Required Report - public distribution

**Date:** 1/31/2005

**GAIN Report Number:** FR5009

FR5009

**France**

**Tree Nuts**

**Annual**

**2005**

**Approved by:**

![](media/image1.wmf)Kurt Seifarth

U.S. Embassy

**Prepared by:**

Marie-Cécile Hénard

**Report Highlights:**

France is the largest EU producer and a net exporter of walnuts.
However, French production is suffering from two consecutive short crops
in 2003 and 2004, due to severe drought in 2003. In addition, the French
trade balance is hurting from the stiff price competitiveness of U.S.
product on the European market, chiefly due to the dollar\'s relative
weakness to the euro.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Paris \[FR1\]

\[FR\]

Table of Contents

[Executive Summary 3](#executive-summary)

[I. Situation and Outlook 3](#i.-situation-and-outlook)

[Production 3](#production)

[Consumption 3](#consumption)

[Trade 3](#trade)

[Policy 4](#policy)

[Marketing 4](#marketing)

[II. statistical tables 5](#ii.-statistical-tables)

[PS&D Table 5](#psd-table)

[Trade Matrices 6](#trade-matrices)

# Executive Summary

France is the largest EU producer and a net exporter of walnuts.
However, French production is suffering from two consecutive short crops
in 2003 and 2004, due to severe drought in 2003. In addition, the French
trade balance is hurting from the stiff price competitiveness of U.S.
product on the European market, chiefly due to the dollar\'s relative
weakness to the euro.

# I. Situation and Outlook

## Production

## 

France is the leading European producer of walnuts, with roughly 25
percent of total European production. In 2004, preliminary estimates
indicate that French walnut production partially recovered from its
abnormally low level of 24,000 MT in 2003, where it was negatively
affected by severe drought.

There are now 2 appellations of origins (AOC) labels for high quality
walnuts in France: \"noix de Grenoble\" and \"noix du Périgord\". Nuts
marketed under these appellations are grown in delimited zones: \"Noix
de Grenoble\" is grown in the southeastern producing regions of France;
and \"Noix du Périgord\" is grown in southwestern France. (See annual
report FR3040, dated 8/11/03)

## Consumption

Total walnut consumption in the PS&D includes human consumption and
estimated stocks, as separate stock estimates are not available. Walnut
consumption in France falls into three categories: snacking and home
cooking, by-products (oils), and shelled walnuts used as ingredients in
the pastry, bakery and cheese industries.

French households are estimated to purchase approximately 7,000-9,000 MT
of in-shell walnuts, (including 2,000 MT of fresh walnuts and 7,000 MT
of dried walnuts), and 6,000 MT shelled walnuts per year.

Most of the southeastern production (roughly 75 percent) is for the
in-shell walnut market, while more than half of the southwestern
production goes to the shelled walnut market segment. Overall, large
grades are for the in-shell walnut market, while smaller grades are for
the shelled walnut market.

The French per capita consumption of walnuts is 150 grams for in-shell
walnuts and 200 grams for shelled walnuts. In-shell walnuts are mainly
consumed in the fall and in winter (mainly November and December). There
is no seasonality for shelled walnut consumption.

## Trade

France is a net exporter of walnuts, and exports principally to EU
member states and Switzerland. French and U.S. walnuts compete in these
markets. As indicated in the tables below, France mainly exports
in-shell walnuts and principally imports shelled walnuts.

In MY 2003/04, French exports of walnuts decreased by 15 percent, due to
the lower availability and lower quality (mainly smaller grade nuts)
than in the previous year, as French walnut harvest was negatively
affected by drought in 2003. In MY 2003/2004, French walnuts also faced
increased competition from California product, which benefited from the
lower Dollar to Euro exchange rate. Market shares for French walnuts in
Spain and Germany have declined, to the benefit of U.S. product.

In MY 2003/04, reduced French domestic production lead to higher imports
of shelled walnuts from Moldova and Ukraine. Imports from the United
States also significantly increased but remained limited, and mainly
consisted of in-shell walnuts.

## Policy

The French Fruits and Vegetable Board (ONIFLHOR) is the Frernch Ministry
of Agriculture agency responsible for distributing EU and GOF funds to
the French fruit, vegetable and flower sectors. French walnut growers do
not receive direct payments for growing walnuts, but they do benefit
from programs run through Producer Organizations (POs).

Over the past few years, the 11 walnut/hazelnut/almond POs used GoF and
European funds to form POs. In addition, working capital insurance to
partially pay storing, packaging and sorting was provided to growers
until 2001 (see report FR3040, dated 8/11/2003).

From 1992 to 2003, 26 million euros were provided to French POs
specializing in walnut/hazelnut and almond production under the "program
for improving quality and marketing" (improving orchards, renewing
equipment, getting technical assistance). This amount included 1.5
million euros paid in 2003, 0.275 million euros from the GOF and
remainder from the EU budget.

## Marketing

While the in-shell large grade, high quality and high-priced walnut
market segment is dominated by domestically-grown walnuts sold under the
origin logos \"noix du Périgord\" and \"noix de Grenoble\", the shelled
walnut and the walnut pieces market segments offer the best
opportunities for U.S. walnuts.

The market for snacking products has increased significantly over the
past few years. Developing consumer-oriented packages (small size, easy
to open and close) of shelled walnuts as snacks would certainly help
increase sales of U.S. shelled walnuts on the French market.

Another marketing opportunity for U.S. walnuts is shelled walnuts or
walnut pieces used in bulk by the French food processing industry. For
example, there are more and more U.S.-type cookies and pastry (brownies,
muffins) sold on the French market and U.S. walnuts may be used as
ingredients in these, either in ready-made products or in cooking mixes
to prepare at home.

The leading French importers of U.S. walnuts is:

SAISOF

28/31, rue des investisseurs, ZA Ouest Plaine Haute

91580 Crosne

tel: (33-1) 69 83 88 30

fax: (33-1) 69 83 88 18

[saisof@aol.com]{.underline}

# II. statistical tables

## PS&D Table

+---------+---------+---------+---------+---------+---------+---------+
| ##      |         |         |         |         |         |         |
| #### PS |         |         |         |         |         |         |
| D Table |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| **Co    | **F     |         |         |         |         |         |
| untry** | rance** |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| **Comm  | **W     |         |         |         | (H      |         |
| odity** | alnuts, |         |         |         | A)(1000 |         |
|         | Inshell |         |         |         | TRE     |         |
|         | Basis** |         |         |         | ES)(MT) |         |
+---------+---------+---------+---------+---------+---------+---------+
|         | 2003    | Revised | 2004    | E       | 2005    | F       |
|         |         |         |         | stimate |         | orecast |
+---------+---------+---------+---------+---------+---------+---------+
|         | USDA    | Post    | USDA    | Post    | USDA    | Post    |
|         | O       | E       | O       | E       | O       | E       |
|         | fficial | stimate | fficial | stimate | fficial | stimate |
|         | \[Old\] | \[New\] | \[Old\] | \[New\] | \[Old\] | \[New\] |
+---------+---------+---------+---------+---------+---------+---------+
| *       |         | 10/2003 |         | 10/2004 |         | 10/2005 |
| *Market |         |         |         |         |         |         |
| Year    |         |         |         |         |         |         |
| Begin** |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| Area    | 20200   | 20200   | 20400   | 20200   | 20400   | 20200   |
| Planted |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| Area    | 15600   | 15600   | 15900   | 15600   | 15900   | 15600   |
| Ha      |         |         |         |         |         |         |
| rvested |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| Bearing | 1600    | 1600    | 1600    | 1600    | 1600    | 1600    |
| Trees   |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| Non-    | 450     | 450     | 450     | 450     | 450     | 450     |
| Bearing |         |         |         |         |         |         |
| Trees   |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| Total   | 2050    | 2050    | 2050    | 2050    | 2050    | 2050    |
| Trees   |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| Be      | 0       | 0       | 0       | 0       | 0       | 0       |
| ginning |         |         |         |         |         |         |
| Stocks  |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| Pro     | 23350   | 24000   | 25000   | 28000   | 30000   | 30000   |
| duction |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| Imports | 17950   | 15490   | 16000   | 13000   | 14000   | 12000   |
+---------+---------+---------+---------+---------+---------+---------+
| TOTAL   | 41300   | 39490   | 41000   | 41000   | 44000   | 42000   |
| SUPPLY  |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| Exports | 16300   | 18750   | 16000   | 20000   | 19000   | 21000   |
+---------+---------+---------+---------+---------+---------+---------+
| D       | 25000   | 20740   | 25000   | 21000   | 25000   | 21000   |
| omestic |         |         |         |         |         |         |
| Cons    |         |         |         |         |         |         |
| umption |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| Ending  | 0       | 0       | 0       | 0       | 0       | 0       |
| Stocks  |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| TOTAL   | 41300   | 39490   | 41000   | 41000   | 44000   | 42000   |
| DISTR   |         |         |         |         |         |         |
| IBUTION |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+

## Trade Matrices

Shelled and In-Shell Trade Data, MY 2000/01 and MY 2001/02 (according to
French Customs):

French exports of in-shell walnuts (08023100), MT, product weight:

  ------------------- ----------------- ----------------- -----------------
  Countries           MY 01/02          MY 02/03          MY 03/04

  Total               17,118            17,291            13,773

  U.S.                0                 0                 0

  Spain               5,416             5,759             3,711

  Germany             4,100             4,782             3,368

  Italy               2,908             1,627             723

  Moldova             1,356             1,945             3,398

  Portugal            1,159             1,059             682

  Belgium             605               456               433

  Switzerland         501               487               446
  ------------------- ----------------- ----------------- -----------------

French Imports of in-shell walnuts (08023100), MT, product weight:

  ------------------- ----------------- ----------------- -----------------
  Countries           MY 01/02          MY 02/03          MY 03/04

  Total               293               1,170             849

  U.S.                194               195               459

  Spain               54                637               17

  Netherlands         0                 16                226

  Italy               13                209               28
  ------------------- ----------------- ----------------- -----------------

French exports of shelled walnuts (08023200), MT, product weight:

  ------------------- ----------------- ----------------- -----------------
  Countries           MY 01/02          MY 02/03          MY 03/04

  Total               2,568             2,440             2,490

  U.S.                0                 0                 0

  Germany             953               1,050             967

  Switzerland         558               475               468

  Spain               224               161               111

  Netherlands         186               125               153

  Portugal            157               96                62

  Belgium             152               167               169

  Denmark             104               128               135
  ------------------- ----------------- ----------------- -----------------

French imports of shelled walnuts (08023200), MT, product weight:

  ------------------- ----------------- ----------------- -----------------
  Countries           MY 01/02          MY 02/03          MY 03/04

  Total               6,200             6,467             7,322

  U.S.                0                 95                40

  Moldova             3,666             4,119             4,451

  India               870               444               286

  Hungary             402               226               298

  Greece              144               75                104

  China               111               317               315

  Ukraine             212               488               870

  Poland              148               101               46

  Romania             151               75                184
  ------------------- ----------------- ----------------- -----------------

Total French exports of walnuts, in MT, in-shell basis (2 MT shelled
walnuts = 1 MT in-shell walnuts) for full MY 2000/01 and 2001/02:

  ------------------ ----------------------- ---------------- -----------
  **Export Trade                                              
  Matrix**                                                    

  **Country**        France                                   

  **Commodity**      Walnuts, Inshell Basis                   

  Time Period        Oct/Sept                Units:           MT

  Exports for:       2003                                     **2004**

  U.S.               0                       U.S.             0

  Others                                     Others           

  Germany            6882                    Germany          5302

  Spain              6081                    Spain            3933

  Italy              1769                    Moldova          3468

  Switzerland        1437                    Switzerland      1382

  Portugal           1251                    Italy            931

  Moldova            1979                    Portugal         806

  Belgium            790                     Belgium          771

  Denmark            630                     Denmark          523

  Netherlands        290                     Netherlands      337

  Poland             264                     Austria          314

  Total for Others   21373                                    17767

  Others not Listed  798                                      986

  Grand Total        22171                                    18753
  ------------------ ----------------------- ---------------- -----------

  ------------------ ----------------------- ---------------- -----------
  **Import Trade                                              
  Matrix**                                                    

  **Country**        France                                   

  **Commodity**      Walnuts, Inshell Basis                   

  Time Period        Oct/Sept                Units:           MT

  Imports for:       2003                                     **2004**

  U.S.               385                     U.S.             539

  Others                                     Others           

  Moldova            8238                    Moldova          8924

  Ukraine            976                     Ukraine          1740

  India              888                     China            630

  Spain              765                     Hungary          596

  China              634                     India            572

  Italy              461                     Romania          368

  Hungary            452                     Slovakia         348

  Slovakia           224                     Spain            301

  Poland             202                     Netherlands      270

  Greece             150                     Italy            266

  Total for Others   12990                                    14015

  Others not Listed  729                                      939

  Grand Total        14104                                    15493
  ------------------ ----------------------- ---------------- -----------

Source: French Customs