Understanding The Walnut Price Drop
March 2, 2016 Walnut values have dropped by as much as 30% to 50%, depending on the cultivar.
So what exactly contributed to this drastic change?
“My understanding is that it is a combination of storage overage due to the dock strikes last fall, the strong dollar reducing export opportunity, and reduced demand from China, as their economy is stressed and they focus on increasing consumption of domestic product,” says Rachel Elkins, University of California Cooperative Extension pomology farm advisor for Lake and Mendocino counties.
International demand for walnuts is currently down, but Elkins anticipates it will be strong in the long-term. “A strong dollar always hurts exports,” she says. “New markets will have to be found to at least partially offset reliance on China. The California Walnut Board is focusing more on increasing domestic consumption now.”
Interestingly, Elkins says demand for organic walnuts is remaining steady and even increasing, and organic walnut prices have not dropped the way conventional prices have. As a result, more growers in Lake County have been considering transitioning to organic acreage.
Overall, though, Elkins says the current price decline will likely mean fewer acres overall – especially of less popular varieties, such as Franquette, Poe, and Hartley.
“Another factor is the new food safety rules, which disadvantage smaller growers,” Elkins adds. “This has been a big topic recently, with or without the lower prices.”
A number of handlers will no longer accept small lots for processing due to the food safety requirements – another blow to smaller growers. “Keeping track of each lot makes it easier to just go with growers with large volumes,” Elkins says.
She notes, however, that in Lake County, costs are lower to produce the crop than they are in the Central Valley, thanks to little threat from codling moth, minimal walnut blight, and almost no phytophthora or navel orangeworm infestations.
Walnut husk fly is a concern, but it can be managed organically, she says. And, more VX211 rootstock is being planted to address lesion nematode issues. Other than that, some winter kill and minor nutritional issues are the only real problems Lake County walnut growers are facing.
As for the future, Elkins expects to see even more growers transitioning to organic production as older orchards are removed. “I expect a slowdown in planting as growers consider whether it is worth it to plant walnuts in the current marketing climate,” she adds. “However, I expect walnuts will remain an important commodity in Lake County as local growers adjust to the market.”
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