May 17 is National Walnut Day. With this in mind, we’ve sifted through the data to share five walnut facts.
The stats below paint a picture of an industry that has experienced tremendous growth during recent years – all while facing new competition for the critical export markets supporting that demand.
1. Acreage Expansion
The 2017 Census of Agriculture estimated 420,000 acres of walnuts in the U.S., a significant increase over the past decade (Figure 1), and virtually all of it is in California. Between 1997 and 2007, U.S. walnut acreage was essentially unchanged at an average of 270,000 acres. From 2007 to 2017, however, acreage increased by 152,000, or 57%.
For context, the U.S. had 2.7 million acres of nut trees in 2017. Almonds accounted for 1.3 million acres, followed by pecans (553,000), walnuts (420,000), and pistachios (335,000).
2. Where Art Thou Higher Prices?
Given the acreage expansion, it’s worth considering walnut prices (Figure 2). From 2000 to 2004, walnut prices averaged $1,200 per ton. After years of trending higher, prices peaked at $3,710 per ton in 2013. By 2015 prices slipped below $2,000 per ton and in 2020 reached $1,200 per ton. Only three other years since 2000 were prices below $1,200 per ton (2001, 2002, 2003).
3. A Big Investment
Walnut production is different from typical Midwest crops in that it is 1) a perennial crop, 2) takes several years to reach reproductive maturity, and 3) requires significant upfront investments. For walnuts, UC Davis crop budgets assume a new orchard will require more than $12,000 per acre of cash flow contributions in the first five years. In other words, the enterprise doesn’t start to become cash-flow positive until year six. Of course, the trees’ long economic life (estimated at 25 years) helps offset those upfront obligations. This sets the stage for big profits being required to incentivize producers to establish new acres. However, oversupply could be a persistent problem if the expansion results in an oversupply.
4. Growth from Exports
Since 2000, exports have been the biggest increase in usage, expanding at an average annualized rate of 6.8% over the past 22 years (Figure 3). The Rule of 72 reminds us that this rate results in a doubling every 10.5 years. Walnut exports have doubled twice since 2000.
On the other end of the spectrum, domestic consumption has increased by just 1.7% annually, doubling every four decades.
Thinking slightly differently about the data, exports accounted for 44% of total usage in 2000. Today, exports are at 70% and were as high as 77% in 2015/16.
5. U.S. Plays Outsized Global Role
The U.S. accounts for a large share of global walnut production and trade (Figure 4). Since 2000, the U.S. has accounted for roughly 30% of global walnut production but a large share of global trade. For example, between 2010 and 2016, the U.S. frequently represented 60% of global walnuts. More recently, however, the U.S. slipped to just 45% of global walnut trade in 2021, the lowest level since 2000.
For more on walnuts and global trade, click here to read about China’s boom and recent slump in walnut consumption and imports.
Wrapping It Up
For a crop that has a 25-year life, the walnut industry has had a lot of change over the last two decades. The growth in exports has been significant and shifted the composition of the market. Second, walnut prices have been full circle and, after peaking at three-times 2020 prices, aren’t much different than at the beginning of the 2000s. Finally, walnut acreage expanded by 50% along the way, although the increases occurred between 2007 and 2017 when prices were high.
Bonus: The USDA’s stats are for English walnuts. English walnuts are grown in the orchards, while the other variety, Black walnuts, are primarily wild and are native to North America. More Black Walnut facts can be found here.