At the recent 50th Annual Almond Conference in Fresno, keynote speakers discussed several major concerns and challenges facing almonds growers. As things currently stand; prices remain suppressed, inventory has skyrocketed due to shipping constraints, acreage has reduced, and water and labor availability remain an issue. Combined with increasing operational costs, almond growers are facing slim margins.
Despite these challenges, the industry is committed to helping growers chart a more sustainable future to become more profitable while navigating regulatory and environmental matters. Gaining greater insight on what market forces are doing and how that will influence almond production can help growers understand what their options are. Equally having greater visibility into all growing activities and operating equipment with more accuracy and precision can improve operational efficiency to increase margins and add to the bottom line.
Market factors impacting California almonds
While there are many issues that impact almond growers, there are three major market factors beyond their control that have had a significant impact on their ability to remain profitable:
Almond production: In the previous decade, almond production experienced steady growth with the price increasing from $1.65 per pound in 2009 to $2.45 per pound in 2019, with production output of 2.56 billion pounds from 1.18 million acres of fruit bearing trees. During this time the price peaked at $4 per pound in 2014 generating a production value of more than $7.3 million. But sadly, since then this figure has been in decline. Despite an increase in acreage and strong yields by the end of 2021 production value sat around $5 million with a price per pound of $1.76. (Ref: USDA 2022 Almond Forecast)
Shipping challenges: One of the major challenges in 2021 / 2022 was the inability to ship almonds to export destinations. Following the pandemic, shipping containers were in short supply and came at a premium. Shipping companies rode this wave choosing to return shipping containers empty to Asia, rather than carry US export produce such as almonds. This resulted in a huge frustration for almond growers as inventory piled up. While it’s usual to have some excess inventory to be able to supply changing market demand, inventory levels have increased by almost 50% in the past year. Some growers had to build additional storage facilities, but the problem remains that almonds sitting in storage don’t generate income for growers.
Impact of trade tariffs and competitive markets: A further blow to the industry was retaliation by export markets to a US initiated trade war. In 2018, the USA instituted import tariffs of 25% and 10% respectively on steel and aluminum imports from China, Canada, Mexico and the European Union, among others. Despite these tariffs being levied on metal commodities, it was the almond growers that suffered as a result. In retaliation, three of the largest almond export markets, namely China, Turkey, and India, responded by implementing trade tariffs on unshelled almonds of up to 45%. This made the cost of importing US grown almonds significantly more expensive. To compound this, zero-tariff trade agreements were signed with alternate almond export countries such as Australia, making it more attractive for importers to buy from them instead of the USA. (Ref: https://s.giannini.ucop.edu/uploads/pub/2022/10/24/v26n1_1.pdf)
These three factors indicate that almond prices are likely to stay depressed for the short term. A decrease in acreage in almond trees for the first time in decades indicates that planting more trees to expand growing operations is not a viable solution right now.
While industry bodies work to try to resolve some of the trade and marketplace challenges, almond growers will need to make adjustments and prepare for a slowdown in growth. For growers trying to weather the storm, finding ways to become more efficient in their operations and reduce the cost of production is critical. This can be supported by agricultural technology where the use of data has the potential to change the way growers approach their operations.
How technology supports greater precision and accuracy in almond growing activities
Gathering data is the starting point to improving operations. By installing smart sensors on all existing machinery and farming equipment, there is the benefit of being able to track operational activities. As the machines work, the sensors continually send data to a cloud platform where it can be organized into dashboards. This creates a benchmark that helps growers better understand how efficient their operations are, and where there’s potential for improvement.
Having data showing what speed each sprayer was moving through the orchard can measure how efficient spraying operations are for each machine. As an example: Less mature trees require less spray and being able to spray with greater precision and accuracy can save on costs. Identifying where there are spaces between the trees and when the sprayer is making a turn at the end of a row, combined with the ability to switch the spray on and off at these times, helps to improve spray efficiency.
The same applies for harvesting. As almond growers know, both over or under shaking trees at harvest time can increase operational costs later in the season. The risk with undershaking is not only reduced yields, but also that nuts left on the tree go black, which can affect the health of the tree. Winter cleaning usually takes care of the nuts left behind but if there are excessive nuts left on the trees as a result of undershaking, it increases the cost of winter cleaning as the process takes longer. Overshaking, on the other hand, can damage trees which leads to reduced yields and potential tree loss. Hence, precision and visibility in shaking operations is essential.
If harvesting activities are carried out more accurately these costs can be greatly reduced. This highlights the need to be able to operate shakers with greater precision and to have visibility on operations when the activities are taking place so that corrections can be made on the same shift. As long as a manager has access to WiFi or 5G signal, the data on activities can be viewed. Even if they’re out of range, the data is still stored on the cloud operations platform to provide insights on growing activities.
It’s this data, when combined with growing expertise that has the potential to have the most impact on almond growing activities. It becomes possible to set targets for improving accuracy of shaking or spraying, for example, and this progress can be tracked. Year over year, the data shows exactly where improvements have been made.
The more growers use the insights to improve productivity and efficiency, the greater the potential impact on the bottom line. In this way, technology becomes the tool helping growers secure their farm future. The ability to carry out growing activities with greater precision and accuracy and track progress throughout the season helps improve productivity. More importantly, almond growers can make more informed decisions, based on more accurate data.