Market Trends of Walnut Industry
Higher Demand for Certified and Premium Walnuts in Emerging Markets
- Despite China being the world’s leading walnut producer, the United States stands out as one of the largest walnut exporters globally. Several key factors including agricultural policies, quality control, and favorable growing conditions drive this dominance in walnut exports. Firstly, the United States, particularly California, has optimal climatic conditions for growing high-quality walnuts, which are appreciated worldwide. The state's fertile soil, temperate climate, and advanced irrigation techniques result in a consistently high yield of walnuts. California alone accounted for 99% of the walnut production in the United States according to the California Department of Food and Agriculture in 2023. These natural advantages are coupled with stringent quality control standards and certifications, such as the USDA quality grading, ensuring that the country's walnuts meet international food safety standards.
- One of the reasons the United States has become such a dominant exporter is product differentiation and the variety of walnut forms the United States offers including whole in-shell, shelled, walnut oil, and even processed walnut products. The United States walnut industry has invested significantly in marketing and branding, positioning its walnuts as premium products, especially in Europe, Middle East, and Asia. Germany and Japan are the largest importers of shelled walnuts in 2023 which accounted for USD 101,628 thousand and USD 77,370 thousand respectively according to the ITC Trademap. In terms of in shell walnuts, Turkey and UAE are the major importers which imported walnuts worth USD 83,301 thousand and USD 53,009 thousand in 2023 respectively.
- Additionally, technological advancements in processing and packaging have also contributed to the country's large exports as walnut producers in the United States use advanced hulling, drying, and packaging methods that extend the shelf life of walnuts. Therefore, even though China leads in walnut production, the United States has leveraged superior quality, product variety, and access to international markets to establish itself as a leading walnut exporter.
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Asia-Pacific is the Largest and Fastest Growing Market
- The Asia-Pacific region leads the world in walnut production, with countries such as China, India, and Japan playing key roles due to their growing production capabilities and increasing consumer awareness of walnuts’ health benefits. China not only dominates walnut production in Asia-Pacific but also globally, contributing 52% of the world’s walnut output according to the United States Department of Agriculture (USDA) in 2023. Within China, Xinjiang Province is the top producer, followed by Yunnan, Shanxi, and Shaanxi Provinces. Over the past decade, walnut output in China has surged nearly 80%, partly due to a poverty-alleviation program in mountainous and hilly areas that encouraged new plantings. Additionally, China’s significant domestic consumption of walnuts is driven by a growing middle class, urbanization, and a rising preference for healthy snacks.
- In India, the walnut market is expanding rapidly, propelled by rising disposable incomes, increasing health awareness, and a growing demand for nutritious food products. Although India is not a major producer of walnuts compared to China, it is a significant importer to meet its rising domestic demand. Regions such as Jammu and Kashmir are the primary walnut-growing areas in India, with an increasing focus on improving yields and expanding cultivation through governmental initiatives. Inclduing walnut under One District One Product Scheme introduced in 2020 to Kishtwar and Kupwara districts of Jammu and Kashmir by the Government of India is projected to drive the production of walnut in the country.
- Japan and Southeast Asian countries such as Vietnam and Thailand, despite being a smaller walnut consumer relative to its Asian neighbors, is witnessing growth in demand driven by its aging population, which is increasingly focused on heart health and maintaining a balanced diet. Similarly, countries in Central Asia, like Kazakhstan and Kyrgyzstan, have ideal environments for walnut production but are limited by a lack of organized farming and market access. These countries have begun to recognize the potential of walnut farming as an income generator, and policies to encourage orchard establishment and improve export capabilities are being developed.
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