by Hayley Boriss, Junior Specialist; Henrich Burnke, Assistant Specialist; and Marcia Kreith, Program Analyst, Agricultural Issues Center, University of California, agissues.ucdavis.edu
Revised January 2008 by Malinda Geisler, content specialist, Ag Marketing Resource Center, Iowa State University.
Overview
Two major varieties of walnuts are grown in the United States--the English walnut and the Black walnut. The English walnut originated in Iran, and the Black walnut is native to the United States. The commercially produced varieties are nearly all hybrids of the English walnut. California produces 99 percent of the nation’s commercial English walnuts with almost all production taking place in the Sacramento and San Joaquin valleys.
The Black walnut is of high flavor, but due to its hard shell and poor hulling characteristics, it is not grown commercially for nut production. The Northern California Black walnut is primarily used as the rootstock for English walnut cultivars. The Eastern American Black walnut is grown east of the Rocky Mountains primarily for wood and veneer.
Marketing
Walnuts are typically sold as a snack item or for use as an ingredient in candies, cereals and baked goods. Roughly 90 percent of walnuts are sold as shelled. Diamond Foods, a former cooperative that went public in 2005, is one of the largest U.S. processors of walnuts (ERS 2005).
The California walnut industry is made up of more than 4,000 walnut growers and about 58 walnut processors. Two main organizations oversee industry advertising efforts and regulation—the Walnut Marketing Board, established by a Federal Marketing Order for walnuts in 1948, and the California Walnut Commission, established through the California State Legislature in 1987. The Walnut Marketing Board is responsible for the U.S. quality control regulation, which mandates that all walnuts be inspected and certified as meeting strict USDA specifications. The Walnut Marketing Board also provides industry analysis and general domestic marketing services. The California Walnut Commission is primarily responsible for international market development.
Consumption
Prior to 1993, per capita consumption of walnuts remained relatively stable at about 0.5 pounds per capita. Consumption fell in 1993 to under 0.4 pound per capita, and after increasing in 1994, fell again in the two succeeding years. However, since the low in 1996 of 0.3 pound, per capita consumption of walnuts has been on the rise. In 2005 per capita consumption was 0.42 pound.
Industry-supported research found that walnut consumption provides health benefits because it is a good source of omega-3 fatty acids, vitamin E and other antioxidants associated with a healthy heart and a potential reduction of cancer cell growth (ERS 2005). The publicity surrounding these results has helped stimulate walnut demand. In addition, a 2005 report by the USDA’s Economic Research Service (ERS) suggests that the increased consumption in 2004 was due in part to the introduction of McDonald’s fruit and walnut salad, which had an impact on consumption both directly, by increasing sales, and indirectly, by reminding consumers of alternative uses of walnuts.
Exports
The United States is the world’s largest exporter of walnuts. In 2006, the United States exported in-shell walnuts valued at $118 million. Top destinations were Italy, Spain and Germany. The U.S. exported $247 million of no-shell walnuts. Top buyers were Japan, Germany and Canada.
The United States is a net exporter of walnuts, with U.S. imports of walnuts negligible in comparison, valued at $1.05 million in 2006. U.S. exports have continued to rise significantly from $148 million in 1999 to more than $241 million in 2004. About 45 percent of the 2006 U.S. crop is destined for exports. Of the U.S. walnut crop, 81.5 percent of the in-shell walnuts and 38 percent of the shelled walnuts are exported.
Supply
While the United States was the leading exporter of walnuts in 2006, China was the leading producer. The majority of China’s production is consumed domestically, but a limited amount of Chinese production meets the international standards for quality (ERS 2005). The United States ranks as the second largest producer in the world, followed by Iran, Turkey and the Ukraine (FAO).
Production
The United States produced 346,000 tons of walnuts in 2006. The value of production of walnuts in the United States has followed a clear upward trend for decades, decreasing in value from the previous year only six times since 1980, although sometimes notably. The U.S. value of walnut production in 2006 totaled $553 million.
Production of walnuts has oscillated over the last two decades but has also followed an increasing trend. Much of the variability in production is due to the alternate bearing nature of walnut trees. Similarly, yields per acre have also been variable over the years and also have shown more significant increases in the last decade. Walnut yields have generally increased from about 1.2 tons per acre in the early 1980s to around 1.6 tons per acre in 2006.
The average size walnut farm in California is 46 acres, and most orchards are family owned or individually held farms (ERS 2005). Bearing acreage of walnuts remained relatively stable from 1980 into the early 1990s. Acreage increases were noticeable after 1993, when each subsequent year acreage remained either at present levels or increased. In 2006, bearing acreage reached was 215,000 acres, up from 178,000 in 1992.
Prices
On a shelled basis, walnut prices have decreased since the early 1980 prices of almost $2.50 per pound. Prices varied in the late 1980s and 1990s between $1.50 and $2 per pound, but in 1999 prices fell to a low of $1.08 per pound. Since 1999, prices increased minimally, remaining below $1.50 for the first 5 years of the new millennium. Also since 1999, prices for walnuts have been less variable, a trend ERS attributes to continued strong demand both domestically and abroad (2005). In 2006, the season average grower price was $1.76 per pound.
Created March 2006 and revised January 2008.