Prices soar as pecan-hungry exporters gobble up U.S. crops

FORT WORTH, Texas – Pecan prices are expected to approach record levels this fall, thanks to a slightly off year in production – down an estimated 20 million pounds or 7 percent from 2009 – and gargantuan demand from China.

The Chinese appetite for pecans exploded in 2007 when rising walnut prices made them a relative bargain, said Joe Pena, an agricultural economist with the Texas Agri-Life Extension Service. U.S. shipments to the world’s most populous nation more than doubled to 25 million pounds, up from 9.2 million the year before.

A decade ago, there was hardly an American pecan on the Chinese market. Last year, U.S. shipments to China soared to 88.6 million pounds, up from 44 million pounds in 2008.

Despite higher prices, the increasingly affluent Chinese middle class still considers the imported nut a bargain compared with a native hickory nut, said Cary Millstein, a U.S.-based pecan buyer for a Hong Kong-based importer, the Welming Group.

And that’s music to the ears of American growers, who supply a whopping 77 percent of Chinese imports, with Mexico and Australia splitting the rest.

“It’s not a one-time deal,” insists grower Danny Davis, a co-owner of the Texas Pecan Co., based in the Central Texas town of Comanche. “This is going to be a lasting market for us.”

Pena says that the U.S. pecan market remains strongly under the influence of five large shelling companies but that Chinese demand has kept a steady upward pressure on prices.

The effect will be felt in the aisles of American supermarkets, translating into increasingly higher prices for bags of whole pecans and pieces this year, he predicted. Already, retail pecan prices at one major chain are up 15 percent.

The Chinese process the pecan as they do a native hickory nut: cracked slightly by hand by row upon row of workers, then marinated in vats of flavored brines, which vary by region. They are dried, packed in cellophane bags and sold as a healthy snack food, Millstein said.