Walnut crop may run shorter than projected

Issue Date: October 16, 2013
By Christine Souza
Walnut grower Gordon Heinrich of Heinrich’s Hulling and Dehydrator in Modesto tests a walnut to ensure it has an 8 percent moisture level, which will protect the nut during storage.
Photo/Christine Souza
Matias Garcia, huller foreman for Heinrich’s Hulling and Dehydrator releases walnuts onto a conveyer that loads them onto an awaiting truck.
Photo/Christine Souza
At the windfall stage of walnut development, ripened nuts are released from the drying green hulls and drop to the orchard floor.
Photo/Christine Souza
Nuts are about ready for harvest when the hull splits.
Photo/Christine Souza

It's a good time to be in the walnut business: That's the feeling among many California farmers as this year's harvest nears the halfway point.

Growers confirm the nuts remaining on the trees are large and good quality, and say they wish they had more to sell, to meet growing global demand.

"A long time ago in another business, I learned that being tight on stock or out of stock was a high-class problem," said Dennis Balint, California Walnut Commission chief executive officer. "More trees are going in the ground, but we need more walnuts. Demand is very strong and we want to keep it that way."

Once harvested, walnuts go through the huller, where the outer green husks are removed and the nut is mechanically dehydrated, or air dried, to an 8 percent moisture level, which protects the nut during storage.

"When the walnuts leave here (the huller), they go to a buyer or broker, who will fumigate them, size them and, in some cases, crack them for the meats. Some walnuts will be sold as meats and some will be sold as inshell," said Heinrich, who is building a new hulling facility that will handle four times the volume. "Walnuts are shipped all over the world. There are many handlers in the business and they are all competing for the product."

The key to success, according to people in the walnut business, is growing demand around the world. To help expand export demand, California walnut growers gained access to India this summer under a new phytosanitary protocol that gives walnut marketers the ability to sell to the country's growing middle class.

"The protocol was completed and regulations have gone out to the ports, so India is ready to receive walnuts," Balint said. "That's another market that's going to be accepting walnuts and of course the Pacific Rim and Asia in general has in the last few years become very important."

Sixty percent of California-grown walnuts are exported to Asia, Europe and the Middle East. The crop ranks as California's fourth-leading agricultural export, according to the commission. Tonnage sold domestically has increased by about 25 percent during the last 15 to 20 years, with California walnuts accounting for more than 99 percent of the commercial U.S. supply.

"We believe we have turned the corner. Looking at data, we saw the strength of the market all of the way back in 2000," Balint said. "Demand was good, demand was rising, but demand was not ahead of supply. Now, demand is way ahead of supply, and that's a very positive situation."

Walnut grower Mat Conant of Rio Oso said he foresees a good year for walnut growers.

"Production is down a little bit, but prices are up and the quality is good," Conant said, adding that the earlier-than-usual harvest helps in moving walnuts to ports to ship to overseas customers in time for the Christmas buying season.

"Buyers want them on the boat before the first of November, so this year, that is going to be an easier deadline to meet," Conant said.

Growers said they expect tonnage per acre will be down for all walnut varieties. Younger walnuts coming into production are doing well, but Conant said the additional production from newly bearing orchards will not be enough to make up for the overall reduction.

"We could have really used a good-sized crop this year just because there is nothing really in the pipeline to speak of to help meet demand," he said.

A lower supply of walnuts from the U.S., coupled with fewer Chinese walnuts on the market due to a freeze there, means a worldwide shortage of walnuts, Conant said. As a result, the price that California growers will earn could be higher than average, in some cases 20 cents a pound higher than last year.

"I'm hearing $2 (a pound), maybe a little more on really good quality Chandlers. Last year, the Chandler variety was $1.80 to $1.85 and that is a really good price, so I'm thinking this year we'll be seeing 20 cents more per pound for walnuts," Conant said.

Farmers have responded to the price increase by replacing other commodities with new walnut trees. Early this year, USDA reported that tree nurseries sold out of walnut varieties for this year, were backed up for 2014 and were taking orders for 2015. Walnut growers say they expect the trend of increased plantings to continue.

The walnut sector, Balint said, has created good demand in the marketplace, with dramatic increases in supply, production and price.

"What we want to do now is make the efforts necessary to keep demand ahead of supply," Balint said. "Once people have a rational belief that walnuts are a healthy food, then it is a matter of reminding them and showing them how to use walnuts, and that's where we have to go. It is a challenge for this industry in the next 10 years."

(Christine Souza is an assistant editor of Ag Alert. She may be contacted at csouza@cfbf.com.)

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