The gap between the supply capacity of American pecan growers and demand for pecans by consumers is expected to grow larger before growers can catch up, as new marketing monies flow into the marketing and research efforts with the passing of the American Pecan Promotion Board.
Pecan growers in the US recently completed the formation and staffing of the new American Pecan Promotion Board after an American Pecan Council board member was caught utilizing American growers monies to market pecans imported from Mexico. While the American Pecan Council was not capable of assessing pecan imports, growers went to work forming an organization that could assess foreign pecan imports, now known as the American Pecan Promotion Board of APPB for short.
The new APPB allows growers to assess pecan imports as well as pecans grown in the US which has helped level the playing field for American growers while at the same time increasing the marketing and research budgets for pecans in the domestic and global marketplace.
Based on past pecan imports, the assessments on foreign pecans should increase the yearly budget by several million dollars. The assessments are levied at $0.02 per pound of in-shell pecans or $0.04 per pound of shelled pecans.
Based on past years from 2011 to 2020 the ten year average of pecans imported from Mexico to the US is 218,105,900 pounds per year. Based on today’s assessment rates that would have allowed for an average of $4,362,118 per year accumulating to a whopping $43,621,180 over the last ten years.
An extra 43 million in marketing in research dollars over the next ten years is nothing scoff at, the implications are serious. This newly formed organization, APPB, is expected to increase demand significantly over the next few years which may serve to widen the gap between demand and available supplies.
While data on US pecan growers deliveries is more limited, we do have some data. The American Pecan Council has been collecting and revising grower delivery data for about 4 years now, and over the last three years we have seen the demand gap widen as US pecan growers struggle to keep pace with the growing demand.
Increasing pecan supply is a undertaking reserved for the experienced and the wealthy. Because commercially viable pecan operations take around 7-10 years to develop and or expand, the barrier to increasing pecan supply is high and reserved only for the well financed, and patient. Once established, commercially operated pecan orchards will long outlive their owners, however because of the hurdle to entry, the space is not expanding as fast as demand.
This is a double edged sword because while in extremely short years demand will push farmgate prices quite high, but in the long run this type of price fluctuation can be a burden on large buyers seeking to develop new products with pecans as an ingredient, making it much harder to predict raw material input costs.