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EXPERT OBSERVER
China has imposed retaliatory tariffs of between 15% and 25% on US$2.75 billion worth of US imports, including nuts, frozen pork and wine, in response to US import duties on aluminium and steel announced by the Trump administration.
The Australian nut industry, like many other primary industries, has been caught in the middle with collateral damage on this year’s crop as some sellers are no longer able to access this market.
The current trade war between China and the US may provide export opportunities for the Australian industry in the short term, provided that product from overseas is not dumped on the Australian market. In the mid-to longer-term, the industry will continue to develop stronger trade links with China to secure long term markets.
The impact on the US has resulted in additional tariffs of between 15% and 20% for their nut products entering China.
The China Australia Free Trade agreement tariffs of between 10% and 25% on Australian nuts will be completely phased out by January 2019.
China is a major buyer of Australian nuts with over $63 million in sales in 2015-16 (ABS) and solid increases in sales over the past two years.
Tree nuts are the country’s largest horticultural export forming over 50% of horticultural goods sold overseas.
China is the world’s second largest buyer of imported food after the US with over A$130 billion in 2016.
Australia is China’s sixth largest supplier of food with exports of A$5.3 billion and continued solid annual increases in double figures.
The macadamia industry is breaking into China’s growing demand for this nut with demand in 2017 at 50,000 tonnes in shell, or 26% of global demand or more than the entire Australian crop.
By 2020, about 24,000 hectares will be planted to macadamias with kernel production greater than 18,500 tonnes. Export value will exceed $280 million.
The pecan industry in the US is continuing to expand at all time high rates with record planting in southern US. Industry experts are saying plantings are sustainable, and that it will take another 30 years of planting to catch up with global demand.
The Australian industry is also seeing record plantings with new entrants into the market. The export market is chasing large nuts which is limiting the varieties planted. The area under pecans is 1,350 hectares. Production is about 3,000 tonnes in-shell (1,650 tonnes kernel).
The almond industry is forecast to harvest over 82,000 tonnes kernel weight this year which is slightly up on last year’s crop. Late season frosts have been a worry for many growers. Australia is the second largest producer of almonds in the world.
In 2015, the area under production was 31,115 hectares, producing a record crop of 82,509 tonnes.
The walnut industry is expecting a harvest of 13,000 tonnes in line with the previous year. This is a significant increase in production over 2016 of 6,000 tonnes in-shell, with a farm-gate value of $30 million and export value of $15 million.
Approximately 3,600 hectares of mature and developing trees were under cultivation in 2016. This number is expected to rise to more than 4,300 hectares by 2021 as current growers expand their orchards and new growers enter the industry in current and new regions.
Webster Limited is the largest walnut grower, owning or managing more than 3,100 hectares of orchards. When mature, these orchards are expected to produce over 18,000 tonnes in-shell per annum. The pistachio industry is expecting a harvest of 2,300 tonnes which will be a record for the industry. The area under production was 950 hectares in 2015.
Chestnuts have had good growing conditions with a crop of 1,300 tonnes expected which is in line with previous years. In 2016, chestnut production was valued at $8.5 million (LVP). In 2016 there were around 1,300 hectares containing approximately 200,000 chestnut trees. The industry estimates that with more trees planted, production will rise to approximately $9.8 million by 2020. The industry is primarily focused on the domestic market with approximately two% exported, mainly to Asian markets.
Hazelnuts have had a mixed growing season with yields of 210 tonnes expected. In 2016, hazelnut production was valued at $1.7 million (LVP). The industry is set for continued expansion with approximately 200 hectares planted, consisting of around 100,000 trees. The industry estimates hazelnut production in 2021 will be 2,550 tonnes with a value of $22.5 million. The area under production is about 1,400 hectares, including young orchards yet to come into commercial bearing.
New areas of hazelnut plantings have extended into southern New South Wales, eastern Victoria and throughout wider regions of Tasmania.
The Australian nut industry has increased revenue by 250% over the past five years and is predicted to exceed $2 billion by 2030 based on new planting and productivity research investment. The table shown is a summary of the Australian nut industry.
The long-term outlook for the industry is of continued growth with new plantings across all nut types at all-time highs. The increase in research and development dollars from industry and government is assisting in productivity gains and new marketing initiatives are targeting value adding to the raw nut product.
The industry is proactive in improved integrated orchard management techniques which are targeting canopy health, drainage and moisture conservation and plant health.
Established growers are continuing to expand their plantings and new entrants bring scales of economy to the industry.
David Nilon is a Director of Herron Todd White. 
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