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Drought, demand from China drive up pecan prices

By Janet McConnaughey
Associated Press / November 7, 2011

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NEW ORLEANS—Expect to pay more for pecan pie this Thanksgiving thanks to drought in parts of the South and big demand from China.

The average retail price for a pound of pecans rose from $7 in 2008 to $9 last year, and it's expected to be about $11 this year, said Jeff Worn, vice president of South Georgia Pecan Co., which processes 40 million to 50 million pounds of pecans a year in Valdosta, Ga. The price increase has him and others in the industry worried that people will stop buying the nuts.

"In an already suffering economy, how long will people be able to pay that much for pecans?" asked Worn, whose customers include the Winn-Dixie and Publix grocery chains, big-box stores Sam's Club and Costco, and food manufacturers such as Russell Stover and Sara Lee.

Pecans are the only major tree nut native to the U.S., which produces about 80 percent of the world's crop. The harvest season begins in the fall in Georgia and Florida and ends in February in New Mexico. Georgia is usually the biggest pecan producer. Other top states include Arizona, Louisiana, New Mexico, Oklahoma and Texas.

Drought dramatically reduced the pecan crop in many of those states this year. Production in Texas, which has had a record drought, dropped the most, from 70 million pounds last year to an estimated 40 million pounds this year. In Louisiana, production plunged from 20 million pounds last year to an estimated 9 million pounds this year.

The entire U.S. crop is expected to be less than 252 million pounds this year, roughly 14 percent smaller than last year, according to the U.S. Department of Agriculture. Pecans are "alternate-bearing" trees, with good crops tending to be followed by smaller crops. In general, odd years should be better, according to the Louisiana State University Agricultural Center, but this year's harvest has been reduced by drought.

"I've been farming for 60 or more years, and this is the driest I've ever seen," said Ben Littlepage, a grower in the central Louisiana town of Colfax. "The bayous are completely dry."

Without enough rain, trees drop nuts early. The nuts also don't open when it's too hot and dry -- and open husks are needed for mechanical shelling.

"If they remain in that green shuck for a long period of time they sprout," Littlepage said.

He expects to get only about a quarter of his typical harvest this year.

A bigger reason for high pecan prices is strong demand from Asia. China typically buys a fifth of the U.S. crop. The nuts are especially prized during the country's two-week New Year celebration in January or February.

Pecans have been popular in Asia since growers and shellers responded to flat domestic sales with aggressive overseas marketing in the past decade. Sales in China and Vietnam climbed from less than 10 million pounds a year in the early 2000s to nearly 89 million pounds in 2009. Exports to Asia dropped some last year, but total exports rose from 143.5 million to 146.7 million, with Europe and Mexico accounting for much of the increase.

Hilton Segler, executive director of the National Pecan Growers Council, estimated China would buy 50 million to 60 million pounds of pecans this year, and other countries would buy about 40 million pounds.

Asked about her current price, Mississippi grower and retailer Suzanne Powers replied, "Are you sitting down?"

A 12-ounce bag of plain pecan halves is going for $11 at her Delta Pecan Orchard in Tutwiler, Miss. Last year, the same-size bag went for $9.50.

Farmers, however, typically get much less than the retail price. They averaged $2.30 per pound last year for nuts in the shell. This year, prices are running from $1.25 to $3.50 a pound, with most varieties starting above $2.

Worn, the pecan company executive from Georgia, said retailers who sell bagged pecans are likely to be hardest hit by increased prices. Food manufacturers who use pecans probably can manage more easily.

"When you've got an ingredient customer like Sara Lee, or let's say McKee Foods -- Little Debbie -- they're able to average that price in with other ingredients," he said.

At Ambrosia Bakery in Baton Rouge, La., owner Felix Sherman Sr. said the price of nuts is one reason he had to raise the price of a 9-inch pecan pie about 15 percent this year, to $12.95. He makes about 500 pecan pies for the Thanksgiving season and about an equal number during the rest of the year.

Sherman said prices for everything seems to be rising, so he thinks people will understand.

Pecans are "just a small luxury. It's a comfort item. And of course," he said hopefully, "Thanksgiving and all, they'd be a staple they'll have to have."

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