APC Data Sheds New Light on USDA NASS and FAS Data Deficiencies
November 07, 2018
Having had a few days now to evaluate the recently released American Pecan Council figures for September 2018, as well as last month’s release of the 2017 crop totals, it would be fair to say that the American Pecan Council (APC) is going to be very busy meeting with NASS and FAS. Comparing recently released APC data to the USDA NASS and FAS numbers for the same period, it would appear that the US has not been shipping as much inshell to China as has been assumed. According to FAS, the US Pecan Industry shipped approximately 81 million pounds of pecans to China in 2017 (inshell basis). However, based on APC figures, only 44.6 million pounds of the 81 million pounds were actually US pecans. How could that be? Mexico has been shipping much of their Chinese exports through the US; in particular, the port of LA/LB. As has been mentioned before, FAS currently has no means by which to identify the country of origin for inshell being transshipped from Mexico to China through the US. They consider the product as a US import when it enters the US and a US export when it leaves. Numerous discussions with the Department of Commerce to establish a harmonized code (HS), or a process by which to identify the country of origin, have been fruitless (no pun intended). Why is this important? If Mexico really did ship 36.4 million pounds of inshell to China through the US in 2017, then the impact of the Chinses tariffs on the US Pecan Industry was not the loss of approximately $220 million in sales but only $121 million. Further, this would also change the consumption estimates and explain why there were more pecans available for sale than what was originally calculated. When you add the fact that the USDA NASS only estimates the size of the crop based on the eight largest producing states, as wells as the double counting of inshell going to Mexico to be shelled and returned to the US for sale, is it any wonder why the industry has a difficult time determining a fair price to charge for their product? This is the type of data that should help the APC during their discussions with the Department of Commerce relative to the establishment of additional HS codes.
Another area where the data should be of assistance is the newly available data on US inshell being shipped to Mexico for shelling and then returned to the US for sale. Based on FAS September data, inshell exports to Mexico totaled 4.8 million pounds. According to the APC, 3.1 million pounds of that was basically work in process; US inshell being processed for resale in the US. If that trend was to continue, it would prove that the bulk of US inshell exports to Mexico are not really exports thereby greatly reducing the perceived impact of Mexican purchases on the US market. Again, this is data that shows why the Department of Commerce needs to establish a new HS code, or some other process with which to account for US inshell that is in reality ‘work in process.’
USDA Cold Storage figures are another area that needs to be addressed. In August, NASS showed 169.4 million pounds in Cold Storage. The APC data showed 108.1 million (inshell basis). In September, NASS showed 169.4 million pounds; APC 112.6 million. While two months of data is not enough to draw any firm conclusions, if the trend continues, the industry should expect to see a monthly difference between the two of approximately 40%. Why the difference? NASS collects data from more than just handlers. Further, growers that have not put their product into commerce are not required to report to the APC. With the new data, APC discussions with NASS should allow the industry to gain a better understanding of where NASS is getting their data.
Speaking of exports, on the surface, it would appear that US exports continue to trend higher. Overall, exports appear to be up almost 35%. However, a deeper dive into the numbers shows that the bulk of the inshell exports were actually US Inshell ‘work in process.’ Adjusting the figures to remove the double counting, the actual increase is much closer to 25%; still good, but as stated above, an issue that needs to be addressed.
Finally, Mexico continues to export a record number of pecans to the US. Through November 5th, imports from Mexico are 45.6% higher than the same period a year ago and 29.3% ahead of 2016’s record shipments. While much of this may be due to weather related delays in the US harvest, should the trend continue, it would indicate that the Mexican crop is much larger than originally forecast.