Growing markets lead to optimistic almond outlook


Issue Date: December 11, 2013
By Christine Souza
Richard Waycott, president and CEO of the Almond Board of California, says long-term work to develop markets has resulted in the creation of loyal almond customers.
Photo/Christine Souza

Near-record production, higher prices and room for increased export opportunities lead leaders in the almond business to forecast continued growth, with optimistic trends outweighing concerns about water supplies, increasing production costs and onerous government regulations.

Almond Board of California President and CEO Richard Waycott, addressing the organization's 41st annual meeting in Sacramento, said the recent success for the almond business shows that "the hard work that our industry and the ABC have been doing is paying off. It means that dedicating industry resources to the long-term education and conversion of customers and consumers to become loyal almond advocates is working."

Approximately 2,200 people gathered at the Almond Conference last week, where they heard forecasts about the future of the almond business.

For the 2012-13 crop year, Waycott said California growers produced 1.88 billion pounds of almonds. Although the total was 7 percent below the previous year, it still ranked as the second-largest crop in history. The 2013-14 crop is estimated at 1.85 billion pounds from 810,000 bearing acres.

The volume of almonds shipped to China, the largest export market, declined 12 percent in 2012-13 but even so, Waycott said, it was the second-best year in shipping to that country, and domestic sales rose sharply.

"The USA experienced a spectacular year, growing by over 7 percent into new record territory," Waycott added. "Overall, last year fared well with global shipments declining by less than 2 percent from the all-time record."

Phil Karsting, administrator of the U.S. Department of Agriculture Foreign Agriculture Service, told almond growers that success in selling almonds globally "fits in a broader pattern of agricultural trade."

The U.S. exported a record $140.9 billion in agricultural products in 2013, and although the USDA has revised its 2014 export forecast to show a slight decrease, to $137 billion, that total would still be the third-largest ever, Karsting said.

Karsting discussed his agency's involvement in trade negotiations under the World Trade Organization, as well as the proposed Trans-Pacific Partnership and the most recent trade negotiation, the Transatlantic Trade and Investment Partnership between the U.S. and the European Union. He also described other trade agreements as successes.

"We found in the first year of the Korean-U.S. trade agreement that almond exports went up 78 percent, from $78 million to $139 million. In the first year of the U.S.-Colombia Free Trade Agreement, our exports quadrupled from $900,000 to $4 million," Karsting said. "And Panama, although it is still relatively small, surpassed $1 million in the first year. We've got a good track record that we can be proud of."

John Talbot, vice president of global market development for the Almond Board, noted that a commodity that was sought after as an ingredient in the 1980s and 1990s became popular years later for its nutritional value, heart-healthy benefits, and its fit with a healthy image. Now, he said, almonds are viewed "not just as an essential ingredient, but also as a high-valued, healthy snack."

"The amazing (media) coverage has actually infiltrated and influenced pop culture," Talbot said. "That's continued to contribute to a fresh, contemporary and health lifestyle, and healthy image. This has had a dramatic impact on consumer perceptions."

Positioning almonds as a healthy snack through Almond Board marketing efforts in the U.S., Talbot said, can be used as a roadmap for success in other key markets, such as China.

The president and CEO for Greater China at Cheil Worldwide, Aaron Lau, described China as hugely complicated—with 1.3 billion citizens, 22 provinces, four municipalities, 815 cities, 56 ethnic groups and 129 dialects—plus an economy valued at $6 trillion that is expected to grow to $12 trillion in 2020. Lau said the California almond sector should pay attention to China's growing middle class and the urban migration that is taking place there. Most of the urban middle class in China, Lau said, are people under the age of 45 who are well educated, well paid and are buying refrigerators, TV sets, mobile phones—and almonds. They are also becoming more health conscious.

"That's great news for exports for California almonds," he said.

Closer to home, Buddy Ketchner, president and CEO of the Sterling-Rice Group, said North America represents a very important market for California almonds, with 350 million people who spend about 70 percent of what they earn.

"North America is the largest market for the almond industry. Most importantly, it is still growing," Ketchner said. "The last couple of years have been phenomenal for shipments to North America. Over the last five years, the business has grown 50 percent. The fact that your biggest market is growing is a really good sign."

(Christine Souza is an assistant editor of Ag Alert. She may be contacted at csouza@cfbf.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.