Several fruit and nut trees are alternate bearing, where a year of low yields (off-year) follows a year of high yields (on-year). Next year’s flowers develop at the same time as this year’s nuts are filling out and maturing. For example, pistachio nuts grow on one-year-old shoots. These shoots are produced from auxiliary buds from the previous year. If the tree spends the majority of its resources on nut production, fewer resources are allocated to flower/shoot production, impacting the following year’s crop. Climatic conditions, farming practices, fertilization, and genetic advances also affect production, and the on/off year cycle can change, something that seems to have happened in US pistachio production.
Going back to 2020, an on-year judging by the preceding 5 years, the US produced a record crop of 1,050 million lbs. The crop was highly celebrated as it was the first time the US produced more than a billion lbs of in-shell pistachios. Yields were good, but not great for an on-year. Yields were 2,828 lbs/acre, much higher than the 2,181 lbs/acre in 2019, but also far lower than the 3,268 lbs/acre in the previous on-year (2018).
Then came the 2021 crop, which was a supposed off-year but yields were 2,854 lbs/acre and it was a consecutive record crop. These impressive off-year yields were attributed to improved farming practices and improved varieties that came into production. At the time 2021 was regarded as a very good off-year. However, in hindsight, between 2020 and 2021 there was a reversal in the on/off year cycle. Despite improved farming practices and better pistachio varieties, trees exhausted a large part of their resources in 2021, which resulted in lower yields in 2022. Yields in 2022 are much lower than the previous 2 years, estimated at only 2,024 lbs/acre. Taking this into consideration, 2023 will likely be a year with high production, when the possibility of weather extremes is ignored.
Source: USDA, Administrative Committee For Pistachios
Despite comparatively low production in 2022, supply in the US will still easily match demand in the 2022/23 MY. Demand, both domestic and international, has slowed down as the focus on healthy eating, observed in 2020, turned into a focus on increasing living costs, since the start of 2022. Furthermore, supplies are abundant due to a large carry-over from the 2021/22 MY. Opening stock for the 2022/23 marketing year was 354 million lbs. The crop is estimated at 870 million lbs. Domestic consumption, exports, and inventory adjustments could add up to 1 billion lbs. This leaves ending stocks of more than 200 million lbs. And on top of that, 2023 will most likely be another year of high yields.
The implications of the switch in on and off years will reach way beyond the 2022/23 marketing year in the US. The world’s top two pistachio producers, the US and Turkey used to have coinciding on-years. Traders managed stocks carefully in on-years, to have sufficient pistachios available in off-years, on both a global and domestic level. In Turkey, carry-over stocks, going into an off-year, were often as high as a 100% stocks-to-use ratio. However, going forward, the US could now have on-years when Turkey has off-years, and it could change trade flows. This 2022/23 MY, the US will aggressively market pistachios for exports, and not mind low ending stocks, as production in 2023 will again replenish stocks. Turkey will most likely export more during its on-years, something that could already start this season, and import large quantities from the US during its off-years.