U.S. Nuts…The Chinese Want Them

In the grand finale of blog posts on this site (for this course term at least), I have decided to take a light-hearted approach to the serious topic I have been commenting on for the past few months.

In a recent Wall Street Journal article titled “Shell Shock: China Demand Reshapes U.S. Pecan Business”, the recent phenomenon of Chinese increased demand for pecans was discussed.

 Pecans are as all-American as anything can be. Washington and Jefferson grew them. They are the state nut of Arkansas, Alabama and Texas. The U.S. grows about two-thirds of the world’s pecans and chews most of them itself.

For generations, pecan prices have fallen with bumper crops and soared with lousy ones. But lately, they’ve only been going up. A pound of pecans in the shell fetched $2.14 on average last year, according to the U.S Department of Agriculture, nearly double what they brought three years earlier.

The reason: The Chinese want our nuts.

Quite honestly when I was reading this article I burst out laughing. Although there is nothing odd about the article, I found the WSJ’s play on words for “the reason” to be quite funny.

All jokes aside however the article was actually very interesting from an economic perspective. Five years ago in China, almonds were considered the preferred nut. However after a string of advertisements in China, claiming that pecans resulted in better health and a longer life, demand immediately spiked for the pecans.  Why this is so intriguing is how it has affected the landscape of the pecan industry. Prices have been driven up rapidly wherever one is trying to purchase the nut, which makes sense from a supply/demand perspective. The supply of pecans has not changed, but the number of people that want increased vastly. Thus, prices rose accordingly.

In the U.S., pecan orchards have seen land values increase as a result of the heightened demand for the nut. While five years ago the orchards typically cost between $3000-$3800 dollars per acre, today they cost between $4500 and $6000 an acre. Pretty big jump I would say.

All in all I actually really like looking at this article because its not terribly serious, but highlights the main idea of my blog: globalization and its inescapable reality. Whether we are looking at policies on education, free speech, or simply changes in pecan consumption, it is clear that actions undertaken by China will affect the U.S., and vice-versa. This leads me to conclude by saying…keep a heads up as to how these countries make decisions; whatever it is they do will undoubtedly impact the other.

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