California Almonds Are Back After Four Years of Brutal Drought

By Alan BjergaAlan Bjerga, Donna CohenDonna Cohen and Cindy HoffmanCindy Hoffman
Photographs and video by George Steinmetz for Bloomberg

This year’s California almonds have had their share of turmoil. Frost and high winds at the end of February damaged parts of the crop, grown throughout the state’s Central Valley. Farmers tried to limit the losses, running water to heat the ground and, in some cases, flying helicopters over trees to keep cold air from settling. The full impact won’t be known until later this month.

“It’s wait and see now,” said Ryan Jacobsen, chief executive officer of the Fresno County Farm Bureau in California’s San Joaquin Valley. Almonds are the county's biggest cash crop. These days, he’s checking his already bloomed trees and seeing whether there’s black or green at the bottom, the telltale sign of whether a nut is viable.

Overview of Crabtree Farm near Modesto Reservoir. The pollination of California’s almonds is the largest annual managed-pollination event in the world.

But California almonds are resilient. The crop has fully recovered from a four-year drought that ended in 2016, with the harvest returning to record levels. Even after withering criticism for its water use during the drought years, almonds are only becoming more important to California—and to consumers, who are eating more of the tree nut per capita than ever. Almonds affect everything from the dairy industry, with which it’s becoming a larger competitor, to the migration of U.S. honeybees. With the trees in bloom, here’s why almonds are a tough nut to crack.

Shelled Nuts

Macadamias

Pecans

 

Hazelnuts

Walnuts

 

Pistachios

Billions of pounds,

by growing season

2.5B

2.0

1.5

Almonds

2.14B

1.0

.5

0

’86–’87

’16–’17

preliminary

Macadamias

Hazelnuts

Pistachios

.02

.03

.45

30 billion pounds

.13

Pecans

25

.60

Walnuts

20

15

10

Almonds

21.4B

5

0

’01–’02

’86–’87

growing season

’16–’17

preliminary

Macadamias

Hazelnuts

Pistachios

.02

.03

.45

3.0 billion pounds

Pecans

.13

2.5

Walnuts

.60

2.0

1.5

1.0

Almonds

2.14B

.5

0

’86–’87

growing season

’91–’92

’96–’97

’01–’02

’06–’07

’11–’12

’16–’17

preliminary

After dropping during the drought, the 2017 almond crop rebounded to a record 2.14 billion pounds of shelled nuts. That’s more than triple the amount of walnuts, the No. 2 U.S. nut, and more than four times that of pistachios, which are emerging as a serious competitor for California acreage. Almonds are “incredibly versatile,” said Daniel Sumner, an economist at the University of California, Davis. “And California is the best place to grow it. Where else can the weather be hot and dry and perfect, but you also have a system where you can bring water from mountains full of snow?” Almond-picking is also highly mechanized, which attracts farmers concerned about migrant-worker labor shortages, and its long history in the state creates a level of expertise competitors can't match, he said.

Employees of Paul Arnold Apiaries of Michigan check the health of their bee hives at Warner Hills Orchard, near the Modesto Resevoir in Waterford.

Where the Beehives Are

  • 0–21K
  • 21K–38K
  • 38K–65K
  • 65K–100K
  • 100K–500K
  • 500K–1M
  • 1M–1.4M
Note: Data for Alaska, Delaware, Nevada, New Hampshire and Rhode Island are not included to avoid disclosing information about individual operations.

Before the drought, the big concern for almonds was the supply of pollinators. Honeybees began dying in alarming numbers in 2006 due to a phenomenon named Colony Collapse Disorder, the causes of which have never been fully explained. Beehives are now more expensive as permanently higher death rates require faster replacement of hives. But almond demand has given growers incentive to pay more for bees that are trucked in from across the U.S. to help pollinate trees, with the crop being the single biggest user of commercial pollination services. California’s bee population peaks in the first three months of the year—last year’s 1.44 million hives accounted for more than half of all the bees in the U.S., and double the number that had been in the state the previous July.

Number of Bee Colonies

4.0M

3,528,000

Honey bee colonies

3.5

–34%

Lowest level in data

kept since 1987

3.0

2.5

2.0

’87

’96

’01

’06

’16

’91

’11

4.0M

3,528,000

Honey bee colonies

3.5

–34%

Lowest level in data

kept since 1987

3.0

2.5

2.0

1987

1991

1996

2001

2006

2011

2016

4.0M

3,528,000

Honey bee colonies

3.5

–34%

Lowest level in data kept since 1987

3.0

2.5

2.0

1996

1987

1991

2001

2006

2011

2016

Almond-growers’ willingness to pay more for pollinators has helped push a rebound in bee colonies nationwide. In 2008, at the height of colony collapse, commercial U.S. beehives hit 2.342 million, their lowest levels in data kept since 1987. In 2016, numbers reached 2.775 million, the most since 1994.

Harvesting almonds with a tree shaker at Braden Farms, near Snelling.

Per Capita Nut Consumption

+19%

Nut milks have fueled consumer interest

5.00 lbs.

3.75

All nuts,

by growing

season

2.50

1.25

Almonds

0

’16–’17

preliminary

’86–’87

+19%

Nut milks have fueled consumer interest

5.00 pounds

3.75

All nuts,

by growing

season

2.50

1.25

−46%

Caused by cold, rainy weather and a bee shortage

Almonds

0

’91–’92

’96–’97

’01–’02

’06–’07

’11–’12

’16–’17

preliminary

’86–’87

5.00 pounds

+19%

Nut milks have fueled consumer interest

3.75

All nuts,

by growing season

2.50

−46%

Caused by cold, rainy weather and a bee shortage

1.25

Almonds

0

’86–’87

’06–’07

’11–’12

’16–’17

preliminary

’01–’02

’96–’97

’91–’92

A key to maintaining California’s almond dominance, Sumner said, is making sure that supply and demand are kept in balance—oversupply means growers lose money, while undersupply can raise prices and cut consumption. That’s what happened in 2005, when bad weather led to smaller crops and higher prices that temporarily reduced demand, a phenomenon repeated during the drought.

Processing raw almonds in Blue Diamond’s Turlock Facility.

Almond Consumption, 2010 to 2017

Pure snack

All almonds

millions of pounds

300M

150M

200

100

Milk substitute

Mixed snack

50M

30M

5

15

Chocolate

Bars, pure

and mixed

20M

30M

10

15

Nut and

seed butter

Ice cream

14M

15M

8

0

Ready to eat

cereal

Non-chocolate

candy

3M

12M

0

6

Frozen novelty

2M

0

All almonds

millions of pounds

Pure snack

Milk substitute

300M

150M

50M

200

100

5

Mixed snack

Chocolate

Bars, pure

and mixed

30M

30M

20M

15

15

10

Ready to eat cereal

Ice Cream

Nut and

seed butter

12M

14M

15M

6

8

0

Non-chocolate candy

Frozen novelty

3M

2M

0

0

All almonds

millions of pounds

Pure snack

Milk substitute

Mixed snack

300M

150M

50M

30M

200

100

5

15

Chocolate

Bars, pure

and mixed

Nut and

seed butter

Ice cream

30M

20M

15M

14M

15

10

0

8

Ready to eat cereal

Non-chocolate candy

Frozen novelty

12M

3M

2M

6

0

0

But that’s been the exception, rather than the rule. Exports continue to expand, and in the U.S., consumer interest continues to rise, reaching a record last year. And that’s been aided by milk.

Almond milk has gone from being an also-ran use for almonds to accounting for one-quarter of U.S. supply, according to Nielsen data. Its use in butter has tripled since 2011.

Recently harvested almonds are piled up and covered with tarps in Salida Hulling’s storage yard, waiting to be shelled and hulled for their growers.

Global Almond Production

3.0B

2.8B

pounds of shelled

almonds projected

or the 2017-2018

growing year

2.5

2.0

1.5

1.0

Global

0.5

U.S.

0

’96–’97

’06–’07

’86–’87

’16–’17

2.8B

pounds of shelled almonds projected for the 2017-2018 growing year

3.0B

2.5

2.0

1.5

1.0

Global

0.5

U.S.

0

’91–’92

’96–’97

’01–’02

’06–’07

’11–’12

’86–’87

’16–’17

3.0B

2.8B

pounds of shelled almonds projected for the 2017-2018 growing year

2.5

2.0

1.5

1.0

Global

0.5

U.S.

0

’91–’92

’96–’97

’01–’02

’06–’07

’11–’12

’86–’87

’16–’17

Even with growing global appetites and sizable crops coming from the European Union, Australia and China, California still dominates the almond trade, with the U.S. producing nearly 10 times as many almonds as the EU, its nearest competitor, and exporting two-thirds of its crop. That dominance may last for years, if not decades, to come, Sumner said.

But, he added, clouds can always appear on the horizon—and not just those accompanying the winds and frosts that can cause seasonal damage, he said. While the drought may have temporarily fueled some mild shortages, it may also have planted the seeds for an oversupply within a few years.

This isn’t just a growing part of the economy here. It is the economy.

Ryan Jacobsen, CEO, Fresno County Farm Bureau

The lack of rainfall during the drought sped up some farmers’ tree-replacement schedules, he said. Rather than let older, less-productive trees produce nuts, those were taken down during the drought and replaced by newer trees that use less water—and typically take a half-decade to produce. That “non-bearing” acreage isn’t showing up in production statistics—yet. But when it does, it may create a surplus, he said.

Or, it just might make almond milk cheaper, making consumers want more. Jacobsen, 38, is a newcomer to almonds—he just added trees this year to the wine grapes he usually grows. That’s because he has faith in its growth. “This isn’t just a growing part of the economy here,” he said. “It is the economy.”