Bountiful almond crop is a 'limb breaker'

The weight of this year's abundant almond crop keeps Manuel Ventura busy with the chainsaw at Kimmelshue Farms clearing snapped limbs to make way for harvest equipment.

Butte County almond grower Dax Kimmelshue directed workers in his almond orchards last week on where to take their chainsaws next. Normally at this point in the almond production cycle, the last thing a farmer would want to hear is the whirring of saws cutting wood.

Kimmelshue, however, is trying to clean up rows where limbs are down—snapped from the weight of this year's heavy crop—to prepare for harvest equipment.

A preliminary estimate issued by the U.S. Department of Agriculture calls for a record 1.3 billion pounds of almonds—a 17 percent increase over last year. Some growers are taking a look at their trees and saying that may be a conservative estimate.

"I see probably the best crop we've had in this area in quite a few years," said Kimmelshue. "As far as the estimate, government projections have gotten pretty accurate statewide. But up here, our crop looks better than ever, probably because of weather conditions.

"When growers in our area get to talking about conditions this year, we all say 'Gee. It's like we're farming in Bakersfield.' We didn't have the winter rain we normally have, which is good and bad, but it's nice to raise nut crops when you're not fighting extreme weather and disease pressure in the spring."

In a wet spring he said farmers have to apply more fungicides, which drives up production costs.

"As far as inputs go, the cost of everything is geared to fuel prices—fertilizer costs are going up, insecticides are going up, pesticides are going up," Kimmelshue said.

"But, I always feel good when I'm harvesting a big crop. No matter what it is, it's good when you're getting yield. Who cares what the price is?" he said and grinned.

"When your going up and down the orchard rows and you're not getting that many nuts out of it, you feel down, even if the price is three dollars-plus a pound," he said as he checked developing nut hulls for signs of pest damage.

"It's not the same when you've got a crop with excellent yields. The farmer in me just gets excited about such a great crop as this."

Kimmelshue said he is uncertain at this point what the per-pound price will be for this year's crop. The relatively short crop of about 915 million pounds in 2005 fetched a per-pound price of about $2.81, according to the California Agricultural Statistics Service. Kimmelshue said there were some reports that prices for that crop went as high as $3.75 a pound.

With a record estimated crop size this year, experts say California farmers could expect to see lower prices for nonpareil, but still above $2 a pound. Throughout the state about 615,000 acres are planted to bearing almond orchards, with more than 145,000 in non-bearing acres.

One thing that may keep prices for this year's crop afloat is that there's very little carryover from last year's record crop of about 1.1 billion pounds, Kimmelshue said. "There's no reason for almond prices to drop. We'll just have to wait and see what the government's final estimate shows in July for crop size."

There also appears to be few reasons for the farmland that produces the state's $2.3 billion-plus almond crop to decline in value either. Analysis of almond ground in the northern Sacramento Valley by the California Chapter of the American Society of Farm Managers and Rural Appraisers indicates that although the price of almonds fell from the 2005 high, it remains at or near record levels.

In a recent report, farm appraisers noted that new orchard developments in the Sacramento Valley for almonds—and walnuts—continues at an unprecedented pace. And, due to excellent profitability, few orchards were offered for sale in the region during 2006 or in the state's other major almond growing areas.

Real estate experts say prices for almond orchards depend on region, age, yield averages, variety mix, soil type, water source and irrigation system. Values in the Sacramento Valley were pegged at about $4,000 to $12,000 an acre, based on a very limited number of sales.

Demand from buyers of almond orchards in the northern San Joaquin Valley remains strong, the farm appraisers said, with few orchards for sale.

"Good quality orchards—primarily in the northern county markets of Modesto, Riverbank and Ceres— indicate strength in values," the report said. "With land values increasing in most markets, orchard developers are now pursuing ancillary areas, with inferior soil quality.

"Modernization in the industry has allowed the matching of appropriate rootstocks with inferior soils," the reported noted. "Furthermore, more efficient irrigation systems have enabled increased production for orchards developed on marginal soils."

Almond orchards served by the Modesto Irrigation District or Turlock Irrigation District commanded prices of $15,000 to $25,000 an acre, based on limited sales. Orchards served by wells or smaller irrigation districts went for $10,000 to $17,000 an acre.

Farm and ranch appraisers in the central San Joaquin Valley noted that "almond orchards continue to be retained by their owners due to extremely favorable commodity prices. Even older orchards, with declining yields, were profitable at 2006 nut prices."

Almond orchards in Fresno and Madera counties sold for between $8,500 and $15,000 an acre in 2006. That price range reflects a near doubling in land value in just five years, with 2001 almond orchard prices ranging from between $3,500 and $8,000 an acre.

In the southern San Joaquin Valley, appraisers said the market for almond orchards remained very strong in 2006. Since nut prices remained strong, as well, experts said farmers had little reason to sell, unless an owner decided to cash in during a strong commodity and real estate market.

Near the end of 2006, appraisers said it appeared as if almond orchard prices in that region had stabilized, and possibly declined slightly. Sales of immature orchards continue, but the pace of new plantings remained aggressive in 2006. Uncertainties about water supplies have not yet been figured statistically into values for southern San Joaquin Valley almond orchards.

Almond orchard prices ranged in Kern County from $12,000 to $15,000 an acre, with Tulare County orchards selling for between $10,000 and $15,000 an acres. For comparison, in 2001 almond orchards sold for between $5,000 and $7,000 an acre in Kern County and between $4,500 and $6,500 in Tulare County.

With the prospect of dramatic increases in bearing almond acres on the horizon, appraisal expert Kirk Sagouspe said in his analysis that the "industry is girding for the anticipated yield increase, with continued marketing efforts and the expansion and increase of processing and marketing facilities.

"With the massive almond production anticipated in the near future, almond prices are expected to moderate from current levels," Sagouspe said. "But this industry has been faced with similar excessive supply challenges in the past, aggressively responding with increased marketing programs and product awareness."

As supply increases and commodity prices moderate, the level of orchard development is expected to slow as well. This should help stabilize underlying real estate values for almond plantings, Sagouspe said.

California's almond sector appears to be in a favorable position to balance the huge impending supply challenges, but he expects older, non-economical orchards will likely be removed, resulting in a potential decrease in the state's overall almond production.

"We've been growing markets, but we haven't had the amount of nuts we need to grow even more," said Stanislaus County almond grower Paul Wenger. "This will probably cause field prices to come down a little bit in the short run, but I think market demand is strong."

One drawback to marketing the state's almond crop abroad, Wenger said, is that there hasn't been a sufficiently rapid increase in the amount of almonds produced by California farmers. In the past 10 years, bearing almond acreage has increased from about 440,000 acres to an estimated 615,000 today, with about 145,000 non-bearing acres.

"I know a 17 percent increase seems like a lot," he said. "But Mother Nature has kept the crop at about a 1 billion pound level during the past couple of years."

Wenger, who is first vice president of the California Farm Bureau Federation, said, "This kind of increase, and the bigger ones to come, will allow us to get out and expand markets. There are people who've wanted almonds but they weren't available to sell or they couldn't afford them because of tight supplies."

Wenger said the crop now maturing on the trees will be good for the almond sector because of the opportunity it promises for expanding markets.

What production capability will ultimately mean for commodity prices and the underlying value of almond orchards remains to be seen. Farm and ranch real estate experts see very few orchards on the market right now because almond farmers are holding their ground.

(Kate Campbell is a reporter for Ag Alert. She may be contacted at kcampbell@cfbf.com.)

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