The good news — the California almond industry produced the largest crop in history during the just completed 2007-2008 crop year.
Final production should closely mirror the 1.33 billion pounds projection by the California Agricultural Statistics Service (CASS) amid good prices and strong worldwide demand.
The bad news — the cloud hanging low over the heads of some almond growers isn't bringing rain. The forecast includes water restrictions and how some almond production could become at risk due to an infamous court ruling further protecting the endangered Delta smelt minnow.
To gain perspectives on the 2007-2008 almond crop year and future crops, Western Farm Press quizzed three leaders in the California almond industry: Rick Kindle, vice-president, Gold Hills Nut Company Inc., Ballico, Calif.; Kelly Burkholder, marketing manager, Harris Woolf Almonds, Coalinga, Calif.; and Mike Kelley, president/chief executive officer, Central California Almond Growers Association (CCAGA), Kerman, Calif.
“The 2007-2008 crop size has been good as far as volume. Apparently we will reach the estimate and may even exceed it a little bit,” said Kindle of Gold Hills Nut, an almond grower, buyer, and processing company. “Shipments have been extremely strong every month, and breaking records. As of Jan. 2, I think the industry will bust December shipment records which indicates strong worldwide demand for California almonds.”
According to the latest shipment report, more than 70 percent of the almond crop is committed or shipped already, Kindle said. Prices have been reasonable and demand has been strong in the midst of marketing the largest crop in history. “Everything has been good.”
Kindle is stepping down from the Almond Board of California board of directors on March 1, 2008 after serving a three-year term.
Kelly Burkholder of Harris Woolf agreed that the 2007-2008 almond crop was a record. He expected final figures to be close to the CASS 1.33 billion pound estimate.
The crop was the second largest ever processed by the CCAGA, Mike Kelley said. That's six million pounds less than the record set with the 2006-2007 crop.
“Volume was off a little in 2007-2008 due to smaller sized meats plus some variety yields were lower. Nonpareil was off marginally,” Kelley said. “It was a good year in our area and was an even better year as you move north into Merced.”
Surprises in 2007-2008
Reduced kernel size was a big surprise in the 2007-2008 crop, Kindle said. Smaller kernels were noted from southern almond growing areas while the middle and northern areas produced a better distribution of sizes.
“On the manufacturing side of almonds that Gold Hills Nut is in, the lack of adequate amounts of input stock for cutting and slicing is apparent,” Kindle said.
Harris Woolf handles almonds from Fresno County to the south. Burkholder saw a drop in 2007-2008 average yields in those areas compared to the 2006-2007 crop year.
“My biggest surprise is the 2007-2008 almond crop in the northern part of the state uniformly seems much larger compared to 2006-2007, and has basically carried the 2007-2008 (state) crop,” Burkholder said. “Every once in awhile you're due. This area had a combination of good weather, pollination, and growing conditions that allowed average yield increases of 30 percent over the previous year. Those are very strong numbers.”
Fresno County and areas south produced 10 percent less on average in 2007-2008 compared to the previous year, Burkholder said. The coming year's crop could equal or be slightly smaller than the 2007-2008 crop if normal growing conditions occur.
“There's only been a few times in the history of the California almond industry where three years in a row of strong increased production occurred. The greater probability is that next year's yields would be lower than this year even if acreage production increases,” Burkholder said.
According to Kelley, trees in his service area had large almond loads. While nut size was good, the meat size once cracked out was smaller than average.
“This could be the result of the extreme heat during summer 2006 and extreme cold during the winter of 2006-2007,” Kelley said. “We had a huge crop year in 2006 so we were probably due to be off a little bit.”
Final price prediction
Kindle offered a conservative year-end price for growers estimated at $1.50 to $1.75 (all sales blended together). “Prices have increased since the beginning of the contracting period and are caused by the sheer fact that we've committed 70 percent of the crop already,” Kindle said.
2008-2009 crop pricing
Trading for the next crop to be harvested in August is underway and prices are slightly less than the current crop, Kindle said. Pricing is strong but he doubts the next season will yield as high as the 2007-2008 crop — even with 45,000 new bearing acres in production.
“On the other side of the coin over 100,000 acres are over 20 years old. Many of those will have a small crop this year. They put on the mother of all crops and it took everything out of them. Historically those old orchards don't come back,” Kindle said.
Many older orchards have been removed. “The question is — as 45,000 acres come out, do they equal the 45,000 coming in? I don't know. I don't think that much acreage has been pulled, but maybe it has.”
Burkholder said demand exists for the 2008-2009 crop, but is not great at this point in the season. He said gross prices could lie in the $1.90 range for California varieties and in the $2.40 range for Nonpareil. It's too early to predict pricing on Carmel.
Higher carry-in numbers
The November 2007 Almond Industry Position Report indicated a carry-in forecast of 133.9 million pounds into 2007-2008 and a carry-in of 274 million pounds into 2008-2009. With almond carry-in numbers increasing, Kindle, Burkholder, and Kelley were asked if that could create negative effects for the 2008-2009 crop year.
Kindle estimates the carry-in for next season represents 10 percent to 15 percent of the total supply. “You have to remember that number is based on the end of July. August shipments still must be satisfied out of the carryover. Even if over 200 million pounds was carried into the new crop, that's still a minimal amount. Usually what is left is not always the best product — it's a lot of byproduct that's not suitable for trade.”
Burkholder believes almond shipments will hit the 1.2 billon to 1.25 billion pound range.
“If you use the 1.25 billion pounds as the final shipment number and the crop is 1.33 billion, you're carrying out about 200 million pounds. That's about 16 percent stocks to use ratio and that's not unmanageable at all, especially with growing consumption,” Burkholder said. “It takes the stocks to use ratio from about 12 percent to 16 percent.”
Kelley believes growing consumer demand for almonds will outweigh carryover issues.
Kindle believes most bee needs for 2008 almond bloom pollination will be met. He's heard of rental prices in the $130 to $150 range. The highest prices are for a minimum 10-frame guaranteed while some lower priced rentals are based on eight frames. “A lot of the price differential is you get what you pay for,” Kindle said.
Burkholder is also hearing about strong bees prices but no supply problems.
“Water availability is definitely a problem on the West Side and to the south,” said Kindle. “How the environmentalists have the power to shut down pumping stations off the Delta continues to amaze me — for a fish that's not even indigenous to the Delta. The peripheral canal is 15 years away but must be built eventually. Water must be conveyed to the south,” Kindle said.
“We've seen more land being fallowed in order for sufficient water for permanent crops,” Burkholder said. “I think the political decision to not pump still leaves people uncertain on water availability.”
Chilling hours are shaping up to be a non-problem this year, noted Kindle, who said chilling hours through early January were well ahead of last winter. “With good chilling hours and adequate bud set, we have a chance for a fairly decent crop. If I was a betting man, I would guess the crop will not exceed the 2007-2008 crop.”
Hulling and shelling capacity increased for last year's crop that allowed marketers to receive the crop faster than usual, Kindle said.
“I think we're currently in pretty good balance in hulling and shelling. Ideally, almond processing should be finished by Thanksgiving but some occurs into December. It doesn't do the nuts any good to leave them stockpiled on the ground. Getting almonds hulled, dried, and stored in a building is important.”
The California almond industry currently has adequate hulling capacity, according to Kelley. Another huller/sheller is planned in the Firebaugh area. “I think we're in really good shape hulling wise for the 2008-2009 harvest,” he said.