Extended drought conditions in California have done little to impact the potential of the pistachio market after Rabobank forecast producers would yield record volumes of the nut; some 1 billion pounds in 2019, despite expected drought disruptions.
This spells good news for investors with interests in the permanent crop as they can continue to feed growing demand from foreign markets such as China and Hong Kong which account for a combined 40 percent of US pistachio exports, according to Rabobank.
Drought will still impact yields over the next two to three years and this year’s crop is expected to net 500 million pounds, well below 2012’s 550 million pound production. The dry conditions mean some trees will not survive into next year, despite pistachio trees’ tendency to be drought tolerant.
“Generally pistachios need about 3 acre feet [of water] per acre to produce a normal crop, so some people are cutting acreage per tree back to 20 percent some up to 40 percent – this will affect the yield and the nut fill. It will also affect next year’s yields from those trees,” Allison Steltzner, a producer of pistachios for Wonderful Pistachios, told Agri Investor.
But pistachio farmers are doing well to mitigate drought conditions by purchasing surface level water and accessing well water, according to the report. Even if drought conditions continue into next year, Californian pistachio growers – who make up 99 percent of pistachio production in the US – are more likely to experience problems with selling into surplus markets.
The predictions came as little surprise to investors with interests in the permanent crop.
“The pistachio harvest is progressing and the crop estimates remain on target from what they were reported to be a couple of months back,” Stephen Kenney, vice president at Hancock Agricultural Investment Group, told Agri Investor. “The crop is spotty in some regions but should still be in line with the estimates.”
Prices for pistachios have fluctuated over the last five years but the average last year was $2.20 a pound.