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US: Central Valley almond growers feel price squeeze

Almonds grow on trees but money doesn't. That's what local almond farmers have learned this year. Average prices for the popular nut have gone from about $2 a pound last year to a little more than $1 a pound, according to Livingston almond grower Wil Hunter. At that price, farmers will find it hard to make a profit.

"At 90 cents or a dollar, it's pretty tough to make it," said Turlock almond grower Ron Macedo. "A lot of us aren't going to be making any money in 2008, 2009. It's a guessing game."

Almonds were a $936 million crop in 2007 in the Northern San Joaquin Valley, with almost half that number generated in Stanislaus County, where almonds are the second-ranked cash crop, behind milk.

Between the bad economy and a surplus of nuts, growers are seeing lower prices this year. For the third year in a row, however, California growers have seen record-breaking yields.

Hunter has grown almonds on Hunter Farms for about 25 years and has seen the price fluctuate over time. There are reasons for the drop this year and they make almond growers a bit uneasy.

Nonpareil almonds, the most popular type of almond, have gotten lower prices in the past. What worries Hunter is the price that the less popular varieties are getting. "Usually, there's a difference in the two of about 15 cents," Hunter said. "This year, it's about 90 cents. I haven't seen prices like this before."

Nonpareils are highly desired because they are bigger and tastier than other varieties. The other varieties of nuts usually go into confectionery goods, Hunter said. "The less popular varieties have really taken a beating this year," he said.

Growers plant both nonpareil and other varieties because nonpareils are nonpollinating and need another variety of pollinating almonds to produce. California is the only state that grows almonds, and about 70 percent of those nuts go to overseas buyers.

With the strengthening of the dollar and less demand in China and India, there will be a surplus of almonds this year. Hunter, who is an Almond Board of California director, said about 350 million pounds of the nuts will be held over to the 2009 season.

"We had historic high yields for three years," Hunter added. "If we have another year of record yields, it could be very, very harmful to growers." Almonds have historically been a moneymaker for growers, which caused a lot of farmers to put in orchards. Now those orchards are coming into production and that has also influenced the price.

Next year's crop could shrink, Macedo said, because of drought and because the lower prices could cause farmers to pull out older, lower-yielding orchards.

"Most people say you need $1.25 to $1.50 a pound to make any kind of economic sense," said Bill McKinney, a grower in the Modesto area. Whether a farmer is making money depends on his per-acre yield and whether he has debt on his land or a production loan, McKinney said.

Farmers know they should put money aside in profitable years to make it through lean years, Macedo said, but it's easier said than done. "I have two kids in college, and another coming. It's tough to put money away," he said.

If there's a silver lining in the gloomy prices, it's that consumers could see cheaper prices for raw almonds in the grocery store. "I'm sure they will," McKinney said. "Prices go down to move the volume." Consumers might not see much difference in the price of a box of cereal with almonds, or processed foods like candy or smokehouse almonds, McKinney said.

Keith Rigg, general manager of Minturn Nut Co. in Le Grand, said putting a finger on why the prices are down is tough. "Even though we are seeing record shipments, we have the third record crop in a row," he said. "And we have a supply issue -- too many nuts for the demand."

Rigg has been in the almond business since 1980, and this is the third time he has seen prices bottom out. "It's not necessarily recession-driven, although that's compounding the problem," he said. "We are oversupplied and overplanted."

Growers who tried to cash in on high almond prices have helped drive the prices down, Rigg said. "It's like a vacuum that people got sucked into." There are about 650,000 acres of almond trees in the state. Hunter and Rigg both hope that next year's crop will not be another record year.

"If we have another record year, the outlook won't be favorable for growers," Hunter said. Rigg said the record yields have been hard on the trees, and next year may see those trees produce fewer nuts. "They need a rest," he said. "I'm sure the price will turn around. Eventually."


Publication date: 1/5/2009


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