Pacific Nut Producer Magazine

Tag: USDA Foreign Agricultural Service

  • US Japan Trade Agreement for Nuts 2021

    The U.S.-Japan Trade Agreement (USJTA) has been in effect for 16 months, however the timing of Japan’s fiscal year meant that the agreement entered “Year 3” of implementation on April 1, 2021. This report is one in a series of product briefs highlighting the tariff benefits for specific commodities and products from Year 3 (2021) to Year 5 (2023) of the agreement. Additional information is available at www.usdajapan.org/usjta/.

    In 2020, the United States exported $411 million of nuts to Japan, making Japan the #7 overseas market for U.S. nuts. Almonds and walnuts are Japan’s top nut imports from the United States, accounting for over half of Japan’s total nut and nut product imports in 2019. The years below correspond to Japan’s fiscal year beginning April 1.

    Market Considerations: Japan relies on imports for most of its nut consumption. Almonds and walnuts are supplied almost exclusively by the United States. Salted mixed nuts remain a popular snack item in the retail sector while unsalted nuts are gaining in popularity due to perceived health benefits. The United States is the second largest supplier of peanuts to Japan, after China. Under this agreement, U.S peanuts gained an immediate tariff advantage over Chinese peanuts.

    Additional Resources: Further information is available at www.usdajapan.org. For additional questions, please contact the USDA Agricultural Trade Office at atotokyo@usda.gov, Tel: 81-3-3224-5115. — By Tomohiro Kurai and Akiko Satake, USDA Foreign Agricultural Service

  • Japan Lifts Aflatoxin Inspection Order on Walnuts

    On April 1, 2021, Japan’s Ministry of Health, Labour and Welfare (MHLW) suspended a mandatory aflatoxin inspection regime imposed on walnuts from the United States and other exporting countries. The suspension marks the first time Japan lifted a 100 percent inspection requirement for aflatoxin- vulnerable imports since 2004 when the current monitoring plan was implemented. In 2020, the United States exported $114 million of walnuts to Japan.

    General

    Japan’s Food Sanitation Act designates the Ministry of Health, Labour and Welfare (MHLW) as the country’s competent authority for food safety. In that role, MHLW develops and enforces aflatoxin regulations for domestic and imported food products. Since 1996, MHLW has mandated a 100 percent hold-and-test approach (called “inspection order”) for imported tree nuts, including walnuts, due to aflatoxin concerns. MHLW justified the inspection order as a response to violations of Japan’s aflatoxin action limit (i.e., 10 parts per billion for walnuts).

    According to Japan’s “Imported Foods Monitoring Plan”, MHLW may lift an aflatoxin-related inspection order for an exporting country, whether under a country-specific or global inspection order, if one of the following conditions is met:

    1. No aflatoxin violations for two years OR for one year or longer with 300 compliant shipments

    2. Bilateral discussion after exporting country

      -Completes root–cause investigation

      -Implements preventive measures based on investigation

      -Confirms effective implementation of the preventive measures through bilateral discussions, on–site inspections, and/or a series of non–violative inspection results.

      • On April 1, 2021, MHLW lifted the global aflatoxin inspection order on walnuts because all exporting countries satisfied the first condition described above. Therefore, MHLW’s inspection schedule for U.S. walnut exports to Japan now follows Schedule 1 of the Imported Foods Monitoring Plan.

        According to MHLW, a single aflatoxin violation in walnut imports from the United States would lead to the immediate resumption of the inspection order on U.S. walnut exports. On the other hand, aflatoxin violations in shipments from other exporting countries would not impact inspection frequency for U.S. walnuts. MHLW indicated that the suspension of the aflatoxin inspection order on walnuts represents the first time since the implementation of the monitoring plan in 2004 that MHLW lifted a global inspection order imposed on imports due to aflatoxin concerns. — By Tomohiro Kurai, USDA Foreign Agricultural Service

  • US Maintains Position as India’s Top Tree Nut Importer as Demand Surges

    India’s tree nut imports continue to surge, with demand growing despite a tariff stranglehold. Consumption is growing as a result of the expanded perception of the health benefits of almonds and walnuts among middle- class consumers. FAS New Delhi forecasts in marketing year 2020/2021 Indian almond imports to reach 115,000 metric tons (MT). While walnut imports are forecast to reach 32,000 metric tons. Trade volumes can potentially be higher if it were not for Government of India imposed trade barriers (both tariff and non-tariff). 

    ALMONDS, SHELLED BASIS

    PRODUCTION:

    FAS New Delhi (Post) forecasts marketing year (MY) 2020/2021 (August-July) Indian almond production at 4,500 metric tons (MT) (kernel-weight basis), up seven percent on a year-on-year basis. More favorable weather conditions and new tree varieties are helping to increase production. Almond production is concentrated in the union territories of Jammu and Kashmir and in Himachal Pradesh. Shelling rates range between 20 and 30 percent for hard-shell varieties, and 40 percent for thin-shelled varieties.

    Post revises downward to 4,200 MT the MY 2019/2020 production estimate, down 300 MT compared to the U.S. Department of Agriculture (USDA) official figure of 4,500 metric tons. The lower number is due to an increase in the number of non-bearing trees observed, despite there being no changes in the area planted. The union territory government of Jammu and Kashmir through its Almond Development program aims to increase by 12,000 hectares the almond cultivation area, and in the process, phase in new higher yielding cultivars.

    CONSUMPTION:

    FAS New Delhi forecasts MY 2020/2021 Indian almond consumption at 125,000 MT, up nine percent from the MY 2019/2020 volume of 114,500 metric tons. The increase is due to strong, steady growth in household consumption of almonds, perceived as a healthy and immunity building snack nut at a time of expanded health concerns. A key factor facilitating driving greater consumption, notwithstanding the novel coronavirus (COVID-19) lockdown, is the rise of e-commerce platforms. With growing numbers of consumers shopping now online for groceries, almonds are making their way onto online shopping carts in greater quantities.

    With India’s middle-class (300-350 million) expansion, there is growing awareness of, and demand for healthy foods. The COVID-19 pandemic accelerated almond consumption in this country of 1.3 billion (Central Intelligence Agency – July 2020 estimate). Perceived nutritional benefits of almonds as a food ‘good for the brain’ and its ‘immunity building characteristics’ are being used to tackle the pandemic. This is resulting in fundamental changes in consumer behavior that will last even after a COVID-19 vaccine is developed. Almonds are today displacing cashews as health-conscious consumers’ nut of choice. A reliable, steady supply combined with growing consumer awareness of the health benefits of almonds, is leading to almonds expanded use as a food ingredient by the Indian food processing industry. Almonds are making their way in greater numbers into breakfast cereal bars, snack foods, beverages, and confectionaries manufactures, as well as the in personal care industry (utilizing almond oil).

    PRICES:

    India is price-sensitive consumer market. Consumers favor affordably priced almonds, and in particular, quintessential California non-pareil almonds that are uniform in size and ‘eye’ shaped and count with the sweetness desired. Australia-origin non-pareil almonds and Carmel (often used for blanching and roasting) varieties account for a growing segment of the market. Iranian Mamra and Oumi varieties are popular in India’s western and northwestern regions (i.e., the National Capital Region – New Delhi, Rajasthan, and Gujarat) and often command price-premiums.

    Favorable Californian crop production and ample supply along with COVID-19 containment measures are driving down almond average prices compared to MY 2019/2020. Almonds will command higher pricing once the Indian hotel-restaurant-institutional (HRI) sector’s own demand for almonds picks up in 2021/2022.

    TRADE:

    FAS New Delhi forecasts MY 2020/2021 Indian almond imports at 115,000 MT, up nearly 10 percent from the USDA official MY 2019/2020 estimate of 105,000 metric tons. Post’s earlier MY 2019/2020 estimate is six percent higher compared to the previous year despite an increase in the basic-customs-duty (see PIB and GAIN-INDIA (IN2019) Government of India – GOI Raises Tariffs on Specific U.S. Ag Products (June 16, 2019). Although shipments of almonds to India increased between January and August 2020, the post-Diwali festive season (when demand for tree nuts normally peaks) will be a bit leaner this year compared to 2019.

    U.S.-origin almonds account for 81 percent of India’s total import volume in MY 2019/2020; Australian almonds come in second with seven percent of the import volume. Almond imports from the United States and Australia are in shell, non-pareil or Carmel varieties, and are shelled locally (machine cracked and hand sorted); other origins supply shelled almonds. Packaged almonds only account for 10 percent of retail sales.

    FAS New Delhi forecasts MY 2020/2021 Indian almond exports at 200 MT, down by 20 MT or nine percent lower compared to the MY 2019/2020 estimate. India’s exports of almonds remain negligible. Exports in MY 2019/2020 are estimated at 220 MT; with the United Kingdom (28 percent), Nepal (14 percent), and the United Arab Emirates (13 percent) being the main export destinations by volume.

    POLICY:

    India does not set quantitative restrictions on almond imports. U.S.-origin almonds, however, face retaliatory tariffs of India rupees (INR) 41/kilogram (kg) (in shell basis) and INR 120/kg (shelled basis). (FOREX: INR 73.92 to $1.00).

    On May 23, 2018, the Indian government issued notifications announcing an increase in the basic-common-duty on several imported agricultural products, including shelled almonds. The tariff increases are applicable to all third-country suppliers. The tariff on shelled almonds increased from INR 65/Kg to INR 100/kg, and significantly restricts trade (see GAIN-INDIA (IN2018-8067) Government of India Increases Tariffs on Certain Agricultural Imports (June 7, 2018). 

    Non-tariff barriers include a third amendment to the Almond Kernel Standards, published by the Food Safety and Standards Authority of India (FSSAI) on August 14, 2020. The standards’ implementation date is set for July 1, 2021 (see GAIN-INDIA (2020-0103) Almond Kernel Standards and Other Various Food Products Published in the Indian Gazette (August 24, 2020).

    Industry sources indicate that the proposed almond kernels standards are too prescriptive to be widely applied across multiple commercial grades. Proposed quality/grade factors pertain to commercial contracts and should not form the basis for import or retail controls. Traders sustain that there is a need for flexibility in grades to account for varying commercial situations, including varietal differences, crop quality variability, and pricing differentials. For these, physical parameters such as damage and the presence of foreign material should not form the basis of import controls.

    Despite these challenges, FAS New Delhi continues to identify market development opportunities, particularly among markets serving children, young adults, and the growing urban work force. Additional opportunities exist with medium- and large-scale bakeries, boutique/artisan patisseries, food processors, such as cookie manufacturers and breakfast cereal companies, consumer packaged goods, and institutional end users. Regions in southern and eastern India offer new, worthwhile marketing opportunities.

    WALNUTS, IN SHELL BASIS
    PRODUCTION:

    FAS New Delhi forecasts MY 2020/2021 (September-August) Indian walnut production at 35,000 MT (in shell basis), a volume largely unchanged from the previous marketing year’s estimate. Indian walnut production is cyclical in nature and yields can vary by as much as 20 percent, depending on weather conditions at the time of blossom and harvest.

    India’s walnut harvest runs from late August through September, with market arrivals peaking in late October. Walnut production is concentrated in Jammu and Kashmir, Himachal Pradesh, and Uttarakhand. Lack of adequate infrastructure in the production areas, long gestation periods, poor orchard management, and uneven yields limit India’s walnut production. India produces hard, medium, or thin shell (kaghazi) walnut types, with an average shelling rate of about 40 percent.

    CONSUMPTION:

    FAS New Delhi forecasts MY 2020/2021 Indian walnut consumption at 60,000 MT, roughly 20 percent above its MY 2019/2020 estimate of 50,000 metric tons. Increases in consumption levels is attributable to greater at home consumption of walnuts during the COVID-19 pandemic outbreak in pursuit of health-related benefits.

    Higher walnut consumption stems from the growing perception among Indian middle-class consumers that walnuts help to reduce cholesterol, improve brain health, and lower risks of diabetes, among other health benefits. The Indian government’s FSSAI issued the public guidance document titled “Eating Right during COVID-19” encouraging the intake of walnuts for their nutritional benefits (especially as it pertains to Omega- 3 fatty acids, Vitamin B-9, Protein, Zinc, and Selenium concentrations). With people confined to their homes during the lockdown, consumption of walnuts increased significantly in 2020. 

    Indian walnut consumption is growing steady since MY 2015/2016 through MY 2019/2020, by almost 15 percent. Strong growth is indicative of the presence of a consistent supply to meet strong domestic demand. Packaging innovations (e.g., vacuum-packed bags, combined with attractive product packaging) is improving the shelf life and quality of walnuts, while encouraging year-round consumption. The rise of new distribution channels such as e-commerce websites are driving consumption and availability of walnuts. Between 70 and 75 percent of Indian walnuts are consumed domestically, and more than half of Indian walnuts are consumed during the holiday, festive, and winter seasons. Industry sources estimate that roughly 17 percent of walnuts go into food processing, with another four percent crushed for the personal care industry.

    PRICES:

    Domestic walnut prices were weak from January 2019 to September 2019. Prices saw improvement during the peak 2019 demand period towards the end of the year, with the upward trend in prices running through 2020. In the wholesale market, imported walnut (in shell) prices in 2020 range INR 52,500 ($710) to INR 60,000 ($812) per 100 kilograms. (FOREX: INR 73.92 to $1.00).

    TRADE:

    FAS New Delhi forecasts MY 2020/2021 Indian walnuts imports at 32,000 MT, up nearly seven percent or 2,000 MT greater than the USDA official 2019/2020 estimate of 30,000 metric tons. The United States will remain the dominant supplier with a 54 percent market share, followed by Chile at 40 percent.

    India is primarily an in shell walnuts market. Trade sources indicate that Indian imports of in shell walnuts grew 46 percent between January and August 2020, while shelled walnuts imports rose by an astonishing 329 percent during that same period.

    FAS New Delhi forecasts MY 2020/2021 Indian walnuts exports at 4,000 MT, up 800 MT or 25 percent higher than the USDA official MY 2019/2020 estimate of 3,200 metric tons. Indian walnuts exports declined in MY 2019/2020 due to high domestic demand for product, which will ease somewhat this year. Walnuts from India will make their way again to the traditional export destinations of France, the United Kingdom, and Germany. 

    Over 95 percent of Indian walnut exports go out as kernels in vacuum packs (35-40 percent light halves, 35-40 percent amber halves/light broken, and the remaining balance as amber halves). Market sources report that Indian walnuts compete with those from the United States, Mexico, Chile, Turkey, China, and Ukraine.

    TRADE POLICY: 

    India’s Open License program permits the import of walnuts without quantitative restrictions. In shell walnut imports, however, are subject to a 100 percent tariff, and shelled walnuts are similarly subject to a 100 percent tariff (effective February 2020). Afghanistan-origin import shipments face a lower, 50 percent tariff due to the enactment of the Indo-Afghan Preferential Trade Agreement.

    India is implementing a retaliatory tariff on U.S.-origin walnuts at 20 percent above the applied basic-common-duty of 100 percent. U.S. shipments of walnuts suffered from this measure in MY 2018/2019. However, California walnuts remain in the Indian market, counting with high consumer demand to help drive volumes.

    Post identified non-tariff barriers to trade include the Walnut Kernel Regulation published by the Indian government’s FSSAI on September 3, 2020 (see GAIN-INDIA (2020-0121) FSSAI Proposes Draft Standards for Walnut Kernels and Other Various Food Products). The effective implementation date is either January 1, 2021, or alternatively July 1, 2021, depending on when the amendment is published in the official gazette. The published standards are non-transparent, ambiguous, and likely difficult to adhere to; particularly as it pertains to moisture levels, foreign matter, damaged units, acidity, color, acid-insoluble ash, and extraneous vegetable matter. These standards deviate from globally established practices.

    India, given its huge market size, and despite the challenges, remains an attractive market especially as it relates to the Indian sweets and snacks industry. — By Ankit Chandra & Mariano J. Beillard, USDA Foreign Agricultural Service

  • EU Once Again Largest Importer of California Tree Nuts: USDA-FAS Report

    Last year, the European Union-28 (EU-28) was once again the largest export market for U.S. tree nuts. In 2018, U.S. shipments of tree nuts to the EU-28 reached $2.8 billion. U.S. almond sales (both in-shell and shelled) totaled $1.6 billion, followed by pistachios with $516 million, and walnuts with almost $344 million. The growing popularity of healthy snacking, higher incomes, and global market dynamics are making the EU nut market more attractive than ever. As of December 14, 2019, a new framework Regulation (EU) 2017/625 will update the implementing regulations setting specifics on the recognition of the Pre-Export Check (PEC) program for almonds, and on the increased control levels for pistachios. Read the Full Annual Report from the USDA Foreign Agricultural Service HERE.

  • Almond Industry Receives $6,900,690 in USDA Funding

    USDA Awards Agricultural Trade Promotion Program Funding

    U.S. Secretary of Agriculture Sonny Perdue announced today that the U.S. Department of Agriculture (USDA) has awarded $200 million to 57 organizations through the Agricultural Trade Promotion Program (ATP) to help U.S. farmers and ranchers identify and access new export markets. The ATP is one of three USDA programs created to mitigate the effects of unjustified trade retaliation against U.S. farmers and exporters. USDA’s Foreign Agricultural Service (FAS) accepted ATP applications between September 4 and November 2 – totaling nearly $600 million – from U.S. trade associations, cooperatives, and other industry-affiliated organizations. The Almond Board of California will receive $3,185,690 and Blue Diamond will receive $3,715,000.

    President Donald J. Trump authorized up to $12 billion in programs to provide assistance to U.S. agriculture through a trade mitigation package announced by Secretary Perdue on September 4, 2018. In addition to the $200 million allocated to the ATP, the package also included the Market Facilitation Program to provide payments to farmers harmed by retaliatory tariffs, and a food purchase and distribution program to assist producers of targeted commodities.

    “At USDA, we are always looking to expand existing markets or open new ones, so we are proud to make good on the third leg of the President’s promise to America’s farmers,” said Secretary Perdue. “This infusion will help us develop other markets and move us away from being dependent on one large customer for our agricultural products. This is seed money, leveraged by hundreds of millions of dollars from the private sector, that will help to increase our agricultural exports.”

    All sectors of U.S. agriculture, including fish and forest product producers, were eligible to apply for cost-share assistance under the ATP. FAS evaluated applications according to criteria that included the potential for export growth in the target market, direct injury from the imposed retaliatory tariffs, and the likelihood that the proposed project or activity will have a near-term impact on agricultural exports.

    “We were pleased to see the large demand for participation in the program, and truly got some out-of-the-box ideas that we are hopeful will expand our global footprint,” Perdue said. “We examined all applications carefully, considered our ranking criteria, and awarded the funds in order to make the best use of taxpayer dollars in growing agricultural trade.”

    The Almond Alliance of California plans to continue to advocate for the $63.3 M in retaliatory trade damages assigned to the almond industry by USDA.  We will keep you updated on our advocacy efforts and how you can be supportive.