Pine Nuts Rate Foie Gras Prices as Bugs to Drought Cut Harvests; “Pine nuts, being for the most part a product of wild ecosystems, follow the sad fate of their forests,”

Pine Nuts Rate Foie Gras Prices as Bugs to Drought Cut Harvests

French gourmets face a quandry: spend that last euro on foie gras or on a package of pine nuts.

The global harvest of the nuts — a key ingredient in classic Italian pesto sauce which graced prehistoric diets and was considered an aphrodisiac in ancient Rome — fell an estimated 47 percent last year, boosting prices to the highest in more than a decade. That’s prompting manufacturers and home preparers to substitute cheaper cashews or walnuts.

“Consumers will start treating them more like a luxury item, something of a tree-produced caviar,” said Leonid Sharashkin, pine-nut forestry adviser to Salem, Missouri-based Pinenut.com, which harvests and sells wild crops.

The crop in China, the biggest shipper, fell 90 percent last year, while yields dropped 63 percent in the Mediterranean region, the International Nut & Dried Fruit Council estimates. U.S. import prices for shelled pine nuts were the highest in at least two decades in 2012, while German buyers in November paid the most for Chinese nuts since at least 1998, trade data show.

French retailer Monoprix SA sells the nuts online starting at 78.40 euros ($103) a kilogram (2.2 pounds), more expensive than foie gras, 20-month-cured Parma ham or lumpfish eggs.

“Merchandise is still available but it depends on the price,” said Michel Kok, who trades pine nuts at Rotterdam- based importer Catz International BV, a unit of Amsterdam Commodities NV. (ACOMO) “There’s definitely less supply.”

Logging, deforestation, fire and pests have reduced pine stands in China, Russia and the U.S. Yield swings mean good pine-nut years alternate with bad ones, said Sven Mutke, a researcher at Madrid-based forest research center INIA-Cifor.

Global Shortage

“Pine nuts, being for the most part a product of wild ecosystems, follow the sad fate of their forests,” Sharashkin said. “There’s a global shortage.”

About 29 pine species produce edible seeds, with East Asia’s Korean pine, the Mediterranean stone pine and Pakistan’s chilgoza pine the most important for world trade, according to the United Nations’ Food & Agriculture Organization. The different pines are as distinct as plums, apricots and cherries, said Mutke at INIA.

“High demand for all kinds of pine nuts is triggering a high price level for all,” Mutke said.

Pompeii, Fregene

Pine-nut remains have been found in the ruins of Pompeii. Large stone-pine forests were planted in Italy after Papal decrees, including one in 1666 near Fregene, north of Rome, which still exists, according to the FAO. The nuts are of “exceptional” nutritional value, rich in protein, unsaturated fats and amino acids essential to human growth, the FAO says.

The classic Pesto Genovese recipe calls for crushed fresh basil leaves, olive oil, pine nuts and parmesan cheese.

“They’re irreplaceable,” said chef Giorgio Locatelli, who uses about 75 kilograms of the nuts a year in dishes such as caponata, a Sicilian eggplant salad, at his London restaurant Locanda Locatelli. “We’ll have to wait and hope for a more favorable harvest that brings the price down again.”

The price has prompted some food makers to change their recipes, said Jochen Voecks, who trades the nuts at German dried-fruit company Michael Priestoph GmbH in Hamburg.

Barilla Holding SpA, the world’s largest pasta maker, has been using cashew nuts to make its pesto for more than 10 years, and consumers like the taste, said spokeswoman Marina Morsellino. With output exceeding global pine-nut trade more than 20-fold, cashews are less than half the price. The switch allows Barilla to sell a 190-gram jar for about 1.58 euros.

Cheaper Substitutes

A comparison of five commercial pesto sauces last year by Italian food-news website Il Fatto Alimentare found three contained cashews as well as pine nuts, while two contained no pignoli at all.

“Pine nuts do have substitutes,” Sharashkin said. “Even if an almond pesto or walnut pesto does not sound nearly as appetizing as the genuine pesto with pine nuts, some people will argue it’s still better than no pesto at all.”

While EU imports of pine nuts fell to about 8,324 tons last year from a 2008 peak of 11,176 tons, the value rose to 104.3 million euros in 2012 from 95.7 million euros four years earlier, trade data show.

Average U.S. import prices for shelled pine nuts have more than doubled in the past 10 years to $22.40 a kilogram last year from $8.19 in 2002, U.S. Census data show.

China’s growing middle class means more nuts are consumed domestically, according to Kok at Catz. German importers paid an average 17.02 euros a kilogram for Chinese nuts in December and 17.12 euros in November, from 8.68 euros in December 2011, according to Eurostat.

Nut Harvests

The world pine nut harvest, about 18,405 tons last year, is dwarfed by an almond crop of more than 1 million tons, INC data show. The harvest fell from 34,445 tons in 2011.

China dominated world trade with 78 percent market share in the five years through 2011, according to the INC. The country’s 2012 crop may have slumped to 2,000 metric tons from 20,000 tons a year earlier, the council estimates.

Production was “almost zero” in Jilin and Heilongjiang provinces in China’s northeast, said Irene Girones, project coordinator at the Reus, Spain-based INC.

Destructive Harvesting

Destructive harvesting may have hurt China’s crop. Hundreds of Korean pines in a reserve in the country’s north were damaged in seven years of nut gathering, and yields fell “tremendously” after two years, a 2010 study led by Lina Tang of the Chinese Academy of Sciences showed.

Stone pines from Turkey to Portugal have been damaged by the western conifer seed bug. The Mediterranean region’s crop probably fell to 905 tons last year from 2,445 tons in 2011 because of the bug, the INC said. The council had previously forecast a pine-nut harvest of 2,700 tons.

Native to the western U.S., the 2-centimeter (0.8-inch) bug, which dines on pine cones, was first found in Italy in 1999, since spreading to Turkey in 2009 and Portugal in 2010.

It feeds on pine nuts by piercing cones and digesting the developing seeds. Italian research suggests feeding by the insect on stone pines caused deterioration for 50 percent of first-year pine cones and 65 percent for second-year cones.

“The actual impact of its damage to stone-pine cones is still under study,” said Mutke of INIA-Cifor. “Where it appeared, many unripe cones abort and dry, and those cones that ripen have a very low seed output.”

Many Causes

Mutke said there’s still uncertainty to what extent the cone losses are caused by the bug or other factors, particularly the region’s increasing droughts in recent years. Pine nuts typically make up about 4 percent of cone weight, which can drop to 2 percent due to damage by the seed bug, according to Mutke.

Endemic pine pests include the cone weevil and the pine- cone moth. Global warming is also making stone pines more susceptible to the fungus diplodia pinea, which can be spread by the western conifer seed bug, according to researchers at the University of Florence.

Rising prices will make it worthwhile to gather pine nuts in remote areas or invest in tree management, according to Sharashkin. Costly pine nuts also mean grafted orchards and agroforestry systems become profitable, Mutke said.

“Supply of pine nuts is almost assured,” Sharashkin said. “The only question is the price.”

To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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