Forces combine to shorten pistachio crop


Issue Date: October 7, 2015
By Christine Souza
Jeff Gibbons, plant manager of Setton Pistachio of Terra Bella, takes a sample of pistachios to check the quality of the crop. California pistachio growers report shells without kernels inside, or blanking, which is expected to contribute to a smaller-than-anticipated crop this year.
Photo/Cecilla Parsons
Jeff Gibbons, plant manager of Setton Pistachio of Terra Bella, cracks open a pistachio to check the quality of the kernel inside.
Photo/Cecilia Parsons

California pistachio harvest is in full swing but as nuts are shaken from the trees and collected, some growers report blanking, or shells that contain no nuts, contributing to a smaller-than-expected crop.

Jeff Gibbons of Setton Pistachio of Terra Bella puts it bluntly: "It's the worst crop we've ever experienced."

Gibbons, plant manager for the family-owned company that grows about 10,000 acres of pistachios and processes pistachios for itself and other growers, attributed the smaller crop to three factors.

"One: There wasn't enough winter chill, so the trees did not receive enough rest," he said. "Two: It was real warm during the bloom and this made pollination unviable, and three: There is the drought."

Dealing with a fourth drought year, Gibbons said, Setton Pistachio suffered another year of a zero federal water allocation in areas such as Terra Bella, and that increased the purchase price for water—if any could be found. In addition, the warm winter and lack of fog meant pistachio trees didn't gain the required 800 hours of exposure to temperatures colder than 45 degrees, needed to help set the crop.

"The last bad crop that we had due to lack of winter chill was in 2003, and the winter chill this year was significantly worse than it was in 2003," Gibbons said.

Richard Matoian, executive director of American Pistachio Growers in Fresno, explained that with low chill hours, "the net effect for pistachios is the male and female trees do not bloom and do not receive the pollen at the same time; one blooms sooner than the other, and pollination does not occur."

Matoian noted that last year's crop was 520 million pounds. Pistachio trees generally have smaller crops in alternating years, and 2015 was expected to be an "off" year.

"We knew this year was going to be an off year. We had no idea it was going to be as off as it is," Matoian said, noting that this year's production could drop to 300 million pounds or less, a prospect he described as "very disappointing."

He said the blanking problem has been "hit or miss," depending on where trees are located, adding that in some of the worst cases, farmers reported blanking in 50 percent to 70 percent of the crop.

"Some growers had what they expected in an off-year crop, and then a field down the street only had a few hundred pounds per acre," Matoian said.

During harvest, Setton Pistachio usually has about 200 truckloads a day coming to the plant and now because of the reduction in the crop size, Gibbons said, the plant expects only 100 truckloads a day. With capacity lower than usual, a second plant west of Terra Bella is not being used.

As a result of the small crop, Gibbons said Setton Pistachio—which typically sells half its nuts domestically and half to export—will divert more pistachios to the domestic market.

"We want to protect our domestic market," Gibbons said. "Europe and China are our biggest export markets. Given the size of this year's crop, there's not a lot of the extra-large pistachios, and we usually ship those to China."

Top export destinations for U.S. pistachios are Asia, Europe and the Middle East, but demand by China—the No. 1 market for U.S. pistachios, Matoian said—is slowing for a number of reasons.

"Part of it is the downturn in their economy, part of it is the strength of the dollar, but another part is our chief competitor, Iran, had its largest crop in 2014, so they supplied a large portion to the Chinese market," Matoian said.

He also cited the West Coast port slowdown earlier this year, which came during peak shipping season for Chinese New Year. Because Chinese customers were having trouble getting pistachios from California, they sought nuts from Iran. That, Matoian said, "affects the immediate sale and future sales, because they may now establish a relationship with a (supplier) from another country, so we may lose that customer."

Given the small pistachio crop , Gibbons said he believes growers should expect prices to reach an all-time high. Last year, the grower price was around $3.50 per in-shell pound. There will be no word on this year's final price until more of the crop is harvested, Matoian said.

Ali Amin, president of Primex Farms, a company that grows nuts in Kern and Madera counties and operates a processing facility in Wasco, said the smaller crop and resulting higher prices could affect shippers' ability to maintain foreign markets.

"Markets are going to be challenging and unknown," Amin said. "We are setting new record prices and also with the devaluation of foreign currencies, specifically in Europe, it makes it even more expensive for them."

For the domestic pistachio market, Matoian said demand appears to be steady, but has slowed a bit because customers are sensitive to price increases. Selling pistachios as a snack nut has always been the sector's primary focus, but shelled nuts or kernels purchased for use as ingredients are gaining in popularity, he said.

"Kernel sales continue to increase. Whether it be crushed and made into energy bars, we are seeing more of it utilized as an ingredient," Matoian said, adding that uses for salad toppers or baking have also increased.

Matoian said American Pistachio Growers intends to continue its marketing programs in the U.S. and around the globe, to accommodate anticipated production increases. Two seasons ago, Matoian predicted the pistachio crop would reach 1 billion pounds by 2020.

"We need to continue marketing our product because we need to prepare for the large crops that are coming," Matoian said. "If the right conditions occur—cold wintertime temperatures, adequate water and normal growing conditions—we will be inching very close to a 1 billion-pound crop by 2020."

But based on what happened this season, he said, that "could be further down the road than what we initially thought."

(Christine Souza is an assistant editor of Ag Alert. She may be contacted at csouza@cfbf.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.