India recorded significant growth in almond, walnut, and pistachio imports in market year (MY) 2020/2021, increasing by 44, 20, and 34 percent, respectively, from MY 2019/2020. However, MY 2021/2022 almond and walnut imports are estimated to drop due to high domestic prices, increased domestic supply, reduced production in the United States, geopolitical tensions in regional suppliers (including Afghanistan), and various global shipping challenges. Conversely, India’s pistachio imports are estimated to rise 11 percent to 31,000 metric tons (MT). The domestic market for pistachios remains marginal, albeit with promising growth prospects and imports are estimated to reach 50,000 MT by MY 2024/2025.
FAS New Delhi (Post) forecasts India’s market year (MY) 2021/2022 (August-July) almond production at 4,500 metric tons (MT) (kernel-weight basis), unchanged from last year’s estimate. Almond production is concentrated in India’s Union Territory of Jammu and Kashmir and in Himachal Pradesh state. Popular varietals grown include Shalimar, Makdoon, Waris, and Kagazi. Kashmir’s local horticultural department promotes the production of the Kagazi (thin-shell) variety due to its higher yield and late blooming characteristics. Shelling rates range between 20 and 30 percent for hard-shell varieties, and 40 percent for thin-shelled varieties.
The Jammu and Kashmir territorial government, through its Almond Development program, aims to increase the region’s almond cultivated area by upwards of 12,000 hectares and phase-in new higher yielding cultivars. However, as of 2021, only one almond nursery is currently under development, and located in the Shopian district.
FAS New Delhi forecasts MY 2021/2022 Indian almond consumption at 135,000 MT, 10 percent below the current year estimate. The MY 2020/2021 consumption numbers, however, have been revised upward to 150,000 MT reflecting stronger local demand. An abnormal drop in international prices led to atypical demand growth. While domestic consumption increased an astronomical 31 percent between MY 2019/2020 and MY 2020/2021, India will likely see a demand correction in the upcoming market year, owing to higher domestic prices a result of reduced production in California. Global shipping constraints, including delays, transit congestions, and container shortages will also have an adverse impact.
India’s almond demand nevertheless is still expected to remain high, with the domestic economy’s recovery coupled with consumer spending increases following in the wake of the COVID-19 second wave. Almond consumption in India’s hotel, restaurant, and institutional sector (HRI) is seen as increasing, which will offset a bit of the drop in retail demand. A return to traditional consumer activities, including outdoor events, weddings, and festive ceremonies, as well as dining out will further propel almond consumption in both the current market and forecast years. Almond sales through the end of 2021 are expected to remain strong in anticipation of this year’s festive season. Bulk sales, associated with business and corporate gift giving, are likely to regain their footing.
Almonds’ nutritional benefits, with their “immunity building characteristics,” have been widely touted during India’s COVID-19 second wave. This has inadvertently led to fundamental changes in consumer behavior, which will likely endure at a minimum in the near- to medium-term.
The role of eCommerce, coupled to hyperlocal grocery delivery companies (i.e., Amazon, Big Basket, Flipkart, and Nature’s Basket), continue to stimulate almond consumption. Additionally, an evolving supply chain, with the growing consumer awareness of perceived health benefits, will drive almond consumption in the food processing, personal care, and Ayurveda industries. The increased use of almonds in breakfast cereal bars, snack foods, flavored dairy products, processed beverages, and confectionaries will help further demand growth.
Market year 2020/2021 saw initial high demand, thanks to the combination of lower sales prices and shipping delays. Beginning in August 2020, shelled almond prices were 20 percent lower ($759/MT) compared to the same period last year ($944/MT). By October 2020, supplies tightened over delayed shipments. However, domestic prices stabilized following a deluge of delayed shipments arriving almost simultaneously – a tidal wave of almonds hitting India’s shores.
Strong demand at the onset of the season helped many businesses reduce their liquidity, recovering from COVID-19 induced losses incurred in March-June 2020. With relatively slowing demand and lower supplies, prices dipped between seven to 10 percent from November 2020 onward (figure 1).
In March 2021, almond prices again rose as the COVID-19 second wave led to renewed nationwide lockdowns. The second wave undermined almond sales, weaking demand for the season’s new California-origin crop. Prices commenced an upward march, climbing 26 percent between May-July 2021. By August prices spike, hitting the $1,194/MT (India rupees (INR) 87,300/MT) mark for shelled almonds and $845/MT (INR 61,800/MT) for in-shell. Indian buyers are now waiting on the September shipments anticipating a new price correction.
Industry sources are already reporting somewhat smaller kernel sizes in the initial shipments, but the expectation is that almond quality should improve with successive consignments. Market sentiment is expected to improve from October 2021 onwards as shipment transits and delays better.
FAS New Delhi forecasts India’s MY 2021/2022 almond imports at 125,000 MT, 18 percent below the MY 2020/2021 estimates. Post is revising the MY 2020/2021 import figures upward to 152,500 MT based on new trade estimates. Between August 2020 and May 2021, almond imports soared by 61 percent.
U.S.-origin almonds account for 87 percent of India’s total import volume in MY 2020/2021, followed by Australian almonds in a distant second place with seven percent market share (table 2). Almond imports from the United States and Australia are typically in-shell, of the nonpareil or Carmel varieties, and are shelled locally (i.e., machine-cracked and hand sorted). Most other origins supply primarily shelled almonds. Packaged almonds account for about 10-12 percent of retail sales.
Global shipping challenges including port delays and congestions, longer transit times, and container shortages are decimating Indian importers’ stocks. In some instances, consignment delays (some over a month), are impacting Indian buyers’ cash flows and the product’s market availability. These shipping challenges are likely to continue in the upcoming market year.
India’s almond exports, at 200 MT in MY 2021/2022 are negligible. Exports in the 2020/2021 included shipments to the United Arab Emirates (UAE), Sri Lanka, and the United Kingdom (UK) (table 3).
India does not set quantitative restrictions on almond imports. U.S.-origin almonds face retaliatory tariffs of $0.56 per kilogram (kg) (INR 41/kg) for in-shell and $1.64 per kg (INR 120/kilogram) for shelled.
India’s non-tariff barriers include narrow almond kernel standards prescribed by the Food Safety and Standards Authority of India (FSSAI). Industry sources indicate that the almond kernels standards are too restrictive to be widely applied across multiple commercial grades. Proposed quality/grade factors pertain to commercial contracts, these should not form the basis for import or retail controls.
Traders sustain that there is a need for flexibility in grades to account for varying commercial situations, including varietal differences, crop quality variability, and pricing differentials, as opposed to physical parameters such as damage and the presence of foreign material.
FAS New Delhi forecasts India’s MY 2021/2022 (September-August) walnut production at 36,000 MT (in-shell basis), up three percent over last year. Indian walnut production is cyclical, and yields can vary by almost 20 percent depending on weather conditions at the time of blossom and harvest.
Walnuts are grown as a plantation crop in the northwestern Himalayan belt, extending through India’s northeastern region. Production is concentrated to Jammu and Kashmir. Popular varieties include Lake English, Drainovsky, Opex Caulchry, which combined account for 90 percent of the overall production area. However, Himachal Pradesh (Gobind, Eureka, Placentia, Wilson); Uttarakhand (Chakrata varietals); and the northeastern states of Sikkim and Arunachal Pradesh do contribute limited volumes.
India’s walnuts come in various sizes and with varying characteristics. These are sorted into paper- shelled, thin-shelled, medium-shelled, and hard-shelled categories. The walnut harvest typically occurs from late August through September. In 2021, the Kashmiri government established three walnut nurseries which produced around 20,000 walnut seedlings for propagation (see, Kashmir Reader).
India’s walnut production lacks advanced horticultural practices that are often found in other walnut growing countries. India does not engage in high-density planting, improved orchard management practices, stable yields, faster fruiting periods, nor has access to modern post-harvest infrastructure facilities. In Jammu and Kashmir, India’s primary production area, walnut trees are largely cultivated in an unorganized manner. Most of the trees are 40 years old; requiring a 15-year gestation period.
Harvesting walnuts remains labor intensive. The COVID-19 national lockdown measures exacerbated labor costs, with many migrant workers forced to return to their home states. Sources indicate that higher yielding varietals, using high-quality grafted plants, are needed to increase domestic production.
FAS New Delhi forecasts MY 2021/2022 Indian walnut consumption to remain flat at 66,000 metric tons. Post is revising India’s MY 2020/2021 consumption to 66,000 MT, some 6,000 MT above the previous estimate. Indian consumers demand walnuts due to the nut’s perceived health benefits and improved packaging (i.e., vacuum-packed bags) that supports year-round consumption. Much like with almonds, traditional and modern retail stores along with eCommerce is spurring on greater consumer demand. Walnuts remain popular with consumers, who perceive the nut having significant health benefits (e.g., cholesterol reducer, diabetes risk abatement, and improved brain function). Walnut kernels are rich in proteins, healthy fats, minerals, and vitamin-B.
About 70-75 percent of Indian walnuts are utilized domestically, with more than half of consumption occurring during the festive (October-November) months and winter season. Industry sources estimate that 17 percent of walnuts are used in food processing, with an additional four percent utilized in the personal care industry. The HRI sector uses walnuts as a key food ingredient, including in bakeries and the manufacture of traditional Indian sweets.
The MY 2020/2021 domestic walnut season kicked off with excellent demand and high prices. By December 2020, a price correction occurs as U.S.- and Chilean-origin imports make their landfall. Sources report quality concerns with imported products – specifically less desirable darker colored walnuts from California. While traders hold that color does not affect product quality, Indian consumers favor lighter-colored walnut kernels. Domestic prices witnessed a drop in February 2021, as a result slower demand and market oversupply. Demand started recovering in May along with prices (figure 2).
Prices will likely stay high for most of MY 2021/2022. Lower production coming from California, along with uncertainty with what will happen next with Afghanistan’s trade in the near-term following the Taliban’s seizure of the state, will keep prices elevated. Domestic average prices as of August 31, 2021, are $1,084/MT (INR 79,200/MT) for shelled walnuts and $692/MT (INR 50,600/MT) for in-shell.
FAS New Delhi forecasts MY 2021/22 Indian walnut imports at 34,000 MT, six percent below the MY 2020/2021 figure. This decline is anticipated as both high domestic prices and trade uncertainty from Afghanistan, the fifth largest exporter of walnuts to India in MY 2020/2021, are likely to reduce consumption. Post is revising its import estimates for MY 2019/2020 to 30,000 MT and MY 2020/2021 to 36,000 MT based on the latest trade data. From September 2020 to May 2021, the United States remained India’s main supplier with 55 percent market share, followed by Chile with 26 percent.
India is primarily an in-shell walnut market. Sources indicate that India’s in-shell walnut imports grew 83 percent in September 2020-May 2021 (table 6), while shelled walnut imports declined by 25 percent.
FAS New Delhi forecasts MY 2020/2021 Indian walnuts exports at 4,200 MT, up 11 percent from the previous market year. Post is revising its export estimate for MY 2019/2020 to 3,000 MT and MY 2020/2021 to 3,800 MT based on the latest trade data. In MY 2020/2021, India increased walnut export volumes to its traditional markets in the UAE, UK, Saudi Arabia, and Germany (table 7).
Over 95 percent of India’s walnut exports are shelled kernels in vacuum packs, with 35-40 percent classified as “light halves,” 35-40 percent “amber halves/light broken,” and the remaining balance as “amber halves.” Market sources report that Indian walnuts are competitively priced against those of the United States, Chile, Turkey, and China.
India’s Open General License program permits walnut imports without quantitative restrictions. Both in-shell and shelled walnut imports are subject to a 100 percent tariff (effective February 2020). India is applying a retaliatory tariff on U.S.-origin in-shell walnuts at 20 percent above the applied BCD of 100 percent. However, California walnuts exports remain strong due to high consumer demand.
On July 30, 2021, the FSSAI published the Food Safety and Standards (Food Product Standards and Food Additives) Third Amendment Regulations (2021) which cites the final standards for walnut kernels with an implementation date of February 1, 2022 (see, GAIN-INDIA – IN2021-0097 India’s FSSAI Issues Final Standards Walnut Kernels and Other Various Food Products). India’s walnut kernel standards apply to fresh products and includes a 15 percent permissible variation for color uniformity. The FSSAI also changed the damage limit from two to four percent based on the number of damaged units, using a percent-by-mass parameter.
There is no commercial production of pistachios in India. Limited, unorganized production is confined to the Union Territory of Jammu and Kashmir.
FAS New Delhi forecasts India’s MY 2021/2022 (September-August) pistachio consumption at 30,900 MT, 11 percent above the current year estimate. India is traditionally a market for in-shell pistachios, with peak demand occurring from October through February. While there is some nominal demand throughout the year, sales typically increase during the Indian festive and wedding seasons. Pistachios are typically sold through retail and wholesale channels. Organized retail outlets, along with online stores, have also increased their market presence to cater to growing pistachio demand. Sources indicate that India’s market for pistachios may reach 50,000 MT by MY 2024/2025.
The Indian consumer traditionally has preferred Iran- and Afghanistan-origin pistachios. This preference derives from consumers’ familiarity with the taste, texture, color, and shape of the tree nut. Conversely, U.S.-origin pistachios are relatively different in taste, have a distinct greenish tint, and are larger in size with a different texture. Popular Iranian varieties include Akbari, Kalleh, Fandoghi and Ahmad Aghaei, while California’s U.S. grade 21-25 No. 1 pistachios is the preferred American variety.
Pistachios from Iran and Afghanistan have tapped successfully into the largely unorganized Indian traditional sweets (mithai) sector primarily due to cheaper pricing despite inconsistent product quality (i.e., broken/chipped kernels). The traditional Indian sweets market readily absorbs lower quality pistachios as a food ingredient.6 California pistachios command a premium due to consistent quality, size, and shape. The consumption of pistachios as a snacking nut is limited to affluent consumers, or about two-to-three percent of India’s population.7 Preferential pricing and mass-marketing activities can help build consumer awareness and demand for higher quality California pistachios.
During MY 2020/2021, domestic prices for in-shell pistachios ranged between $9.50 to $14.00/ kg (INR 700 to 1,000/kg), and shelled pistachios $14.00 to $22.00/kg (INR 1,000 to 1,600/kg). Higher quality California pistachios retail between $10.50 to $12.00/kg. The first half of MY 2020/2021 was difficult for Indian buyers, as they struggled with excessive inventories at the onset of the season due to the national COVID lockdown measures of March-June 2020. The situation this market year has improved, due to stabilized supply chains and pricing. Typically, profit margins for pistachios range between three to five percent for importers.
FAS New Delhi forecasts India’s MY 2021/2022 pistachio imports at 31,000 MT, 11 percent above MY 2020/2021. From September 2020 to May 2021, the UAE was the largest supplier of pistachios to India, followed by Afghanistan, the United States, and Hong Kong (table 10). Neither the UAE, nor Hong Kong produce pistachios, and are instead transshipping products from other origins, primarily from the United States. Historically, the United States, Iran, Afghanistan, and Turkey have been the largest suppliers of pistachios to India (figure 3).
Shipment transit delays have been affecting Indian pistachio importers. According to sources, some importers continue to await pistachio containers that were intended to arrive in June 2021. Indian exports of pistachios for MY 2021/2022 are forecasted at 100 MT and will continue to remain negligible for the foreseeable future (table 11).
India levies a 10 percent BCD on raw pistachios (in-shell and shelled), and 30 percent on roasted pistachios. Additionally, a Goods and Services Tax of 12 percent is applied on the customs and freight value, along with a Social Welfare Surcharge of 10 percent of the customs duty. — By Ankit Chandra, Mark Rosmann & Mariano Beillard, USDA Foreign Agricultural Service