As with any industry, success trajectories are never consistent. The California almond industry knows this from experience as some will recall a period in the late 1990s when almond prices to the grower fell well below $1.
For young growers and those new to the industry, the sub-$1 grower prices of 1999 to about 2002 are ancient history. At about $3 per pound almond prices today are at record highs to the grower and profit margins are relatively healthy, or at least they were before the 2014 water crisis hit with all the tact of a tsunami.
While water worries are quite real, so too is the apparent confidence of growers as new almond plantings continue to spring up and nursery orders are backlogged.
Still, the state of the California almond industry may not be as rosy as projected just two short years ago when growth curves could be seen ramping up to extraordinary levels in the face of additional bearing acreages.
Though no single crop is exempt from California’s epic drought conditions, almonds were hit hard in 2014 and will likely suffer in 2015 as impacts from the drought reverberate with reduced tree health and decreased nut set over the next couple years.
With 860,000 bearing acres of nuts and growing, the industry faces significant challenges in the coming years, according to Almond Board of California CEO Richard Waycott.
Waycott told attendees at the 2014 Almond Conference in Sacramento, Calif. recently that the industry is projecting flat production for the next several years, in spite of a boost in bearing acreages. He blames drought and the lingering impacts it will have on tree health and short-term water uncertainties for the less-than-robust outlook.
Can the almond industry sustain its robust success of the past few years? That’s a question Waycott says will weigh on an industry that has seen a doubling of yields over the past 20 years and new markets open to gobble up that production.
Not all is gloomy, however.
The Almond Board of California recently commissioned the UC Davis Agricultural Issues Center to study the economic impacts of California’s almond industry. The results of this study paint the almond industry in positive light as a positive economic driver.
The study determined that a vibrant and growing almond industry plays a significant role in the overall economic health of California. Waycott says the ABC hopes to use the report’s conclusions and information to help promote the needs of the industry, including ample supplies of water and science-based regulatory reforms.
According to report author Daniel Sumner, two of the headline numbers coming out of the report include number of jobs supported by California’s almond industry and the value-added component that can be included with California’s gross state product, or the sum of all goods and services produced in the State of California.
Of the 104,000 jobs generated by almond farming, roughly 75 percent of them happen outside of almond production, according to Sumner. These can be anything from those employed making the packages used to ship almonds to the transportation and sales of almonds and almond products.
Moreover, Sumner sees overall Ag employment trending to more permanent jobs and less of the seasonal nature as permanent plantings become more popular.
About half of the almond industry’s $21.5 billion in total output, or $11 billion, is seen in the value-added side of the equation, Sumner said.
“Although its economic linkages are statewide (and global), the almond industry is especially important to the economy of the California Central Valley,” according to the report.
“This is the first time we’ve conducted this study and the results are revealing to everyone,” said Waycott. “Until now the ABC has not been able to quantify the size and economic impact of the industry.”
At the front of a parade of challenges facing the almond industry is water. California’s drought simply illuminated a problem Waycott and others say is facing California agriculture; ample and sustainable supplies of irrigation water almonds and other crops are as much political as they are climatic.
Waycott predicts California’s agricultural footprint will shrink for lack of water and forces like heavy regulatory constraints and labor issues. He also sees a temporary flattening of almonds’ growth trajectory because of the drought and its long-lasting impacts on almond production.
Waycott expects almond production in California to remain under two billion pounds until at least the 2017/18 crop season, when new plantings and the hope of better water deliveries combine to push more nuts from an ever-increasing number of bearing acres.
Until then ABC projections have yields dipping slightly next year and possibly returning to this year’s figure for the 2016/17 crop year before climbing above two billion pounds once again.
Aside from these challenges Waycott says there is an “implied confidence” inherent in the industry right now that seems to run counter to reality and the paradox of “increasing unreliability of surface water supplies, the soon-to-be sustainability plans for groundwater management, and unprecedented world pricing levels for our product.”
Waycott recommends the almond industry look to more non-traditional alliances and ideas to further the industry’s successful track record while remaining focused “on what we believe and what we know to be successful.”
For instance, Waycott suggested water issues could be aided in the short-term by fast-tracking urban water recycling programs and by possibly working with urban environmental groups to “foster rational and fair compromise on sharing water resources.”
Perhaps another challenge for the almond industry was seen earlier in 2014 as a grower referendum to continue with the marketing order revealed that not all those voting appear to support the Almond Board of California.
While the numbers were high – 91 percent of those returning ballots voted to continue with the federal marketing order known as the Almond Board of California – the flip side is 9 percent did not favor keeping the program, which uses a three-cent-per-pound assessment on almond shipments through handlers as the majority funding mechanism for ABC programs.
“If you’re a nine per center, come see us,” Waycott said in closing out his state-of-the-industry address at the recent Almond Conference.
Waycott and ABC Chairman Bill Harp used referendum vote figures to invite everyone in the almond industry to become more involved in the regulatory and political issues that serve as headwinds to industry growth and success.