Walnut production in China surged by 27% YoY in 2022, to 1.4 million mt on an in-shell basis (or 616,000 mt on a kernel basis), continuing a rapid expansion in the industry. With a much larger volume of walnuts available, it was initially expected that China’s exports would also increase considerably. However, that has not been the case and exports are lagging well behind the previous marketing year.
Between September, when the marketing year started, and December, China exported an estimated 32,700 mt (on a kernel basis), compared to 43,678 mt over the same period in the 2021/22 MY. On a value basis, walnut exports generated only USD 153 million between Sep-Dec 2022, compared to USD 228 million the year before.
Most of China's walnuts are grown in the plains of Xinjiang, with a significant increase also seen in areas in Yunan province. Xinjiang produces comparatively better quality walnuts than Yunan, where mountainous terrain complicates proper orchard management. The production increase in 2022 was mainly due to a recovery in Xinjiang production, which had been damaged by frost the previous year. The increase in Xinjiang has also led to a larger supply of comparatively good-quality walnuts in the 2022/23 crop, further boosting expectations of increased exports.
Despite improvements in quality, Chinese walnuts often do not meet consumer standards in certain regions, such as Europe. With ample global supply and low prices, high-quality walnuts from the US and Chile offer a good value proposition. As a result, buyers are considering these alternatives before turning to Chinese walnuts. Most of China’s walnuts are exported to CIS countries, with Kazakhstan and Kyrgyzstan as the main buyers. Turkiye is also normally a popular destination for Chinese walnuts. However, Turkiye’s imports from China dropped to only USD 3.7 million in Sep-Dec 2022/23, from USD 35.8 million over the same period in the 2021/22 MY, as it opted for walnuts from Chile instead. This was partially offset as exports to Kyrgyzstan soared to a value of USD 45 million, compared to USD 18 million over the same period in the 2021/22 MY.
Source: General Administration of Customs of the People’s Republic of China
While the weak exports will be a concern, it is somewhat negated by the fact that 90% of the country’s production is consumed domestically. Domestic consumption has increased steadily in line with production increases for the most part. According to the International Nuts and Dried Fruit Council, China’s per capita consumption of walnuts in 2020 was 0.295kg/year which was higher than the world average of 0.142kg/year. The domestic market in China still holds vast untapped potential, but as production continues to grow rapidly, the country is expected to export increasing amounts of walnuts in the coming years.