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- Land values are very strong in California. Investors are chasing land, but more often than not it is farmers who are beating them out.
Tree nut horizon, water trouble
There are probably no crops more profitable now than almonds, walnuts and pistachios. All continue to be planted throughout the state. What is your outlook for those crops?
Almond prices have been historically volatile. They can go from $3.50 to $4 pound to the grower to 90 cents ... but we have not seen 90 cents in a long time. Prices are high right now and if prices get too high you could see price rationing. The thing with almonds is that orchards only last 20 years so you can make adjustments in the supply side relatively rapidly. However, $1.75 almonds are still profitable, and prices are a long way from that right now. The Chinese market is the key component in the success of these nut crops. There is always the chance China can begin producing their own nut crops. However, it is almost impossible to produce almonds in China. It is tough to grow pistachios. Walnuts are a big crop there, but they are planted mostly to prevent land erosion. They would have to change the way they cultivated walnuts and process them to be competitive with California walnuts. That could take a long time.
The citrus industry is another healthy segment. What do you see regarding its future?
The easy peel Mandarins are really hot right now. There is a concern that as more of the peeled Mandarins come into the market, Navels could suffer. I have not seen that yet. A good navel is still a nice product.
Any discussion about California agriculture has to center on water and its availability and cost. (When Farm Press interviewed Crowder, many were projecting a 30 percent to 40 percent allocation this season. That dwindled to just 20 percent in the spring.)
The water issue has grown more critical as we plant more permanent crops. Also, vegetables and processing tomatoes act like permanent crops when it comes to water. Farmers are much more reliant on water than they were just a few years ago.
It is harder and harder to make adjustments if they do not get deliveries. Unfortunately, even if we get all the dams needed and get a new Delta conveyance system, it will be 20 years or more before we get any new water. Therefore, for the next year or the next 20 we need to focus on groundwater monitoring and banking. Not all groundwater is managed and monitored properly today. We need to be making better water decisions. Groundwater banking is still small in comparison to what we need to support agriculture. Farmers need to know if they create groundwater banks, will it be available to them in 20 years. Water availability will become an even more important financial element for bankers in the future.
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