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Ag Alert Pistachio Demand, Acreage Continue to Grow

November 9, 2011

As the two-month-long pistachio harvest winds down, growers are sporting smiles similar to the ones on their unique and popular green-hued nut.

Handlers and pistachio-business leaders report the second largest crop in the history of U.S. pistachio cultivation—in an "off" year for the alternate-bearing trees. In addition, prices and markets remain strong.

Richard Matoian, executive director of American Pistachio Growers, said early crop estimates ranged from 400 million to 450 million pounds, but deliveries as of mid-October totaled 446 million pounds, with another 10 million to 20 million pounds expected by the end of harvest.

"It was a bit of a surprise to top the 450 million-pound mark," Matoian said. "But with the demand for pistachios, we see that as a positive."

Last year's record crop of pistachios totaled 528 million pounds, a significant jump from the 2009 total of 354 million pounds.

"Last year's crop was the best ever, but this is another exceptional year," reported Jeff Gibbons, plant manager for Setton Pistachio of Terra Bella.

Even with additional acreage coming into production every year, this year's crop size and quality were exceptional, Gibbons added.

"This was bigger than just new acreage coming in; we had a good production year with weather and chill hours. It really suited the trees," Gibbons said.

About 300 pistachio growers deliver nuts to Setton, the second-largest processor of pistachios in California after Paramount Farms. Gibbons said growers harvested a quality crop this year that averaged 3,000 pounds per acre; last year's crop averaged 3,900 pounds per acre.

Although the 2011 pistachio crop is smaller in size, it had a lower percentage of nuts that did not open naturally. Growers watch the split percentages carefully, because unopened nuts bring a lower return. According to Gibbons, a number of factors, including weather, determine if a pistachio nut shell will naturally split open during the ripening process. This year, 19 percent of the crop had closed shells, compared to last year's 23.5 percent.

Thanks to the continuing market value of pistachios, Gibbons said that growers are spending the money necessary to protect their harvests from pests and diseases that can lower yields and quality. Better materials to control pests and fungal disease are available and growers are more likely to use them, given good returns on their crop, he added.

Andy Anzaldo of Paramount Farms said a consistent attribute of this year's crop is size. This year's pistachios will be the largest ever—very favorable from a marketing standpoint, he said.

Nut quality is split between growing areas, Anzaldo added. On the west side of the San Joaquin Valley, the crop has low stain levels and high closed shell. On the east side, fungal disease has been more of a concern.

Strong returns to growers have kept nurseries busy propagating trees for new plantings. California pistachio acreage is near a quarter of a million acres, mostly in Kern, Kings and Tulare counties. University of California pistachio specialist Louise Ferguson characterizes pistachios as the single most successful plant introduction of the 20th century, noting that only 30 years ago there were just a few thousand acres statewide.

Prior to 2004, there was an average of 3,700 acres being planted annually to pistachios. Since that time, 10,000 to 12,000 acres of pistachio trees have gone in the ground each year.

"For a commodity that is not removing acres, that is a lot," Matoian said.

California grows 98 percent of the U.S. pistachio crop, with Arizona and New Mexico supplying the remaining 2 percent. Matoian said he sees the potential for more growth in Arizona due to lower land costs.

Although pistachios are more drought-tolerant than other nut crops, there are some issues with water availability, he said. Besides water availability, competition from other nut crops or low prices are the only threats he sees to pistachio growth.

Looking ahead, Matoian said the sector expects to harvest 800 million-pound crops by 2017.

"That's not a bad thing. There are opportunities for marketing in China, India and Europe," he said. "Returns to growers by and large have been good."

Average grower price reached a record $2.22 per pound in 2010. Paramount announced a $2.10 grower minimum this summer, but Anzaldo said that with the quality of the crop plus strong marketing campaigns, the price could increase by the end of the year.

Strong prices are the reason farmer John Konda of Terra Bella said he plans to expand his pistachio acreage. His seven-year-old trees just produced their first commercial crop, yielding nearly 700 pounds per acre. With bonuses paid by the processor as the crop sells, Konda said he expects to recoup his long-term investment after a few years.

With an average wait of seven to eight years before the trees begin to produce a commercial-sized crop, Konda said, "planting pistachios is not for the faint of heart." Still, he said he plans to add more acres based on the strength of demand and prices.

Matoian's voluntary grower organization has been involved in promotion of pistachios, including a recent U.S. Department of Agriculture purchase of 6 million pounds of pistachios for federal food nutrition assistance programs. The request to purchase the nuts was initiated by American Pistachio Growers and marks the first USDA purchase of pistachios. The group said the sale could add $24 million in new revenues to the pistachio sector.

Paramount Farms has its own marketing program that includes one and a half-ounce "snack-size" packages in convenience stores and at retail checkout stands.

Processors are already looking ahead and planning expansions to handle the larger crops. The seven large processors who handle 95 percent of the crop in California are all planning to increase capacity to meet demand, Matoian confirmed.

Credit: Western Farm Press.

About Setton Pistachio - Setton Pistachio of Terra Bella, the second largest pistachio processor in the United States, has been growing and processing pistachios in the Central Valley since 1986. Setton Pistachio has ownership in over 7,000 acres of planted pistachios and currently processes more than 80 million pounds of pistachios owned by Setton and its grower partners. Setton Pistachio provides pistachios to more than 30 foreign markets, and, through Setton International Foods Inc., distributes a variety of nuts and dried fruits to wholesalers and retailers throughout the United States.

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