Global demand drives growth in almond market, investment

Los Angeles TimesJanuary 17, 2014 

LOS ANGELES — Eat an almond anywhere in the world and chances are that it was grown in California. The state produces 82 percent of the globe’s almonds, harvesting about 800,000 acres of the tree nut across a 400-mile stretch.

Fueling the boom is robust foreign demand, particularly from emerging consumer markets such as China and India, where the industry has been promoting almonds as a healthful snack.

About 70 percent of California’s almonds are sold overseas. That made the crunchy nut the No. 1 state agricultural export in 2012 at $2.5 billion. That’s 21/2 times more than wine, the second-most-valuable California agricultural export, according to the U.S. Census Bureau.

“The U.S. is the 800-pound gorilla of the global almond industry,” said Karen Halliburton Barber, assistant vice president and senior analyst for produce at Rabobank, a leading agricultural lender. “They’re the dominant producer.”

The Almond Board of California forecasts that the state will harvest its third-largest crop this year at 1.85 billion pounds — slightly less than last year’s 1.88 billion pounds.

That’s more than three times what the state was producing in the late 1990s. Experts are optimistic that the industry can maintain that sort of volume in the coming years. Foreign demand is expected to increase. Competition should remain light. The main barriers to continued growth are access to land and tightening water supplies.

“We’ll run out of dirt and water before we run out of almond markets,” said Daniel Sumner, director of the Agricultural Issues Center at University of California-Davis.

The biggest of those worries is water. Almonds are a relatively thirsty crop, and farmers need to water them even during dry spells.

California suffered its worst drought conditions in 90 years between January and May, leaving reservoirs dangerously low and state water allocations to farmers well below historical averages, according to the Bureau of Reclamation. The stingy water supplies resulted in smaller almonds this year.

John Melin, chief operating officer at Tacoma-based Brown & Haley, said Thursday, “California is the source of all of the almonds we use in Almond Roca. We observe the market and the water conditions in California very carefully because low water conditions always result in higher almond prices. So even though we like the sun shining in Washington state, we would be much happier if it was raining in Central California.”

As it is every year, the immediate direction of the market depends on climatic conditions. “There no question that almond prices are higher, and everyone is waiting to see early indications on the 2014 crop,” Melin said.

Growers are harvesting more almonds and using less water per acre than in years past. But the sheer acreage of California’s almond industry means water will remain a concern.

Still, with almond prices nearly doubling in the last five years to $2.58 a pound, it’s little wonder that growers have been abandoning crops such as cotton and furiously planting almond trees. There’s twice as much almond acreage in California as there was two decades ago. Meanwhile, cotton acreage has dwindled to about 400,000 acres from 1.3 million acres over the same period.

“It feels like almonds became rock stars overnight,” said Karen Ross, secretary of the California Department of Food and Agriculture. “But they’ve been building in bits and pieces for years. I look at almonds as a great case study because they were very strategic and willing to make long-term investments.”

Central to that plan are nutritional research and clever marketing. The Almond Board of California has funded a number of studies, including an October report in the European Journal of Clinical Nutrition showing that eating dry-roasted, lightly salted almonds could sate hunger without increasing body weight.

The state almond board has an office in China, where it has invested heavily promoting the nut on billboards and in print and digital advertising as part of a youthful and healthy lifestyle.

What bodes well for the industry is that almond demand is also expanding in Europe and the U.S., shielding it from dips in consumption in any one place, said Halliburton Barber of Rabobank.

“They have a balance. It’s more than just China,” she said. “There’s still great potential to keep growing.”

Staff writer C.R. Roberts contributed to this report.

The News Tribune is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service