The continued lack of overall profitability in the California dairy industry continues to impact the almond sector – just ask a huller-sheller or grower.

The almond hull industry is struggling to attain higher prices for its byproduct fed to livestock, mostly in milk cow rations. Prices for almond hulls have been basement bound for the last year and a half in the $60 per ton range.

Prices about five years ago were about double in the $120/ton to $130/ton range. Efforts are underway to nudge prices higher.

“There are bids at $80 to $90 FOB but there have been few takers,” says Mike Kelley, president and chief executive officer of the Central California Almond Growers Association (CCAGA) based at Kerman.

Texas bound

Almond hulls are usually sold to California dairies due to the proximity of huller-sheller facilities to nearby dairy farms and lower local transportation costs.

Yet due to ongoing lower hull demand and prices, CCAGA continues to look beyond its traditional sales territory to find customers and higher prices elsewhere.

Last fall, CCAGA partnered with the Penny Newman Grain Company to transport 90 railcars filled with prime California almond hulls from Fresno to the Texas Panhandle at Levelland.

Kelley says producer milk prices are higher in Texas so some dairymen will pay a higher price for almond hulls, including the extra transportation costs for the multi-state trip by rail.

“This sale was huge,” Kelley said. “There are a lot of dairymen who have moved to the Panhandle who want almonds hulls, or have heard of the value of this product in the dairy ration.”

He added, “With the current hull price point we can ship it there. They are under a different milk (price) marketing order so it worked out great. We’d like sell more.”

CCAGA is the largest almond huller-sheller in the world with four operations in the central San Joaquin Valley. The co-op has a single huller-sheller plant at Sanger plus three plants at Kerman, all in Fresno County.

CCAGA’s processing capacity is higher than the entire combined almond industry in Spain, notes Kelley, and close to Australia’s total almond processing capacity.

Arizona shipment

Kelley is also shipping almond hulls to central Arizona where, for example, a dairyman is mixing the hulls with ensilage to ferment and moisten the hulls for dairy feed.

For the CCAGA agricultural service cooperative, California almond hulls are traditionally trucked to dairies within 100 miles of the association’s huller-sheller plants so the Texas and Arizona sales represent expanded markets.

Kelley says about 97 percent of California almond hulls are fed in dairy rations with the remainder sold to dry lot cattle (dairy and beef). Almond shells are used in dairy mangers.

Low milk prices

Kelley says low hull prices are an end result of unprofitable California milk prices as dairymen choose lower cost feed inputs over hulls.

He noted, “Last year, every single dairyman in the nation made money on dairy, except for California. They lost money because of the (state) marketing order and over production.”

Efforts are underway to possibly shift California milk pricing to a new federal plan.

CCAGA’s out-of-state hull sales are important since California almond acreage continues to increase which means more hulls to sell. California has an estimated 1.1 million almond acres, most of those in commercial production.

Last year, CCAGA processing facilities hulled and shelled a combined 109 million pounds of almonds from its 400 active members who grow about 53,000 acres of almonds. Kelley pegs the 2017 hulling-selling figure at 111 million pounds.

CCAGA members grow almonds from Tulare County north to Merced and from one side of the Coastal Range to the mighty Sierras.

Thinner wallets

Lower hull prices are a tough pill to swallow for almond growers and huller-shellers across the state. In essence, almond growers hire a huller-sheller to hull and shell out the nut meats and then sell the byproducts to buyers.

For CCAGA, it’s been a win-win price wise for membership for about eight years. Byproduct sales have covered the grower’s huller-sheller processing costs, and in fact put extra cents per meat pound into growers’ pockets.

In 2015, the co-op paid out its largest payout ever – 9 cents per meat pound net of trucking cost. Last year, member return slipped to 4.8 cents per meat pound due to reduced hull demand.

This year the return fell further south. Instead of putting money in their pockets, CCAGA members must pay one cent per pound out of pocket to hull and shell their almonds. Kelley says this is a common situation with other huller-shellers in the state though the price may be different.

“It was a season of disappointingly low prices for our hull, shell, and hash byproducts. Prices for hulls and shells stink,” Kelley told his membership gathered for the association’s annual meeting held in June at Fresno.

“The present situation with California dairies (unprofitability) has and will continue to substantially dampen the returns as long as milk prices are below the cost of production,” he said.

New processing plant?

With increasing California almond acreage, Kelley says the association has reached about 80 percent of processing capacity. If member almond plantings continue, Kelley faces a decision in the next three to four years to build a fifth huller-sheller, or modernize an existing plant to keep us ahead of expanding volumes.

Estimated costs for a new sheller would be in the $20 million range. Ouch!

The location of an additional plant would largely be based on where members’ acreage is located. Another factor could be tied to water issues – choosing a “less vulnerable” irrigation district given current and new state regulations and potential water cutbacks due to future droughts.

Kelley and other farm leaders are weighing state water regulations including SGMA – the state’s Sustainable Groundwater Management Plan.