The stretch of Interstate 5 from Stockton to Bakersfield on the west side of California's San Joaquin Valley is called “almond alley.”
Where white fields of cotton once stretched endlessly each fall, it is now springtime white with almond trees blooming in thousands of acres of newly planted almond orchards.
The only thing more remarkable than the endless panorama of orchards are four straight years of rising prices. The last three seasons have seen California almond growers produce more than 1 billion pounds of almonds each season.
It is almost breathtaking — the look and the prices. The nonpareil average for Blue Diamond growers in 2001 was a respectable $1.03 per pound. It reached $1.67 for 2003 and recently the price of nonpareil almonds from marketers to buyers reached $2.70 per pound, according to Doug Youngdahl, president of Blue Diamond Growers. That price was posted midway through an early harvest of a huge, excellent-quality crop. Growers used to be happy just to receive $1 per pound.
Demand continues to go straight up, parallel to a frozen rope price chart pointing ever upward. It defies typical agricultural economics. The more you produce, the lower the price is supposed to go down. That has yet to happen for 4 straight years, and more almond orchards continue to be planted, replacing field crops, wine and raisin vineyards and now tree fruit orchards. No California horticulture crop has been able to keep pace with almonds.
Drive pays off
It is all about demand. The industry has supported an aggressive worldwide marketing effort through the Almond Board of California. It is paying off more than even the most optimistic could imagine.
The 2004 harvest began early with overall quality promising to surpass last year and be close to the excellent quality of 2002, according to Youngdahl.
“Kernels are blonde and while sizes are smaller than last year, they are larger than those produced in 2002,” he said. “Although the jury is still out on whether or not the crop will reach or exceed the CASS estimate, Blue Diamond believes that the 2004 almond crop will be the third consecutive billion-pound crop.”
He called that “good news because most customers throughout the world are eager to purchase more almonds than ever. A small or mediocre crop at this stage would be detrimental to the growth in demand for California almonds,” the Blue Diamond president reports.
New crop almond prices are running 25 percent to 30 percent above levels reported for 2003.
“After the industry committed a considerable amount of Standard S/R — 5 for $1.85 per pound, prices have moved up over 50 cents per pound to levels now above $2.45 per pound,” he said.
Nonpareil market prices have risen above $2.70 per pound to the surprise of both buyers and sellers, said the Blue Diamond CEO.
“This latest jump in prices reflects an industry that is well committed overall and hesitant to sell more until the 2004 crop size is validated. In the current sellers market, sellers have demanded a higher price on each successive sale and many buyers, with a lack of immediate alternatives, have accommodated,” he said.
That is the good news. There is bad news, even with record prices. Youngdahl admitted Blue Diamond is “beginning to hear negative rumblings in various markets about the relentless price increases and buyer anxiety. Many end users have put on hold new product development and are now making plans to reduce the amount of almonds from some of their products.”
Nevertheless, Youngdahl reported during the 2003 crop year the industry set a new all-time record for shipments of 1.024 billion pounds, including impressive new growth in the whole natural and flavored snack items. Blue Diamond consumer gross sales are up 45 percent versus a year ago. He does not expect that to slow appreciably.
This steady climb in market values reflects, according to Youngdahl:
Rising global demand for California almonds that exceeds supply.
A continuing weak U.S. dollar compared to other major currencies.
Still favorable price levels for California almonds compared to most other tree nuts.
If the world wants almonds, they have to come to California.
More pounds earlier
For growers with young or replacement orchards, getting a new orchard into production early and farming it to reach maximum yields within just a few seasons is no longer simply to recoup establishment costs, it is a case of trying to catch a once-in-a-lifetime shooting star.
Once content to invest three to four years to get a significant return on investment, growers for whom Clovis, Calif., independent consultant Eli Akel works are seeing returns of more than 1,000 pounds per acre on third leaf trees and fifth leaf trees producing as much as 5,000 pounds per acre, more than double the state average.
Impressive tonnage made only more extraordinary by current prices.
According to the University of California, it costs about $6,800 per acre to carry an orchard to its fifth leaf, the year considered to be the first to return a profit for Southern San Joaquin Valley. The cost estimate figures only a minimal yield by the third leaf and a small profit by the fifth leaf at almond prices of $1.10 per pound — less than half what almond prices are now.
With $2 almond prices, 1,000 pounds by the third leaf recovers almost a third of the establishment cost. For a 5,000-pound mature orchard yield at today's prices, there is a profit of more than $3,000 per acre, after deducting 5-year establishment costs.
So when Akel offers up advice on how to bring an orchard into strong production early, growers are all ears.
Akel is a graduate of California State University, Fresno with bachelors and masters degrees in plant pathology. He has been a private consultant for about two years, after working for seven year for a well-known Clovis farming operation P-R Farms and six years for Campos Brothers, a large almond operation in Fresno County.
Akel's specialty is nutrition management. However, closer tree spacing is also playing a major role in significantly increasingly almond per acre yields.
Gone are the old 24 by 24-foot or 20 by 30-foot orchards. Most of the orchards Akel works with are on 22 by 18-foot spacing.
“Properly managed small trees come into production earlier than the large trees on older spacings,” said Akel. “Larger trees require more nutrients because they are so large. Big size is not always a good thing because large almonds are more difficult to harvest.”
Akel uses less nitrogen on smaller trees; 100 to 150 pounds for small trees versus 300 to 400 pounds for larger trees. Most of his orchards are on drip or micro sprinklers allowing him to spoon feed nitrogen and other nutrients.
Potassium use by plants has been one of the most controversial subjects in the San Joaquin Valley. Oftentimes soil samples show high levels of K in the soil, but Akel said just as frequently, it is not available or taken up by the plants.
One of the highest yield responses ever recorded in a University of California trial was when supplemental K was added to cotton. And just like cotton bolls are a sink for K, so is almond tree fruitwood, according to Akel.
“When I added potassium in the fall I noticed I would get more bloom the following spring and as every almond grower knows bloom is half the battle in getting a good crop,” he said.
Akel applies K based on tissue analysis. “If the soil is locking up too much K, it will show in the tissue,” he said.
He spoon feeds K no fewer than four times per season with the bulk of about 80 pounds per season applied in the fall. “I like to store the K in the wood. If you apply potassium in the spring, the roots are cold and wet and will not actively take up nutrient like a tree will in the fall,” he said.
Akel has come to rely on phosphorus to aid in branch development of the trees.
“Nitrogen for elongation; phosphorous for branching and potassium to build up the budwood is the formula I like to use,” said Akel, who consults for about eight West Side growers.
He also likes to introduce humic acid in the mix because it aids in nutrient uptake, he believes, regardless of whether N,P or K are soil or foliar applied, he added.
“It takes a keen eye and aggressive orchard manager to make sure there is follow through on recommendations,” he said.
Irrigation management is a key element as well in nutrient management and that is where the grower or his foreman make a big difference. “Under or over irrigation can have a detrimental effect on aggressive nutrient management programs similar to what I try to employ,” he said. “I can recommend similar programs for two different orchards and there will be differences in response. Oftentimes, the reason is the manager. You have to spend time in the orchard to understand what is going on.”
His nutrient management plans include the results of soil samples on a yearly basis. “A lot of growers tend to overlook that and think every other year is good enough. Nutrient levels in the soil can vary significantly from year to year and you will not detect that unless you take soil samples,” said the veteran plant pathologist.
He tissue samples twice a year, one in the spring and once in June just before hullsplit. The latter one is Akel's favorite because it will readily identify any problems he can correct before the next season.
He is beginning to validate his work with satellite imagery from Digital Globe.
“I also highly recommend summer pruning of young orchards,” he said.
This means pruning in summer just like you would in the fall. It is better, he said, to develop a scaffold during the growing season rather than during the fall dormant season.
“Summer pruning allows you to set the leaders from the onset of the tree growth and not wait until fall when there is a lot of brush to remove,” he said.
He admits that growers are reluctant to summer prune, thinking that excessive removal will reduce leaf surface and retard growth. However, he believes in closely monitoring nutrients in the young trees to see that they are not deprived will prevent any growth retardation.
Early nutrient management and summer pruning will bring trees into production earlier, but Akel says the same aggressive approach through the life of the orchard also will pay off.
“Right now everyone is very happy with prices and yields. Unfortunately the cycle will turn down and that is when quality will become a bigger factor in almond production and prices handlers pay,” he said. Nutrient management plays a big role in quality.
Handlers now market to buyers on size and quality “and when the glut comes only those with quality will be able to continue getting good prices,” he said.