The U.S. pistachio industry is poised for a significant supply increase that will make marketing innovation and health research crucial to maintaining price stability, according to a new report from RaboResearch, a division of Rabobank.
Over the past 20 years, pistachios have consistently offered higher gross returns per bearing acre than almonds and walnuts in California, according to the report.
“With average gross returns of $6,400 per acre over the past decade, pistachios have outperformed almonds and walnuts by 20% and 70%, respectively,” a news release about the report said.
The profitability of pistachios, combined with its resilience against to salinity and drought, has spurred rapid planting growth since 2012, RaboResearch reports.
From 2011 to 2023, California’s pistachio-planted area increased by over 372,000 acres, with projections suggesting a bearing area of 590,000 acres by 2028, the release said. Industrywide challenges, such as the Sustainable Groundwater Management Act in California, are expected to limit new plantings, signaling a shift from rapid growth to a maturity stage in production, according to the report’s authors.
U.S. pistachio output accounted for 63% of the global output in 2023-24.
“This growth is a result of steadily expanding bearing acreage, with the U.S. outpacing the other major producer, Iran,” said David Magaña, senior analyst of fresh produce and tree nuts for RaboResearch.
In 2023-24, Turkey and Iran accounted for 15% and 14% of the global pistachio crop, respectively, the release said.
The U.S. pistachio production grew at a compound annual growth rate of 10% over the past decade, significantly higher than the global CAGR of 5%, the release said.
The U.S. also leads in pistachio production, rising from 41,500 metric tons in 2005 to 225,000 metric tons in 2023-24. Key drivers of demand include product and packaging innovations, health research, promotional efforts and the availability of high-quality products year-round, the report showed.
RaboResearch said the four key markets for pistachios are the U.S., Turkey, China, and the European Union, which account altogether for 72% of global pistachio consumption.
“It’s interesting to highlight that over the past decade, pistachio consumption has increased in the U.S., Turkey, China, and the EU, expanding at compound annual growth rates of 13%, 7%, 5% and 6%, respectively,” Magaña said. “In India, a country that absorbs 4% of world’s pistachios, consumption has expanded at 11% CAGR in the past 10 seasons.”
The U.S. accounts for 70% of global exports, while China, the EU, Turkey, and India absorb the majority of imports, the release said.
Magaña said that the U.S. pistachio industry’s success is partly due to its ability to identify and serve international markets efficiently. China, in particular, is a crucial market, especially in the season leading up to the Chinese New Year.
“However, heavy reliance on a single market poses geopolitical risks, highlighting the need for market diversification and improved access,” the release said.
For the 2024-25 season, initial prices are expected to remain steady, with potential improvements due to a shorter crop. Strong shipments and lower supplies could lead to very low inventories, supporting prices into the 2025-26 season, the release said. The average price estimate for 2024-25 to 2028-29 is around $2.10 per in-shell pound, with an 80% chance of prices ranging between $1.80 and $2.20 in 2027-28.
“However, with increasing pistachio volumes, demand creation will be essential to avoid unsustainable price pressures,” the release said. “Continued adoption of economically sustainable practices will be crucial to maintaining profitability.”
