Nuts About Nuts
Pecan farmers probably never imagined their traditionally Southern crop would become a status symbol, associated around the world with Gucci handbags and expensive cars.
|Bill Goff and his son, Matt, own Riverbend Pecans in Lowndesboro. The Goffs are a growing part of Alabama's $8.5 million pecan industry.|
But that's exactly what is happening, and people around the world--particularly in China--will pay large sums of money for the versatile, healthy nuts grown almost exclusively in the southern United States.
"Pecans are becoming a limited commodity," said Matt Goff, manager of Riverbend Pecans in Lowndesboro. "Just like Gucci handbags, there's a limited supply of a product that is in demand. Not everyone can have them even if they wanted them, so you've got this attitude of 'I can pay for them and you can't.'"
China's growing middle class is estimated to have reached about 300 million people. To put that number into perspective, the United States' entire population is about 312 million. By 2030, some experts project 1.4 billion people in China will have a disposable income.
The explosion of new wealth in China has generated demand for products the Chinese perceive to be valuable in Western culture, said Bill Goff, Matt's father and owner of Riverbend Pecans and three other orchards in the Southeast.
"Pecans are attached to the Western culture, and they want to emulate that," said Bill, who is also an Auburn professor and pecan Extension specialist.
In 2003, the United States exported 700,000 pounds of pecans to China. By 2009, China imported 88.6 million pounds of pecans. That number is still rising, Bill said.
China's middle class isn't the only population demanding pecans.
Diet and nutrition guides are filled with advice to eat pecans, which are high in mono-saturated fats, protein and antioxidants. Recent research shows pecans are beneficial for heart and brain health, can lower cholesterol and aid in weight loss.
With high demand and a limited supply comes competition and skyrocketing prices. Chinese traders compete against each other and have begun to call growers directly about buying pecans, Bill said.
"I've never seen pecans anywhere near this price," said Ken Buck, an Irvington pecan grower and former president of the Alabama Pecan Growers Association. "The prices have greater than doubled in the last three or four years."
Before the spike in demand, pecans sold for about $1.25 or $1.50 a pound, Bill said. Now, growers are able to sell them for $3 a pound.
"Pecan growing has not been a profitable business in Alabama until recently," said Buck, who has been growing pecans in Mobile County since 1972. "Now, growers can afford to invest in their orchards and expand."
Mac Higginbotham, the Alabama Farmers Federation's Horticulture Division Director, said the increase in demand has been good for the state's economy as well as Alabama producers.
According to the USDA National Agricultural Statistics Service, the value of the 2010 utilized pecan crop increased by 57 percent to $675 million in the United States. Alabama alone utilized 5 million pounds of in-shell pecans in production, bringing the value to about $8.5 million, Higginbotham said.
"We are excited to see pecans becoming such a valuable asset to Alabama agriculture and the state in general," Higginbotham said. "Producers like Bill and Matt Goff are pioneers in the industry, and we are proud to have people like them representing Alabama in the overseas market."
During the next 10 years, the Goffs and other producers plan to improve and expand their orchards, constantly replacing old trees with newer varieties that produce more nuts at a higher quality.
The biggest challenge for producers who export their pecans, Matt said, will be to produce a consistently good product. By nature, pecans bear cyclically, meaning the trees will produce a large, low-quality crop one year and a smaller, high-quality crop the next.
The Goffs have traveled to China multiple times to meet with buyers, and they've hosted several Chinese businessmen in the states. Establishing trusting business relationships is key to being successful in the international pecan market, Matt said.
"We've been given this God-given opportunity, and if we don't keep the supply up, we'll waste it," Matt said. "And if we don't keep the quality of the product up, it'll go away. It's our responsibility as growers to continue to supply a quality product every year."