Nature's Finest Foods, Ltd.

Specializing in the markteting of tree nuts.
12/28/18

Over the past few days, I have received several calls asking why there is such a significant difference between the USDA Cold Storage and the American Pecan Council’s inventory figures.  When comparing any USDA, FAS, Market News or APC data, it is important to understand where the data is coming from.  The 1938 law that created the industry’s ability to establish a Federal Marketing Order specifically prohibits the collection of information, or assessments, from farmers whose product has not entered the stream of commerce. Only ‘Handlers’ are required to report and pay the assessment. In a year like this one, with many farmers deciding to put their crop in cold storage, that inventory will not be included in the APC data.  As such, the numbers are not going to be close.  Further, while the APC figures would appear to indicate that approximately 80% of the reported inventory is committed, that number is actually considerably less.  Based on currently available information, the committed figure could actually be closer to 70%.  The other thing to remember is that the USDA receives information from industry components outside of the pecan industry.  Data is collected from public, as well as private, cold storage facilities many of which are holding product for major retailers, grocery chains, etc.  As such, the USDA Cold Storage figures will always be greater than the APC figures.  As the APC continues to gather monthly data, it will eventually be possible to project what that difference should be.

As for current market pricing, it is important to remember that we are dealing with a commodity, a commodity which is subject to the same supply and demand parameters as other commodities.  The only difference, unlike many commodities, pecans are not listed or traded on any exchanges. Over the past few weeks, there are some segments of our industry that would like to blame other segments for the current situation.  I am not aware that any segment of our industry is capable of controlling Mother Nature or implementing tariffs. Yes, the industry lost between 70 and 80 million pounds of pecans to this year’s weather events.  However, with China out of the market, the lost pounds are roughly equivalent to what China will not be buying.  Since the industry carried out approximately 30-million more pounds than they did a year ago, and with Mexico and South Africa having produced record crops, pricing could have been a lot worse (glass half full approach). 

It is time that the industry realize that current demand cannot be met without Mexican and South African production.  Like the industry alliance reached by the American and Mexican avocado producers, the US Pecan Industry must begin to look at pecan production from a global view, not a domestic one.  Based on current production estimates, within five years, the industry could be faced with a world-wide supply of over 1 billion pounds (inshell basis).  Further, pricing cannot be based on one customer. Approximately 70% of the world’s pecan consumption is based on kernel pounds, NOT INSHELL.  Yet for the past ten years, pricing has been based on the latter. For those who pay attention to data, this market drop could have been forecast two years ago (see seven graphs under 'Market Conditions on the Pecan Crop Statistics page of this site).  It’s time for the US Grower to quit asking how the US Sheller is going to support them.  The question should be how the two segments can work together so that everyone can make a profit.

 

This website contains only pecan related statistics. For statistical information on other tree nuts, click the appropriate link(s) above.