Demand for California walnuts in markets around the world has raised walnuts to the fourth leading export from the state, valued at approximately $820 million.  The industry has experienced record growth in the last five years, breaking through the 500,000-ton barrier in 2010 to reach $1 billion in farm gate revenue. Exports now account for 60 percent of shipments with strong demand from Asia, Europe and the Middle East.

Developing export demand is one of the responsibilities of the California Walnut Commission (CWC), established in 1987 through California state law AB 547 and a referendum of growers.  The CWC began its early investment in markets that were not yet open to imports in the 1980’s.  “The Market Access Program (MAP) was designed for agricultural commodity groups, such as the California Walnut Commission, to engage in promotional activities that encourage the development and expansion of export markets,” states USDA Foreign Agriculture Service (FAS) Horticultural Crops Branch Chief Kevin Sage-EL.  “The MAP program has been critical to our industry’s export market development, funded key marketing activities to expand distribution, furthered product development and educated consumers to the many benefits California walnuts offer,” says Chuck Crain, Commission Member and President of Crain Walnut Shelling. Grant awards through MAP have contributed on average $4.5 million to partially fund the industry’s export development activities.  These funds are matched by industry contributions.

In Europe, Germany has traditionally been a top destination for inshell walnuts. However, changing consumer preference has spurred the popularity of shelled walnuts which account for much of the growth seen in recent years.  Shelled shipments to Germany increased 30 percent over the year prior.  Overall, exports to Germany have reached a record high of 82 million pounds (ISE) during the most recent crop year, making Germany the walnut industry’s number two market.

South Korea, a closed market to the industry in the early 1990’s, was successfully opened in 1995 through bilateral negotiations.  With the support of the MAP program, today South Korea imports 46 million pounds (ISE) from California, valued at nearly $70 million.  The successful negotiation of the United States and South Korean Free Trade Agreement (KORUS) in 2007, ratified by Congress last fall, which will reduce tariffs on walnuts is expected to boost exports to this market.  The shelled walnut duty will fall from 30 percent to zero over six years, with the first year’s reduction being immediate, effectively phasing out the duty in five years.  The inshell duty will fall from 45 percent to zero over 15 years.  

China increases imports

Recently, China/Hong Kong has become the leading export market for inshell California walnuts, with shipments growing to 121 million pounds (ISE), more than double the 2008/09 crop year shipments. Although China is the world’s largest producer of walnuts, Chinese exports have continued to fall while California imports have sharply increased, making China a net importer of walnuts.  Export market development activities have expanded distribution and fostered product development which has led to increased use of walnuts in the snacking, baking and processed food sectors.  Direct to consumer education of California walnuts’ quality, taste, versatility and health benefits has increased awareness resulting in greater local consumption.

The industry’s strong health research program has been key to increasing consumer perceptions of the nutritional benefits of consuming walnuts.  “Consumer perceptions are leading indicators of consumer behavior,” states CWC CEO, Dennis A. Balint.  “These indicators show demand has been increased by health messaging in all of our active markets,” says Balint.  The consumers’ perceptions that walnuts are healthy, a good source of omega-3 and a heart smart choice have risen to new highs.  “The communication of health research has proven influential in raising consumer perceptions and contributing to increased purchase and use of walnuts” states Jack Mariani, walnut grower and President of Mariani Nut Company.  “Health research is instrumental to our global promotional efforts, providing consumers with additional reasons to incorporate walnuts in their diet,” Mariani goes on to say.

Over the past 20 years, the CWC has established a health research program that has generated 74 published papers in leading peer reviewed journals.  Research has focused on key public health issues including cardiovascular disease, cancer, diabetes and cognitive function, among others.  This strong database of health research led to walnuts achieving health claims from the United States Food and Drug Administration and European Food Safety Authority in the European Union.  A robust pipeline of projects are ongoing with 26 projects in the areas of male reproductive health, cancer and diseases of aging being conducted at leading universities in the United States, Spain and Germany, among others.

The industry’s commitment to expanding its health research database and growing consumer awareness continues to yield favorable results, by increasing global consumption and fully utilizing production gains.  As the industry looks to the future, continued expansion of export markets will be critical to absorb future production gains. MAP has been instrumental in export market development efforts and will continue to be as the industry pursues emerging markets such as India. California walnuts remain a leading import in South Korea, Japan, Germany, Spain and China/Hong Kong, among many others, as a result of the industry’s commitment to increasing awareness and respective purchase of walnuts.