Program, according to MarketScale. That could help ease some of their burden.
However, COVID-19 presented an even greater challenge to the already struggling $9.5 billion industry.
As the world’s largest producer and shipper of tree nuts, more than half of the United States’ yield is typically exported, and it relies on international trade. Not only did the pandemic slow down world trade due to bottlenecks at global ports, but President Donald Trump’s ongoing trade war with China is also fueling complications.
Whereas China was once one of the leading consumers for almonds, the country has begun growing its own crops in a move toward self-sufficiency. So it certainly didn’t help when Beijing placed tariffs of up to 75% on U.S. shipments. The coronavirus outbreak also coincided with Chinese New Year, in which nuts are commonly given as gifts. The lack of demand, as celebrations screeched to a halt, resulted in a 15% drop in pistachio exports alone.
Additionally, according to estimates by Rabobank International, almond exports are already down 25% from 2019, and other nut varieties have seen similar declines.
How farmers are already seeing the effects of a tree nut glut
Bill Carriere, a fourth-generation farmer and owner of the California-based Carriere Family Farms, told Bloomberg that his walnut trees are so ripe that his employees have resorted to pruning the ends of burdened branches so the limbs don’t break.
“It’s been five years since the last trees were planted, and now that production is hitting and the young trees are coming on board, it’s going to be a big crop, and that will be true for the next few years,” said Carriere.
“We’re nervous, especially for next year, with where prices are,” Carriere added. “They could get below the cost of production.”
Unfortunately for Carriere, he already has an order for more saplings that were placed more than a year ago. Those are currently growing in a nursery with even more to arrive in February 2022. “Once the new trees are in, you’re in for 40-50 years,” he conceded. “We’ll have to suck it up and grit our teeth and get through it.”
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