California Tree Nut Industries Set up Well to Handle COVID-19 Pandemic Brittney Goodrich

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California Tree Nut Industries Set up Well to Handle COVID-19 Pandemic Brittney Goodrich California Tree Nut Industries Set Up Well to Handle COVID-19 Pandemic Brittney Goodrich This article discusses the impacts of The supply chains in California’s tree shelter-in-place orders were imple- the COVID-19 pandemic on tree nut nut industries have been disrupted mented throughout the U.S., all three industries in California, specifically less than in some other crops. This is, markets saw significant increases in almonds, pistachios, and walnuts. in part, due to tree nuts being rela- domestic shipments. It’s clear that in Overall, impacts seem to be minimal tively non-perishable, which allows addition to other food staples, U.S. due to the nature of tree nut marketing for long-term storage without spoil- consumers stocked up on tree nut and mechanization along the supply ing. Additionally, logistical processes supplies. chain. associated with tree nuts (harvest, shipping, processing, etc.) are done in Figure 2 shows weekly domestic Supply Chain bulk and are highly mechanized. This wholesale prices for California tree nuts in comparison to 2019. Pistachio California tree nuts are mechanically means social distancing measures are prices showed a noticeable response to harvested in the fall and much of the easy to implement throughout most the demand increase from the pan- harvest is stored to be sold throughout of the tree nut supply chain, and labor demic. Pistachio prices in 2020 had the rest of the marketing year. Tree nut shortages have not been an issue. been below 2019 levels until the week growers typically market their produc- of March 14, when prices increased tion through handlers who aggregate Domestic Consumption by 21%. California walnut prices and sell the nuts or their processed California accounts for, virtually all have been consistently above their products. USDA production num- almond, pistachio, and walnut pro- 2019 levels, while almond prices have bers and December 2019 inventory duction in the United States and is decreased over the time period and reports for the 2019/2020 marketing the primary supplier for domestic are now below 2019 levels. Almond year showed that California growers consumption. Figure 1 displays per- prices decreased 11% between January sold over 94% of each crop to han- centage changes of domestic ship- and April. This is likely a response to dlers prior to the new year. Almond, ments by month in comparison to the the record almond crop anticipated walnut, and pistachio handlers had 2018/2019 marketing year for pista- for 2020, in addition to export demand approximately 42%, 44%, and 63%, chios, almonds, and walnuts. Nuts disruptions. respectively, of their total inventory shipped from December 2019 through left to market beginning in January February 2020, deviated slightly from In April, pistachios and walnuts saw 2020. the previous year. In March, when significant decreases in domestic ship- ments from previous years (Figure 1), Figure 1. Percentage Changes in Domestic Shipments between 2018/2019 and likely an adjustment due to consum- 2019/2020 Marketing Years, December 2019-April 2020 ers having bought large quantities of 40% December ’19 January ‘20 February ‘20 March ‘20 April ‘20 these items in the previous month, 30% as well as to relatively high prices 20% (Figure 2). Domestic shipments of 10% almonds fell in April, but not by as much—likely due to low prices. 0% 2019–20 . -10% Exports -20% For 2016–2018, nearly half of pis- tachios and roughly two-thirds of -30% 2018–19 vs walnuts and almonds were exported, -40% so export markets play a considerable -50% role in California tree nut markets. Percent Change in Domestic Shipments, Percent Pistachios Almond Walnut There have been no clear overall Sources: Author’s calculations using data from Almond Board of California Position Reports, effects across all export markets due to Administrative Committee for Pistachios Shipment Reports, and California Walnut Board the pandemic. It should be noted that Shipment Reports 12 Giannini Foundation of Agricultural Economics, University of California tree nut markets have been experienc- Figure 2. Weekly Average Wholesale Price Ratios for California Almonds, Pistachios, ing trade issues in a number of major and Walnuts: 2019 vs . 2020 markets, which make isolating effects 1 .5 of the pandemic difficult (Sumner et 1 .4 al., 2019). Walnut 1 .3 One relatively large export market for 1 .2 Pistachios California almonds and walnuts doc- 1 .1 umented sizeable disruptions due to 1 .0 the pandemic. The Indian government 0 .9 Almond issued a three-week lockdown begin- Low and High Price Low ning March 25, and confusion regard- 0 .8 ing which industries and workers of 2020 to 2019 Average Ratio 0 .7 were considered “essential,” caused 0 .6 a shortage of workers at Indian ports 4-Jan 1-Feb 11-Apr (Almond Board of California, Global 18-Jan 15-Feb 29-Feb 14-Mar 28-Mar 25-Apr Update, April 2020). As a result, Sources: Author’s calculations using data from USDA AMS Terminal Market Reports California tree nut exports to India dropped off substantially in April. No pistachios were exported to India and port facilities needing to imple- Author’s Bio in April, while almond and walnut ment social distancing measures, exports were down 52% and 12% from but given that many adjustments Brittney Goodrich is an assistant April 2019. Most of these shipments have already been made over the last Cooperative Extension specialist in were likely postponed and will be couple of months, it is unlikely these the Department of Agricultural and shipped later, but it is unclear whether disruptions will be major. Resource Economics at UC Davis. exports to India in the coming months She can be contacted at bkgoodrich@ On May 19, USDA announced details will compensate for this sharp decline ucdavis.edu. of the Coronavirus Food Assistance in shipments. Program (CFAP), which will provide Looking Ahead direct payments to producers with For additional information, losses due to the pandemic. Almonds, the author recommends: It seems probable that consumers will pecans, and walnuts are listed as Sumner, D.A., T. Hanon, and W.A. continue to eat more food at home eligible commodities. Growers can than usual in the coming months, Matthews. 2019. “Implication of apply for this funding beginning May Trade Policy Turmoil for Perennial given the recession and continued 26 through their local USDA Farm social distancing measures associated Crops” Choices. Qtr. 4. https://bit. Service Agency. Applications will be ly/2ZmOG7D with the pandemic. Tree nuts are done online or over the phone. Find considered a healthy snack by many more information about the program Administrative Committee for Pista- consumers and frequently included at the CFAP website: www.farmers. chios Shipment Reports, https://bit. in cereals, granola bars, and other gov/cfap. ly/2ZAZfnk processed foods that are consumed at home. With the shift to more food Almond Board of California Global consumed at home, consumer demand Update April 2020, https://bit. could increase for California tree nuts ly/2WWunvO in the coming months, though it is too Almond Board of California Posi- early to tell. tion Reports, https://bit.ly/3g- If a second wave of COVID-19 occurs dTWAn in the fall during harvest of tree nuts California Walnut Board Shipment in California, growers are unlikely to Reports, https://bit.ly/3bXRAC8 see too much of an impact given the mechanization of harvest. There may be issues with nut processing plants, handling and shipping operations, Giannini Foundation of Agricultural Economics, University of California 13.
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