With growing demand bolstering almond prices, even as production rises to 2 billion pounds annually, California growers continue to smile.
What’s more, they’re likely to continue wearing big grins for at least a few more years, according to major almond processor Hilltop Ranch at Ballico, Calif.
“The last eight years have been the most profitable ever for almond growers,” says Paul Ewing, company sales manager. “We estimate that the next three seasons will be even more profitable than most of the past few years.”
The reasons are described in an outlook report the company, one of the largest privately owned processors of almonds, issued in early July. Hilltop Ranch handles about 30,000 tons of almonds annually, shipping to buyers in more than 70 countries.
Each month, the company issues an assessment of the current almond market. Its new report marks the first time, however, that the company has analyzed long-term trends in production and demand and their likely impact on California’s almond industry.
The report was prompted by a major shift in the market just now getting under way, says Ewing. Worldwide demand for California almonds continues to surge, fueled in large part by a growing middle class in many emerging markets. This demand has increased an average of 13 percent annually over the last six years, he notes. California exports about 70 of its almond production.
Meanwhile. bearing acreage has grown rapidly, especially over the past three seasons, ever-improving orchard management practices have increased per acre production.
Yields are averaging more than 2,600 pounds per acre, and California growers are poised to harvest their third record crop in as many years. The 2012 harvest now under way is also likely to be the second straight 2 billion pound crop.
And the crops can only get bigger, Ewing says. “We believe 2011 was the start of another wave of large plantings, and we expect that this year and next will be among biggest, if not the biggest, planting years in history.”
Those trees won’t be producing much crop before 2015, so with only modest increases in California’s production potential until then, he looks for almond prices to keep rising for the next three years or so.
“We anticipate average prices through 2014 to be higher than those over the past four years,” Ewing says. “By around 2015, we anticipate another quick rise in bearing acreage and more moderate prices to allow for further rapid demand growth. We believe California will produce a 3 billion pound crop by 2020.”
More acres of trees will play a big role in that additional production. However, Hilltop Ranch believes more dense orchards, minimal pruning to encourage higher production early in an orchard’s life, and more vigorous rootstocks will help the per acre yield average to go up.
On the demand side, increased awareness of the health benefits of almonds is expected to encourage more consumption, and shoppers will have more variety in the types of food products containing almonds. Last year, the report notes, nearly 1,200 new almond products were introduced to consumers in the U.S. Worldwide, the number of new almond product introductions in 2011 exceeded 5,500 in more than 70 countries.
Meanwhile, demand for California almonds overseas is becoming more widespread and more stable. Six years ago, 61 percent of the state’s exported almonds went to Western Europe. Today, just 34 percent of California almonds shipments are bound for that region. This market diversity has also helped flatten the traditional fall peak in demand, resulting in a more consistent level throughout the year.
“Every year, it seems, especially at this point in the season, that many doubt we’ll be able to sell all the almonds we’re going to produce,” Ewing says. “Even now, following six years of impressive growth when shipments of California almonds have doubled, some growers, processors and buyers are doubting themselves again.
“But, I think a year from now people will look back and be impressed that once more we’ve sold it all.”
The complete Hilltop Ranch Long Term Outlook is available on the company’s website: www.hilltopranch.com