Pecan Consumption Up
September 15, 2020
While the 2019/2020 marketing year will probably go down as one of the strangest in history (someone suggested that if it were a movie, it would be the equivalent of Deliverance), there were a number of positives to come out of it. First, even with the Chines/US tariff, based on USDA FAS data, overall exports remained stable at 193 million pounds (Inshell basis assuming a 50% conversion rate). Had it not been for a poor July, 2019 exports would have exceeded 2018’s figures. Not only were inshell exports up significantly to China (up 101%), they were also up in almost every major market. Inshell exports to the EU were up 81%, up 93% to the UK and up 65% to Germany. Inshell exports to Canada were up 113%. While the volumes came nowhere near to offsetting recent losses in the Chinese market, this is an encouraging trend and indicates a continued desire to purchase pecans even in the toughest of markets. (See attached graphs under the 'Market Conditions' tab in the Statistics section of this site).
Assuming a carryout of approximately 202 million pounds, US consumption was also up last year; 3.3%. Considering that an entire segment of the kernel industry was crippled by the pandemic, this bodes well for the 2020 crop year.
With respect to imports from Mexico, while Mexico produced another record crop, they exported 6.8% less to the US (300.2 million v 322.2 million). This may be because they exported 65.7% more to China (55.7 million pounds v 30.6 million).
Based on currently available information, both worldwide production and supply set new records in 2019. Barring an unforeseen natural disaster, current projections would indicate another record year in 2020.
Finally, almost two years ago, the American Pecan Council unanimously approved the first major revisions in over fifty years to both the USDA inshell and kernel standards. Unfortunately, because they have been proposed as voluntary standards, the USDA has deigned to take their time in moving the proposals through the regulatory process. In the meantime, two groups have decided to propose their own standards: The United Nations Economic Commission for Europe (UNECE) and the State of Georgia. Evidently, Germany grew tired of waiting for the USDA and pushed the UN to create a MANDATORY standard for the EU. While it is based on the 1969 USDA standard, when the USDA finally gets around to publishing the proposed US standard, the differences between the two are significant enough to not only create substantial confusion, but without a mandatory US standard, it will put US processors at a competitive disadvantage against product coming from South Africa and Mexico.
As for the Georgia standard, while it understandably tries to create a new size and grade, all it will do is confuse the buyer. With at least five representatives from Georgia on the APC board, one would have thought that the proposal would have been sent to the APC through those Georgia reps for inclusion in the new standard rather than adopting a standard that only applies to Georgia. It was never mentioned. Now the industry has four standards: the USDA standard, the Mexican standard, the UNECE standard and Georgia’s. The US is the largest processor of pecans and the world’s largest market. If the proposed USDA standard was to be made mandatory, the rest of the world will follow suit. If not, welcome to the ‘wild west.’