Demand for tree crops boosts nursery sales
If sales at wholesale nurseries offer a guide, California farmers appear ready to plant new or replacement orchards at an increased rate this winter. Two large nurseries say they detect a sense of cautious optimism among farmers, based on renewed demand for their trees. But they say demand varies greatly among crops and regions.
Nancy Fowler Johnson, whose family has grown trees for orchards in the Sierra foothills for nearly 100 years, said wholesale nurseries can serve as a barometer of future strength in the agricultural sector, but cautions about reading too much into it.
Fowler Nurseries, located near Lincoln in Placer County, supplies commercial growers with new orchard stock for almonds, pears, cherries, peaches, nectarines, apricots and prunes. Although her sales have been off as much as 30 percent, Johnson said they're picking up now.
"We're in the 2010 shipping season right now," she said. "Demand is beginning to outstrip supply. The growers we work with seem to have sat back for the past year or so and said, 'OK, let's wait and see.'"
Johnson said her nursery deals with two different grower groups: "Northern California growers who typically have water and then our Southern California growers who are dependent on the water delivery system. It's in the south where we've seen the most significant dropoff in our sales."
Nancy Fowler Johnson, general manager of Fowler Nurseries in Lincoln, says the market for bareroot orchard trees is rebounding, signaling farmers feel more optimistic about the future for tree crops.
What makes the bareroot tree business risky, she said, is that nursery operators plant starter trees without knowing what the future might hold.
"Right now, we're trying to match the number of pre-sales or orders under contract and still provide those extra trees that growers don't necessarily plan on, but need," she said.
Because of the long time span between planting nursery stock and a farmer's first harvest from those mature trees—five to seven years or more—a lot can happen that impacts the value of California's more than 1.5 million acres of tree crops.
Johnson lists drought, loss of export markets, gyrations in the stock market, the fluctuating value of the dollar against foreign currencies, limited credit availability, recession, consumer trends, pests and natural disasters as things that can wrench grower expectations and suddenly send orders for her tree stock up or down.
Firming commodity prices are helping bareroot tree sales now, and Johnson said the phone is ringing more and she's finding her customers becoming more cautiously optimistic.
"I probably could have sold more almond trees this season than I actually produced, because we had more demand than expected last fall on certain rootstocks. But getting the supply-demand balance right is all about anticipation and combination," she said.
"We're starting to see growers redoing hard-shell almond orchards, changing out the Buttes and Padres that aren't capturing prices and transitioning to nonpareils," she added. "I have surpluses on certain kinds of almond rootstocks, but not enough on the new Russian rootstock, Krymsk 86."
Johnson said the new rootstock offers better tree anchorage than other popular varieties, which helps trees stay rooted in heavy rain and windstorms—a trait farmers like.
New orders for replant trees with the Krymsk 86 rootstock are picking up, Johnson said.
"In fact, they're far exceeding our expectations. When the price for the commodities comes up, growers naturally get more optimistic," she said.
Farmers don't view all orchard crops as optimistically. Pear growers are in a dicey situation, she said, but cherry growers are doing great.
Government surveyors don't track the year-to-year magnitude of increases or declines in the purchase of trees for commercial production. Nursery and greenhouse products as a whole, however, rank as California's third most valuable commodity, with a value of about $3 billion in 2008.
"As a nursery, we're seeing the market for stonefruit trees improve," said Dennis Terry, general manager and CEO of Dave Wilson Nurseries in Hickman, a company that has produced nursery and orchard stock since 1938. "Cherry tree sales have been strong for the past couple of years. In part that's because California is emerging as a center for cherry production, gaining on the production capability of Washington state."
In 2010, Terry said the company expects to sell more than 3 million trees, with sales divided at about 2.2 million for orchard trees and about 800,000 for the home garden and retail sector.
With sales last year up 5 percent compared to the previous year, Terry said orders for 2010 plantings are outpacing those in 2009.
"The outlook for most of our commodity growers—like peaches, nectarines and, most notably, almonds—is pretty good. A lot of people are more comfortable with their economic prospects and they're going ahead with planting intentions."
He cited several reasons for strong sales of almond orchard stock: The almond sector is healthy, commodity prices have been on the uptick, demand worldwide is growing and, even with a big crop, there may not be enough almonds to meet world demand.
Terry said the nursery's inventory of commercial orchard trees is just being processed, but demand for trees may force the company to sell deeper into existing inventory.
One concern, he said, is the availability of credit for his customers, whether they're farmers who want to increase planted acres of tree crops or pull out older, less productive orchards and replace them.
"Lenders have been telling me they haven't done any redevelopment loans in the orchard business in quite a while," Terry said. "They're being cautious and they're not necessarily looking for ag lending deals."
He said he believes the reluctance to seek orchard lending opportunities is a combination of worry about the creditworthiness of some growers, smaller returns on agricultural lending compared to other sectors and uncertainties about commodity prices and grower returns.
A commodity that's seeing a lot of planting, he said, is olives for oil. Investors say California's olive oil business continues to be one of the state's most promising crops for farmers, and the amount of acreage being planted in olive trees has grown consistently.
Driving the planting surge are statistics that indicate per capita consumption of olive oil has grown nearly 230 percent in the past 20 years. Although California produces almost all of the nation's domestically made olive oil, that still accounts for less than 1 percent of the world supply.
(Kate Campbell is an assistant editor of Ag Alert. She may be contacted at firstname.lastname@example.org.)
Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.