Drought, low prices and supply chain disruptions have been plaguing California’s walnut farmers for years and a heat wave during last year’s harvest scorched the state’s groves, but ideal weather so far this year has the sector optimistic that growers are going to see their fortunes change.
“We have a lot of reasons to be optimistic that this is going to be a great quality year,” California Walnut Commission CEO and Executive Director Robert Verloop tells Agri-Pulse.
Heavy winter rains and a strong snowpack this year restored deep soil moisture that trees are drawing on now to protect against the summer heat — something not possible last year when record temperatures rendered 20-40% of the state's walnut crop unmarketable.
Baking too long in the sun turns the walnuts darker than normal; although the color doesn’t affect the quality of the nuts, it does make them look older than they are and buyers — especially in international markets — prize lighter-colored nuts, said Verloop. That meant a lot of last year’s production ended up being sold at a loss to livestock operations.
“There is a … misconception that dark walnuts are inferior,” says Don Barton, who grows walnuts, almonds and olives on 1,800 acres in Escalon, Calif. “Often dark walnuts taste sweeter. It’s something that is a matter of consumer education.”
Even the walnuts that didn’t go into animal feed have been fetching very low prices.
Around the middle of the last decade, farmers were getting as much as $2 per pound of walnuts, says Barton. That was the time of the “rah, rah” years for farmers and it seems like a long time ago, he said.
Robert Verloop, California Walnut CommissionLast year, farmers were getting an average of about 72 cents per pound — about the cost of production — and then it got much worse this year, said Verloop. Prices were cut in half or even worse.
“We’re very concerned, of course, because that has a significant impact on our growers,” he said. “It’s well below break-even and it’s not the first year we’ve had financial stress.”
Some farmers gave up, pulling up some or all of their trees. A survey conducted by the California Walnut Board from Oct. 1 last year through June 30 showed farmers had removed 23,000 acres of walnut trees during the nine months, bringing the state’s growing acreage down to 380,000.
That’s likely to drop even further this year, according to the California Walnut Commission.
“The industry will likely see additional reductions between July and December … as more growers decide to shift to other crops and the needed tree removal equipment becomes available,” the group said in a recent statement.
One of those farmers who pulled up trees is Barton. He got rid of 132 acres of trees that grew Hartley Walnuts because that variety — once the most popular — is now generally out of favor by international markets that mostly want the lighter-in-color Chandler variety.
But like many other farmers, Barton says he still hasn’t decided if he’ll replant those acres with any kind of walnut trees.
“We are waiting to see,” he told Agri-Pulse. “At least temporarily, the plan is to put in an annual field crop on that ground and then watch how things are going in the walnut industry and the recovery from historically low prices.”
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Barton says the quality of the walnuts and the prices farmers will get for the nuts harvested this year — from late August or early September through November — will be a major factor for him and other farmers as they decide on their futures in the walnut sector.
“We had very poor quality last year, brought on by a very long and hot heat wave in California from the last few days of August through the first 10 days of September,” Barton said. “We need to avoid that situation. We can’t have a repeat of that. If we have a repeat of 2022, you’re not just going to see older legacy orchards (pulled up). You’ll see removal of prime Chandler orchards … that are highly productive. There will be capitulation and the industry will get a lot smaller.”
The USDA’s Agricultural Marketing Service is already working to improve the odds for strong walnut prices by purchasing 57 million pounds of walnut kernels under its Section 32 authority, which uses customs revenues to stock food banks and other feeding programs.
That, Verloop said, will reduce the 2022-23 carryout and create record-low inventories as this year’s crop is harvested and goes to market.
Another factor in favor of strong prices for this year’s crop is India. Prime Minister Narendra Modi announced in June that the country would be eliminating tariffs it imposed five years ago on chickpeas, lentils, almonds, walnuts and apples in retaliation for U.S. tariffs on Indian steel and aluminum imports.
That will drop the 120% tariff on walnuts to 100% — the same level that India imposes on all imports — and put U.S. exports on a level playing field with competitors like Chile.
Indian buyers, says Verloop, “are cautiously optimistic about our quality (this year). They want to see it. They want to know our quality is back to what we’ve been known for and then we’ll see orders coming in.”
Furthermore, Verloop also stressed that customers in Japan and South Korea are low on walnut supplies and they are “anxiously waiting to get our crop.”
The California walnut crop is at its most vulnerable from now through harvest, but weather right now is ideal and the outlook is very good, said Verloop, who added that earlier rains and wide canopies on the trees will protect the crop from short heat spikes.
“Going into August, the on-tree quality looks phenomenal,” he said. “There are a lot of indications that show this year’s quality will be back to what California is known for — consistent size, color and flavor.”
Barton says he’s hopeful.
“We need a strong recovery in pricing for the 2023-24 season,” he said. “We think there are a lot of reasons to be hopeful … but we’ll have to see how things pan out.”
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