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Listen to the interview or read the transcript below. You can also download the Dried Fruit and Nuts Report 2017.

Podcast transcript:

Adam Sharpe

I’m joined by dried fruit and nut market analyst, Julian Gale, to discuss the vibrant US almond sector, which has seen robust growth in overseas shipments this year as consumption increases both at home, and abroad. Julian, US producers seem pretty confident of a good year in terms of almond sales, how does the 2016-17 marketing year compare with last season, and recent years?

Julian Gale
Well in fact, it’s going great guns. It’s a very successful season that we’re in at the moment. We’re at a stage now where we’ve only got one month to go of the current season, so this obviously the 2016-17 season, and the latest figures from the Almond Board of California were released this week, and they show that the total shipments, that’s domestic, and export shipments, so net shipments are already more than 16% ahead of those at the same stage last year. So, to give an actual specific figure on that, the total we’re looking at is 1.946 billion pounds of almonds shipped, and the period we’re talking about is from August last year, to the end of June this year. That obviously being the eleven months of the current season. 

Now, digging further into the Almond Board of California data, I discovered that this was already higher than the end-season totals for each of the previous nine seasons. So, that means going back to, and including 2007-08. I don’t have the stats for any years prior to that, because those weren’t included in the latest Almond Board data that I got this week. That shows that things are very impressive, and that they are maintaining a good pace of sales growth. The other thing to bear in mind, of course, is that, obviously, in many of those years, the actual production may have increased as well, so what has happened is, as they’ve increased their production, they’ve still maintained the demand. So, whatever extra they produced, they’ve managed to find markets for, so it’s a very strong success story.

So, what effect has this upturn in demand had on prices?

Well in fact, actually, prices this year actually moved lower than those of 2016, and this helped to actually stimulate demand even further, but then, perversely, what has happened is, because of this continued demand, prices for almonds remain on the firm side. It also has to be born in mind that almonds are competitively priced relative to certain other tree nuts, and indeed, US almond producers are encouraged by this, they are very positive about this, and European traders who deal in almonds are positive about this. They site this as, you know, encouraging the outlook for future years, and certainly for the next twelve months, you know, the fact that the nut is competitively priced relative to these other tree nuts, and indeed, they site instances of it displacing other tree nuts in certain induces.

What are the big overseas markets for almonds from the US? Where is the consumption growth coming from, and what are the factors driving this increase in consumption?

Yes, well I think it’s probably best if I quote some statistics from the latest report in terms of the big overseas markets. We can see that the Asia Pacific region as a whole, that accounts for 27% of the total shipments so far this season, and the volume sold to that Asia Pacific region are up by 24%. Shipments to South Korea are 24% ahead so far, and those two, Taiwan are 28% up. India is currently at 33% higher than the same period last year, while China is at a more modest 5%. Western Europe, and Central, and Eastern Europe, they are also significant. They, combined, count for a share of 27%, that’s the share of the total exports done by California, and the shipments to these destinations are 10% ahead so far. Now, if I turn to the second part of your question, ‘What are the factors driving the consumption growth?’ One of the underlying things is the positive health message behind almonds, that has really, sort of, help string things along. 

Another key thing related to that is it’s proving increasingly popular as a snack item. To quote some research that was done by the Almond Board of California in conjunction with Innova Market Insights, this showed that nearly 25% of global snack nut products launched in 2016 featured almonds as an ingredient. Another thing is that almonds were the number one nut in new product introductions in Europe with a 48% regional share.

Another general principle, I think, which is really helping things is, not surprisingly, in view of what I’ve already said, the marketing of almonds has been extremely effective, and a great deal of credit for that must go to the Almond Board of California. You know, they really have marketed it extremely effectively, and as I was saying earlier, almond prices are viewed as a favourable level of price against those of other tree nuts, so there is a view that they will displace other nuts for snack consumption.

Okay, with these strong underlying factors, it looks, therefore as though world demand is set to continue to grow. What do you think the result will be, in terms of production? Not just in the US, but in other producers? Do you think those countries will start to produce more as well?

Yes, it’s certainly looking very likely that that will be the case. For example, Australia started a major expansion of orchard plantings last year, and according to some recent figures, these now cover more than 35,000 hectares. Now, Select Harvests, which is a company which has orchards in Australia as well as in the US, but is a major player in Australia, and that company is a key part of Australia’s overall expansion in almonds, and it has got its own area in that country entering into production over the coming years. The company has also been investing heavily in acquisitions, and improving its productivity levels, so improving yields etc. 

Also, Select Harvests, it predicts that new almond plantings in the US, Australia, and Spain will result in a 7.9% net growth per annum. We’ve also got-, Spain is a producer of almonds. Spain is also indeed an importer of US almonds. Spain is expecting a bigger crop this year. The other thing to add to all this is that, you know, although I would expect other juicing origins to boost their output. I would never see the US losing its dominant position in this global market. Particularly in view of the fact that it’s also looking to raise its production even further to meet the continual rise we’re seeing in demand.

Thank you very much Julian.

This is an excerpt from episode 5 of the Down to Agribusiness podcast. Listen to the full episode here.

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