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Updated: Dec 22, 2022

With just a few short weeks until bloom, there are a number of compelling storylines worth tracking as the almond industry kicks off the 2021 season. Market uncertainty exacerbated by trade concerns and the COVID-19 pandemic has resulted in reduced income for many almond growers. Facing budgetary constraints, some growers might look to cut costs this season.

Here’s a quick recap for context:

· Almond production is still in a stage of significant growth, with more than 300K non-bearing acres to enter production over the next few seasons. Fun fact: there are more acres of non-bearing almonds than there are total acres of apples in the US (source).

· Almond prices fell from $2.50-$3 per pound in 2019 to as low as $1.40 in 2020. Though reduced prices led to a 5% increase in exports in 2020, grower income still suffered (source).

· Weather during pollination was dreadful in 2019, but excellent in 2020. Despite the vast difference in pollination conditions, a record crop was produced in both seasons.

Almond prices, 2011-2021 (source)

How well do we understand pollination?

Results from the 2019 season still weigh heavily on the minds of almond growers. For decades, growers had been told to rent no less than 2 hives per acre to achieve adequate pollination. It’s widely understood that 2 hives per acre is more than enough for usual conditions, but experts say that renting extra bees provides insurance for when pollination conditions are poor.

In 2019, pollination conditions were as bad as they’ve ever been. Wet, cold and windy weather is not conducive to bee activity, so as beekeepers removed their hives from the orchards, fear set in among growers that a disastrous yield was in store. But instead, growers produced a record-breaking crop—yielding 11.8% more pounds per acre than the previous record.

The facts are puzzling, but the takeaway is clear: even with historically poor weather, 2 hives per acre is enough to provide above-average pollination.

Why this matters

Coming off a 2020 season in which growers netted far less income than usual, the impact of 2019 lingers. With new pressure to keep costs low, growers combing through their budgets won’t hesitate to draw a big red circle around pollination—which ranks among the top 3 costliest inputs to grow almonds. Growers are keen to wonder what they can get away with; what’s the minimum number of hives they need to get the job done?

This begs many questions:

· What percentage of growers will rent fewer hives this season?

· Of these growers, how many fewer hives will they rent?

· Will more growers follow suit in future seasons?

· How will this affect hive rental fees?

· Will this behavior remain after almond prices climb back up?

Renting fewer hives is a gamble that hasn’t been tested on a large scale. But given the current financial landscape, it’s a bet many growers might be willing to take. If it fails and most growers receive poor pollination, a likely outcome is a decrease in production, which may lead to a spike in the price of almonds. In this case, the biggest winners will be the growers who decided NOT to cut pollination spending—growers whose yields didn’t suffer from poor pollination will still reap the benefit of higher prices.

Final thoughts

For what it’s worth, weather forecasts look decent throughout the Central Valley over the next few weeks. Another record almond crop is certainly within the realm of possibility, though a down year might provide a necessary boost to the price of almonds.

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