California almond growers and the allied California almond industry are facing one of the most difficult years in recent history.
The two main sources of this difficulty are drought and the global supply chain mess, which first began in April 2020 due to the global economic shutdown over the Covid-19 pandemic and has since become worse, due to the war in Ukraine and China’s most-recent strict shutdown over a renewed outbreak of Covid-19 in part of the country.
Despite these struggles – and both are serious problems for growers and the California almond industry as a whole because drought is a long- term issue, requiring long-term solutions, and in terms of the supply chain mess, since about 70% of almonds grown in California are exported, primarily to India, East Asia and Europe, its impact on the almond industry is much more severe than is the case for most other crops grown in California, which have a much higher percentage of domestic sales than they do export sales – it’s my analysis that California almond growers and the industry will continue overall to do well, largely because there’s such a high consumer demand for almonds and for food and drink products made from or containing almonds as key ingredients.
I do believe, however, that we’ll see very little if any almond acreage growth in California for the next few years. The California almond industry will continue to bloom, although I don’t see it blossoming for the next few years, despite these current struggles.
The demand for almonds, from both consumers and the food industry – almonds have become a favorite ingredient for branded food and beverage products – also continues to increase. Almond milk, for example, is the top-selling alternative milk in U.S. grocery stores, beating out soy milk, oat milk and all the others. Almond milk sales in the U.S. are growing by about 6-8% annually, according to food industry research firm SPINS, and by an even higher percentage in the UK and Europe, where almond milk was introduced later than it was in the U.S. Demand for almond milk in food service – cafe’s, restaurants and other institutions – continues to grow too.
Food-makers also continue to create a whole lot of branded food products containing almonds. Almonds not only are a popular ingredient used in candy and snack foods, they’ve also become a popular ingredient in cereals, ice cream, packaged rice mixes and other products, along with being marketed as ready-to-eat snack foods in a variety of flavored varieties like chocolate, lemon, caramel and others. Over the last few years almonds have been one of the 5 most- popular ingredients used by food-makers in the creation of new branded products, according to research firm Technomic, which keeps track of the various kinds of ingredients used in product development.
Labor also is an important issue for almond growers. But it’s an issue growers have been dealing with for many years and finding solutions to, like automation, so I’m saving it for another day.
Drought
In terms of drought, almonds consume somewhere between 7-10% of California’s annual water use. The actual percentage depends on the source of the data. And contrary to what some say, almonds aren’t the most water-intensive crop grown in California. Rice, cotton, alfalfa and various feed crops – all popular in California – are more water-intensive than almonds are. However, the reason almonds are estimated to use 7-10% of California’s total water supply, is because of the huge total number of acres – about 1,600,000 based on 2021 data from the California Department of Agriculture – planted in the Golden State.
Growers plant and produce almonds in California – particularly in the Central Valley – because it has the perfect climate and excellent soil for growing almonds, as well as because it’s profitable, compared to growing numerous other crops. Alfalfa, for example, isn’t a profitable crop to grow in California. Doing so generally only makes sense for dairy farmers, who can use it as feed for their cows, or if land isn’t suitable to grow much else.
Many California almond growers have made great strides over the last decade to reduce the amount of water they use to irrigate their almond trees. The almond industry trade associations have also made water-savings a top-priority in terms of the services they offer growers.
But like farming in general in California, the big issue remains the amount of water allocated to farmers by government authorities each year. It isn’t enough, in my opinion ,but that’s an issue that can only be solved politically between the almond industry, its lobbyists and state and federal regulatory officials and elected representatives. The water allocation for farmers in California this year is particularly unfair, even though there’s a drought. This is going to require almond growers to get even more innovative in terms of water use. It’s also likely to result in some growers fallowing almond acreage. My analysis and opinion though is that we’ll see very little total acreage fallowed this year and new year.
Supply chain mess
The California Almond Alliance, an industry trade group, is working hard to get Secretary of Agriculture Tom Vilsack and Secretary of Commerce Pete Buttigieg to help solve the problem. Basically, the issue is that there are few container ships available to transport tons and tons of almonds to their overseas destinations. This is because Asian countries have convinced container ship companies – and it’s a very consolidated industry with only a few players controlling the container ship business – to send containers that arrive full in the US back to Asia empty so that China, the main instigator in this, and other Asian countries can export faster than the normal two-way process. Sending containers that arrive in the U.S. back empty is one of the most stupid and unfair trade practices we’ve seen in a very long time.
The California Almond Alliance and other groups have also reached out to California’s Congressional representatives in Washington DC, asking them to urgently help solve this situation, which has devastating implications for California almond growers if not resolved fast. The industry says the tons and tons of almonds, which are already sold but are sitting in warehouses in California, must be put on the water now or else the industry faces an economically devastating scenario that will hurt not only growers but also the other industries that are part of the almond industry value chain in California.
In late May there appeared to be some progress made to resolve the situation, with Senator Dianne Fienstein getting involved as well as both of the cabinet secretaries mentioned above elevating the issue higher on their priority lists.
What needs to happen is that the container companies must change their practice of sending containers back to Asia empty. The U.S. government needs to apply strong pressure on the CEOs of these global companies to make this change now, not only because of the damage it’s doing to the California almond industry but also because it’s an unfair practice. The U.S. is the leading importer of goods from China and their leading export market, and it needs to be made clear to the Chinese government and to the CEOs of the container ship companies that if this practice continues there will be severe economic penalties enacted.
California and almonds
Almonds were first planted in California as early as 1853, according to a seminal paper, Almond Production in California, by Daniel Geisseler and William Horwath of UC Davis.
Almonds weren’t much of a crop in California until the period 1964-1985 when almond acreage increased to more than 400,000 acres, according to Geisseler and Horwatch. Product development and marketing contributed significantly to this increase. A second factor, according to the authors, was the increase in the irrigated area in the Central Valley, where soils and climatic conditions are ideal for almond production. It’s important to note that from the 1950s-1970s California made a commitment to agriculture through the California Water Project. Without this major project California would not be the agriculture powerhouse it is today. The governor and elected officials in Sacramento would be smart to do some historical reading on the importance of water projects in the making of California.
Total almond acreage remained relatively stable between 1985-1995, according to the authors, but starting in 1996 a boom in almond orchard plantings began again, reaching a new high of nearly 800,000 acres of bearing orchards by 2011. Almond orchard growth in California has continued to increase since then, standing at over 1 million acres in 2022.
Solutions future prognosis
The most immediate need for growers and the allied almond industry is for the supply chain situation to be solved. All those almonds need to be shipped out of warehouses, put in containers, and shipped to their destinations overseas.
The drought, which is a systemic, long-term issue, must be addressed too. California farmers in general need more irrigation water allocated to them. However, farmers can’t wait for this magic day to occur, so they must with the state and federal governments financial assistance, keep moving fast on water conservation, while at the same time industry lobbying groups, along with farmers themselves continue to plead the case for more water. Eaters, which we all are, also need to get involved. We’re currently facing a global food supply crisis and the price of food at the grocery store is at its highest levels since the 1970s. If this isn’t enough for people to realize that food comes from farms and that farmers need water to grow it, I think we’re in big trouble as a nation that has prided itself since its inception on being able to produce enough food for all its people.
My prognosis is that the supply chain issue will be solved before or by the end of July. Almond growers will meanwhile continue to deal with and muddle through the drought. We will see some following of almond acreages but I don’t think it will be in significant numbers.
My further prognosis is that the future for almond growers and the industry remains bright because consumers continue to demand almonds and love eating them and drinking beverages made from them. The California almond industry will continue to blossom but in my analysis we aren’t going to see the kind of blooming the industry has experienced up until now for the next few years.
The struggles are real but opportunity remains. Key to both are to solve these problems. It takes more than farmers alone to do so. Elected officials and consumers need to become part of the solution rather than part of the problem. Every eater is a stakeholder when it comes to agriculture.
