California almond growers will have to hustle in 2006 to regain markets lost to a short '05 crop and subsequent high prices that took almonds off shelves and out of manufactured products.

Processing tomato canneries will have to pony up more cash if they are to get producers to grow the crop they need to replenish supplies from a short '05 crop.

Walnut producers can breathe a sigh of relief that China apparently will not flood the world market with walnuts and will continue to buy California walnuts.

California citrus growers may experience an unprecedented third straight good year.

For cotton growers, the big ‘04 crop continues to hang over market, sending prices sideways.

Raisin and wine grape growers are not getting much healthier financially and more vines may be destined for the burn pile. However, table grape growers are coming off their first $1 billion crop year with nowhere to go but up.

Those are overviews of some of California's major crops. Below are more details on the outlook for those commodities provided by industry leaders for the 24th annual Agribusiness Management Conference held in early November in Fresno. It was sponsored by California State University Fresno Center for Agricultural Business and California Agricultural Technology Institute.

Almonds

The California almond juggernaut that saw new shipments set monthly records virtually every 30 days from September 2002 until December '04 have hit a major speed bump, according to Ago Dermenjian and Brent Stolpestad of Derco Foods.

Shipments have declined each month since December 04 due to a short '05 crop and subsequent high prices. The 05 crop prices, some believe, are too high, taking almonds off supermarket shelves and removing them from manufacturers' recipes and ingredients' lists ahead of an anticipated string of huge California crops. It may be difficult to regain those markets.

By 2009, there will be more than 685,000 acres of almonds capable of producing 1.5 billion pounds compared to 500,000 acres today capable of generating a 1-billion-pound crop annually.

“Prices will decline to account for this growing production, and California will have to continue to market upcoming crops effectively and aggressively…to avoid production surpluses that would greatly reduce the profitability of farming almonds,” according to the experts.

Walnuts

Walnut growers produced a record crop this year, yet prices are firm and expected to stay that way for the marketing season. The weak U.S. dollar has helped sales abroad, especially in Europe.

Like just about every other segment of California agriculture, walnut growers worry about China, which has tripled its production during the past 30 years.

However, during that same time Chinese exports dropped by 50 percent. China now consumes domestically 90 percent of its production.

This comes as a relief and good news to the California walnut industry. Good news because Chinese imports of in-shell walnuts were up 70 percent in '04 over '03. Shelled imports were up 95 percent during the same period. More than 95 percent of the imports came from the U.S.

Citrus

The California citrus industry has experienced two good years in a row and “we're beginning to wonder how much success we can stand,” reports California Citrus Mutual president Joel Nelsen.

And the ‘05-‘06 Navel crop looks good, reports Nelsen. It is just two percent smaller than last year, but “we believe it to be manageable for marketing purposes.” Sizes are smaller due to summer heat, but growers say exterior quality is “much better than last season.”

Removal of 30,000 acres of Valencias last year shrunk that crop, balancing supply and demand for the summer citrus, said Nelsen. “Early indications are that Valencia producers this summer did make money as a whole,” Nelsen said.

The mandarin segment continues to expand. Clementines, satumas and other “tangerine varieties” are replacing pulled Valencias and early navel varieties.

Lemon producers are experience much more volatility due to offshore production, primarily from Mexico and Chile, entering the U.S. market. Plus large Argentine producers are eroding the export market for California lemon producers.

“In the aggregate, there continues to be more citrus planted; family farmers continue to be the core of the industry, and while there are fewer producers, the acreage and production figures to remain constant,” noted Nelsen.

Cotton

U.S. cotton producers will handle about 22.7 million bales from 14 million acres this season. Production is down about 600,000 bales, but with a large carryover from the '04 marketing year, total supplies available will be higher this year, according to National Cotton Council economist Gary Adams.

Domestic mill use is expected to remain constant at about 6 million bales. However, exports are projected to reach 16 million bales, 1.6 million bales more than record '04 exports.

“With the U.S. crop of almost 23 million bales; mill use of 6 million bales and exports of 16 million bales, stocks would (still) build further by the end of the current marketing year,” noted Adams.

World cotton production looks like it will roughly in line with consumption, leave little change in global stocks over the next year.

Prices continue to move “sideways” under the weight of last year's large U.S. crop and only a “significant surprise” would send them higher.

And once again for the world cotton industry, China is the wild card, said Adams. “Specifically, what will be its purchases and at what timing?”

Raisin grapes

Bearing raisin grape acreage has been reduced by 40,000 acres since 2000 and that will continue this winter, according to Glen Goto of the Raisin Bargaining Association in Fresno.

The 2005 crop is estimated at 266,000 tons, roughly the same as 2004. However the final tonnage may change since grapes were still being picked for drying in October and November because the wineries did not offer concentrate prices until October. What was offered was at least half '04 prices and far below what growers were expecting. They laid grapes for raisins instead.

Growers are being paid on a preliminary free tonnage of 74 percent of the $1,210 field price, leaving about a fourth of the crop to be sold at bargain basement prices.

Table grapes

In '04, California table grape growers have their first $1 billion crop year. From '95 to '04, crop value for fresh California grapes grew at an average rate of 5 percent annually compared to the 2 percent average growth rate for the entire California ag industry, according to Kathleen Nave and Jim Howard of the California Table Grape Commission.

Growers shipped 88.2 million boxes produced from 115,000 acres in '04.

Since '95, fresh grape exports have increased 39 percent. Today about 25 percent of the crop is exported annually.

The development of new varieties; innovations in packaging and shipping and opening of new worldwide markets have combined to fuel this growth.

Domestically, per capita consumption is almost 8 pounds compared to less than 3 pounds in the early 1970s when the California Table Grape Commission was formed.

Grapes are one of the most profitable items in the supermarket produce section and are now considered a staple for consumers rather than a specialty item.

Wine grapes

The year '03 was supposed to be the turnaround season after a long downturn in grape prices and demand in the wine grape business for at least the Central Valley, home to almost 60 percent of the state's annual wine grape production.

The '04 season witnessed a rebound, but so far in '05 wine grape producers appear to be headed back the other way as wineries accepted only contact tonnages, leaving some grapes from a large, late crop and good quality crop homeless or sold at surplus prices, according to Tony Correia, president of Correia-Xavier and Nat DiBuduo, president of Allied Grape Growers.

Compounding the economic plight of growers is continued consolidation in the wine industry meaning fewer buyers and less competition.

Imports continue to put pressure on domestic wine sales.

“Demand for the very highest quality grapes and the vineyards that produce them remain relatively strong,” report the two experts.

“We can now see renewed demand in the lower tiers of the market. The level of market activity remains slow and many marginal properties, under financial pressure, are still experiencing softened prices. However, we see renewed levels of buyer activity, with the promise of rebounding vineyards values in some areas.”

Tree fruit

A promising 2005 turned sour for growers who saw rains during bloom dramatically reduce yields, resulting in insufficient returns, according to Gary Van Sickle, director, research and regulatory compliance for the California Tree Fruit Agreement.

Yields were down 30 to 70 percent for many growers.

“Declining profits for the past few years; extended resources; dwindling options; new regulations and increasing costs have many local growers wondering if it is worthwhile to remain in agriculture,” noted Van Sickle.

However, he added that industry consolidation and vertical integration as well as orchard removals of poor varietals, may signal a turning a point.

With increases awareness of obesity in America and healthier diets, “there appears to be a trend toward eating healthier.” Hopefully, this will include more tree fruit.

“Added to that is the fact consumers have grown accustomed to paying premium prices for produce at their local market, provided their expectations for quality have been met,” noted Van Sickle.

Processing tomatoes

A very short '05 crop of 9.5 million tons (19 percent below '04 and 8 percent below the original crop estimate) has dropped processing tomato inventory to the lowest level since 1999, according to Ross Siragusa, president of the California Tomato Growers Association.

This means processors will need to contract 5 to 10 percent additional acres in 2006.

“Prices will have to be sharply higher in order for processors to fill their pack,” said Siragusa.

“Northern California growers are more unified in demanding much higher prices which may cause pricing to be more regional as opposed to statewide,” he added.

“For the first time since 1999, it's a seller's market,” concluded Siragusa.

e-mail: hcline@primediabusiness.com