India. Tree Nuts Annual. Sep 2013 Nov. 10, 2013
Post expects that Indian almond imports will decline for a second consecutive year as higher prices inhibit demand. Almond imports will be upwards of 63,000 metric tons (MT) (in-shell basis) in marketing year (MY) 2013/14 (August/July), a five percent decrease over the previous year and a 16 percent decrease over MY2011/12. Indian walnut production is forecast at 40,000 MT (kernel weight basis), an increase of 11 percent over the previous year. Rising domestic consumption will cap walnut exports while encouraging imports to augment domestic supply.
Almonds, Shelled Basis
India’s almond production for MY 2013/14 (August/July) is forecast at 1,100 tons (kernel weight basis) due to a slack in the production cycle. Indian almonds are primarily grown in Kashmir and Himachal Pradesh. Yields are typically low and range between1,000 -1,500 nuts per tree per year. Shelling rates generally vary from 20 to 30 percent for hard shell varieties to about 40 percent for thin-shelled varieties.
Anticipating tight supplies and consequent effective demand contraction due to higher prices, the Indian almond consumption for MY 2013/14 is expected to grow moderately to 75,000 MT, up seven percent over the previous year; almost at half the pace of normal consumption in India. While average almond prices in MY 2012/13 were up 22 percent over the previous year, consumption nevertheless grew as competing nuts were relatively expensive. India’s growing population and expanding middle class continue to support consumption of dried fruits and nuts. Indian demand for nuts typically peaks during the festive season, which runs from September to January. Besides the traditional non-pareil, Indian consumers tend to buy almonds from different origins, indicating openness to trying new varieties.
Although almonds are traditionally consumed in India, there is a growing perception among Indian consumers of the nutritional and health benefits associated with almonds. As a result, food processors use more almonds in a broader variety of product categories, to include snack foods, health foods, and confections. Indian consumers tend to think of almonds as a high energy food, well suited for children, physically active people and recovering patients. Moreover, there is also a growing demand for lower quality almond kernels used for oil extraction by the cosmetic and health care product producers. Historically, Indian consumers have long indicated a preference for Californian non-pareil almonds due to price sensitivity, size, uniform ‘eye’ shape and sweetness. Australian non-pareil and carmel varieties also account for a growing segment of the Indian market. Iranian varieties like Mamra and Qumi are popular in the western and northwestern regions of India (e.g. Rajasthan and Gujarat), and often command a higher price premium.
Average almond prices grew by 40 percent in MY 2012/13 and exceeded Rs 600 levels in August 2013. Prices continued to remain strong for the whole season due to volatility in exchange rate (INR|USD) 1, except for a brief period of two months (March-April 2013) when prices slumped due to higher shipments and relatively stable exchange rate. Since August 2013, domestic almond prices have trended upward, reflecting upcoming festive demand.
In MY 2012/13 Indian almond imports decreased 11 percent to 66,645 tons (shelled basis) over MY 2011/12. Rising cost of imports, tight international supplies and inflationary pressure on the rupee will further reduce imports by an additional five percent in MY 2013/14 to 63,000 tons. Moreover, recent historical trends indicate that when overall volumes of imports decrease, Indian traders tend to prefer Californian and Australian almonds over almonds from China, Iran, or other Middle Eastern countries. Almond exports to India are likely to rebound during the festive season when Indian importers and traders normally build stocks. During the same period, the absolute share of U.S. almonds grew 13 percent over last year to 85 percent. Australia accounted for 11 percent market share followed by Afghanistan at slightly more than one percent. The remainder came from ‘other’ origins. Non-traditional suppliers (Italy, Malaysia, Thailand, South Korea, South Africa, Japan, and Taiwan), which accounted for roughly 10 percent of the market share until last year, were virtually absent from the market during MY 2012/13. Almond imports from the U.S. and Australia are mostly in-shell non-pareil or carmel varieties, which are shelled locally. Almonds from other origins are typically already shelled. In India, most almonds are sold by weight in loose form, and only about 5 percent of retail sales are in package form.
Trade Policy & Marketing Opportunities
While India does not maintain quantitative restrictions on almond imports, U.S almonds face a tariff of INR 35/kg tariff for inshell almonds and of INR 66.95/kg for shelled almonds. In 2006, India’s plant quarantine office amended Plant Quarantine Order 2003 to require an official phytosanitary certificate and phosphine fumigation at the country of origin.
India is currently the third largest export market for U.S. almonds behind China and Spain. Significant market development opportunities remain, particularly in southern and eastern India where more and more consumers are becoming aware of the health benefits of almond consumption.
Walnuts, Inshell Basis
Assuming normal weather conditions, Indian walnut production is expected to reach 40,000 MT (in-shell basis) in MY 2013/14, up 11 percent from previous year. The walnut crop has cyclical production with year to year (between ‘high’ and ‘low’ production years), varying from 5- to 20 percent depending on the weather. The production estimate for MY 2012/13 has been revised up marginally to reflect current trade estimates. Recent heavy rain in the Kashmir valley is unlikely to affect the crop size but may have some impact on quality.
India’s walnut production areas are mostly confined to Jammu and Kashmir, Himachal Pradesh and Uttarakhand. Long gestation periods, poor orchard management and uneven yields (estimated at 18-50 kg/tree/year with nut sizes varying from 24-32 mm) keep production relatively stagnant. Indian walnuts are classified as hard, medium or thin shell (kaghazi) and the average shelling rate is 40 percent. The typical harvest season runs from the end of August through September, with market arrivals peaking in late October.
Anticipating stable supplies and prices, walnut consumption in MY 2013/14 is forecast at 29,000 tons, up 16 percent over previous year. The exportable surplus as percent of total supplies is gradually declining due to strong domestic demand and relatively static production. Under this backdrop, India may resort to imports to augment domestic supply. Presently, an estimated 50 to 60 percent of Indian walnut supplies is consumed domestically, of which nearly half is consumed during the festive season (September-January). Industry sources estimate that more than 10 percent of domestic consumption goes to the bakery, confectionary and ice-cream industries while 3 to 4 percent of walnuts (typically nuts that have gone rancid) are used for oil extraction by soap and cosmetic manufacturers.
Typically, walnuts are consumed domestically in raw form for snacking. A growing awareness of the health benefits of walnuts, along with a wider use of attractive consumer packaging (vacuum packs), has prompted Indian consumers to buy walnuts the year around. The use of vacuum packs has improved the shelf-life and quality of walnuts, and has also encouraged consumer demand for ready-to-eat snacks. Major processing facilities for shelling and packing walnuts are located in the state of Jammu and Kashmir.
During the first four months of the MY 2012/13, average domestic walnut prices grew more than 35 percent on production concerns. Apprehensions gave way when arrivals started building up and walnut production came out to be higher than anticipated. Export demand, too, was stable, giving some support to domestic prices. Average walnut prices remained relatively stable through CY 2013.
With domestic production likely to recover in MY 2013/14, Indian walnut exports are forecast to reach 13,000 tons, marginally higher than previous year. Traditional buyers (United Kingdom, Egypt, China, Germany, and Netherland) purchased almost 60 percent of India’s exports in MY 2012/13. More than 95 percent of Indian walnuts is exported as kernels (35-40 percent light halves; 35-40 percent amber halves/light broken; and the balance as amber halves) in vacuum packs. Market sources report that the U.S., Mexico, Ukraine and Chile compete with Indian walnut exporters selling to the EU. For the first time, walnut imports are forecast at 1,000 metric tons with an upward bias if domestic production fails to meet the consumption and (re-)export demand.
The Government of India now allows import of walnuts (Juglans spp.) from the United States with an additional declaration and special conditions, specifically fumigation (GAIN Report IN3082). Walnuts are imported into India without quantitative restrictions under the Open General License (OGL). Imports are subject to an effective import duty of 30.9 percent except for imports originating from the South Asian Association for Regional Cooperation (SAARC) countries and Afghanistan. Given the strength of Indian domestic production and the relatively high level of tariffs, walnut export opportunities to the Indian market are limited