By Kerry Klein
Standing in an almond orchard near Caruthers, California, farmer Christopher Frith said he grows grapes and walnuts – but mostly almonds.
He said he eats a handful of them every day, and won’t eat any baked goods that don’t contain either sliced almonds or almond flour.
“I do cookies with them. We did brownies the other night,” he said, laughing.
In June, it’s a few months until harvest, and the nuts on his trees are green and fuzzy, like unripened peaches. The trees are so full that the branches are bending low, some nearly to the ground. And yet, Frith isn’t sure his operation will break even.
In the last few years, operating costs at almond orchards have increased, while the wholesale prices that growers receive for their almonds have plummeted.
“My father in law’s having to pull money out of savings, out of retirement, to keep the ranch going,” he said.
Almonds have long been a major cash crop in California, for decades bringing in billions of dollars a year. In 2022, it was the state’s second highest grossing crop after grapes.
Over time, overseas exports exploded and, as demand rose, so did prices. Farmers planted more trees, and outside investors gobbled up farmland hoping to turn a profit. As a result, in the last 30 years, almond-bearing land in California tripled to more than 1.3 million acres.
But pandemic-era shipping snags upended all those exports. That, coupled with the maturing of tens of thousands of acres of trees that had been planted when prices were higher, left an oversupply that dropped prices to the lowest they’ve been in 20 years.
In just the last few months, however, the outlook has been changing, with wholesale prices on the rise after almond-bearing acreage dropped for the first time in decades. While some growers and producers are optimistic the industry is turning around, others continue struggling. The situation even led one investment group, with 8,000 acres of almonds, to file for bankruptcy this spring.
“It's scary. It's really scary,” Frith said.
Some say permanent changes are afoot for almond industry
Around 8,000 farms in California are responsible for producing 80% of the world’s almonds. Most of those orchards are concentrated in the vast Central Valley, where the trees thrive in the mild winters and scorching, dry summers that make up the region’s Mediterranean climate.
“Ninety percent of those are family farms. Many of them are multi-generational,” said Clarice Turner, president and CEO of the trade and marketing group Almond Board of California.
More than half of the nuts they produce are then exported, primarily to India, Spain, China and the United Arab Emirates. And so, understandably, the industry was hit hard in 2021 by “Container-geddon,” when heightened demand for online goods clogged cargo ship traffic in U.S. ports. The months of delays led to tens of thousands of shipping containers, many of which would normally be filled almonds and other agricultural products, going unfilled.
A 2021 UC Davis study estimated the affair, which many feared would lead to the permanent losses of some overseas customers, cost the agricultural industry more than $2.1 billion.
Even once Container-geddon was resolved, inflation had set in, raising the costs of fertilizer and farming equipment as well as the interest rates on loans that growers sought out for purchasing land and young trees.
“For the most part, most growers have not been making money for a couple of years,” said Turner.
And while producers stockpiled the almonds that couldn’t be sold, more trees continued to come into production, resulting in hundreds of millions of pounds of the nuts being carried over into the current season.
“Carryout into last year was about 800 million pounds, which is almost double what, in a normal year, it would be,” Turner said.
Still, Turner is confident that international demand for the nuts never waned. Indeed, marketing is a part of her job – the Almond Board touts the benefits of the nuts across the country and around the world, which helped drive up demand as production expanded. The board’s YouTube channel displays hundreds of videos, many featuring celebrity athletes and fitness influencers, promoting the health and beauty benefits of almonds in French, Spanish, German, Korean, and a half dozen languages spoken in India.
But supply and demand aren’t the only economic factors that have presented challenges for almond growers.
In the last few years, state groundwater legislation known as SGMA began limiting landowners’ groundwater use, resulting in tough decisions about how much land growers can irrigate and which crops they can afford to keep alive.
As a result, land prices have been shifting based on access to other water sources like irrigation canals. A recent report by land pricing company Acres, which crunches numbers based on publicly available data from land sales, shows that land values for almond orchards have been declining for years, regardless of water access.
“There was a tremendous amount of new acreage that went into production during the 2014 through 2021 time frame. Values for orchards were driven up tremendously high. And since that time we have seen a pullback in land values across the board,” said Acres’ Managing Director of Investments Drew Lipke.
Among other effects, falling land values can limit the amount a grower can borrow for new trees or equipment. And while the struggle has been acute for almond growers, who have simultaneously contended with lower prices, Michael Ming, an agricultural real estate broker and appraiser based in Kern County, said these forces are presenting challenges to farmers across the board.
“I think that's a new reality that…really you're looking at the water and how many of the total acres you own that you can farm,” Ming said. “It's been a downward trend…I think there's permanent changes happening.”
Who can survive – and how?
Ming said almond growers he’s worked with are finding creative ways to stay afloat. Many are selling their land, then leasing back just a portion of it. Others are pulling out their almond trees and planting other crops, or installing solar panels to generate power instead of food.
Some, he said, are selling their land and getting out of agriculture altogether.
“We're seeing a lot of family farms exit,” he said.
Across the board, growers are cutting costs. That includes Margaux Hein, a farm manager responsible for almonds and other fruits and nuts grown throughout the San Joaquin Valley and Central Coast.
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