CALIFORNIA and walnuts are synonymous terms in the hard-shelled fruit sector, but this may be about to change in Australia.
Walnuts Australia, a subsidiary of Webster Ltd, has signed an agreement with a major Australian retailer to fully replace their imported Californian walnut kernel from June 2014.
Australia imports about five thousand tonnes of Walnut kernel annually, and Webster chief executive John Hosken says about half of that could be replaced with domestic produce.
About 2200 hectares of Walnut orchards managed by Webster in Tasmania and NSW produce 6,500 tonnes of in-shell Walnuts annually.
Webster's inability to process their walnuts on-shore -produce is sent to Vietnam for cracking - meant 83 per cent of the company's sales in the 2012-13 financial year came from exports.
However Mr Hosken said the commissioning of a new $10.5million cracking facility at Leeton, NSW, in March 2014 would improve their access to the domestic market.
"Australian's don't seem to want to eat in-shell walnuts," Mr Hosken said.
He said the ability to crack and pack walnuts and hold them back from exports markets meant Walnuts Australia would be able to satisfy the demands of the year-round domestic market.
A 910ha orchard has been acquired in Tabbita, NSW, which will be planted in 2014 and is expected to increase the company's orchard size by 40pc.
It takes four years to produce a commercially viable harvest from an orchard, and eight for the trees to fully mature.
"There's a lot of cash out before some starts coming in," Mr Hosken said.
The shelf-life of an orchard is dependent on conditions, but Mr Hosken said yields per hectare were expected to decline at the 25-year mark.
Swansea, Tas, was the site for Walnut Australia's first orchard 20 years ago, but Mr Hosken sees the mainland, in particular the
Riverina area of NSW, as a commercially viable growing solution going forward.
"Tasmania's not getting enough heat and we've been getting inconsistent yields as a result. The capacity to expand is on the mainland," he said.
A driver behind Australia's walnut growth has been its counter-seasonal marketing position.
Being able to supply fresh walnuts into the northern hemisphere for six months of the year - when European production is at its
lowest - has allowed southern hemisphere suppliers to access lucrative pre-Christmas markets.
"Southern hemisphere production of Walnuts has increased from 1pc of the market share five years ago to five per cent now, which has been a huge advantage for us," he said.
"European markets are looking for us to provide walnuts by August, certainly by September to take some pressure off demand for walnuts before Christmas."
The potential for Walnut Australia's domestic growth is offset however by their commitment to valuable export markets.
China, in particular, has a near insatiable demand for walnuts - last year 45pc of all Webster's walnut exports went to the East Asian State.
"Japan and South Korea don't consume any walnut kernel; so there are opportunities there," he said.
Mr Hosken said the medium-term plan would be to supply 20pc of the domestic market while maintaining its focus on exports.
Webster Ltd's position on the Australian Securities Exchange (ASX) ingrains a responsibility to its shareholders, which presently, according to Mr Hosken is in the export market.
"Were a public company and have a duty to make money for our shareholders. This means we need to pursue the best possible returns in whichever market that is," he said.