Required Report - public distribution

**Date:** 8/19/2003

**GAIN Report Number:** IN3076

IN3076

**India**

**Tree Nuts**

**Annual**

**2003**

**Approved by:**

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

U.S. Embassy, FASNEWDELHI

**Prepared by:**

Santosh Kr. Singh

**Report Highlights:**

India\'s almond imports in 2003/04 are forecast to decline to 24,000
tons (kernel weight), on expected higher export prices of US almonds.
Indian walnut production in 2003/04 is forecast to increase to 31,000
tons (in-shell) due to favorable weather conditions. Exports are
forecast at 15,000 tons on tight supplies.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

New Delhi \[IN1\]

\[IN\]

# 

# TABLE OF CONTENTS

# 

[**TABLE OF CONTENTS 2**](#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 & Market Opportunities
4](#trade-policy-market-opportunities)

[WALNUTS 4](#walnuts)

[Production 4](#production-1)

[Consumption 4](#consumption-1)

[Trade 5](#trade-1)

[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 3: Wholesale Almond Kernel Prices, Delhi Market during MY 2002/03
vs. 2001/02
7](#table-3-wholesale-almond-kernel-prices-delhi-market-during-my-200203-vs.-200102)

[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 7: Walnut Prices during 2002/03 vs. 2001/02
11](#table-7-walnut-prices-during-200203-vs.-200102)

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

[Table 9: Tariff Table for Almonds and Walnuts for IFY 2003/04
13](#table-9-tariff-table-for-almonds-and-walnuts-for-ify-200304)

#   {#section-2 .unnumbered}

# SECTION I - SITUATION & OUTLOOK

## ALMONDS

### Production

Despite the 'down' phase of the alternating bearing pattern of the
trees, India's almond crop is forecast at 1100 tons (kernel weight
basis) in 2003/04 due to favorable weather conditions. Assuming normal
weather conditions, 2004/05 production is forecast to increase to 1200
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

Almost 96 percent of India's consumption requirement is met through
imports. US almonds have a dominant share (more than 85 percent) in the
Indian market. Consequently, domestic market prices tend to closely
follow US export prices. Local consumption has grown in the last few
years on attractive prices vis-à-vis other nuts, steady growth in the
Indian economy and an expanding middle class. Indian almond consumption
in 2003/04 is forecast lower at 26,000 tons on expected higher export
prices of US almonds. Consumption is likely to recover in 2004/05 to
28,000 tons as the alternating bearing pattern of the US crop will
increase supplies and lower export prices.

Indian consumers consider almonds a 'high energy' food, especially good
for growing children, recuperating patients, and people involved in a
high level of physical activity. Almonds are consumed as whole nuts
and/or used in local desserts, sweets and confectionary items.
Consumption is seasonal, occurring more during the winter festival
season from September through January. They are also heavily consumed
during marriages and other major social events. The relatively low
prices during the last few years have favored the substitution of
almonds for other nuts (cashews and pistachios) in traditional Indian
dishes, snack foods, and confectionary items. However, some traditional
users (mostly higher income households) prefer Iranian (Mamra/Qumi) and
Afghani (Gulbandi/Kagzi) almonds despite premium prices (see table 3).
The rancid almond kernels are mostly processed for oil by cosmetic
manufacturers.

### Trade

India's almond imports in 2002/03 reached a record 26,850 tons on
comparatively low US export prices. Indian almond imports for 2003/04
are forecast lower at 24,000 tons as US export prices are expected to
rule comparatively higher vis-à-vis last year prices. India's almond
imports in 2004/05 may recover to 26,500 tons on anticipated higher US
almond production and consequent lower prices.

Almonds are one of the leading US agricultural exports to India as
volumes increased from 6,000 tons in 1996/97 to a record 23,800 tons in
2002/03 (market share of 86 percent). Imports from competing origins,
such as Iran, Afghanistan, Australia, and Middle East in the recent past
have been stagnant due to comparatively higher prices vis-à-vis prices
for US almonds. Under the recently signed Indo-Afghan Preferential Trade
Agreement (IAPTA), India provides a tariff concession of 50 percent of
the applicable basic duty on almonds imported from Afghanistan (see
IN3040). The duty benefit narrows the existing price difference between
US almonds vis-à-vis Afghani almonds in favor of the later. Market
sources expect a 5 percent gain in market share of almonds from
Afghanistan at the expense of US nuts.

Steady and relatively low domestic prices during the season (see table 2
& 3) have supported higher volumes of imports during 2002/03. Many of
the traders took a long position, contracting for imports when the US
export prices were lowest (CIF \$1.02-1.05/lbs in September), and
thereby benefited on steadily increasing US export prices during the
later part of the season. However, most traders are expected to take a
short position in contracting for the 2003/04 almond crops as opening
export prices are expected to be high. Imports from the US and Australia
are mostly nonpareils in shell, hand shelled locally before being sold
in the market. Imports from Iran, Afghanistan, and the Middle East are
mostly kernels.

### Trade Policy & Market 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 \"reasonable\" (i.e., rs. 15-20/kg vs. the existing
rs. 35/kg). In addition to addressing the trade policy issues, efforts
to increase sales of US almonds should include a media campaign focusing
on year-around consumption of almonds by highlighting its nutritional
benefits and alternative usage in traditional and western-style foods.

## WALNUTS

### Production

Despite the 'down' phase of the alternating bearing pattern of the
trees, India's 2003/04 (Oct./Sept.) walnut production is forecast higher
at 31,000 tons (in shell basis) due to extremely favorable weather
conditions. Light rains in February/March provided optimum moisture
conditions to the trees at flowering and fruit setting stages. Excellent
monsoon rains since mid-June have been extremely beneficial for fruiting
and good nut size formation. Market sources expect the nut size to be up
by 10 percent compared to that from the previous year (nut size varies
from 24-32 mm). There are no reports of any pest or disease attacks.
Arrivals are expected to be timely from early September, with peak in
late October. Assuming normal weather, 2004/05 walnut crops is forecast
higher at 33,000 tons on higher yielding phase of the alternating
bearing pattern.

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. Indian
walnuts are classified as either 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.

### Consumption

Despite tight supplies, walnut consumption in 2003/04 is forecast higher
at 16,500 tons on improved domestic demand and expected higher prices of
other nuts like almonds. Walnut consumption will remain stagnant in
2004/05 at 16,500 tons owing to expected recovery in exports and
availability of lower priced almonds. Domestic walnut prices were very
firm in 2002/03 (see tables 6 & 7) on tight domestic supplies and prices
are expected to remain firm during 2003/04 season.

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

### Trade

Although walnut exports depend largely on export demand and domestic
prices, exports in 2003/04 are forecast at 15,000 tons (unchanged from
2002/03 exports) on tight domestic supplies; and increase to 17,000 tons
in 2004/05 on forecast higher production.

Exports during MY 2002/03 have been revised lower to 15,000 tons on
tight domestic supplies, strong domestic demand, and diminished export
competitiveness due to strengthening in the value of Indian rupee. The
value of the Indian rupee compared to the US dollar improved by 5-6
percent during 2002/03. Major export destinations during the Indian
fiscal years 2001 and 2002 were Spain, Germany, France, U.K., Greece,
Egypt, Netherlands, Denmark, and Italy (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.

There are no restrictions on walnut exports, and no export subsidies are
provided. Walnuts, like most other dry fruits and nuts, are allowed to
be imported without restriction under the Open General License (OGL),
subject to an effective import duty of 35.2 percent (see tariff table 9)
except for South Asian Association for Regional Cooperation (SAARC)
countries and Afghanistan. Given the strong domestic production and high
tariffs, opportunities for imports are negligible.

# SECTION II -- STATISTICAL TABLES

## Table 1: Commodity, Almond PSD Table

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

  Country:           India                                                   

  Commodity:         Almonds,                                                
                     Shelled                                                 
                     Basis                                                   

                                2002              2003             2004      UOM

                     Old        New       Old     New       Old    New       

  Market Year Begin             09/2002           09/2003          09/2004   (MONTH/YEAR)

  Area Planted       19000      19000     19000   19000     0      19000     (HA)

  Area Harvested     16800      16800     16900   16900     0      16900     (HA)

  Bearing Trees      1050       1050      1100    1100      0      1100      1000 TREES

  Non-Bearing Trees  250        250       200     200       0      200       1000 TREES

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

  Beginning Stocks   5000       5000      5600    5450      0      4550      (MT)

  Production         1100       1100      1000    1100      0      1200      (MT)

  Imports            27000      26850     22000   24000     0      26500     (MT)

  TOTAL SUPPLY       33100      32950     28600   30550     0      32250     (MT)

  Exports            0          0         0       0         0      0         (MT)

  Domestic           27500      27500     25000   26000     0      28000     (MT)
  Consumption                                                                

  Ending Stocks      5600       5450      3600    4550      0      4250      (MT)

  TOTAL DISTRIBUTION 33100      32950     28600   30550     0      32250     (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:                    2003                       

                                                      

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

                                                      

  Year                     2002         2003          \% Change

  Jan                      25600        26500         3.5%

  Feb                      26600        25700         -3.4%

  Mar                      24800        24300         -2.0%

  Apr                      25000        25100         0.4%

  May                      25175        25400         0.9%

  Jun                      26500        26200         -1.1%

  Jul                      25850        25600         -1.0%

  Aug                      26200                      -100.0%

  Sep                      25500                      -100.0%

  Oct                      25200                      -100.0%

  Nov                      25200                      -100.0%

  Dec                      25550                      -100.0%

                                                      

  Exchange Rate            45.8         (Local        
                                        currency/US   
                                        \$)           

  Date of Quote            08/13/03     (MM/DD/YY)    
  ------------------------ ------------ ------------- --------------------

Source: Economic Times (Weekend Prices in Delhi Wholesale Market).

## Table 3: Wholesale Almond Kernel Prices, Delhi Market during MY 2002/03 vs. 2001/02 

+-------------------------------------+----------------+--------------+
| ***Type (Origin)***                 | ***2002/03***  | *            |
|                                     |                | **2001/02*** |
+-------------------------------------+----------------+--------------+
| #### Californian Almonds            | 243-266        | 208-270      |
+-------------------------------------+----------------+--------------+
| Mamra Almonds (Iran)                | 470-550        | 420-460      |
+-------------------------------------+----------------+--------------+
| Qumi Almonds (Iran)                 | 285-315        | 280-320      |
+-------------------------------------+----------------+--------------+
| Gulbandi Almonds (Afghan)           | 235-265        | 250-280      |
+-------------------------------------+----------------+--------------+
| Kagzi Almonds                       | 300-320        | 300-310      |
+-------------------------------------+----------------+--------------+

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               2001                             2002

  U.S.                      22053         U.S.               23800

  Others                                  Others             

  Iran                      1485          Iran               1400

  Afghanistan               922           Afghanistan        1300

  Australia                 163           Australia          150

  UAE                       55            UAE                50

                                                              

                                                              

                                                              

                                                              

                                                              

                                                              

  Total for Others          2625                             2900

  Others not listed         222                              150

  Grand Total               24900                            26850
  ------------------------- ------------- ------------------ --------------

Source: Estimates derived from official GOI sources (2001/02), trade
sources (2002/03) and California Almond Board Statistics (2001/02 and
2002/03).

## Table 5: Commodity, Walnut, PSD Table

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

  Country:           India                                                   

  Commodity:         Walnuts,                                                
                     Inshell                                                 
                     Basis                                                   

                                2002              2003             2004      UOM

                     Old        New       Old     New       Old    New       

  Market Year Begin             10/2002           10/2003          10/2004   (MONTH/YEAR)

  Area Planted       36500      36500     36500   36500     0      36600     (HA)

  Area Harvested     30200      30200     30500   30500     0      30500     (HA)

  Bearing Trees      1307       1307      1310    1320      0      1320      1000 TREES

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

  Total Trees        1572       1572      1575    1575      0      1575      (1000 TREES)

  Beginning Stocks   4050       4050      3050    3050      0      2550      (MT)

  Production         32000      30000     30000   31000     0      33000     (MT)

  Imports            0          0         0       0         0      0         (MT)

  TOTAL SUPPLY       36050      34050     33050   34050     0      35550     (MT)

  Exports            17000      15000     15000   15000     0      17000     (MT)

  Domestic           16000      16000     16000   16500     0      16500     (MT)
  Consumption                                                                

  Ending Stocks      3050       3050      2050    2550      0      2050      (MT)

  TOTAL DISTRIBUTION 36050      34050     33050   34050     0      35550     (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:                    2003                       

                                                      

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

                                                      

  Year                     2002         2003          \% Change

  Jan                      8000         9400          17.5%

  Feb                      8000         8700          8.8%

  Mar                      8000         9000          12.5%

  Apr                      8100         9000          11.1%

  May                      8400         9000          7.1%

  Jun                      8400         9350          11.3%

  Jul                      8200         10000         22.0%

  Aug                      8000                       -100.0%

  Sep                      7800                       -100.0%

  Oct                      10000                      -100.0%

  Nov                      10000                      -100.0%

  Dec                      8000                       -100.0%

                                                      

  Exchange Rate            45.8         (Local        
                                        currency/US   
                                        \$)           

  Date of Quote            08/13/03     (MM/DD/YY)    
  ------------------------ ------------ ------------- --------------------

Source: Economic Times (Weekend Prices in Delhi Wholesale Market).

## Table 7: Walnut Prices during 2002/03 vs. 2001/02

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

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

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

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

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

  3\. Amber Broken                  -do-          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             2001                             2002

  U.S.                    174         U.S.                 150

  Others                              Others               

  Spain                   3950        Spain                3000

  German F Rep            1913        Egypt A Rep          1900

  Egypt A Rep             1622        German F Rep         1800

  UK                      1482        France               1800

  France                  1382        Greece               1300

  Greece                  1320        UK                   1200

  Denmark                 835         Denmark              700

  Netherlands             720         Netherlands          600

  Australia               542         Australia            350

  UAE                     216         New Zealand          350

  Total for Others        13982                            13000

  Others not listed       2844                             1850

  Grand Total             17000                            15000
  ----------------------- ----------- -------------------- --------------

Source: Indian Fiscal Year (IFY) 2001 -- Export figures from DGCIS,
Ministry of Commerce.

IFY 2002 -- Provisional Trade Estimates.

## Table 9: Tariff Table for Almonds and Walnuts for IFY 2003/04

  ----------- ------------- -------- -------- -------------- -----------------
  Commodity   Description   Import   Basic    Special        Total Applicable
  Code                      Policy   Duty/2   Addl.Duty(%)   Duty (%)

  HC 0802.11  Almonds       OGL /1   Rs 35/kg 4              /4
              Inshell                                        

  HC 0802.12  Almond Kernel OGL /1   Rs 65/kg 4              /4

  HC 0802.31  Walnut        OGL /1   30/20%   4              35.2/24.8 /3
              InShell                /3                      

  HC 0802.32  Walnut        OGL /1   30/20%   4              35.2/24.8 /3
              Shelled                /3                      
  ----------- ------------- -------- -------- -------------- -----------------

Notes:

/1: OGL (Open General License) -- no import 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: Preferential duty for SAARC countries (Pakistan, Bangladesh, Sri
Lanka, Nepal, Maldives and Bhutan).

/4: Method for computing Total applicable duty:

A: CIF Value of Good

B: Basic Duty = Basic Duty Rate \* A

C: Special Additional Duty (SAD) = SAD Rate \* (A+B)

Total Applicable Duty = B+C

/5: 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.