Required Report - Public distribution

**Date:** 9/21/2007

**GAIN Report Number:** CH7071

CH7071

**China, Peoples Republic of**

**Tree Nuts**

**Annual**

**2007**

**Approved by:**

![](media/image1.wmf)William Westman

AGBEIJING

**Prepared by:**

Eric Trachtenberg, Chanda Beckman, Wu Bugang, and Evid Liu

**Report Highlights:**

Post forecasts walnut production at 460,000 metric tons in marketing
year 2007, up eight percent from 2006. This increase is a result of
increasing yields in Shanxi province, expanded acreage, favorable
returns, and significant government support. These factors are also
expected to increase production further as the new plantings begin
bearing. Walnut consumption remains strong and is forecast to increase
by about eight percent to 436,250 metric tons, while demand for other
tree nuts is more dependent on prices. Walnut imports are likely to
increase to fulfill domestic demand. The United States remains the
single largest exporter of walnuts to China, with MY 2006 exports to
China valued at \$9.9 million. Almond and pistachio imports are also
forecast to increase to 2,000 metric tons and 16,000 metric tons
respectively.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Beijing \[CH1\]

\[CH\]

Table of Contents

[**Executive Summary 3**](#executive-summary)

[Production 3](#production)

[Larger Harvest, Except in Yunnan 3](#larger-harvest-except-in-yunnan)

[Increasing Plantings 3](#increasing-plantings)

[Better Management 3](#better-management)

[Limited Almond and Pistachio Production
4](#limited-almond-and-pistachio-production)

[Prices 4](#prices)

[Consumption 5](#consumption)

[Higher Income, Increasing Consumption
5](#higher-income-increasing-consumption)

[Trade 5](#trade)

[Walnut Imports Increase 5](#walnut-imports-increase)

[China's Imports Price-Dependent 5](#chinas-imports-price-dependent)

[Domestic Demand Ahead of Production
6](#domestic-demand-ahead-of-production)

[Policy 6](#policy)

[Government Assistance Continues 6](#government-assistance-continues)

[Import Tariffs and VAT for Nut Products in 2007:
6](#import-tariffs-and-vat-for-nut-products-in-2007)

[Increased Inspections at China's ports
7](#increased-inspections-at-chinas-ports)

[Marketing 7](#marketing)

[IPR Infringement 7](#ipr-infringement)

[Lower Cost Substitutions Used 8](#lower-cost-substitutions-used)

[Tables 9](#tables)

[Walnut Production, Supply and Demand (PSD) Table
9](#walnut-production-supply-and-demand-psd-table)

[Trade Matrices for Walnuts 10](#trade-matrices-for-walnuts)

[Almond Production, Supply and Demand (PSD) Table
11](#almond-production-supply-and-demand-psd-table)

[Trade Matrix for Almonds 12](#trade-matrix-for-almonds)

[Pistachio Production, Supply and Demand (PSD) Table
13](#pistachio-production-supply-and-demand-psd-table)

[Trade Matrices for Pistachios 14](#trade-matrices-for-pistachios)

# Executive Summary

Walnut production is forecast up at 460,000 metric tons in marketing
year 2007, an increase of eight percent from 2006. The increase is
mostly attributed to recovering production in Shanxi, where 90 percent
of the walnut crop was lost to a spring snowstorm in MY 2006. Production
of shelled almonds in MY 2007 has recovered and forecast at 1,500 MT, up
from 200 MT in 2006 when the crop was devastated by a cold winter and
very little agricultural inputs from farmers.

Walnut consumption remains strong and is forecast to increase by about
eight percent to 436,250 MT in MY 2007. The United States remains the
single largest exporter of walnuts to China, with MY 2006 exports to
China valued at \$9.9 million. Almond and pistachio imports are both
forecast to increase by 30 percent to meet the increasing consumer
demand for nuts at reasonable prices. U.S. exports will likely increase,
because prices are lower in anticipation of bumper harvests in almonds
and pistachios.

IPR infringement is a threat for U.S. nut products in China. Increased
effort should be placed on protecting the IPR of U.S. nut products and
educating consumers about specific U.S. product characteristics.

# 

# Production

## Larger Harvest, Except in Yunnan

Walnut production is forecast up at 460,000 metric tons (MT) in
marketing year 2007 (MY, October - September), an increase of eight
percent from 2006. The increase is mostly attributed to recovering
production in Shanxi, where 90 percent of the walnut crop was lost to a
spring snowstorm in MY 2006. Shanxi is China's fourth largest
walnut-producing province. However, MY 2007 production in other major
producing provinces is forecast to decrease slightly because of heavy
rain and high temperatures during crop development in Yunnan, and frost
damage during the blossom season in Xinjiang and Shaanxi.

## Increasing Plantings

Walnut planted area is forecast up at 1.33 million hectares (HA) in MY
2007, up five percent from 2006 in the wake of good returns and
government support (see Prices and Policy below). Acreage expansion is
occurring in almost all walnut producing provinces, but especially in
Yunnan Province. Farmers typically plant walnut trees on slopes and many
rural households own just a small parcel of land. However, a survey
conducted by the local government in Yunnan indicates that as much as
5.33 million HA of uncultivated, mountainous land can be developed into
walnut production by 2010. In Shanxi Province, where land resources are
quite limited, some farmers reduced the area of apple or pear plantings
in favor of walnuts.

## Better Management

China is attempting to improve both quality and yields. General nut
quality is improving with better orchard management and the increased
use of higher quality varieties. Traditionally, growers did not care for
their walnut trees, planting them along roadsides, in backyards, or
scattered on hills. Gradually, farmers are beginning to manage their
crops more carefully, especially consolidated orchards. Industry sources
report more focus on pruning, irrigation, and fertilization -- all
despite increasing agricultural input costs. Industry sources report
that water shortages continue to be a concern for growers, along with
rising wages.

China's producers are also moving into more modern consolidated
orchards, increasing yields. A more traditional plantation will yield
about 500 kilo per hectare, while a consolidated orchard will yield
about 3,000 kilo per hectare. Post estimates the share of consolidated
orchards accounts for one-fifth to one-sixth of the total walnut planted
area.

## Limited Almond and Pistachio Production

China produces limited amounts of almonds and virtually no pistachios.
Almond production is concentrated in the Northwest of China, in Xinjiang
Province. Production of shelled almonds in MY 2007 has recovered and
forecast at 1,500 MT, up from 200 MT in 2006. The MY 2006 crop was
devastated by a cold winter and very little agricultural inputs from
farmers. In Kashi, the major almond-producing county in Xinjiang,
temperatures dropped so low in February 2006 that almost all the buds
were destroyed.

Although the provincial government has an impressive plan to plant
67,000 hectares of almond trees during the 11^th^ Five-Year-Plan
(2005-2010), industry sources report that even increased planting area
is unlikely to dramatically expand almond production given the extreme
lack of inputs and poor orchard management. Almonds produced in Xinjiang
are mostly sold in-shell within the province, while a very limited
quantity is transported to nearby provinces.

Pilot almond production programs in Shanxi and Gansu to date have also
not been promising. Newer plantings have not yet borne fruit, and older
trees are often plagued by pests and disease.

China produces very few pistachios. Industry sources indicate some trial
programs have begun in Southern Xinjiang, but no production has been
reported \-- and sources doubt the success of such programs given the
cold weather there.

# Prices

Walnut prices in China continue to increase because of strong demand but
vary in each city depending on availability and variety. The average
farm gate price for in-shell walnuts has jumped from \$0.6 US per kilo
in 1994 to \$2.9 in 2006. Farm gate prices for the 2007 crop are not
available until late September, but traders predict a higher price than
the previous season. Nut prices and consumption peak during traditional
holidays such as the Spring Festival in January or February or the
Mid-Autumn (or Moon) Festival in September. ![](media/image2.wmf)

Note: exchange rate 1\$US = 7.5 RMB; North region includes the major nut
producing cities of Beijing, Tianjin, Shandong, Shanxi, Inner Mongolia,
and Hebei. Figures for 2007 are forecasts.

# 

# Consumption

## Higher Income, Increasing Consumption

Walnut consumption remains strong and is forecast to increase by about 8
percent to 436,250 MT in MY 2007. MY 2005 and 2006 consumption has also
been revised up to 358,468 and 401,925 MT respectively. In general, nuts
are considered a snack food in China and consumption is heavily
dependent on disposable income, making nuts and nut products
price-sensitive and vulnerable to substitution. A major industry source
reports an annual growth rate of five percent in total nut consumption,
but Post believes walnut consumption is increasing much faster than
other types of nuts. Unlike other nuts, walnuts are considered a health
food with many benefits - most notably improved brain function. Nut
products are mainly consumed in urban areas, especially in large cities
such as Beijing and Shanghai. Higher income households tend to purchase
more nuts. The provisional results of a survey conducted in Nanjing, a
major industrial city near Shanghai, indicate that more than 20 percent
of households buy one to six kilos of walnuts a month and eight percent
of families consume more than six kilos of walnuts per month. Demand for
nuts is expected to continue to increase (for walnuts in particular)
with income growth, urbanization, and more health-conscious consumers.

Although some processed products such as walnut milk, walnut oil, and
walnut powder are sold on the market, the majority of walnuts are sold
in bulk (in-shell and unsalted) or packaged forms (shelled, sugar/honey
coated, or salted). Bakery and confectionery industries also consume
significant amounts of nuts. New products such as salted in-shell
walnuts may generate more buying interest from Chinese consumers who are
open to trying new products.

# Trade

## Walnut Imports Increase

MY 2007 imports of walnuts are forecast to increase by 13 percent from
2006, to 8,750 MT. This rise is based on strong domestic demand driven
by rising incomes and health conscious consumers. The appreciation of
the Yuan is also fueling buying interest. The United States remains the
single largest exporter of walnuts to China, with MY 2006 exports to
China valued at \$9.9 million.

## China's Imports Price-Dependent

Chinese importers remain highly sensitive to world nut prices and import
volume is heavily dependent on price. When prices are high, buying
interest is capped or importers look for cheaper alternatives.
Pistachios are a good example of this; Iran has overtaken the United
States as the top exporter of pistachios to China because of its price
advantage. Moreover, consumers are unable to differentiate between U.S.
and Iranian pistachios, the latter are usually bleached by importers.
Therefore, the majority of pistachios sold in the domestic market are of
Iranian origin. Imported U.S. pistachios are mainly processed and packed
for re-export to the United States and Europe. This year, however,
Chinese importers bought a greater amount of U.S. pistachios at prices
even lower than Iran's when U.S. exporters cleared their stocks in
anticipation of a bumper harvest. As a result, China's MY 2007 imports
of pistachios are forecast to increase 30 percent from MY 2006 to 16,000
MT. Industry sources confirm Iran is also expecting a good pistachio
harvest this year.

Almond imports are also forecast to increase by 30 percent from 1,566 MT
in 2006 to 2,000 MT in MY 2007 to meet the increasing consumer demand
for nuts at reasonable prices. California suppliers also anticipate a
bumper almond crop and are offering lower prices. U.S. almonds account
for an average of 30 percent of China's almond import market, the
largest share held by any one country.

Some Chinese importers/processors have begun to express an interest in
buying U.S. pecans. Increased U.S. industry marketing efforts, coupled
with promotional events targeting the baking/confectionary sector, could
lead to sales in the near future.

## Domestic Demand Ahead of Production

Walnut exports are forecast to increase six percent to 32,500 MT in MY
2007 as result of crop recovery in Shanxi, a major walnut production
area. However, China's long term share of walnut exports to the world
market is expected to decrease because of a stronger Yuan and quickly
increasing domestic demand. However, some companies still prefer to
export walnuts than sell them domestically because payments from
overseas buyers clear their accounts more quickly than from domestic
retailers. Large supermarkets or hypermarkets require a high "entrance
fee" and often delay payments to the food suppliers.

# 

# Policy

## Government Assistance Continues 

A national forestation program that subsidizes farmers who convert grain
crops on slope land into forest or grass (to prevent soil erosion) has
facilitated walnut plantations since 1999 (refer to previous tree nut
annuals CH6067 and CH5062 for details about the program). However,
industry sources report the area of slope land benefiting from this
program is limited. Substantial support for walnut production occurs at
the provincial level or below, depending on the local government's
resources and the importance attached to production. Often provincial
support is implemented through technical services, free or subsidized
seedlings, and in some cases, cash subsidies. For example, in the major
walnut producing area of Yunnan Province, the county government of Dayao
provides \$100 US per hectare to walnut growers whose orchards measure
more than one mu (15 mu = 1 hectare).

Provincial governments also fund public research institutes and
agricultural universities to develop standardized farming practices and
to build demonstration farms to exhibit these standards. Research
projects also focus on developing new or improving existing varieties.

China's tree nut industry does not benefit from any direct central
government support. However, the government does provide a five percent
tax rebate to walnut exporters after their products have been exported.
According to industry sources, exporters can also easily receive bank
loans to purchase raw materials.

Import tariffs for nuts remain high, especially for in-shell almonds and
walnuts. In addition to the customs duty, importers must pay a 13
percent VAT on top of the value of the shipment, making imported nuts
more expensive than domestically produced nuts. There is no sign the
government will reduce these tariffs in the near future. Industry
contacts report that some importers are now buying nuts from ASEAN
countries bordering China, to take advantage of the zero tariff
arrangement on farm products between China and ASEAN nations.

## Import Tariffs and VAT for Nut Products in 2007:

  ------------ ---------------------------- -------- --------- -----------
  HS Code      Description                  Tariff   VAT       Effective
                                                               Rate

  0801.3100    Cashew nuts, in --shell      20.0%    13.0%     35.60%

  0801.3200    Cashew nuts, shelled         10.0%    13.0%     24.30%

  0802.1100    Almonds, in-shell            24.0%    13.0%     40.12%

  0802.1200    Almonds, shelled             10.0%    13.0%     24.30%

  0802.2200    Hazelnuts/Filberts, shelled  10.0%    13.0%     24.30%

  0802.2100    Hazelnuts/Filberts, in-shell 25.0%    13.0%     41.25%

  0802.3100    Walnuts, in-shell            25.0%    13.0%     41.25%

  0802.3200    Walnuts, shelled             20.0%    13.0%     35.60%

  0802.5000    Pistachios                   10.0%    13.0%     24.30%

  0802.9049    Macadamia nuts               24.0%    13.0%     40.12%

  2008.1910    Walnut kernels, in airtight  20.0%    17.0%     40.40%
               containers                                      

  2008.1920    Other nuts, in airtight      13.0%    17.0%     28.70%
               containers                                      

  Source:                                                      
  China                                                        
  Customs                                                      
  ------------ ---------------------------- -------- --------- -----------

## Increased Inspections at China's ports 

China's General Administration of Quality Supervision, Inspection and
Quarantine (AQSIQ) recently started requiring exporters to register the
walnuts orchards from which they source raw materials. Industry sources
indicate this requirement is difficult to implement because most
exporters do not own orchards, but source from middle men who collect
walnuts from numerous individual farmers. The recent spike of food
safety incidents associated with Chinese food exports has resulted in
increased inspection and testing by China's local Inspection and
Quarantine Bureaus (CIQs). Nut shipments for export are now tested for
heavy metal residues. Additionally, AQSIQ now requires that all export
food products receive a CIQ inspection label prior to export.

Increased CIQ inspections also impact China's imports. Since early 2007,
clearance of imported cargo has slowed. Where it used to take one day
for a shipment to clear inspection and customs at a port of entry such
as Guangdong, it now takes four or five working days.

Imported nut products must meet China's Hygienic Standard for Nuts
(GB16326-2005) (refer to CH3087 for an English version of the standard).

# Marketing

## IPR Infringement 

IPR infringement is a threat for U.S. nut products in China. In general,
U.S. nuts are considered superior in quality and are favored by Chinese
consumers. However, consumers have difficulty distinguishing U.S. nuts
from competitors in the market. This has created substantial
opportunities for counterfeit products that claim to be of U.S. origin
but are made from ingredients originating elsewhere. Increased industry
efforts should be placed on protecting the IPR of U.S. nut products and
educating consumers about specific U.S. product characteristics.

Pistachios are a good example. Due to lower prices since 2002, imports
of bleached pistachios from Iran have increased over U.S. pistachios.
Many consumers are unaware that Iran's pistachios are bleached white to
attain a shell color similar to U.S. pistachios. U.S. pistachios
naturally have an ivory colored shell without bleaching. Most consumers
associate the bleached shell with higher quality U.S. pistachios, and
purchase based on shell color and the lowest price. A large nut
processor whose products are carried in high-end retailers recently
tried to sell U.S. pistachios through its retail partners. However,
learned that consumers actually preferred the whitest shell color, not
realizing the ivory shell of the non-bleached nuts actually
distinguishes the higher quality U.S. pistachios from those of inferior
quality. This type of misconception could quickly become a barrier to
promoting U.S. pistachios in China's market.

**Promoting U.S. Nuts**

The high quality, important health benefits, and added value of U.S.
nuts should be included as themes in the promotion of U.S. nuts in
China's market. China's high-income consumers are concerned about
quality and also seek health benefits from food. Therefore, they will
pay a premium price for products with these attributes. In recent years,
an increasing niche has emerged in the fast growing bakery and
confectionary sector, featuring new forms of nuts (slivered, sliced,
grounded, or powdered) as ingredients in a wider range of products from
cakes to breads and candies to biscuits. Because consumers lack specific
knowledge of U.S. nuts, technical assistance and product recipes will be
helpful in promoting nut ingredients to high-end bakeries and
confectionary makers.

## Lower Cost Substitutions Used

Price remains critical in China's market. Imported U.S. nuts are more
expensive than those from China or other countries, and price can serve
as a purchase barrier for both end-consumers and food manufacturers. To
cut costs, some manufacturers and bakeries substitute tree nuts
(especially almonds) in recipes with a less expensive alternative, such
as peanuts. Educating Chinese buyers about the value U.S. tree nuts add
to the final product is a way to convince Chinese manufacturers and
consumers to purchase the higher quality U.S. ingredients instead of
less expensive alternatives.

# Tables

## Walnut Production, Supply and Demand (PSD) Table

<table>
<colgroup>
<col style="width: 18%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 8%" />
<col style="width: 9%" />
<col style="width: 8%" />
<col style="width: 9%" />
<col style="width: 7%" />
<col style="width: 9%" />
<col style="width: 9%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="10"><p id="psd-table" class="heading">PSD Table</p></td>
</tr>
<tr class="even">
<td><strong>Country</strong></td>
<td colspan="9"><h6 id="china-peoples-republic-of">China, Peoples
Republic of</h6></td>
</tr>
<tr class="odd">
<td><strong>Commodity</strong></td>
<td colspan="9"><h6 id="walnuts-in-shell-basis">Walnuts, In-shell
Basis</h6>
<p>(HA)(1000 TREES)(MT)</p></td>
</tr>
<tr class="even">
<td></td>
<td>2005</td>
<td>Revised</td>
<td></td>
<td>2006</td>
<td>Estimate</td>
<td></td>
<td>2007</td>
<td>Forecast</td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
</tr>
<tr class="even">
<td><strong>Market Year Begin</strong></td>
<td></td>
<td>10/2005</td>
<td>10/2005</td>
<td></td>
<td>10/2006</td>
<td>10/2006</td>
<td></td>
<td>10/2007</td>
<td>10/2007</td>
</tr>
<tr class="odd">
<td>Area Planted</td>
<td>1009800</td>
<td>1009800</td>
<td>1200000</td>
<td>1380000</td>
<td>0</td>
<td>1270000</td>
<td>0</td>
<td>0</td>
<td>1333500</td>
</tr>
<tr class="even">
<td>Area Harvested</td>
<td>858000</td>
<td>858000</td>
<td>858000</td>
<td>966000</td>
<td>0</td>
<td>889000</td>
<td>0</td>
<td>0</td>
<td>933450</td>
</tr>
<tr class="odd">
<td>Bearing Trees</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Non-Bearing Trees</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Total Trees</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Beginning Stocks</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Production</td>
<td>388000</td>
<td>388000</td>
<td>388000</td>
<td>425000</td>
<td>0</td>
<td>425000</td>
<td>0</td>
<td>0</td>
<td>460000</td>
</tr>
<tr class="even">
<td>Imports</td>
<td>2800</td>
<td>2800</td>
<td>6214</td>
<td>8400</td>
<td>0</td>
<td>7585</td>
<td>0</td>
<td>0</td>
<td>8750</td>
</tr>
<tr class="odd">
<td>Total Supply</td>
<td>390800</td>
<td>390800</td>
<td>394214</td>
<td>433400</td>
<td>0</td>
<td>432585</td>
<td>0</td>
<td>0</td>
<td>468750</td>
</tr>
<tr class="even">
<td>Exports</td>
<td>39500</td>
<td>39500</td>
<td>35746</td>
<td>33000</td>
<td>0</td>
<td>30660</td>
<td>0</td>
<td>0</td>
<td>32500</td>
</tr>
<tr class="odd">
<td>Domestic Consumption</td>
<td>351300</td>
<td>351300</td>
<td>358468</td>
<td>400400</td>
<td>0</td>
<td>401925</td>
<td>0</td>
<td>0</td>
<td>436250</td>
</tr>
<tr class="even">
<td>Ending Stocks</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Total Distribution</td>
<td>390800</td>
<td>390800</td>
<td>394214</td>
<td>433400</td>
<td>0</td>
<td>432585</td>
<td>0</td>
<td>0</td>
<td>468750</td>
</tr>
</tbody>
</table>

Note: Numbers have been converted into in-shell basis using a ratio
between in-shell and shelled of 1:0.4.

## Trade Matrices for Walnuts

+-------------------+--------------+-------------------+--------------+
| ####### Im        |              |                   |              |
| port Trade Matrix |              |                   |              |
+-------------------+--------------+-------------------+--------------+
| **Country**       | China,       |                   |              |
|                   | Peoples      |                   |              |
|                   | Republic of  |                   |              |
+-------------------+--------------+-------------------+--------------+
| **Commodity**     | ###### Wal   |                   |              |
|                   | nuts, In-she |                   |              |
|                   | ll Basis {#w |                   |              |
|                   | alnuts-in-sh |                   |              |
|                   | ell-basis-1} |                   |              |
+-------------------+--------------+-------------------+--------------+
| Time Period:      |              | Units:            | MT           |
| Calendar Year     |              |                   |              |
+-------------------+--------------+-------------------+--------------+
| Imports for:      | 2005         |                   | 2006         |
+-------------------+--------------+-------------------+--------------+
| U.S.              | 3651         | U.S.              | 6013         |
+-------------------+--------------+-------------------+--------------+
| Others            |              | Others            |              |
+-------------------+--------------+-------------------+--------------+
| Kyrgyzstan        | 25           | North Korea       | 188          |
+-------------------+--------------+-------------------+--------------+
| Japan             | 14           | Japan             | 78           |
+-------------------+--------------+-------------------+--------------+
| Peru              | 11           | Mexico            | 6            |
+-------------------+--------------+-------------------+--------------+
| South Africa      | 7            | Peru              | 3            |
+-------------------+--------------+-------------------+--------------+
| Mexico            | 5            | Kazakhstan        | 1            |
+-------------------+--------------+-------------------+--------------+
| North Korea       | 3            |                   |              |
+-------------------+--------------+-------------------+--------------+
| Total for Others  | 65           |                   | 276          |
+-------------------+--------------+-------------------+--------------+
| Others not Listed | 1            |                   | 1            |
+-------------------+--------------+-------------------+--------------+
| Grand Total       | 3717         |                   | 6290         |
+-------------------+--------------+-------------------+--------------+

Note: Import numbers have been converted into in-shell basis using a
ratio between in-shell and shelled of 1:0.4. Figures are calendar year,
based on available statistics.

+-------------------+-------------+-------------------+---------------+
| ####### Ex        |             |                   |               |
| port Trade Matrix |             |                   |               |
+-------------------+-------------+-------------------+---------------+
| **Country**       | China,      |                   |               |
|                   | Peoples     |                   |               |
|                   | Republic of |                   |               |
+-------------------+-------------+-------------------+---------------+
| **Commodity**     | ###         |                   |               |
|                   | ### Walnuts |                   |               |
|                   | , In-shell  |                   |               |
|                   | Basis {#wal |                   |               |
|                   | nuts-in-she |                   |               |
|                   | ll-basis-2} |                   |               |
+-------------------+-------------+-------------------+---------------+
| Time Period:      |             | Units:            | MT            |
| Calendar Year     |             |                   |               |
+-------------------+-------------+-------------------+---------------+
| Exports for:      | 2005        |                   | 2006          |
+-------------------+-------------+-------------------+---------------+
| U.S.              | 165         | U.S.              | 25            |
+-------------------+-------------+-------------------+---------------+
| Others            |             | Others            |               |
+-------------------+-------------+-------------------+---------------+
| UK                | 7378        | UK                | 7965          |
+-------------------+-------------+-------------------+---------------+
| Japan             | 5593        | Japan             | 7823          |
+-------------------+-------------+-------------------+---------------+
| Vietnam           | 3100        | Vietnam           | 5532          |
+-------------------+-------------+-------------------+---------------+
| Germany           | 3001        | Germany           | 3128          |
+-------------------+-------------+-------------------+---------------+
| Canada            | 2356        | UAE               | 1392          |
+-------------------+-------------+-------------------+---------------+
| UAE               | 1782        | Netherlands       | 1078          |
+-------------------+-------------+-------------------+---------------+
| Taiwan            | 1200        | Taiwan            | 1000          |
+-------------------+-------------+-------------------+---------------+
| Australia         | 1168        | France            | 908           |
+-------------------+-------------+-------------------+---------------+
| Netherlands       | 1083        | Saudi Arabia      | 843           |
+-------------------+-------------+-------------------+---------------+
| Turkey            | 905         | Algeria           | 625           |
+-------------------+-------------+-------------------+---------------+
| Total for Others  | 27566       |                   | 30294         |
+-------------------+-------------+-------------------+---------------+
| Others not Listed | 6358        |                   | 5552          |
+-------------------+-------------+-------------------+---------------+
| Grand Total       | 34089       |                   | 35871         |
+-------------------+-------------+-------------------+---------------+

Note: Export numbers have been converted into in-shell basis using a
ratio between in-shell and shelled of 1:0.4. Figures are calendar year,
based on available statistics.

## Almond Production, Supply and Demand (PSD) Table

<table>
<colgroup>
<col style="width: 17%" />
<col style="width: 7%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 8%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 8%" />
<col style="width: 10%" />
<col style="width: 9%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="10"><p id="psd-table-1" class="heading">PSD Table</p></td>
</tr>
<tr class="even">
<td><strong>Country</strong></td>
<td colspan="9"><h6 id="china-peoples-republic-of-1">China, Peoples
Republic of</h6></td>
</tr>
<tr class="odd">
<td><strong>Commodity</strong></td>
<td colspan="9"><p><strong>Almonds, Shelled Basis</strong></p>
<p>(HA)(1000 TREES)(MT)</p></td>
</tr>
<tr class="even">
<td></td>
<td>2005</td>
<td>Revised</td>
<td></td>
<td>2006</td>
<td>Estimate</td>
<td></td>
<td>2007</td>
<td>Forecast</td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
</tr>
<tr class="even">
<td><strong>Market Year Begin</strong></td>
<td></td>
<td>10/2005</td>
<td>10/2005</td>
<td></td>
<td>10/2006</td>
<td>10/2006</td>
<td></td>
<td>10/2007</td>
<td>10/2007</td>
</tr>
<tr class="odd">
<td>Area Planted</td>
<td>0</td>
<td>0</td>
<td>6000</td>
<td>0</td>
<td>0</td>
<td>6600</td>
<td>0</td>
<td>0</td>
<td>7250</td>
</tr>
<tr class="even">
<td>Area Harvested</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Bearing Trees</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Non-Bearing Trees</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Total Trees</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Beginning Stocks</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Production</td>
<td>0</td>
<td>0</td>
<td>1000</td>
<td>0</td>
<td>0</td>
<td>200</td>
<td>0</td>
<td>0</td>
<td>1500</td>
</tr>
<tr class="even">
<td>Imports</td>
<td>0</td>
<td>0</td>
<td>935</td>
<td>0</td>
<td>0</td>
<td>1566</td>
<td>0</td>
<td>0</td>
<td>2000</td>
</tr>
<tr class="odd">
<td>Total Supply</td>
<td>0</td>
<td>0</td>
<td>1935</td>
<td>0</td>
<td>0</td>
<td>1766</td>
<td>0</td>
<td>0</td>
<td>3500</td>
</tr>
<tr class="even">
<td>Exports</td>
<td>0</td>
<td>0</td>
<td>102</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>200</td>
</tr>
<tr class="odd">
<td>Domestic Consumption</td>
<td>0</td>
<td>0</td>
<td>1833</td>
<td>0</td>
<td>0</td>
<td>1766</td>
<td>0</td>
<td>0</td>
<td>3300</td>
</tr>
<tr class="even">
<td>Ending Stocks</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Total Distribution</td>
<td>0</td>
<td>0</td>
<td>1935</td>
<td>0</td>
<td>0</td>
<td>1766</td>
<td>0</td>
<td>0</td>
<td>3500</td>
</tr>
</tbody>
</table>

Note: Numbers have been converted into shelled basis using a ratio
between in-shell and shelled of 1:0.45 for imported almonds and 1:0.3
for domestic almonds.

## Trade Matrix for Almonds

+-------------------+--------------+-------------------+--------------+
| ####### Im        |              |                   |              |
| port Trade Matrix |              |                   |              |
+-------------------+--------------+-------------------+--------------+
| **Country**       | China,       |                   |              |
|                   | Peoples      |                   |              |
|                   | Republic of  |                   |              |
+-------------------+--------------+-------------------+--------------+
| **Commodity**     | ######       |                   |              |
|                   | # Almonds, S |                   |              |
|                   | helled Basis |                   |              |
+-------------------+--------------+-------------------+--------------+
| Time Period:      |              | Units:            | MT           |
| Calendar Year     |              |                   |              |
+-------------------+--------------+-------------------+--------------+
| Imports for:      | 2005         |                   | 2006         |
+-------------------+--------------+-------------------+--------------+
| U.S.              | 1063         | U.S.              | 731          |
+-------------------+--------------+-------------------+--------------+
| Others            |              | Others            |              |
+-------------------+--------------+-------------------+--------------+
| Kyrgyzstan        | 21           | Kyrgyzstan        | 185          |
+-------------------+--------------+-------------------+--------------+
| UK                | 18           | Japan             | 19           |
+-------------------+--------------+-------------------+--------------+
| Japan             | 7            | Pakistan          | 11           |
+-------------------+--------------+-------------------+--------------+
| Germany           | 4            | Kazakhstan        | 2            |
+-------------------+--------------+-------------------+--------------+
|                   |              |                   |              |
+-------------------+--------------+-------------------+--------------+
|                   |              |                   |              |
+-------------------+--------------+-------------------+--------------+
| Total for Others  | 50           |                   | 217          |
+-------------------+--------------+-------------------+--------------+
| Others not Listed |              |                   | 2            |
+-------------------+--------------+-------------------+--------------+
| Grand Total       | 1113         |                   | 950          |
+-------------------+--------------+-------------------+--------------+

Note: Numbers have been converted into shelled basis using a ratio
between in-shell and shelled of 1:0.45. Figures are calendar year, based
on available statistics.

## Pistachio Production, Supply and Demand (PSD) Table

<table>
<colgroup>
<col style="width: 19%" />
<col style="width: 7%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 7%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 7%" />
<col style="width: 9%" />
<col style="width: 9%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="10"><p id="psd-table-2" class="heading">PSD Table</p></td>
</tr>
<tr class="even">
<td><strong>Country</strong></td>
<td colspan="9"><p id="china-peoples-republic-of-2"
class="heading">China, Peoples Republic of</p></td>
</tr>
<tr class="odd">
<td><strong>Commodity</strong></td>
<td colspan="9"><p><strong>Pistachios, In-shell Basis</strong></p>
<p>(HA)(1000 TREES)(MT)</p></td>
</tr>
<tr class="even">
<td></td>
<td>2005</td>
<td>Revised</td>
<td></td>
<td>2006</td>
<td>Estimate</td>
<td></td>
<td>2007</td>
<td>Forecast</td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
</tr>
<tr class="even">
<td><strong>Market Year Begin</strong></td>
<td></td>
<td>10/2005</td>
<td>10/2005</td>
<td></td>
<td>10/2006</td>
<td>10/2006</td>
<td></td>
<td>10/2007</td>
<td>10/2007</td>
</tr>
<tr class="odd">
<td>Area Planted</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Area Harvested</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Bearing Trees</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Non-Bearing Trees</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Total Trees</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Beginning Stocks</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Production</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Imports</td>
<td>0</td>
<td>0</td>
<td>10796</td>
<td>0</td>
<td>0</td>
<td>12200</td>
<td>0</td>
<td>0</td>
<td>16000</td>
</tr>
<tr class="odd">
<td>Total Supply</td>
<td>0</td>
<td>0</td>
<td>10796</td>
<td>0</td>
<td>0</td>
<td>12200</td>
<td>0</td>
<td>0</td>
<td>16000</td>
</tr>
<tr class="even">
<td>Exports</td>
<td>0</td>
<td>0</td>
<td>4252</td>
<td>0</td>
<td>0</td>
<td>3660</td>
<td>0</td>
<td>0</td>
<td>4000</td>
</tr>
<tr class="odd">
<td>Domestic Consumption</td>
<td>0</td>
<td>0</td>
<td>6544</td>
<td>0</td>
<td>0</td>
<td>8540</td>
<td>0</td>
<td>0</td>
<td>12000</td>
</tr>
<tr class="even">
<td>Ending Stocks</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Total Distribution</td>
<td>0</td>
<td>0</td>
<td>10796</td>
<td>0</td>
<td>0</td>
<td>12200</td>
<td>0</td>
<td>0</td>
<td>16000</td>
</tr>
</tbody>
</table>

## Trade Matrices for Pistachios

+-------------------+--------------+-------------------+--------------+
| ####### Im        |              |                   |              |
| port Trade Matrix |              |                   |              |
+-------------------+--------------+-------------------+--------------+
| **Country**       | China,       |                   |              |
|                   | Peoples      |                   |              |
|                   | Republic of  |                   |              |
+-------------------+--------------+-------------------+--------------+
| **Commodity**     | ####### Pi   |                   |              |
|                   | stachios, In |                   |              |
|                   | -shell Basis |                   |              |
+-------------------+--------------+-------------------+--------------+
| Time Period:      |              | Units:            | MT           |
| Calendar Year     |              |                   |              |
+-------------------+--------------+-------------------+--------------+
| Imports for:      | 2005         |                   | 2006         |
+-------------------+--------------+-------------------+--------------+
| U.S.              | 6417         | U.S.              | 4856         |
+-------------------+--------------+-------------------+--------------+
| Others            |              | Others            |              |
+-------------------+--------------+-------------------+--------------+
| Iran              | 5141         | Iran              | 3905         |
+-------------------+--------------+-------------------+--------------+
| Australia         | 405          | Australia         | 367          |
+-------------------+--------------+-------------------+--------------+
| Singapore         | 2            |                   |              |
+-------------------+--------------+-------------------+--------------+
| Vietnam           | 2            |                   |              |
+-------------------+--------------+-------------------+--------------+
|                   |              |                   |              |
+-------------------+--------------+-------------------+--------------+
| Total for Others  | 5550         |                   | 4272         |
+-------------------+--------------+-------------------+--------------+
| Others not Listed | 1            |                   | 1            |
+-------------------+--------------+-------------------+--------------+
| Grand Total       | 11968        |                   | 9129         |
+-------------------+--------------+-------------------+--------------+

Note: Figures are calendar year, based on available statistics.

+-------------------+--------------+-------------------+--------------+
| ####### Ex        |              |                   |              |
| port Trade Matrix |              |                   |              |
+-------------------+--------------+-------------------+--------------+
| **Country**       | China,       |                   |              |
|                   | Peoples      |                   |              |
|                   | Republic of  |                   |              |
+-------------------+--------------+-------------------+--------------+
| **Commodity**     | ####### Pi   |                   |              |
|                   | stachios, In |                   |              |
|                   | -shell Basis |                   |              |
+-------------------+--------------+-------------------+--------------+
| Time Period:      |              | Units:            | MT           |
| Calendar Year     |              |                   |              |
+-------------------+--------------+-------------------+--------------+
| Exports for:      | 2005         |                   | 2006         |
+-------------------+--------------+-------------------+--------------+
| U.S.              | 2434         | U.S.              | 2461         |
+-------------------+--------------+-------------------+--------------+
| Others            |              | Others            |              |
+-------------------+--------------+-------------------+--------------+
| Netherlands       | 976          | Netherlands       | 385          |
+-------------------+--------------+-------------------+--------------+
| France            | 397          | Australia         | 328          |
+-------------------+--------------+-------------------+--------------+
| Australia         | 327          | Vietnam           | 168          |
+-------------------+--------------+-------------------+--------------+
| Hong Kong         | 241          | Spain             | 160          |
+-------------------+--------------+-------------------+--------------+
| Czech Republic    | 116          | Hong Kong         | 131          |
+-------------------+--------------+-------------------+--------------+
| Singapore         | 94           | Singapore         | 80           |
+-------------------+--------------+-------------------+--------------+
| Vietnam           | 94           | South Korea       | 80           |
+-------------------+--------------+-------------------+--------------+
| South Korea       | 84           | France            | 74           |
+-------------------+--------------+-------------------+--------------+
| Germany           | 58           | Germany           | 41           |
+-------------------+--------------+-------------------+--------------+
| Greece            | 54           | Japan             | 16           |
+-------------------+--------------+-------------------+--------------+
| Total for Others  | 2441         |                   | 1463         |
+-------------------+--------------+-------------------+--------------+
| Others not Listed | 117          |                   | 7            |
+-------------------+--------------+-------------------+--------------+
| Grand Total       | 4992         |                   | 3931         |
+-------------------+--------------+-------------------+--------------+

Note: Figures are calendar year, based on available statistics.

# 

#