In a bit of a surprise, the initial forecast for the 2006 California almond crop is 1.2 billion pounds.
It was surprising because an early frost damaged early blooming varieties and the spring was one of the wettest and coldest in recent years, prompting growers to spray fungicides repeatedly to protect the crop.
However, growers reported some of the most aggressive bee pollination in many seasons and bee supplies were more than adequate. Earlier growers were concerned there would not be enough bees to pollinate the crop, but record hive rental prices enticed more out-of-state beekeepers to bring more hives into the state.
If realized, it will be the fourth billion pound crop in the past five years and maybe one of the most welcomed billion-pound crops.
Last year's production was 915 million pounds, large by past industry standards, but not large enough to meet demand created by aggressive industry marketing efforts to increase demand for three consecutive 1-billion pound crops that netted growers record and near record prices for the same three years.
The 2005 short crop was the priciest yet, netting growers more than $3 per pound, almost $1 more per pound than the '05 average price. However, '06 prices also soured some growing markets for California almonds.
If this year's crop comes in as the May subjective measurement indicates, it should bring prices down to a more acceptable level for buyers. Nevertheless, strong prices for the 2006 crop could make almonds a $3 billion per year crop for California. Last year's crop is projected to total almost $2.8 billion.
The '06 subjective measurement is based on a telephone survey of 368 growers conducted April 24 through May 3. It is 11 percent more than growers produced last year. It does not take into account any loss from the annual “June drop.” Acreage represented in the survey represented 24 percent of the total bearing acreage. An objective measurement will be taken in June.
Rabobank's Food and Agribusiness Research group says that, while the last few years have been very lucrative for U.S. almond growers, resulting in expanded acreage and new plantings, California's challenge will be to increase demand to support 1.5-billion-pound annual crops on the horizon.
“The last few years have been very successful for almond producers, who have expanded their acreage and increased plantings,” explains Chris Noble, Rabobank's Food and Agribusiness fresh produce analyst. “The first wave of new production will begin to hit the market in 2007 and continue through 2010.”
The California 2006 almond set looks strong, despite several factors that could have led to a lighter set, according to the NASS California field office. There was a low accumulation of chilling hours that resulted in an early bloom, a frost hit some early varieties, and wet, cool conditions continued throughout the spring. However, California has the potential for a good almond crop, according NASS.
In general, the set is good in the Central Valley. The southern most producing counties are uniformly heavy in set. The northern most producing counties have a bit lighter set, which is likely due to frost effects. The dominant California almond variety, Nonpareil, has set well and is “looking very good,” according to NASS.
This year is expected to begin a series of uninterrupted 1 billion pound annual crops with the 100,000 acres of new almond orchards planted in California within the past three years.
These new orchards can easily produce 300 million pounds more annually of almonds when they reach maturity. Although traditional wisdom says almond orchards do not begin producing until the third or fourth leaf, many newer, closer spaced orchards aggressively managed can have a harvestable crop by the second leaf and be nearing full production capacity by fifth or sixth leaf.
Domestic demand for almonds has grown significantly in recent years, but California almond growers will need to look toward both the domestic and export markets for future growth.
U.S. almond consumption has doubled over the last decade, from a half-pound per person during the mid-1990s, to more than 1 pound per person over the last four years. Aggressive marketing efforts by the Almond Board of California to leverage the health benefits of almonds have contributed to these record consumption levels, as have the changing eating patterns of U.S. consumers, according to Rabobank.
For the 2006/2007 season, Spain, India, Germany, Japan and Italy are expected to import approximately 65 percent of California's total almond production. The strength of the Euro versus the U.S. dollar will continue to favor U.S. producers and ensure that U.S. exports to Europe remain strong.
“India. Russia and China are prime markets for export growth in the near term,” says Noble. “However, these developing markets are particularly sensitive to price, so if prices for U.S. almonds increase, demand in these markets may not grow as anticipated and may even shrink.”
A major challenge for California's almond producers will be to maintain the balance between profitable price levels and continued demand growth in some of these price sensitive markets.
Prices for the 2005 crop averaged $3.08 per pound, providing excellent returns for the “short crop” that was the fourth largest ever produced. However, year-to-date exports of in-shell almonds to India were down 36 percent from year-earlier levels, and total California exports were down by 20 percent. This decline can be mostly attributed to higher almond prices.
“Going forward, California almond growers need to keep in mind that, although global demand and appreciation for almonds is at an all-time high, it is important not to over-produce and to maintain the correct balance between supply and demand,” concludes Noble.