Despite the higher yields and increased efficiencies California almond growers have gained over the years, the costs associated with growing almonds have risen dramatically while net returns per acre have shrunk.
ABC-funded researchers continually look for ways to add production efficiencies that will ultimately reduce input costs. Studies to determine the most efficient irrigation water delivery systems and techniques, for instance, have helped reduce California almond growers’ water and energy costs.
The total cost of producing an acre of almonds is now $3,897, according to an analysis by Karen Klonsky of the Agricultural & Resource Economics department at UC Davis. Klonsky, who is known for her cost-and-return studies for various crops grown throughout California, presented her most recent data on California almonds at the Almond Industry Conference last December.
Not surprisingly, cultural costs topped the list of expenses growers face every year. In the study, which analyzed costs for an assumed 40-acre orchard in the northern San Joaquin Valley with 16-foot-by-22-foot spacings, 124 trees per acre, microsprinkler irrigation and a 25-year orchard life, cultural costs were $1,752, or 45 percent of total cost of production in the year studied (see chart).
Cultural costs include pruning, orchard floor management, disease and pest control, and ATV and pickup use.
The second-highest expense is land. In the study, land ownership cost $750 an acre, or 19 percent of total costs. Land is categorized as noncash overhead (capital recovery). Other noncash overhead costs are principal and interest, buildings, shop, field tools, irrigation system, fuel tanks, equipment ownership and the trees.
At $437 per acre (11 percent of production costs), cash overhead is the third-highest production cost. Cash overhead includes office expenses, insurances, sanitary service, property taxes, and building and irrigation system repairs.
Coming in fourth is the cost of trees, which was pegged at $356 per acre, or 9 percent of production costs. Harvest, at $325 per acre, is also 9 percent of production costs, and includes shaking, sweeping, picking up and hauling. It also includes hulling and shelling.
Lastly, equipment costs account for $277, or 7 percent of the cost of producing almonds.
Applying this cost scenario to a price of $1.90 per pound, Klonsky calculated the break-even point would require a 2,000-pound-per-acre yield.