Editor’s note: This is the first report in a three-part series on tree nuts.
It’s been a tough few years for almond and walnut producers in the U.S., says Roland Fumasi, head of RaboResearch Food & Agribusiness for North America, who oversees a team of 20 analysts has had his finger on the pulse of the country’s tree nut industries.
“Prices are still below breakeven today for the almond and walnut space,” he said. While a large crop in the 2023-24 crop season put a dent in the profitability of pistachios, Fumasi says the price is still above breakeven.
This might seem gloomy, but Fumasi says there are bright spots for pistachio, almonds and walnuts. Overall inventories are down, which means the amount of crop held over from the 2023-24 season will be less than in past seasons.
“One of the positive aspects occurring right now is that it looks like in all three tree nuts, the 2024 carry-in levels are going to be at multiyear lows,” he said. “The industry has moved a significant amount of product this marketing year so far.”
This means there’s less of a past-season crop to move and more room for the 2024-25 crop.
“You’ve heard the old saying that the best cure for low prices is low prices,” Fumasi said. “The weaker prices do help stimulate the quantity that buyers are willing to purchase, which helps to right-size supply, but it also puts pressure on industry profitability in the current season.”
Fumasi says low prices, though, are starting to impact almonds and walnuts acreage. He, along with other industry insiders in this series, will look at the present and future of almonds, pistachios and walnuts in the U.S.
Almond demand
For almonds, it’s all about the carry-in, Fumasi says.
First-quarter shipments of almonds are up year over year by 5%. April shipments were up 22% and May shipments were up 15%.
“Inventory is now really tight, which puts the industry on track to have a very, very manageable carry-in,” Fumasi said.
Clarise Turner, president and CEO of the Almond Board of California, says she doesn’t see demand slowing for almonds. However, the state’s almond industry did experience its first major reduction in bearing acreage in the last 10 years.
Turner says grower returns are low, which makes the macroeconomics of growing almonds a challenge. Banks are not giving growers lines of credit extensions or new credit, Turner says; if a grower succeeds in getting a new line of credit, the interest rates are upward of 8%.
In her 100-day address as almond board CEO, presented in April, Turner noted that 90% of almond farms in California are family owned and 70% are less than 100 acres, which makes the low returns a major challenge for almond growers.
“Right now, our price is at one of the lowest levels that it’s been in 10 years,” she said. “[Growers are] not making money. And that can only happen for so long until you start to see people getting out of business, which we are seeing some of that.”
Fumasi agrees. “We’ve also seen older almond acreage come out at a much faster pace, given the lack of profitability over the last three years,” he said.
“That’s why bearing acreage was down slightly in 2023 and is expected to basically stay flat to slightly down when you look at 2024,” he said. “Given demand expectations and the tighter carry-in, we’re expecting a decent rebound in almond pricing.”
Almond sustainability
Turner said that almonds often bear the brunt of agriculture water use discussions, but the Almond Board of California has been focused on its California Almond Stewardship Program, which highlights the industry’s sustainability efforts.
Almond orchards help sequester about 30 metric tons of carbon each year. The industry has also deployed better irrigation techniques to slash water use, Turner says.
“Our efficiency or reduction in the water that is used to grow each almond reduced 33% from 1990 to 2010, and we’re on track for another 15% by 2025,” she said.
Growers of these multigenerational family farms see being good stewards of the land as a critical role.
“They want to pass that land down to their children, so it’s intrinsic in their motivation to take care of it and to take care of the people that live in those communities,” Turner said in the 100-day update.
Almond exports
Turner says a lot of focus for the Almond Board of California is finding new export markets. While the board’s major export markets include Europe, India and China, the organization worked with consulting firm Deloitte to identify opportunities within domestic and international markets. One finding was the growth potential for more exports to India.
More than half of the population in India is under age 30, and it is the largest population in the world, Turner said in the 100-day update. Turner says what also makes India a country with more export potential is its relatively stable economy and a stable political climate.
“There’s opportunity to build different marketplaces and go a bit broader with the geography,” she said.
Turner says Deloitte also identified Indonesia, Turkey and Morocco as potential export markets.
“Where you see some relative stability, politically, and you see a population of younger folks that’s growing, [with] a decent disposable income — all those are things that signal to us that there’s some potential there to develop this market,” she said.
The board recently conducted a joint trade mission with the U.S. government to India and Morocco to better understand those growth opportunities.
The U.S. also recently lifted tariffs in the United Kingdom, which would represent about $4 million in relief to almond growers, Turner said in the 100-day update.
Domestic market
Turner says she’s seen a 40% cost inflation in groceries, which makes adding almonds to a shopping cart a challenge. While prices are low at the wholesale level, she’s not seeing that low price benefiting the consumer, and thus, helping to move volumes.
“When almonds are expensive and you don’t see that come down, [shoppers are] going to pick something, unfortunately, that’s probably less healthy for them,” she said.
The almond board’s work with Deloitte highlighted some domestic opportunities for almond hulls and other forms of the crop. Turner says 14 different almond forms can be utilized domestically, but the use tends to fall around to the kernel.
The board is looking at a powdered form of almond hulls, traditionally used in animal feed, for use in nutrition bars and other grain alternatives due to its high fiber, calcium and protein content. She says using the hull is not only another sustainable part of the industry, but it also could help to drive down the cost of nutrition bars and bring up the nutritional value.
“There’s no reason that those need to be going to animal feed,” she said.
Turner says almonds also are poised to capitalize on growing interest in plant-based proteins.
“I’m confident that demand is out there for the getting, because [almonds are] the plant-based protein that’s got zero waste, is so nutritionally dense, [and] it’s incredibly good for you,” she said. “And we know when it’s included in products that consumers are more apt to buy them.”
Almond forecast
Fumasi says the USDA recently released its estimate and, combined with private-grower estimates and other crop estimates, he’s predicting around a 3-billion-pound crop this year. The USDA says this will be about 21% higher than the 2023-24 final production of 2.47 billion pounds.
The USDA also said yield per acre will likely be up about 2,170 pounds per acre, which is up about 380 pounds per acre from the 2023-24 season yield of 1,790 pounds per acre.
Fumasi says positive pricing pulled back when the figures came out this spring.
“Given how strong April and May shipments were, prices have strengthened again,” he said. “If we can continue that kind of pace and really continue to draw down that carry-out/carry-in, we’re expecting that almond prices should be able to get back up to that profitable level in 2024-25.”
Fumasi says 71% of marketable supplies shipped through May, versus only 64% in 2023 and 62% in 2022.
“That’s higher than it’s been the last couple of years but on par with what it was about three years ago,” he said.
As for the future of almonds in California in the next few years — Fumasi says it’s good news.
“We think on almonds, we’ll see a return to profitability,” he said.
