“It’s been a crazy year–this being agriculture, every year is a crazy year, but this year was really unique,” said Mark Jansen, president and CEO of Blue Diamond Growers, to a crowd of growers gathered at the University of California’s Nickel’s test field.
The freezes that rattled growers don’t seem to have dented this year’s crop as much as some feared, he said.
“As far south as Merced, with temperatures that should have meant we’d have no crop to sell, and it looks like a record crop this year,” he said. “Almost nowhere in the state does it look like a washout.”
Jansen said that while Tehama County’s commissioner had estimated 40% frost damage, that the number seemed closer to accurate for bloom damage, and yields may only be down single digits.
“Terranova surprised everyone with a 2.5 billion pound crop number,” Jansen said. “The general perception is it will be a record crop.
Many are predicting a 2.2 or 2.3 billion pound crop, Jansen said.
“If you would hold a gun to my head, I would say, 2.3, 2.4 (billion pounds),” he added. “The marketplace has said, 2.5 seems a little high, but is no longer a crazy number.”
Growers including Wonderful have been prepared for a spike in prices if total almond crop turned out to be at or below 2.1 billion pounds.
Jansen said he is looking forward to a subjective forecast estimate coming out Thursday, May 10.
The industry may not produce 320 million pounds of carryout, Janson said, citing factors such as insect damage and nonpareils below NPS quality.
“For higher-quality nonpareils, I do think there will be a rise in prices, because there will be shortages,” he said. “I think we’re looking at a 2.4 billion pound crop that will be easily consumed by the market.”
So, what’s next for the industry in a year not marked by frost damage and a cold bee pollination season?
“We are absolutely going to have a 3 billion pound crop in the next five years,” Jansen said, referring to a prediction by the Almond Board late last year in Sacramento at the annual almond conference.
Quality issues are real, he said. Blue Diamond Growers expects it will need to spend an extra $20 million to get the crop to the same quality as previous years. That is in part due to processing running slower due to insect damaged nuts.
“We’ve seen growers who have been 1%, 2% rejects (due to damage) year after year jump up to 10%,” Jansen said.
He said good farmers have been hit hard by insects, and in many cases, better winter sanitation is the only answer.
Jansen said that as Chinese tariffs have increased on almonds, so too has a willingness to enforce those tariffs, which is creating more fear in the gray market that typically responds to tariffs with almonds directed through neighboring ports and countries.
Chinese buyers don’t mind paying more for almonds, he said, as long as they aren’t paying the tariff unnecessarily by buying a long period of supply and then seeing the tariff lifted.
“What’s happened is China is buying hand to mouth right now,” he said.
While Australia is well-positioned to benefit from the tariff on American nuts, he said, there are limits to how much market share they can take: Australia’s entire crop is less than U.S. exports to China, and seasonally Australian almonds are not ready during Chinese New Year.
Beyond that, Jansen cited several other factors that mean California growers don’t need to fear their Australian counterparts.
For one, Australian labor is more expensive, he said, around $23-$25 an hour. Australian growers also face water constraints, and will stop planting if prices drop much lower.
Jansen said Blue Diamond Growers’ perspective is that the market has adequate demand to absorb the increasing volumes from the U.S.
“The short and mid-term outlook is very good for almonds,” he said. “We’re having the right type of price increase–it’s gradual.”