Massive financial Hit to Tree Nut Growers, but Pecans may be rebounding faster than other markets. Pecans (Carya illinoinensis) have been good to growers who are willing to wait 10 years for their investments to start paying off, but one good thing about the longer wait for commercial production may be the natural barrier it creates for market entry.
If you were fortunate enough to have had the opportunity to ride the pecan roller coaster ride over the last decade you might be thinking you have had your ass handed to you over the last couple of years and might be considering getting off and going back to the concession stand for a minute to recover from that ride.
Especially if you got on the ride before 2006. As a proud pecan farmer and part time contributor to the pecan report I try not to write about myself but I can honestly say it has felt a bit like a roller coaster over the last 2-3 years. It has only started feeling that way over the last 3 years or so.
If you have ever ridden a roller coaster you can relate. They slowly bring you up for a gorgeous view of the landscape they make you feel like you are flying and on top of the world. But then we know what happens then, you free fall for a thrilling ride of twist and turns grabbing on to anything for dear life and trying not to look stupid for the camera that gets you at the perfect moment of terror. You might even loose things on the ride. Like your sunglasses or your desire to ride roller coasters ever again.
While I have described one my fun times at a rollercoaster park in the US. I could have just as easily been describing the pecan industry from 2006 – 2017. People like myself got into the pecan industry 20+ years ago and we saw meager returns for our invest, imagine this is where you buy your ticket and stand in line for 2 hrs. Then you finally get to start harvesting on your orchard instead of only taking care of your trees, and the anticipation builds, finally your hard work has paid off you are now getting real returns for 10 years of dedication to your job, which is actually your life at this point. Imagine you’re finally get to sit down in the coaster seats and pull the bars down tight over your waist checking twice for safety, and you start the slow accent. Life is good, by this point you’re a pecan pro, not really, but you know your orchard well and you’re making some decent returns on your invest of money and time. For years for ten years straight things are good and you can buy more land and plant a few more trees only you know much more by now. Imagine you’re reaching the peak of the long ascent.
Then the FREE FALL. In late 2017 exports of American pecans all but stopped for the in-shell pecan market and life on the farm changed from making dam good money, to just paying your bills and trying real hard to find buyers for pecans in the commercial in-shell market. While we said we shouldn’t get too dependent on China at grower meetings, the hard truth is that many of us did. The best part of the story is that not all growers experience the same ride, growers who sell direct to consumers felt the fall far less than growers who relied on the commercial shelling market and China. Chinese demand was the drug and we were addicted to steadily increasing pecan prices for a decade straight. With such a small global production, when China got a taste for pecans demand could only go one way.
China is slowly getting back into the market, purchases of pecans are increasing and growers are again shipping in-shell pecans to processors in China. The middle class in China is growing fast and the economy is recovering well, with the phase one trade deal in place and the in-shell market is slowing recovering and allowing American growers to again ship pecans to China at a price point that feasible for buyers Diversification of buyers moving forward will be key to preventing such drastic swings of the in-shell market.
* [This article was updated on 7-Apr-2021]