Required Report - public distribution

**Date:** 8/17/2004

**GAIN Report Number:** IN4088

IN4088

**India**

**Tree Nuts**

**Annual**

**2004**

**Approved by:**

![](media/image1.wmf)Chad R. Russell

U.S. Embassy, New Delhi

**Prepared by:**

Santosh Kr. Singh

**Report Highlights:**

India's almond imports during MY 2004/05 (September/August) are forecast
lower at 23,500 tons (in-shell) on expected strong US almond export
prices. Walnut production in 2004/05 (October/September) is forecast to
increase to 34,000 tons (kernel weight) due to favorable early season
weather and this year's positive bearing pattern for trees. Supported by
higher supplies, exports are forecast higher at 16,500 tons, as is
consumption at 17,000 tons.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

New Delhi \[IN1\]

\[IN\]

**Table of Contents**

[**SECTION I - SITUATION & OUTLOOK 3**](#section-i---situation-outlook)

[ALMONDS 3](#almonds)

[Production 3](#production)

[Consumption 3](#consumption)

[Trade 3](#trade)

[Trade Policy & Marketing Opportunities
3](#trade-policy-marketing-opportunities)

[WALNUTS 4](#walnuts)

[Production 4](#production-1)

[Consumption 4](#consumption-1)

[Trade 4](#trade-1)

[Trade Policy 5](#trade-policy)

[SECTION II -- STATISTICAL TABLES 6](#section-ii-statistical-tables)

[Table 1: Commodity, Almond PSD Table
6](#table-1-commodity-almond-psd-table)

[Table 2: Almond, Price Table 7](#table-2-almond-price-table)

[Table 4: Almond, Import Trade Matrix
8](#table-4-almond-import-trade-matrix)

[Table 5: Commodity, Walnut, PSD Table
9](#table-5-commodity-walnut-psd-table)

[Table 6: Walnut, Price Table 10](#table-6-walnut-price-table)

[Table 8: Walnut, Export Trade Matrix
11](#table-8-walnut-export-trade-matrix)

[Table 9: Tariff Table for Almonds and Walnuts for IFY 2004/05
12](#table-9-tariff-table-for-almonds-and-walnuts-for-ify-200405)

#   {#section .unnumbered}

# SECTION I - SITUATION & OUTLOOK

## ALMONDS

### Production

India's almond crop is forecast at 1200 tons (kernel weight basis) for
MY 2004/05 (September/August) due to 'up' phase of the alternate bearing
pattern of the trees and to favorable weather conditions. Assuming
normal climatic conditions, 2005/06 production is forecast to decline to
1100 tons. Almonds are grown in the Kashmir Valley, and consumed almost
exclusively where produced. The yield ranges from 1000-1500
nuts/tree/year; shelling rates are 20-25 percent (hard shell varieties)
to 40 percent (thin-shelled varieties).

### Consumption

India's consumption requirement is met primarily through imports, and US
almonds have a dominant share (85-87 percent) in the Indian market.
Consequently, domestic market prices closely follow US export prices.
Indian almond consumption in 2004/05 is forecast lower at 25,000 tons on
expected higher export prices of US almonds and consequent high domestic
prices. Consumption is likely to recover 26,000 tons in 2005/06 tons on
expected growth in the Indian economy and an expanding middle class.

Indian consumers consider almonds a 'high energy' food, especially good
for children, recuperating patients, and physically active people.
Almonds are consumed as whole nuts and/or used in local desserts, sweets
and confectionary products. Due to expected relatively higher prices of
almonds vis-à-vis other nuts during the 2004/05 season, market sources
expect cashew, pistachios & walnuts to partially replace almonds in
traditional Indian dishes, snack foods, and confectionary products.
Consumption occurs mostly in the September-January period. Some
traditional users (mostly higher income households) prefer Iranian
(Mamra/Qumi) and Afghani (Gulbandi/Kagzi) almonds despite premium prices
(see table 3). Cosmetic manufacturers process most of the spoiled/rancid
almond kernels for oil.

### Trade

Indian almond imports for 2004/05 are forecast lower at 23,500 tons as
US export prices are expected to rule comparatively higher vis-à-vis
last year's prices. India's almond imports in 2005/06 may recover to
25,000 tons on growing domestic demand.

Almonds are one of the leading US agricultural exports to India as
volumes increased from 6,000 tons in 1996/97 to a record 24,150 tons in
2002/03 (market share of over 87 percent). However, US almond imports in
2003/04 declined to 21,380 metric tons due to comparatively higher
export prices vis-à-vis those of last year. Imports from Afghanistan
have gained in 2003/04 due to the tariff concession (50 percent of the
applicable basic duty) under the Indo-Afghan Preferential Trade
Agreement of 2003 (see IN3040). However, imports from other competing
origins, such as Iran, Australia, and Middle East have been stagnant due
to comparatively higher prices vis-à-vis prices of US almonds. Imports
from the US and Australia are mostly nonpareils in shell that are hand
shelled locally and sold in the market. Imports from other origins are
mostly in the form of kernels.

### Trade Policy & Marketing Opportunities

While there are no quantitative restrictions on imports of almonds, high
tariffs (see table 9) constrain growth in almond imports. Market sources
assess India's import potential at 35-36,000 tons of US almonds if
tariff levels were \"reduced\" (i.e., rs. 15-20/kg vs. the existing rs.
35/kg). Post strongly supports the US almond industry's marketing
efforts in India, which focus on promoting year-around consumption of
almonds by highlighting their nutritional benefits and alternative uses
in traditional and western-style foods.

## WALNUTS

### Production

Riding on the 'up' phase of the alternating bearing pattern of trees,
India's 2004/05 (October/September) walnut production is forecast higher
at 34,000 tons (in shell basis) due to extremely favorable weather
conditions. Light rains in February/March provided optimum moisture for
trees at flowering and fruit setting stages. Monsoon rains have been
sufficient for fruiting and good nut size formation. However, rains in
September will determine the quality of the upcoming crop as any rains
during the harvest adversely affect the color of the kernel. There are
no reports of any pest or disease attacks. Assuming normal weather, the
2005/06 walnut crop is forecast lower at 31,500 tons because of the
'down' phase of the alternating bearing pattern of trees.

Indian walnuts are grown almost entirely (98 percent) in Jammu and
Kashmir under rainfed conditions in rocky terrain. Stagnant grower
prices and continued uncertainty and violence in Kashmir have
discouraged additional plantings. Yields are low due to the lack of
irrigation and low fertility, ranging from 18-50 kg/tree/year. The nut
size varies from 24-32 mm. Indian walnuts are classified as hard, medium
or thin shell (Kaghazi). The average shelling rate is 40 percent, but
can go as high as 70 percent in the case of the thin-shelled 'Bakshi'
variety. Harvesting of walnuts begins in end-August going through
September, and market arrivals peak in late October.

### Consumption

Walnut consumption in 2004/05 is forecast higher at 17,000 tons on
improved domestic supplies and expected higher prices for almonds.
Walnut consumption will remain stagnant in 2005/06 at 17,000 tons owing
to forecast tight supplies. Domestic walnut prices ruled easy in 2003/04
(see tables 6 & 7) on poor export demand. However, prices are expected
to rule higher in MY 2004/05 on expected strong export and domestic
demand.

Better consumer packaging (vacuum packs) have encouraged middle class
consumers to include walnuts for year-round snacking purposes. Walnut
use by the confectionary and ice-cream industries is expected to
increase, as walnut prices are competitive with other nuts like almonds,
cashews, and pistachios. Around 2-3 percent of walnuts (normally rancid
nuts) are used by the soap and cosmetic manufacturers for their
extracted oil.

### Trade

Although walnut exports depend largely on foreign demand and domestic
prices, exports in 2004/05 are forecast to increase to 16,500 tons on
improved domestic supplies; and decrease to 15,000 tons in 2005/06 on
forecast lower production.

Exports during 2003/04 are estimated at 15,500 tons (vs. 18,000 tons in
2002/03) on tight domestic supplies, strong domestic demand, and
diminished export competitiveness due to strengthening in the value of
Indian rupee. Major export destinations during the 2002/03 and 2003/04
seasons were Spain, Germany, Greece, France, Netherland, Egypt, Denmark,
U.K., and Australia (see table 8). Most walnuts are exported from
October through March. More than 95 percent are exported as kernels (40
percent light halves; 20 percent amber halves/broken; and the balance as
brokens) in vacuum packs.

### Trade Policy

India does not restrict or subsidize walnut exports. Walnuts, like most
other dry fruits and nuts, are imported without quantitative restriction
under the Open General License (OGL), subject to an effective import
duty of 30.6 percent (see tariff table 9). South Asian Association for
Regional Cooperation (SAARC) countries and Afghanistan have better
market access under preferential trade agreements. Given strong domestic
production and the high tariff, opportunities for imports are
negligible.

# SECTION II -- STATISTICAL TABLES

## Table 1: Commodity, Almond PSD Table

  ------------------ ---------- -------- ------- -------- ------ -------- --------------
  PSD Table                                                               

  Country:           India                                                

  Commodity:         Almonds,                                             
                     Shelled                                              
                     Basis                                                

                                2003             2004            2005     UOM

                     Old        New      Old     New      Old    New      

  Market Year Begin             Sep-03           Sep-04          Sep-05   (MONTH/YEAR)

  Area Planted       19000      19000    19000   19000    0      19000    (HA)

  Area Harvested     16900      16900    16900   16900    0      17000    (HA)

  Bearing Trees      1100       1100     1100    1100     0      1120     1000 TREES

  Non-Bearing Trees  200        200      200     200      0      200      1000 TREES

  Total Trees        1300       1300     1300    1300     0      1320     (1000 TREES)

  Beginning Stocks   6700       6700     4700    6600     0      6300     (MT)

  Production         1000       1000     1200    1200     0      1100     (MT)

  Imports            22000      24900    26500   23500    0      25000    (MT)

  TOTAL SUPPLY       29700      32600    32400   31300    0      32400    (MT)

  Exports            0          0        0       0        0      0        (MT)

  Domestic           25000      26000    27850   25000    0      26000    (MT)
  Consumption                                                             

  Ending Stocks      4700       6600     4550    6300     0      6400     (MT)

  TOTAL DISTRIBUTION 29700      32600    32400   31300    0      32400    (MT)
  ------------------ ---------- -------- ------- -------- ------ -------- --------------

Note: Due to the continued civil strife, Post is unable to visit Jammu
and Kashmir. As published information on almonds is limited, the PSD is
based on discussions with major almond traders.

## Table 2: Almond, Price Table

  ------------------------ ------------ ------------- --------------------
  Prices Table                                        

  Country:                 India                      

  Commodity:               Almonds,                   
                           Shelled                    
                           Basis                      

  Year:                    2004                       

                                                      

  Prices in (currency)     rupees       per (uom)     100 kg

                                                      

  Year                     2003         2004          \% Change

  Jan                      26550        30675         15.5%

  Feb                      25700        30700         19.5%

  Mar                      24300        30800         26.7%

  Apr                      25100        30100         19.9%

  May                      25400        30400         19.7%

  Jun                      26200        30550         16.6%

  Jul                      25600        31550         23.2%

  Aug                      26100        33200         27.2%

  Sep                      26500                      -100.0%

  Oct                      28800                      -100.0%

  Nov                      28900                      -100.0%

  Dec                      29500                      -100.0%

                                                      

  Exchange Rate            46.41        (Local        
                                        currency/US   
                                        \$)           

  Date of Quote            08/16/04     (MM/DD/YY)    
  ------------------------ ------------ ------------- --------------------

Source: Economic Times (Average weekend prices in Delhi Wholesale
Market).

**Table 3: Wholesale Almond Kernel Prices (Rs./Kg.), Delhi Market**

+------------------------------+------------+------------+-----------+
| ***Type (Origin)***          | ***        | ***        | ***2      |
|                              | 2003/04*** | 2002/03*** | 001/02*** |
+------------------------------+------------+------------+-----------+
| #### Californian Almonds     | 261-332    | 243-266    | 208-270   |
+------------------------------+------------+------------+-----------+
| Mamra Almonds (Iran)         | 500-650    | 470-550    | 420-460   |
+------------------------------+------------+------------+-----------+
| Qumi Almonds (Iran)          | 325-450    | 285-315    | 280-320   |
+------------------------------+------------+------------+-----------+
| Gulbandi Almonds (Afghan)    | 280-325    | 235-265    | 250-280   |
+------------------------------+------------+------------+-----------+

Source: Market sources.

## Table 4: Almond, Import Trade Matrix

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

  Country:                 India        Units:            metric tons

  Commodity:               Almonds,                       
                           Shelled                        
                           Basis                          

  Time period:             Sep-Aug                        Sep-Aug

  Imports for              2002                           2003

  U.S.                     24153        U.S.              21382

  Others                                Others            

  Iran                     1255         Afghanistan       1300

  Afghanistan              1050         Iran              1200

  Australia                845          Australia         800

  UAE                      62           UAE               50

                                                           

                                                           

  Total for Others         3212                           3350

  Others not listed        266                            168

  Grand Total              27631                          24900
  ------------------------ ------------ ----------------- ----------------

Source: Estimates derived from official GOI sources (2002/03), trade
sources (2003/04) and California Almond Board Statistics (2002/03 and
2003/04).

## Table 5: Commodity, Walnut, PSD Table

  -------------------- ---------- -------- ------- -------- ----- -------- --------------
  PSD Table                                                                

  Country:             India                                               

  Commodity:           Walnuts,                                            
                       Inshell                                             
                       Basis                                               

                                  2003             2004           2005     UOM

                       Old        New      Old     New      Old   New      

  Market Year Begin               Oct-03           Oct-04         Oct-05   (MONTH/YEAR)

  Area Planted         36500      36500    36600   36600    0     36600    (HA)

  Area Harvested       30200      30500    30500   30500    0     30800    (HA)

  Bearing Trees        1320       1320     1320    1330     0     1330     1000 TREES

  Non-Bearing Trees    255        255      255     255      0     265      1000 TREES

  Total Trees          1575       1575     1575    1585     0     1585     (1000 TREES)

  Beginning Stocks     3050       3050     2550    2050     0     2550     (MT)

  Production           31000      31000    33000   34000    0     31500    (MT)

  Imports              0          0        0       0        0     0        (MT)

  TOTAL SUPPLY         34050      34050    35550   36050    0     34050    (MT)

  Exports              15000      15500    17000   16500    0     15000    (MT)

  Domestic Consumption 16500      16500    16500   17000    0     17000    (MT)

  Ending Stocks        2550       2050     2050    2550     0     2050     (MT)

  TOTAL DISTRIBUTION   34050      34050    35550   36050    0     34050    (MT)
  -------------------- ---------- -------- ------- -------- ----- -------- --------------

Note: Due to the continued civil strife, Post is unable to visit Jammu
and Kashmir. As published information on walnuts is limited, the PSD is
based on discussions with major walnut traders in Delhi.

## Table 6: Walnut, Price Table

  ------------------------ ------------ ------------- --------------------
  Prices Table                                        

  Country:                 India                      

  Commodity:               Walnuts,                   
                           Inshell                    
                           Basis                      

  Year:                    2004                       

                                                      

  Prices in (currency)     Rupees       per (uom)     100 Kg

                                                      

  Year                     2003         2004          \% Change

  Jan                      9400         9250          -1.6%

  Feb                      8700         10000         14.9%

  Mar                      9000         10000         11.1%

  Apr                      9000         8000          -11.1%

  May                      9000         8000          -11.1%

  Jun                      9350         8000          -14.4%

  Jul                      10000        8000          -20.0%

  Aug                      11000        8000          -27.3%

  Sep                      11000                      -100.0%

  Oct                      8000                       -100.0%

  Nov                      8000                       -100.0%

  Dec                      9000                       -100.0%

                                                      

  Exchange Rate            46.41        (Local        
                                        currency/US   
                                        \$)           

  Date of Quote            08/16/04     (MM/DD/YY)    
  ------------------------ ------------ ------------- --------------------

Source: Economic Times (Average weekend prices in Delhi Wholesale
Market).

**Table 7: Walnut Prices during 2003/04**

  ---------------------------- ----------- ------------- ------------- -------------
  **PRICE**                    **UNITS**   **2003/04**   **2002/03**   **2001/02**

  Wholesale Price of FAQ       (Rs./Kg)    48-55         50-60         35-45
  Walnut                                                               

  Export Price (C&F Europe)    US\$/MT                                 

  1\. Light Halves             -do-        4150-4850     3950-4900     3800-4500

  2\. Light Broken/Amber       -do-        2950-3650     2850-3700     2700-3400
  Halves                                                               

  3\. Amber Broken             -do-        2750-3100     2600-3300     2600-2900
  ---------------------------- ----------- ------------- ------------- -------------

Source: Market Sources.

## Table 8: Walnut, Export Trade Matrix

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

  Country:                India       Units:               Metric Tons

  Commodity:              Walnuts,                         
                          Inshell                          
                          Basis                            

  Time period:            Apr-Mar                          Apr-Mar

  Exports for             2002                             2003

  U.S.                    0           U.S.                 0

  Others                              Others               

  Spain                   4295        Spain                4125

  German F Rep            1807        German F Rep         2340

  Greece                  1709        Greece               1650

  Egypt A Rep             1507        France               1650

  France                  1467        Netherland           1100

  UK                      1274        Egypt A Rep          980

  Netherland              978         Denmark              800

  Denmark                 724         UK                   690

  Australia               580         Australia            550

  New Zealand             334         New Zealand          300

  Total for Others        14676                            14185

  Others not listed       3326                             1315

  Grand Total             18001                            15500
  ----------------------- ----------- -------------------- --------------

Note: MY 2002 refers to Indian Fiscal Year (IFY) 2002/03 (April-March)
as most exports happens during October 2002 through March 2003.

Source:-- MY 2002 - Export figures from DGCIS, Ministry of Commerce.

MY 2003 -- Provisional Trade Estimates.

## Table 9: Tariff Table for Almonds and Walnuts for IFY 2004/05

  ------------ ------------- --------- --------- ----------- -----------------
  Commodity    Description   Import    Basic     Education   Total Applicable
  Code                       Policy    Duty/2    Cess        Duty /5

  HC 0802.11   Almonds       OGL /1    Rs 35/kg  Exempted /3 Rs 35/kg
               Inshell                                       

  HC 0802.12   Almond Kernel OGL /1    Rs 65/kg  2%          Rs. 66.3/kg

  HC 0802.31   Walnut        OGL /1    30/20% /4 2%          30.6/20.4% /4
               InShell                                       

  HC 0802.32   Walnut        OGL /1    30/20% /4 2%          30.6/20.4% /4
               Shelled                                       
  ------------ ------------- --------- --------- ----------- -----------------

Notes:

/1: OGL (Open General License) -- no quantitative restrictions.

/2: Under the IAPTA, a tariff concession of 50 percent applied on the
basic import duty for these goods if imported from Afghanistan.

/3: Almond in-shell exempted from the education cess.

/4: Preferential duty for SAARC countries (Pakistan, Bangladesh, Sri
Lanka, Nepal, Maldives and Bhutan).

/5: Method for computing Total applicable duty:

A: CIF Value of Good

B: Basic Duty = Basic Duty Rate \* A

C: Education Cess (EC) = EC Rate \* B

Total Applicable Duty = B+C

Note: India's local food law (Prevention of Food Adulteration Act, 1955)
specifies that dry fruits and nuts should not contain more than 5
percent insect damaged fruits/nuts, by counts.