Optimism pushes pistachio acreage higher — but how much is too much?
Like digging into a bag of nuts that’s supposed to last through the week, local pistachio growers may soon have to decide what’s the proper balance between their own appetite and what constitutes a sustainable supply.
The latest industry data shows bearing acreage across the state jumped by a fifth between 2020 and 2022 to reach 446,000 acres, bolstering projections that pistachios will continue to see the fastest growth among nut trees in California.
Enthusiasm for increasing production of Kern’s No. 3 crop is to be expected, on one hand, given sturdy price trends and pistachios’ meager thirst for water amid long-term dry weather patterns. But as almond growers have learned in recent years, there’s always a danger of overdoing it.
“No one’s really talking about it and saying, ‘Let’s pump the brakes,’” on new plantings, said President Richard Matoian of the American Pistachio Growers trade group. “But I think people are more cognizant and focused on the fact that there is more production that is right around the corner and the need for us to get more focused on promoting.”
One thing to understand about pistachio trees is that it takes them about seven years to begin bearing nuts after they’ve been planted, which is generally two years longer than almonds take and means investment decisions reflect conditions can change substantially by the time production finally hits the market.
Since 2020, the rate at which institutional and other growers have planted new pistachio trees has accelerated dramati
(I) think people are more cognizant and focused on the fact that there is more production that is right around the corner and the need for us to get more focused on promoting.”
— Richard Matoian, president of the American Pistachio Growers trade group
cally. According to industry statistics cited by RaboResearch, California plantings averaged about 30,000 acres per year between 2012 and 2016 before slowing by a third between 2017 and 2020. Then, in 2021, they soared to more than 34,000 acres.
Longer term, the state’s pistachio-bearing acreage has increased fivefold during the past two decades, while almond- and walnut-bearing acreage grew at half that rate, RaboResearch pointed out.
It’s easy to see why: Pistachio growers have benefited from the trees’ ability to withstand lower-quality water and conservation measures like deficit irrigation — certainly better than almonds, Kern’s fourth highest-grossing crop, whose acreage in the state has recently shrunk as the industry struggles with oversupply.
“Pistachios kind of check off a lot of boxes,” Matoian said, adding that California pistachio production is now on track to grow by as much as 50 percent between 2023 and 2026.
“The challenge for us as a group that promotes and conducts consumer awareness on pistachios is to build demand ahead of the production,” he said.
So it has, by sponsoring research that has highlighted the nuts’ health and nutrition benefits. More recently, the industry has shifted toward enticing flavors, especially spicy-hot options like Sriracha.
The good news, as RaboResearch Senior Analyst David Magaña pointed out in an analysis from June, is that the price outlook remains strong. He wrote that, with domestic demand for pistachios expanding steadily, the probability of prices dipping below $2 per pound in the near term is just 10 percent, while there’s a 50-percent chance the price will settle between $2.29 and $2.92.
“Compared to other tree nuts,” he wrote, “pistachio prices are likely to remain the most stable for the foreseeable future.”
Local farmland appraiser and broker Mike Ming sees another side. Growers have been facing challenges like higher farming costs, rising interest rates and supply-chain disruptions, all of which he noted have squeezed profit margins.
At the same time, he said by email, local orchard values have begun to decline. That’s an ominous sign, but whether it lasts remains to be seen.
“I think the next 8-12 months will give us the answer whether we are stable (or) going even lower,” Ming wrote.