California Walnuts Face Threatening Tariffs

Big Challenges For the Walnut Industry

By Mikenzi Meyers, Associate Editor

It takes one glance at current news headlines to know that agriculture trade is a hot-button issue within the industry. Amongst countless exported crops being hindered by tariffs, the California walnut industry is no different. With California English walnuts making up two-thirds of the world’s trade, the California Walnut Commission is on high alert to ensure that growers are protected from tariffs that could damage their markets.

Pamela Graviet, the commission’s senior marketing director, spoke deeper on this issue.

Pam Graviet

“If you look at the three major markets—China, Turkey, and India—where we have tariff issues,” Graviet said, “that represents twenty percent of our total shipments … it’s over $300 million we’re going to lose.”

Thus far, the walnut industry has avoided paying the full tariff direct to China through the “gray market,” or the sales of walnuts through other countries that feed into China.

“But when you’re tariff constrained or in a trade war” Graviet explained, “they are also cracking down on those other routes, and the gray market has also suffered.”

The California Walnut Commission will continue their work to protect nearly 100 handlers and 4,800+ growers that make up the California walnut industry.

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Julie Borlaug Honors her Famous Grandfather

Julie Borlaug Honors her Famous Grandfather, Norman Borlaug, in Advancing Science in Agriculture

 

Editor’s Note: Julie Borlaug spoke recently at the 2016 Forbes AgTech Summit in Salinas, and shared with us the legacy of her Grandfather, Norman  Ernest Borlaug, a man who used technology to ward off starvation and the recipient of the Nobel Peace Prize, the Medal of Freedom, the Congressional Gold Medal, as well as the importance of advanced technology in Agriculture. 

 

Julie Borlaug, associate director for external relations, Norman Borlaug Institute for International Agriculture at Texas A&M University, introduced the Institute’s mission, “We design and implement development and training programs. We take the legacy of my grandfather and we carry it out through the land-grant mission of teaching, research and extension. We’re primarily funded by organizations like USAID and USDA, so we truly are a development agency.”

Here is more of what she shared:

Norman Borlaug

We all know why we care about agriculture and a lot of why we care is pretty much some of the same reasons my grandfather was up against during the green revolution. My grandfather was the recipient of the Nobel Peace Prize, the Medal of Freedom, the Congressional Gold Medal and now a statue in the National Statuary Hall at the U.S. Capitol. However, when I speak about my grandfather I like to humanize him a little and make people realize he was a normal person and that anyone can, if they’re dedicated, change the world.

Norman E. Borlaug Statue
Norman E. Borlaug Statue, National Statuary Hall, U.S. Capitol.

Growing up with him, we didn’t really know what he did. We just knew he flew through Dallas on his way to Mexico or Africa or India. In third grade, I took him to show and tell, and he was upstaged by a hamster. I think it was good for him.

When he got the Congressional Gold Medal I got to sit with him on stage and he had two minutes to talk. The entire Congress was shut down. At 10 minutes, Nancy Pelosi‘s staff [was] poking me from behind saying, “You’ve got to stop him.” I leaned forward to President Bush and I said, “They want him to stop. You’re the President.” He said, “This isn’t my thing, this is the Congressional.” Right at that point, I think we were about 18 minutes in, my grandfather said, “Poverty and hunger are fertile seeds for isms, and terrorism is one of them.” At that point Bush leaned back and said, “Don’t stop him now.”

Norman Borlaug, Congressional Gold Medal
President George W. Bush Presents Congressional Gold Medal to Dr. Norman Borlaug. Also pictured is House Majority Leader Steny Hoyer, left, and Speaker of the House Nancy Pelosi. (Source: White House photo by Chris Greenberg)

My grandfather was many things. He was a warrior against hunger, he was a teacher, but first and foremost he was a scientist. He often said, “The fear of change is the greatest obstacle to progress.” He came down on the side of innovation and was known to be bold and quick.

He was a fierce advocate for innovation and technological change, especially when it came to developing countries and small-scale farmers. His most potent view of science was that man’s most advanced knowledge and technology should be used in the battle against hunger and poverty.

Like my grandfather’s green revolution, we have a huge challenge in front of us: How to feed 9 billion people. This is going to require new economic, political policies, new rounds of innovation, of technological advancements, but most importantly in agriculture, it will require a new way of agriculture to address things.

Transformation

Norman E. Borlaug Statue
Norman E. Borlaug Statue

We have to change our thinking, we have to have new partners and we can’t be the traditional Ag and take a silo approach. We have to be interconnected, transformative, with greater transparency and we need to bring the life science technology entrepreneurs—everyone, even the medical community—to the table.

That’s one of the reasons why my grandfather’s green revolution was so successful. He realized he had to bring the government, economic infrastructure and technology together for the small-holder farmer for it truly to work, because agriculture alone cannot transform.

Like my grandfather, I strongly believe in biotechnology and innovation. I always get asked, “Can we feed 9 billion people?” My answer is yes, if we are allowed to. If my grandfather were here he’d say, “We are not going to be able to do this without science and without pushing the boundaries of innovation.”

To feed 9 billion we need to realize we have a new strain of fact-resistant humans and we have a lack of transparency, that’s all you can call them. I could call them something else, but that’s the most polite way.

Consumer Confusion

We need to realize that our consumer is very different. We have mommy bloggers, we have foodies driving the conversation and the table is moving closer to the farm. We have all the misconceptions; a backyard garden is not farming.

Pretty backyard gardens with chickens running around is not going to feed the world. It takes more than that and we have a public who thinks that’s what it is. I always ask those people, if they want to go see reality, come with me to rural Kenya and let’s ask a female farmer what she needs. It’s seeds, inputs and technology.

We also have market confusion. We have vegan green beans, we have gluten-free cranberries, we have GMO-free beef. I was at an opening of Whole Foods a few years ago and there was a North Texas cattle company that was showing GMO-free beef and I had to walk over and ask what he meant. He said, “We do not genetically modify our cattle.” I said, “Well, of course you don’t. Do you mean you’re not giving feed that has been genetically modified?” He said, “No, no, no, we do that. We just don’t genetically modify our cattle.” It was great marketing.

Julie Borlaug -2
Julie Borlaug, associate director for external relations, Norman Borlaug Institute for International Agriculture at Texas A&M University

We had GMO-free salt that sold at stores. I like that one. We have a public that believes everything on social media, especially what their 20-year-old yoga instructor says, who got a degree in nutrition online. We also have fear campaigns; look at what Greenpeace has done.

You cannot be anti-hunger and anti-innovation. If you are going to be anti-innovation, you better have a solution for us because we’re willing to accept it.

Innovation and NextGen

What’s really [fascinating] is where my grandfather would be excited about the future of Agriculture. My grandfather would be most excited about the gene revolution. We have gene-editing and synthetic biology. There are so many new solutions out there. We have a sharing economy, internet of everything, cloud biology, MachineryLink—something I’m involved in. It’s an uber platform for sharing of equipment.

In order to really get to my grandfather’s legacy, we have to remember that we are responsible for the next generation. We have to build the hunger-fighters that my grandfather built. The next generation is growing up with technology, they’re creative, they have bold ideas, they collaborate across discipline and they want change. We need to bring them to the table and support them.wheat

When my grandfather got the Nobel Peace Prize, the Chair said, “Behind the outstanding results in the sphere of wheat research for which the dry statistics speak, we sense the presence of a dynamic, indomitable and refreshingly unconventional research scientist. We still need more of those today. It’s going to be unconventional partnerships and innovations that help us end hunger. Just remember, if we don’t allow it to happen here, if we try to ban the future of agriculture and innovation, it’s just going to happen somewhere else, and I think we want that to happen here.”

If my grandfather was here he would thank you for your dedication and he’d tell you to move faster, because there are 25,000 people who are going to die today while we’re debating future technologies. I think we need to always remember that.

Before he died he said he had a problem. This was when he was told he was going to pass away, and it was 3 days before he died. My mom and I asked what his problem was and he said it was Africa. “I never brought a green revolution to Africa.”

I quickly said, “All the hunger-fighters, everyone you’ve trained, everyone in this room is going to ensure we bring a green revolution to Africa that’s appropriate for each country and each area, and we will do that everywhere.” That is what you’re doing, but remember, your innovation and technology is only good when you take it to the farmer.


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Record Walnut Crop

New Record Walnut Crop:  575,000 Tons

By Patrick Cavanaugh, Deputy Editor

 

In a recent interview with Dennis Balint, executive director and ceo of the California Walnut Board, Balint discussed the Board’s promotion efforts on what has become another record walnut crop, grown on approximately 300,000 acres in the state.

California Ag Today (CAT): Despite the drought, the valiant walnut growers of California have produced yet another record crop of 575,000 tons, up one percent from 2014’s crop, and crop quality is reported to be excellent. How does that relate to overall supply?

Balint: This increase represents 5,000 additional bearing acres. Last year, the world availability was up about 140,000 tons higher than the previous year. We knew that we could absorb incremental production of 20,000 or 30,000 tons a year; however, 140,000 tons was a bit of a surprise. Couple that with the fact that China’s economy isn’t today what it was a couple of years ago. That has hurt us a bit.Walnut trees

So at any rate, that means we are going to have a record total of availability this year, and I think we are going to see prices moderate. Now, the really good news is the industry had some foresight in approving a huge budget to market the product, so we’ll be having a serious marketing campaign in the 2015-2016-crop year.

CAT: Walnut consuming promotions?

Balint: The board will continue promoting walnuts with print and television campaigns, as well as public relations efforts through Edelman Public Relations. That will continue on two fronts; one is consumer appeal, like recipes, and just raising overall awareness regarding the versatility of walnuts; but second and most importantly, Edelman is in charged with promoting health. Health continues to be a very important card in promoting our product to consumers and health professionals as well.

CAT: It is always good that people think of health when they think of walnuts!

Balint: Yeah they do. It is amazing how that number has changed over the years.

CAT: Is eating more, better?

Balint: You know we have a daily range. When we do studies, researchers will always look at the composition of the product and, depending on what they are expecting, they will adjust accordingly. So we have studies that are based on 1 ounce, 1.5 ounces, and 2 ounces daily. So it really depends on the end points they choose to look at.

We try to never talk about compounds because we like to talk about the whole walnut, but occasionally researchers who are deconstructionists suspect a particular compound. Then we have to analyze it down to the nitty-gritty so somebody can put it in a pill. When that happens on occasion, researchers say, “Well, we really need to feed 2 ounces.” And in some cases, 2 ounces in the short-term works very well. In the long-term, being practical, 1 to 1.5 ounces is good.

CAT: Please go back to the advertising budget. Is it mainly domestic?

Balint: It is all domestic. The export program will remain intact—no changes there. We will still have good programs in a number of countries overseas, but all of the increased production is going into the domestic market.

CAT: Do we need to increase per capita consumption to handle the oversupply issue?

Balint: That is a good question. What we need is the following: We estimate, and we don’t have hard numbers, not much more than one in five households is purchasing and using walnuts on a regular basis. So that leaves a lot of room for growth. Our campaign has been designed to appeal to light and non-users, and not just the core consumer who is already loving walnuts and buying them on a regular basis, to expand our user base.  We are doing so by presenting walnuts as an ingredient in salads, vegetable side dishes, entrees, and of course as a snack. As a matter-of-fact, we are waiting on copy testing results in the next week or two.

CAT: Good. And walnuts make everything better and that’s what it is all about, isn’t it?

Balint: Absolutely. Walnuts are a little added touch that makes food not only more interesting because of the color, texture, and taste, but also because it is healthful. All of our ads are going to have the heart check logo. I want to reemphasize health research will still capture a lot of media on its own. That will continue, ‘no reduction there.

CAT: Are the ads in food or fitness magazines primarily?

Balint: Food magazines, primarily. We have four executions of print ads and two television commercials. We are waiting for the test results for the ads. The copy testing we have done also includes what the experts call rapid eye movement. By observing people’s eyes, we’ll know when consumers like or don’t like a word or a phrase, or think something is plausible or implausible. We will also know where their glance goes, how long it stays there and where it goes next.

This will help us structure the commercial to eliminate some of those “down spots” and focus on things that capture their attention. We will be reaching 95% of adults between the ages of 25 and 54 with this campaign on average 26 times per person over a period of about five months.

CAT: Wow, you are running it on some big television programs?

We’ll be going after different segments. For example, we have scheduled morning television segments like “Live with Kelly & Michael,” “Rachael” with Rachael Rae, and pillar events. A pillar event might be a broadcast on E! Network such as “From the Red Carpet at the Academy Awards” or an event in the sporting world. But that is not a focus. We will also include standard shows like “The Big Bang Theory” and so on.

Television will be in ten key markets, and I don’t have the list in front of me. But we will also continue our aggressive social media program. We have a couple of new ideas that I think will capture people’s interest.California Walnut Commission logo

CAT: Tell us about the campaign with the wrapped truck that looks like a walnut.

Balint: We converted a food truck to look like a walnut by wrapping it with walnut texture and contoured the boxy truck into a rounded walnut shape. So when it is parked in downtown Manhattan or Washington D.C., the truck with those affixed contours makes quite a spectacle.

CAT: So what were you doing with that truck? Did you hand out information?

Balint: We made information available, facilitated games, hosted walnut cracking, and most importantly, served an ice cream sandwich made out of yogurt, walnuts and chocolate graham crackers. We had samples of walnuts as well.

CAT: What is your health research strategy? Are you working with key researchers to compare eating walnuts with not eating any nuts?

Balint: Our health research strategy depends on the target. Remember, walnuts are the only good food source of Omega-3; most nuts have no Omega-3. We like to test the whole walnut in a lot of our studies. Sometimes we will find an indication that one compound is more important than another; but we recently finished a study with 27 scientists for our annual meeting. They look at what we have done, what we are doing, and what we should do next. So it is not just guesswork, it is a carefully thought-out program that focuses on areas of greatest interest to scientists.

One thing I will tell you is one day before the meeting began, we had six key scientists come in for what we call a “brainstorming session.” We asked them to tell us how to make our program better: the way we run our health research program, the way we run the conference and so on. The unanimous opinion of the six in attendance was not to change a thing. They said basically the program is a model for what should happen in health research, because we don’t go into research with a preconceived notion. We don’t go in and say, “Researcher, please raise your hand and provide us with a positive result on this disease.” We follow the science.

CAT: What are your biggest markets abroad?

Balint: China of course is huge. But other very strong markets include Germany, Japan, Korea, Spain and Turkey. China slipped this past year, of course, and we are all scratching our heads because we hear a lot about China. But their economy is a little soft. They had a crackdown on the gray market, which hurt business a little bit because some of the product that goes into China finds its way there through either Hong Kong or Vietnam. So China’s utilization this year was down. It is too early to tell whether they will return or continue at the same pace they experienced in 2014-15. We just don’t know yet.

CAT: Are you promoting the health message in these foreign countries?

Balint: Yes, and it is a really interesting situation. In countries that have a tradition of walnut-use like China, only about 40% of our messaging is health-related because they have known it is healthy for a thousand years. Whereas, in Japan, when a big story breaks accompanied by some television coverage, our sales will spike like you can’t even believe. So, it differs by market.

Here in the U.S., it is very high, as in Germany and Spain. Turkey is building and India as well, but slowly. We have some issues there; India is a market in which they too grow lots of walnuts, but we are slowly but surely making some headway.

The Korean market opened in 1994, but it was 2001 before we had any meaningful number of shipments. You have to be patient with some of these markets to be able to dismantle some of the trade barriers.

CAT: Are there any markets in South America?

Balint: Years ago, in the 90’s, there was an effort in Brazil and Argentina. Now, Chile grows walnuts, Argentina grows some, Brazil still grows a few. The Mercosur* pact down there (a special trading pack between South American countries) is a problem because the Mercosur countries trade duty-free. So we are at a disadvantage. We’re contra-seasonal. Last, but not least, we have a tariff burden. So we tried it for a couple of years, but decided there were better places to invest.

CAT: Well, it’s interesting. We don’t see South America being a big market for almonds or pistachios yet either.

Balint: It’s true; they grow Brazil nuts and, as I said, walnuts. Chile, as a matter-of-fact, is increasing their plantings. As their plantings increase, their initial sales will remain within the South American continent. When they get into the summer, especially late summer, they will sell what they have left into markets like Korea, and if they can, France and Germany. They basically go into our markets and try to sell in advance of our crop.

CAT: How are California growers doing? They are going through another year of drought, and I’m sure you are worried….

Balint: Everyone is, and we are all waiting for the other shoe to drop. Here we are with another record crop, and we know the reason for that. It’s because five or six years ago, somebody planted more walnuts, and they are coming online now. It appears as though we are trying to grow more walnuts in the middle of the drought, though the fact of the matter is those trees went in the ground long before water scarcity became as bad as it currently is.

CAT: Exactly, Fresno County just released their numbers last month and broke a record 7 billion dollars. Kern County and Tulare County broke records as well. In terms of ag value, we are not taking such a hit, mainly due to high nut prices.

Balint: Even before I was in the commodity business, I used to work for a company in Massachusetts called William Underwood Company. They had B&M (Burnham & Morrill Company) Baked Beans, Underwood Deviled Ham and other meat spreads. That is where I learned about commodities.

We had an economist on staff to predict the prices of navy beans, fatback**, sugar, ham hocks, and chicken. I learned it was much easier for the chicken guy year to year; he would just have more chickens to count! The bean people could have more beans. What about the walnut people? If the trees weren’t in the ground, they were not going to get more walnuts.

________________________________

*Mercosur or Mercosul (Spanish: Mercado Común del Sur, Portuguese: Mercado Comum do Sul, Guarani: Ñemby Ñemuha, Southern Common Market) is a sub-regional bloc. Its full members are Argentina, Bolivia, Brazil, Paraguay, Uruguay and Venezuela. Its associate countries are Chile, Peru, Colombia and Ecuador.

Source: Wikipedia, the free encyclopedia

 

**Fatbackthe fat, usually salted, from the upper part of a side of pork

Source:  Dictionary.com

 

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CALIFORNIA SUSTAINING GLOBAL ALMOND DEMAND

Domestic Consumption Greatest Source of Increased Almond Demand

 

Mark Jansen, President and CEO Blue Diamond Growers, issued a press release TODAY reporting that for the second consecutive year, domestic consumption of California Almonds is driving demand. U.S. shipments have grown 11% over a year ago, and in December they posted a 20% gain.  The U.S. is the most consistent, largest and greatest source of growth for California almonds.

Total global shipments for the month were flat to last year. Year to date, shipments exceed prior year by 6%.  We are now projecting a 2 billion pound crop, which should give the industry just enough almonds to sustain the current growth rate of 6%.

Prices are 25% higher than last year, so we are increasingly seeing which markets will pay premium prices for almonds. Sales weakness continued in two of the largest export markets, China and India. The total European region sits at 21% year to date over last year.  Spain had a particularly strong month receiving nearly 60% more volume than last year.  The Middle East is recovering, replacing last year’s losses with shipments up 28% over prior year for the month and climbing 39% year to date.
With demand for California Almonds firmly in place, prices are expected to remain solid as we progress into the bloom.

Mark Jansen currently serves on the Executive Council for the California Chamber of Commerce, is on the Executive Council for the National Council of Farmer Cooperatives, is Director, International Nut and Dried Fruit Council, and is on the Board of Trustees for the Graduate Institute of Cooperative Learning.

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