The outlook for the California almond industry is healthy and positive in the wake of 2002's limb-drooping crop that may weigh in at one billion pounds.
That's the view of Brian Ezell, managing director of the almond division of Paramount Farming Co. The company, based at Bakersfield, has 24,000 acres of almonds and about 29,000 acres of pistachios, making it the nation's largest grower of the two crops.
“Things are tough in agriculture, but we in the almond industry have a lot of positive factors going for us. One is increasing per capita consumption. We see significant growth in almonds, although growth of walnuts and pistachios is smaller,” he said in an analysis of nut crops at the recent Annual Agribusiness Management Conference in Fresno.
Also encouraging, he added, is that despite the west coast ports dispute, almonds “are 3.7 percent ahead of last year's record pace for the first two months of shipments. Opening prices were 20 to 30 cents higher than a year ago, and we believe they will continue to rise during the coming year.”
Health value high
In the United States, almond per capita consumption is approaching one pound, a gain of 0.1 pound since mid-1999, while walnuts are just below a half-pound and pistachios are nearly 0.4 pound.
Tree nuts, in general, he said, have market growth potential because their health benefits are supported by recent medical research, they blend well into a variety of native diets, and they are more cost-effective than meat in improving diets of emerging economies.
He said the California industry has stability because the state, with its typical lack of rain during pollination and hot, dry summers, offers a perfect climate for almonds that few other locations can match.
The industry continues to export about 70 percent of its crop. In 1997, 75 percent of the exports went to “mature markets,” or those where per capita consumption is traditionally high. Since then, however, 63 percent has gone to mature markets and the balance to emerging markets, including South America, Africa, the Middle East, and Asia.
“The good thing about these emerging markets is they represent 80 percent of the world's population,” Ezell said. “We have seen excellent increases in consumption in Japan, which increased 50 percent since 1995. China and India together jumped 425 percent since 1996, from 16.6 million pounds to 70 million pounds last season.”
He said in-shell exports, mainly the less expensive varieties with split shells, are popular in China. There the product is brined, roasted, and packaged like peanuts or pistachios for snacks.
A different practice is common for in-shell product sent to India, where Nonpareils are hand-cracked for perfect meats, which are then packaged.
California dominates world trade in almonds and claims more than 85 percent of the production. Spain is the second largest customer, after the emerging markets, and received 85 million pounds last year, much of it processed and exported.
Almond acreage in California at 530,000 bearing and 75,000 non-bearing acres is up more than 60 percent from a total of about 375,000 acres in 1979.
Many growers switched from Nonpareils to hard-shell varieties having higher yield after short crops and high prices in the mid-1990s. However, prices later slipped downward.
Yield per acre of almonds, at about 1,800 pounds in 2002, has been increasing since the mid-1990s, due to higher yielding varieties and favorable growing weather in recent seasons.
But Ezell said the industry, doubtful of being able to successfully market projected billion-pound crops, actually undervalued its production without realizing that demand for almonds would continue strong.
Average growing costs have been about $1,500 per acre in recent years and returns in the last three years have trailed the cost of production. This led to a leveling off of acreage in 2001 as growers began to take out orchards.
The 2002 harvest progressed with ideal conditions and the forecast by the California Agricultural Statistics Service is 980 million pounds, up 19 percent from the 824 million pounds of 2001.
Ezell said the crop may exceed the forecast. “In actuality, from a grower-processor point of view, this is probably a billion-pound crop.” With carry-over, the marketable supply is just over one billion pounds, or 100 million more than 2001.
Folded into Ezell's optimism is anticipation that the 2003 crop will be significantly less than 2002's record output. He said his company plans to carry-over nearly 25 percent of its 2002 crop in anticipation of a shorter crop in 2003 and Blue Diamond Growers will also hold some of its volume for the 2003 season.
Turning to the walnut industry, Ezell said acreage in California, around 200,000 acres bearing and 25,000 non-bearing, has remained relatively flat since 1979 and prices during the past decade have been between 40 and 60 cents per pound.
About 40 percent of the crop is exported, mostly in-shell, and U.S. consumption is mainly for kernels. Spain, Germany, and Japan are the main export destinations.
Unlike almonds, walnuts are produced throughout the world, and China is an emerging source. Walnuts are cracked by hand there and yields are much smaller, but massive plantings are under way.
Ezell predicted China will be a “growing challenge for us, particularly in competing with their lower costs, as they continue to plant more trees.”
The pistachio industry, this year with 83,000 bearing and 23,000 non-bearing, has been adding about 5,000 acres each year since 1980. The 2002 crop, an “on-year,” is expected to be nearly 300 million pounds. Shipments through September were 11 percent ahead of 2001 and prices are 20 to 30 cents per pound higher.
Aside from their alternate-bearing pattern, pistachio orchards are gaining in average yields, from 2,000 pounds per acre in 1985 to nearly 3,500 pounds in 2002, due to improved management and more resistant rootstocks.
“Pistachio growers have enjoyed very good profitability over the past few years, because supply and demand have grown in tandem,” Ezell said.
However, he also said he has some concern about the future marketing of pistachios because consumption growth is relatively flat and 25 percent more acreage will come into bearing between 2004 to 2007.
“The thing about pistachios is 95 percent of them are sold as snack items, while other nuts are used as ingredients.
We, both growers and marketers, have to focus on how to get pistachios used as ingredients for other products so we can develop a new basis of usage that we don't have now,” he said.