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California walnut sales get cracking after tough 2008

Soaring demand from overseas is boosting the market, which nearly collapsed last year because of the global credit crisis.

December 26, 2009|By Reed Fujii

California's walnut industry dived off a bridge last year, only to stage a bungee-cord rebound as it now sets sales records month after month, growers and processors report.

Growers harvested a record-shattering 2008 crop of 436,000 tons, only to have the market nearly collapse in the face of last year's global credit crisis. Demand came roaring back in the spring, however, and has remained strong since.

"We had 70,000 tons shipping in the month of November. The highest we ever had before was 48,000 tons," said Pete Turner, chairman of the California Independent Handlers Coalition.

This year's recently completed walnut harvest is expected to top 415,000 tons, although industry insiders say the final tally might be closer to 425,000 tons. Either way, it would be California's second-largest crop ever.

That is having little effect on prices or demand.

"The world financial crisis just killed us," Turner said. "But it came back, and we moved the crop.

"We've almost shipped half the crop already," Turner added.

Increases in demand are coming primarily from Turkey, China and South Korea; other countries, such as Italy and Germany, also are purchasing record tonnage.

Jerry Barton, a Ripon walnut grower whose family operates Gold River Orchards, a nut processor in Oakdale, said he had never seen as severe a price drop as in November 2008 or as strong a recovery as this year.

"It's been a little bit of a roller coaster; but boy, I'll tell you, it's great to see things turn around," Barton said.

The rapidly growing middle class in China, as well as a short walnut crop in that country, may be contributing to the demand for California's walnuts.

"That has a lot to do with increasing the demand in Europe, because China is using almost all of their own crop," Turner said.

Last year's low prices, coupled with a weak U.S. dollar making California commodities relatively cheaper for foreign buyers, also may be a factor, Barton said.

"In a way, it may be that some of these markets got started because of last year's depressed prices," he said. "Once they saw the quality and realized they were doing business with reputable handlers, they came back again and much stronger than they did last year."

So far this year, shipments of California walnuts are up 50% compared with last year. Prices, too, are stronger.

Walnuts are San Joaquin County's third-most-valuable commodity, with the total crop worth an estimated $178 million in 2008.

Fujii writes for the Record in Stockton.

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