Coming off a record-setting year like 2010, pecan grower and buyer Phil Arnold can only hope for a repeat in 2011.
“This past season was like a dream year for us,” says the industry veteran at Las Cruces, N.M. “We’re just coming off the highest prices ever paid to farmers for inshell pecans.”
As if that weren’t sweet enough, New Mexico growers had more nuts to sell than originally expected.
“Right now, it looks like the 2010 harvest will exceed 60 milllion pounds,” Arnold says. “That’s the largest off-year crop in history for New Mexico.”
Some growers received more than $3 a pound for their unshelled nuts, he says. Overall, he figures prices paid to western growers averaged around $2.75.
That’s nearly twice as much as two years ago when the market valued a pound of inshell nuts at about $1.50. By the time western growers harvested their 2009 crop, the price had risen to around $1.85.
Arnold attributes much of the rising pecan market to Chinese buyers. They first entered the North American market around 2006, buying some 15 million pounds of U.S. pecans. Since then, volume has increased steadily, reaching 120 million pounds — about a fourth of North America’s pecan production — for the 2010 crop. Those purchases included 85 million pounds from the U.S. and the rest from Mexico.
Western pecan producers are profiting from more than big export sales — American consumers, attracted by the health benefits of pecans, have helped bolster domestic sales in recent years.
This past season, stick-tight problems in Georgia orchards cut the state’s expected production by one-third, reducing the total from 90 million pounds to 60 million pounds. At the same time, total U.S. production last year was down by about 60 million to 70 million pounds from earlier estimates and helped strengthen prices in 2010.
Arnold doubts the current prices will hold, at least in the near term.
“As a grower, I’m very happy to see that the prices of pecans, as well as other ag products, have risen to new benchmark levels recently. Over the years, I’ve seen a lot of farmers barely make ends meet.
“But, the negative in this situation is concern about what high prices will do to consumption. I’m curious to see what happens when China comes back into the market. For the first time in the last five or six years, we’ve found a ceiling for prices in that country.
“And,” he says, “I’m extremely worried that, when American shoppers see how expensive a package of pecans is in the supermarket, they’ll turn to other products.”
“Even consumers willing to pay higher prices may not find the pecans they want because of low current supplies,” Arnold notes. “This, too, could cause pecan growers to lose market share as consumers seek other types of nuts.”
But, he expects North American pecan production to rise over the next several years. In fact, he looks for Mexican growers to harvest a big crop this year as a number of young orchards begin producing pecans. Meanwhile, attractive prices have prompted growers in different parts of the U.S. to step up planting of new orchards recently.
Assuming increased production and continued demand can support prices at profitable levels, he sees a promising future for North American pecan growers. Farmers in a few countries, like Brazil, Israel and South Africa, have begun small plantings of pecans.
But, Arnold says, “I don’t see them producing pecans in large enough quantities in the next 10 to 15 years to threaten the market position of growers in the southern areas of the U.S. and in northern Mexico.”