Almond growers jittery about future Falling demand, prices worry area producers

Mar 3, 2009      The Record - Stockton, California

Reed Fujii

Mar. 3, 2009 (McClatchy-Tribune Regional News delivered by Newstex) -- Rain dampening the annual almond bloom may be the least of California growers' concerns.

For decades, they've found markets for ever-larger harvests, but after a record fall harvest combined with last fall's global economic crunch, demand has flattened and nut prices fallen. And the ongoing drought may curtail production on up to 200,000 acres of the state's orchards.

Ripon almond grower Kevin Fondse, anticipating forecasts of several days of rain, said farmers have to deal with whatever Mother Nature may deal out. But less-than-ideal weather might actually be a blessing, he suggested.

"An average crop would be fine," he said. "It might help the market."

The California almond industry, which provides 80 percent of the world's supply, had set more than a dozen new shipment records month after month until sales gains stalled in October, when the world credit crisis put the pinch on foreign buyers.

"The biggest problem with almonds is the global catastrophe and the credit," Fondse said.

Overall, sales are nearly flat. Shipments from the season's Aug. 1 start through Jan. 31 totaled nearly 696 million pounds, down only about 0.3 percent from 698 million pounds in the same period the year before.

"Up to this point, shipments in the industry have run neck and neck with last year's record shipments," said David Baker, director of grower relations for the Blue Diamond growers' cooperative.

And there are indications demand for almonds is recovering, as Baker anticipates the industry will crack a new shipment record for February and possibly again in March.

"We feel good," he said. "We will exit the year with a new record in shipment and consumption in the almond industry."

However, with the record-breaking 2008 almond harvest of about 1.5 billion pounds, farmers have seen prices for their crop decline.

"In general, if you look at the cost of growing almonds, depending on variety now, the return should be right above the cost of production," Baker said.

That might not be enough, however, for some farmers carrying higher financing or land costs than other growers or if they are producers of less-popular almond varieties, particularly small-size nuts.

Blue Diamond is considering developing an almond butter product, as well as continuing to produce almond milk, as a way to market its supply of small, unmarketable nuts.

"It's not easy being an almond grower right now, because we have to sell the crop," Fondse said. "And there's not going to be the huge returns we had."

Recent rains, while providing some relief in the ongoing drought, have had a mixed impact on the state's almond orchards. Wet, cool weather primarily keeps bees from pollinating the blossoms.

The heaviest impact so far has been on orchards in the northern Sacramento Valley, Baker said, with a more moderate effect in the midsection of the state. The southern San Joaquin Valley has seen few weather problems.

Assessing what harm the weather has had is pretty much a guessing game, however, said Phil Brumley, an almond and rice grower in Escalon and an agricultural consultant.

"At this point, it's difficult from an industry standpoint to know how that's going to affect us," he said. "We're not going to know until about May what's still hanging on the trees."

Another uncertainty is what impact the drought, and recent predictions that federal water managers may deliver no irrigation supplies to their southern Valley customers, will have on almond growers.

There are more than 200,000 acres of almonds grown in affected areas, and Baker predicted 40,000 to 50,000 acres could be knocked out of production. Statewide almond producing acreage was pegged at 660,000 acres last fall.

Brumley said he thinks the water shortage could affect well over 50,000 acres.

He said he heard beekeepers were told not to deliver hives for pollination to some orchards and that some growers are planning to shake down the almond blossoms.

"It takes less water to keep the tree viable," Brumley explained. "They'd be willing to give up this year's crop if they can save the orchard to go on to another day."

The uncertainty has pushed almond buyers to the sideline.

"From a market standpoint, it always gets real quiet around bloom time," Brumley said.

"They're not going to buy way ahead until they see where this thing is headed."

Contact reporter Reed Fujii at (209) 546-8253 or rfujii@recordnet.com.

Newstex ID: KRTB-0186-32505036

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