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Updated: Jan 25, 2023

When I outlined the third edition of my almond pollination outlook series (links: 2022, 2021) just a few short weeks ago, I didn’t anticipate any compelling new storylines. I planned to simply revisit the same topics I’ve covered extensively over the past few years—the ongoing drought and economic challenges that continued to mount in 2022, which Almond Board President and CEO Richard Waycott labeled as “probably the toughest year we've had as an industry.”

I would have featured articles published late last year with headlines like California’s drought disaster is turning into an economic disaster: ‘It’s unprecedented’ and DROUGHT EXPANSION GROWS CONCERN FOR 2023 GROWING SEASON. But in the time since those articles were published, something unexpected has taken center stage: rain!

An end to the drought?

A series of “atmospheric rivers” brought a deluge of rain to California in December and January, resulting in widespread flooding and at least 20 deaths. Though these storms replenished reservoirs and added valuable snowpack in the Sierra Nevadas, the state’s reservoirs are still well below capacity and the snowmelt won’t reach aquifers if temperatures rise too quickly this spring.

Flooded almond orchard in Merced, shared on Facebook Jan 10.

Since almond trees are dormant this time of year, Richard Waycott notes, the rainfall won’t boost this season’s harvest unless the water is captured for when the trees need it—during the growing cycle from March through August. So although the rain was a welcome sight, these record-breaking storms were not the saving grace almond growers were hoping for, at least not yet.

Almond industry challenges

It seems my eagerness to cover an exciting new topic was short-lived. The storms did not wash away the almond industry’s water issues, and drought remains high on the list of concerns alongside an array of economic issues. Latest almond prices are even lower than this time last year, making the impact of rising costs and inflation especially painful for almond growers.

Left: International shipments of US Almonds, 2020-2022. Right: Almond prices, Nov 2017-Jan 2023. Source: Derco Foods.

In last year’s pollination outlook post, I argued that supply chain issues were stifling almond prices, preventing a rebound to pre-COVID levels. Almond Board President echoed this point in an interview last week. The real trigger for the industry, according to Waycott, is getting pricing of our product back up to where it needs to be. He indicated that low almond prices resulted from a “backup of the 2021 crop that couldn’t get shipped.”

Data from November 2022 shows annual shipments were down another 4.3% compared to the bleak 2021 results, which were 15% less than 2020 shipments. Despite consecutive annual decreases, recovery may already be underway as the market continues clearing out the last of the backlogged 2021 shipments.

Making sense of it all

There’s so much going on in the almond industry with many conflicting indicators in play. Here are just a few questions driving growers’ strategic decisions:

  • Climate: Is drought beginning to ease? Will water become cheaper and more available?

  • Almond prices: Will supply chain issues get resolved? Will decreased supply drive prices up? Will future prices return enough to pay off current debts?

  • Short-term costs: Can growers afford to wait until prices rebound? What spending cuts will growers prioritize?

  • Almond production: Will yield per acre bounce back from last season (lowest since 2009)? Has almond acreage peaked (2022 saw first decrease in 25 years)? Will almond production be profitable 5-10 years out?

Almond growers remain in a tough financial position. High costs and inflation aren’t going away anytime soon. But the influx of orchard removals plus a poor yield last season will decrease supply, which should boost almond prices. However, market dynamics are complex and it may take time for prices to correct.

In the meantime, growers still have bills to pay, and the potential for future profits may seem too distant. Risk-averse growers may choose to cut their losses and remove their trees. Growers who are on the fence may see the recent surge of rain as a sign that drought may soon end, causing them to hesitate on orchard removals for at least another season.

What might this mean for pollination? In the short-term, keeping costs low will remain the top priority for most growers. Compared to line items like labor and input costs, pollination is an expense that growers feel they can trim more easily. It’s as simple as telling your beekeeper to bring 5% fewer hives than last year, which increases the risk of poor pollination. For budget-conscious growers who want to ensure optimal pollination, check out our Pollination Contracts Best Practices resource for ideas on getting the most out of every dollar spent on bees.

Final thoughts

Two things need to happen for the almond industry to return to a place of stability: solving the shipping issues and boosting almond prices. In theory, overcoming the shipment backlog should be enough to facilitate a price increase. Growers need income to return to normal before they begin spending as freely as before and fueling the industry’s future growth.

Based on Richard Waycott’s comments about the progress on the shipment backlog, I think we’ll finally see a significant increase in almond prices this year. It may take one or two seasons of strong prices before we see a return to previous levels of spending, but I expect most growers will be eager to move on from pinching pennies.

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