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Pecan Marketing
and Economics
Dr. Marco A. PalmaAssociate Professor and Extension EconomistTexas A&M AgriLife Extension ServiceTexas A&M University [email protected]
2
OutlineGeneral Horticulture Overview
Demand Drivers of Consumption
Pecan Outlook
WTP for Native vs Improved
Cost of Production and Returns
Pecan Budget Tool (IpmPIPE)
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Per Capita Consumption 1970-2000
Per Capita Consumption 1970-2012
Per Capita Consumption 2000-2012
Per Capita Consumption 1970-2012
Per Capita Consumption 2000-2012
Net trade of Fresh Fruit and Vegetables
Share of Consumption from Imports
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Total horticulture value is increasing
Increase in populationNew international marketsYear round demandConsumers willing to try new
products
Why?
Major Macro-Trends
Local and specialized Markets
13
What are “functional foods”According to American Dietetic Association:
“provide additional health benefits that may reduce disease risk and/or promote optimal health”
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Major Macro-Trends
DGA 2010
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Food Pyramid: 1992
My Plate: 2010
Recommended vs actual
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110%
149%
200%
280%
110%
61%
44%
52%
42%
59%
15%
0% 50% 100% 150% 200% 250% 300%
Saturated fat
Sodium
Refined Grains
Calories from SoFAS
Meat, Poultry, andEggs
Oils
Seafood
Dairy
Fruits
Vegetables
Whole Grains
Percent of goal or limit
Eat more of
LIMIT
Eat less of these:
GOAL
Major Macro-Trends
Food Safety
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Major Macro-TrendsBIG DATA
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Big Data
Big data analytics is the process of examining large amounts of data of a variety of types to uncover hidden patterns, unknown correlations and other useful information.
Purchases, searches, preferences. Store and online purchases Search query analytics Preference correlation other
Tree nuts Trends
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Utilized production (Shelled)
Thousand lbs
Utilized production (Shelled)
Thousand lbs
Average Prices (Shelled)
cents/lb
Value of production US
Thousand $
Pecan Trends
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Production of US Pecan
Value of US Pecan
Pecan Prices
Pecan Prices: Improved - Native
Total Supply
Total Supply
Per capita consumption - Pecans
Trade of Pecans
Source: ERS, USDA
Trade of Pecans – Imports by country
2011/12 2012/13 2013/14
Share Avg ANN: Oct-Sep ANN ANN ANN ANN Nov YTD99.5% 304,033 307,653 240,155 288,382 379,942 99,235
0.3% 1,066 209 2,336 1,721 257
0.1% 214 0 112 233 509 98
0.0% 44 222 0
0.0% 35 176 0
157 87 15 0 0
305,477 308,417 240,355 290,965 382,172 99,590 111,422
Spain
Argentina
Other Countries
Mexico 110,283
Australia 387
South Africa 752
Ranking based on prior 4 annual market year* totals 2014/15 2015/16
Fresh or dried¹ Nov YTD
Source: ERS, USDA
Trade of Pecans – Exports by country
2011/12 2013/14 2014/15 2014/15
Share Avg ANN: Oct-Sep ANN ANN ANN Nov YTD31.2% 130,314 126,598 102,019 123,075 39,760
14.0% 63,589 72,046 55,486 78,137 6,198
14.0% 62,048 60,754 46,682 95,871 32,224
12.3% 53,880 58,645 52,155 55,084 12,111
7.2% 32,354 29,332 31,793 35,621 4,224
88,808 84,951 118,532 15,943
436,440 436,183 373,086 506,321 110,460Fresh or dried total 430,170 120,942
Netherlands 32,670 4,780
Other Countries 84,727 21,137
Vietnam 44,886 12,708
Canada 49,636 13,279
Hong Kong 169,565 61,856
Mexico 48,687 7,183
Ranking based on prior 4 annual market year* totals 2012/13 2015/16
Fresh or dried¹ ANN Nov YTD
Pecan Trends by State
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ALL PECAN VarietiesUtilized Production
State 2012 2013 2014(1,000 pounds) (1,000 pounds) (1,000 pounds)
Alabama 4,000 3,270 1,900 Arizona 20,000 22,500 21,000 Arkansas 2,200 2,700 3,500 California 4,300 5,000 5,000 Florida 2,000 (D) 200 Georgia 100,000 89,000 73,000 Kansas 3,000 (D) 880 Louisiana 15,000 11,000 14,000 Mississippi 2,500 5,500 1,000 Missouri 2,500 2,740 640
New Mexico 65,000 72,000 65,000 Oklahoma 25,000 20,000 19,000 South Carolina 1,800 1,560 250 Texas 55,000 28,000 60,000
United States 302,300 266,330 265,370
ALL PECAN VarietiesPrice per pound
State 2012 2013 2014(dollars) (dollars) (dollars)
Alabama 1.31 1.72 2.02 Arizona 1.60 1.90 2.10 Arkansas 1.35 1.40 1.32 California 1.58 2.06 2.30 Florida 0.94 (D) 1.60 Georgia 1.91 1.91 2.28 Kansas 1.35 (D) 1.30 Louisiana 0.90 0.93 0.91 Mississippi 1.17 1.14 1.42 Missouri 0.99 1.07 1.29
New Mexico 1.70 1.90 2.00 Oklahoma 0.99 0.99 1.09 South Carolina 1.67 1.98 2.19 Texas 1.36 1.60 1.83
United States 1.57 1.73 1.91
ALL PECAN VarietiesValue
State 2012 2013 2014(1,000 dollars) (1,000 dollars) (1,000 dollars)
Alabama 5,258 5,635 3,834 Arizona 32,000 42,750 44,100 Arkansas 2,974 3,781 4,612 California 6,794 10,300 11,500 Florida 1,885 (D) 319 Georgia 191,120 170,120 166,160 Kansas 4,050 (D) 1,144 Louisiana 13,500 10,270 12,790 Mississippi 2,925 6,289 1,421 Missouri 2,475 2,932 823
New Mexico 110,500 136,800 130,000 Oklahoma 24,750 19,767 20,700 South Carolina 3,000 3,090 547 Texas 74,760 44,780 110,040
United States 475,991 460,390 507,990
Improved VarietiesUtilized Production
State 2012 2013 2014(1,000 pounds) (1,000 pounds) (1,000 pounds)
Alabama 3,400 2,500 1,600 Arizona 20,000 22,500 21,000 Arkansas 1,600 2,000 2,200 California 4,300 5,000 5,000 Florida 1,100 700 150 Georgia 96,000 83,000 71,000 Louisiana 5,000 1,500 2,500 Mississippi 2,000 3,800 700 Missouri 200 500 170 New Mexico 65,000 72,000 65,000
Oklahoma 5,000 3,000 4,000 South Carolina 1,500 1,500 200 Texas 42,000 22,000 48,000
United States 247,100 220,000 221,520
Improved VarietiesPrice per pound
State 2012 2013 2014(dollars) (dollars) (dollars)
Alabama 1.40 1.94 2.19 Arizona 1.60 1.90 2.10 Arkansas 1.54 1.60 1.60 California 1.58 2.06 2.30 Florida 1.10 1.72 1.74 Georgia 1.94 1.96 2.30 Louisiana 1.30 1.40 1.62 Mississippi 1.25 1.23 1.64 Missouri 1.45 1.34 1.85 New Mexico 1.70 1.90 2.00
Oklahoma 1.55 2.05 1.80 South Carolina 1.75 2.00 2.36 Texas 1.52 1.79 2.08
United States 1.73 1.90 2.12
Improved VarietiesValue
State 2012 2013 2014(1,000 dollars) (1,000 dollars) (1,000 dollars)
Alabama 4,760 4,850 3,504 Arizona 32,000 42,750 44,100 Arkansas 2,464 3,200 3,520 California 6,794 10,300 11,500 Florida 1,210 1,204 261 Georgia 186,240 162,680 163,300 Louisiana 6,500 2,100 4,050 Mississippi 2,500 4,674 1,148 Missouri 290 670 315 New Mexico 110,500 136,800 130,000
Oklahoma 7,750 6,150 7,200 South Carolina 2,625 3,000 472 Texas 63,840 39,380 99,840
United States 427,473 417,758 469,210
Native VarietiesUtilized Production
State 2012 2013 2014(1,000 pounds) (1,000 pounds) (1,000 pounds)
Alabama 600 770 300 Arkansas 600 700 1,300 Florida 900 (D) 50 Georgia 4,000 6,000 2,000 Kansas 3,000 (D) 880 Louisiana 10,000 9,500 11,500 Mississippi 500 1,700 300 Missouri 2,300 2,240 470 Oklahoma 20,000 17,000 15,000 South Carolina 300 60 50 Texas 13,000 6,000 12,000
United States 55,200 46,330 43,850
Native VarietiesPrice per pound
State 2012 2013 2014(dollars) (dollars) (dollars)
Alabama 0.83 1.02 1.10 Arkansas 0.85 0.83 0.84 Florida 0.75 (D) 1.16 Georgia 1.22 1.24 1.43 Kansas 1.35 (D) 1.30 Louisiana 0.70 0.86 0.76 Mississippi 0.85 0.95 0.91 Missouri 0.95 1.01 1.08 Oklahoma 0.85 0.80 0.90 South Carolina 1.25 1.50 1.50 Texas 0.84 0.90 0.85
United States 0.88 0.92 0.88
Native VarietiesValue
State 2012 2013 2014(1,000 dollars) (1,000 dollars) (1,000 dollars)
Alabama 498 785 330 Arkansas 510 581 1,092 Florida 675 (D) 58 Georgia 4,880 7,440 2,860 Kansas 4,050 (D) 1,144 Louisiana 7,000 8,170 8,740 Mississippi 425 1,615 273 Missouri 2,185 2,262 508 Oklahoma 17,000 13,617 13,500 South Carolina 375 90 75 Texas 10,920 5,400 10,200
United States 48,518 42,632 38,780
Looking forward
50
Prices at Selected Markets Nov-Jan
Production of US Pecan
10 yr Avg: 277,518
2015f: 274,834
Production of US Pecan
10 yr Avg:169
2015f: 180
Economics of Pecan Production
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How can I estimate my own cost of production?
Cost of Production Basics
Economic vs. Accounting Costs
Calculating Costs of Production – Two Components
Fixed Costs (overhead): Not dependent on
business activities (sales volume) Buildings, Land,
Machinery
More units produced = SAME fixed costs
Calculating Costs of Production – Two Components
Variable Costs: Increases as the units
produced increase Labor, fertilizers,
herbicide/fungicide
More units produced = HIGHER Variable Costs & Total Costs
Table ES1: Proposed initial assessment range (dollars per in-shell lb.) Assessment Cost per lb
Low High Midpoint
Improved pecans $0.02 $0.03 $0.025
Native/seedling $0.01 $0.02 $0.015
Table ES2: U.S. Seasons average grower price (dollars per in-shell lb.) 2012 2013 2014
Improved pecans $1.73 $1.90 $2.12
Native/ seedling $0.88 $0.92 $0.88
Table ES3: Assessment as a Pct of U.S. Season average pecan grower price (midpoint of propose initial assessment range) 2012 2013 2014
Improved pecans 1.4% 1.3% 1.2%
Native/ seedling 1.7% 1.6% 1.7%
Table ES4: Benefits of generic promotion in the proposed FMO Benefits per lb of FMO
Low High Average
Improved pecans $0.040 $0.096 $0.063
Native/seedling $0.027 $0.042 $0.036
Table ES5: Cost and benefits by farm size of the proposed FMO Small Medium Large
Production (lbs) 49,980 291,667 833,333
Production assumes a 78% improved variety and 22% native/seedling split in acreage
Cost of FMO $1,140 $6,650 $19,000
Assessment per pound * pounds produced = cost of FMO
Benefits of FMO $2,853 $16,643 $47,550
Average price increase per pound * pounds produced = benefits of FMO
Shown for 30 acres, 175 acres and 500 acres at 1666.67 lbs of inshell pecans per acre (average yield per acre over all three regions), as representative for small, medium and large farms in the production area.
Dr. Marco PalmaAssociate Professor and Extension EconomistTexas AgriLife Extension ServiceTexas A&M University [email protected]://hbin.tamu.edu
Questions
