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Over the past decade, demand for almonds, walnuts, and other nuts has boomed. This is largely due to people turning to nuts and products made from nuts for healthy, high-protein snacks.
Nut groves take time to grow, so farmers could not respond to rising demand immediately. Five to 10 years ago, farmers ramped up planting—and this year, they are seeing results. Growing conditions were particularly favorable this year, which is also boosting the supply of tree nuts. America’s almond crop is expected to hit a record 3 billion pounds this year, up 20% from last year. Pistachio growers are expecting a 1 billion pound harvest, which is a new record. Other nut industries are seeing similar growth in supply.
However, the timing of this supply boom is causing problems for farmers. Because international trade, especially with China, has been limited, the price of nuts is sinking.
The US grows and ships more tree nuts than any other country in the world. Normally, more than 50% of the US’ nuts are exported. However, international trade has slowed this year and almond prices are down 25% from a year ago.
China is normally one of the main destinations for American tree nuts. However, as tensions between China and the US rise, China is moving toward growing its own crops and putting tariffs as high as 75% on US products.
Typically, Lunar New Year in China is a big moment for the global nut industry because people buy boxes of nuts to give as gifts. Because the holiday this year took place during the height of the coronavirus pandemic in China, the nut industry took a hit. Because the holiday was so different from normal years, the pistachio industry saw a 15% dip in shipments.
The $9.5 billion nut industry may struggle with sinking prices for some time. The supply of nuts is very inelastic, meaning it is hard for farmers to quickly respond to changes in demand. Trees take years to mature and produce crops. Once trees are full-grown, they live for about 40 years, and farmers can’t control how many nuts they produce.
Marketing efforts are the main way the nut industry can control demand. Demand for plant-based protein is growing rapidly, and hopefully nut farmers’ high-yields this year will be able to capitalize on that trend.