As I reported in my last blog post, the pecan market is puzzlingly dismal. Despite the loss of 1/3 of Georgia’s pecan crop to Hurricane Helene, and an overall 2024 supply (US Crop, Mexico, and Cold Storage) forecast to be lower than that of 2023, growers are being offered shockingly low prices for their crop. I have heard Desirable prices of $1.50/lb in shell. At a variable cost of production of $1600/acre and a yied of 1000 lbs/acre, the break even price for growing Desirable is $1.60/lb. That is with 10 fungicide sprays and anyone growing Desirable in Georgia knows that it took more than 10 sprays to make Desirable in 2024. Not only do these prices prevent growers from making a profit, they cause them to lose money. Therefore, I think it is critical that growers get as much information as possible about what is going on in the current pecan market so that they can make decisions for their own operations. Without transparency on both sides of this industry, it is impossible to make good decisions.
I had reported that if I heard from anyone giving an explanation for this illogical market I would report it here to growers so that they can have the information on which to base their decisions. Here is what I have discovered:
I was told that in spite of an anticipated lower supply than last year and the increase in domestic demand, there are one or more large shellers out there who may have volume on hand and are able to offer pecan halves at a low price to large volume customers. They’re not doing anything illegal. Whether they have the volume on hand or not, they can afford to, or are willing to, make contracts at that low price. The issue is that when this occurs, it brings everything down. It makes everybody else scared to go up on the price that they offer growers because they’re not sure they’re going to be able to sell them on the other side for a higher price. It creates a lot of panic in the market. Nobody wants to make a decision and move forward. There are shellers out there who need and want pecans but they are paralyzed by the current situation.
This is one sheller’s explanation of what’s going on with the pecan market. I don’t see any other explanation that makes sense other than the consideration that the law of supply and demand does not currently apply to the overall domestic pecan market. The sheller agreed. I’m not happy about it and I don’t think growers will be happy about it but I think it is important that they know what’s happening on that side of the business. This industry has operated in the dark for far too long and growers deserve straight answers about the state of the pecan market and what issues are at play. We are all taught that markets are supposed to operate on the law of supply and demand but based on what is occurring, it does not appear that this is the case for the domestic U.S. pecan market. When logical economic models do not work for a given crop market, it makes it very difficult for everyone in the industry. The effects spiral down. Growers who are harvesting can’t make good decisions about whether or not to sell or hold for a while, or place nuts in cold storage. Growers who have been ravaged by hurricanes can’t make good decisions about whether or not to replant their orchards. Shellers who want to buy are scared to make offers. The industry simply cannot grow and be successful on the back of a marketing system that does not play by the logical rules of supply and demand.
