America has a nut problem; oversupplied conditions with plunging demand thanks to President Trump’s trade war and the virus pandemic could prove disastrous for nut farmers this year who produce a majority of the world’s almonds, walnuts, and pecans.
Bloomberg describes a world in which an economic boom led farmers to increasingly plant more and more saplings. Several years later, these trees are now becoming nut-bearing ones, will soon increase supply at a time when the trade war has crushed demand for US agriculture products, and the virus pandemic has crashed the global economy.
Bill Carriere, a seasoned nut farmer in California, said saplings were planted about five years ago are now becoming nut-bearing ones, could produce an unusually high crop yield this year.
“It’s been five years since the last trees were planted, and now that production is hitting, and the young trees are coming on board,” said Carriere. “It’s going to be a big crop, and that will be true for the next few years.”
A bumper crop of nuts is one thing, but now the nut industry, comprising of almonds, walnuts and pecan farmers, has been at the mercy of the president’s trade war, resulting in plunging demand for American nuts.
“We’re nervous, especially for next year, with where prices are,” said Carriere, who is also on the California Walnut Board and California Walnut Commission. “They could get below the cost of production.”
America’s nut boom is becoming more and more like a nut bust. The US Department of Agriculture’s (USDA) latest crop report projects almond yields will jump 20% this year to a record 3 billion bounds. California produces about 80% of global almonds – any decline or collapse in price will undoubtedly be felt in local communities in the West Coast state.
China, and the rest of Asia, have been regularly importing US nuts over the years, but that has decreased since the trade war began, forcing Beijing to slap America’s nuts with tariffs.
USDA estimates US almond exports will reach a three year low in 2020 – suggesting supply concerns will pressure spot prices.
In addition to declining trade flows between the US and China – the coronavirus pandemic has plunged world trade into a depression.
Carriere expects more saplings will be planted on his California farm through 2022. He added:
“Once the new trees are in, you’re in for 40 to 50 years,” he said. “We’ll have to suck it up and grit our teeth and get through it.”
President Trump’s failure to sign a legitimate trade deal with China, as we now know, the phase one deal was nothing more than hype to boost the president’s election odds as Beijing had zero intention on fulfilling trade purchase commitments (in dollar amount). Nevertheless, the president is now saying the phase two trade deal is “unlikely.”
The Trump administration might to ready the next bailout to farmers, this time with maximum concentration on nut growers.