12 CapitalPress.com
October 21, 2016
Water
Election
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where water held out a lit-
tle bit longer in the system,
said Bill Buhrig, an Oregon
State University cropping
systems extension agent in
Ontario.
In areas where water was
scarce, a lot of early season
crops such as cereal, wheat
or triticale were planted.
As a result, Buhrig said,
a lot of onions and cereals
were planted on the same
ground several years in a
row and farmers got out of
their normal fi ve- to six-year
rotations, which is not ideal
for soil health.
“To go to a full allotment
enables growers to get back
into the rotations that really
benefi t both what their pro-
duction needs are and soil
health,” he said.
As a result of the drought,
acreage for some water-in-
tensive crops, such as sugar
beets, was cut signifi cantly.
After falling to 4,725 acres
in 2014 and 5,500 acres in
2015, sugar beet acres in the
area bounced back to 8,000
this year, which is close to
normal.
The ground left fallow
the past few years has also
been put back into produc-
tion, said Stuart Reitz, an
OSU cropping systems ex-
tension agent.
The full allotment “gives
He said federal policies erect
barriers to entering and stay-
ing in business, particularly for
small farmers and ranchers.
“They feel the government is
not trying to protect them, trying
to help them, and they’re won-
dering how they’re going to stay
in business,” Clovis said.
He said a Trump adminis-
tration would support regional
regulations to take into consid-
eration different climates, geog-
raphy, land uses and ownership.
“Those 13 states in the West-
ern part of the United States
probably ought to have their
own rules because so much land
is owned by the federal govern-
ment,” he said.
Merrigan said regulations
put businesses on equal footing
and protect the public. She cited
organic standards and market-
ing orders as examples of farm-
er-driven rules.
“I think this anti-regulatory
drumbeat is not helpful,” she
said.
Said Clovis: “I can’t let that
go.
“The fact is we have a bur-
densome regulatory regime that
imposes itself, particularly on
smaller enterprises because they
do not have the wherewithal to
fi nd the compliance staff,” he
said.
Merrigan
said
farmers
can ensure their survival by
participating in government
Sean Ellis/Capital Press
A sugar beet fi eld in Eastern Oregon is irrigated in June. A full water allotment for the fi rst time
in four years has made a big difference for farmers who depend on the Owyhee Reservoir to
irrigate their crops.
people more fl exibility on
what they can grow and
where they can grow,” he
said. “Having those short
water years threw every-
body’s rotations off.”
Dairyman Frank Ausman
likes to grow most of his
own feed but had to leave
one of his three farms idle
the past two years to spread
what little water he did get
to the other two.
He was able to put all
three into production this
year.
“It’s made a huge differ-
ence,” he said. “We have ba-
sically got back to normal.”
When the OID system
stopped delivering water
Sept. 30, there was 166,000
acre-feet of carryover water
in the reservoir, less than
normal but much more than
the 5,000 acre-feet left the
past two years.
“From the get-go, when
we set the allotment, our
goal was to try to carry
over 100,000 acre-feet and
we actually did better than
that,” Chamberlin said.
“We’re pretty pleased we
were able to carry over that
much.”
1,000
Nuts
California nut acres
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For years, California’s
nut boom defi ed gravity. The
production, bearing acreage,
prices and total value of wal-
nut and almond crops have
been rapidly growing for the
past two decades — particu-
larly since 2005, according to
the National Agricultural Sta-
tistics Service.
Bearing almond acreage
has more than doubled, from
418,000 acres in 1995 to near-
ly 900,000 this year. Produc-
tion has increased from 370
million pounds to an antici-
pated 2.05 billion pounds this
year.
A 2014 study by Sumner
and others found that almond
production directly and indi-
rectly contributes more than
$21.5 billion annually to the
economy and creates more
than 100,000 jobs. Almonds
account for about one-quarter
of all farm exports from the
state.
Walnut acreage has been
trending upward since 1988,
from 177,000 acres to 315,000
this year. Production has more
than doubled during that peri-
od, to a record 670,000 tons
this year, and the total crop
value increased from $193
million in 1988 to $1.9 billion
in 2014.
Pistachios are the other ris-
ing star, with 310,000 acres of
trees in the state, according to
the American Pistachio Grow-
*Estimate
Almonds
Walnuts
Pistachios
600
400
890: Up 74.5% from 2000
300: Up 50% from 2000
510
200
200
74.6
232.7: Up 212% from 2000
0
2000
’05
’10
Sources: USDA NASS; California Pistachio Commission
‘Demand is strong’
Nut boom
(Thousands of bearing acres)
800
Like Lindauer, most in the
industry are taking the lull
in prices in stride. The com-
modity groups are stepping
up their efforts to fi nd new
customers for nuts, and grow-
ers are beginning to make or-
chard-management decisions
that refl ect new realities. If
there’s a ceiling on how many
nuts California can produce
and still maintain profi tability,
they remain convinced they
haven’t yet reached it.
“Leading into the new
crop year, demand is strong,”
said Richard Waycott, the Al-
mond Board of California’s
president and chief executive
offi cer. “Pricing is at a range
where it has rebounded from
the lows that we hit back in
April.”
Finite water resources
amid the ongoing drought
may slow the expansion a bit,
and lower prices may mean
tree nuts are less attractive
to those who would plant or-
chards strictly as investments,
said Daniel Sumner, direc-
tor of the Agricultural Issues
Center at the University of
California-Davis.
“I wouldn’t say we’re
done” expanding, Sumner
said. “It partly depends on
how we get things organized
when it comes to groundwater
and (issues surrounding) sur-
face water.”
conservation programs.
“Do everything that good
science is saying on the farm,
cost-share. And then say to them,
‘And now you’re not going to
be regulated out of business be-
cause you’ve done everything
that we’ve asked of you,” Mer-
rigan said.
Clinton and Trump both con-
demn the Trans-Pacifi c Partner-
ship, leaving the surrogates little
room to distinguish their candi-
dates.
On immigration, Clovis said
the H2-A visa program could be
streamlined to supply agriculture
with workers.
“If they want a legal work-
force, we can work with them to
make it legal,” Clovis said.
Merrigan said agriculture
would be better served by im-
migration reform than building
a wall. Clinton “is ready to lead
us past the current political im-
passe, which is crippling the
agricultural industry,” Merrigan
said.
Clovis stressed that the next
president will have the opportu-
nity to appoint at least one U.S.
Supreme Court justice, maybe
more. He also said Trump wants
to lower corporate tax rates.
Merrigan listed several gov-
ernment initiatives favored by
Clinton, including installing so-
lar panels in rural areas, bringing
high-speed internet connections
to rural homes and supporting a
new generation of farmers, par-
ticularly women and veterans.
“We can’t afford to ignore any
tools in our toolbox,” she said.
Tim Hearden/Capital Press
Piles of empty shells and other natural debris that was kicked out of the processor await use behind
the Crain Walnut Shelling plant near Los Molinos, Calif. The waste will be used as a soil amendment
before a new orchard is planted.
ers. This year’s crop — esti-
mated to be as much as 800
million pounds — will easily
surpass the record crop of 555
million pounds in 2012. Near-
ly all U.S. pistachios grow in
California.
Even more nut trees will
come into production in the
next few years. According to
NASS, about 220,000 almond
acres and 65,000 walnut acres
were yet to begin bearing as
of last year. About 70,000
acres of pistachio trees in the
ground are non-bearing, said
Richard Matoian, the Pista-
chio Growers executive di-
rector.
For all three nuts, planting
a new orchard is a huge invest-
ment. Preparing and planting
each acre of trees costs about
$3,768 for walnuts, $2,327 for
almonds and $1,932 for pista-
chios, according to the UC
Cooperative Extension’s most
recent cost estimates.
Market correction
In the past year, supply has
caught up to demand as inter-
national competitors ramped
up production. As equilibrium
was reached, prices fell. The
overall value of last year’s
walnut crop — $977 million
— was a little more than half
the record $1.9 billion 2014
crop, according to NASS.
“For us, we see the mar-
ket as still pretty strong,” said
Dennis Balint, president of
the California Walnut Com-
mission. “The problem is
we’re seeing growth in other
countries’ crops. China, if you
believe what they report, is
expecting a 10 percent higher
crop.”
Chile will probably be
looking at a record crop, he
said. “We have to be cogni-
zant of the fact that we are
competing against other pro-
ducers.”
While last year’s almond
crop was smaller than the
previous year’s, it still outper-
formed expectations, which
caused a price slide, Waycott
said. The current average
price of $2.50 per pound for
nonpareils is still profi table,
industry insiders say.
Meanwhile, large pista-
chio crops in Iran during the
past two years enabled that
country to gain market share
in destinations such as China.
California growers dealt with
a small crop last year because
of drought and a lack of win-
ter chilling hours, Matoian
said.
This year, pistachio grow-
ers have been initially guar-
anteed between $1.70 and
$1.80 per pound, down from
an average of $3.57 per pound
they received in 2014, he said.
That price could increase via a
negotiated “marketing bonus”
that growers usually receive
at the season’s end, he said.
Despite the price decreas-
es, the average California
tree nut farm is still profi t-
able, according to the UCCE
estimates. In established or-
chards, walnuts cost $4,703
an acre per year to produce
and return $5,875 to the oper-
ation each year; almonds cost
$3,890 an acre to produce and
return $5,000; and pistachios
cost $4,984 an acre to produce
and return $7,224.
ly court domestic consumers.
The Walnut Commission has
invested more than $17 mil-
lion in the last two years to
boost U.S. sales. The goal is
to increase walnut consump-
tion from 22 to 30 percent of
U.S. households.
The Almond Board is also
burnishing the industry’s im-
age at home. Facing criticism
from some quarters for its wa-
ter use during the drought, the
industry committed $2.1 mil-
lion last year to research more
sustainable farming practices
such as whole-orchard recy-
cling and groundwater bank-
ing, and “is really upping the
game in terms of precision
agriculture for the industry,”
Waycott said.
Meanwhile, walnut farm-
ers have begun switching to
varieties such as Chandler,
Howard and Tulare to get the
highest yields and nut quality.
To help them get the best pos-
sible returns, farm advisers
have been offering tips on pro-
ducing higher-quality, lighter
kernels by closely monitoring
water use and applying a plant
growth regulator.
California unique
Growers worried
What makes California’s
tree nut industries unique is
they either dominate or own a
large percentage of the world
markets, so they’re heavily
dependent on trade, said Eric
Houk, director of the Agri-
cultural Business Institute
at California State Universi-
ty-Chico.
The state supplies 80 per-
cent of the world’s almonds
and 35-40 percent of the
world’s walnuts and pista-
chios, he said.
With almonds, “weaker
prices are not usually asso-
ciated with increased foreign
competition but a general de-
crease in foreign demand” as
production continues to rise,
he said in an email.
Walnut and pistachio
growers face an increase in
foreign competition, he said.
With global markets in
fl ux, the commodity groups
have also begun to aggressive-
Modesto area almond and
walnut grower Paul Wenger,
the California Farm Bureau
Federation president since
2009, said he has long sus-
pected the state was produc-
ing more nuts than could be
sustained in the long run.
“A lot of the expansion
we’re seeing in agricul-
ture isn’t the typical family
farmer — it’s pension funds
and hedge fund investors,”
Wenger said. “If they can get
a 2 or 3 percent annualized
return, they’re OK with that.”
It will be interesting to see
how family farmers can stand
up against the institutional
farm owners, he said. “I know
down in the (San Joaquin)
Valley we’ve got hedge funds
drilling wells where family
farmers would never do that.
It’s a disposable dollar for a
lot of these folks.”
Lindauer, the Los Molinos
walnut grower, said lower
prices make it more diffi cult
to meet increasing expenses,
including the state-mandat-
ed increase in the minimum
wage to $15 an hour by 2022
and a new law applying the
8-hour work day to agricultur-
al workers. After 8 hours, they
will receive overtime pay.
He said the new labor laws
will force growers to “invest
in enough machinery that we
can get everything done in 8
hours that used to take 10 or
12.”
“We can’t be doing this
and losing money,” he said.
At the same time, some
farms that are heavily lever-
aged may have a hard time
surviving if prices stay low,
said Rick Buchner, a UC Co-
operative Extension farm ad-
viser in Red Bluff.
A few growers who plant-
ed nuts in place of prunes
a few years ago when that
crop’s prices fell may turn
around and plant more plums,
Buchner said. Prune produc-
ers had received an average
of less than $1,000 per dry ton
over the fi ve years ending in
2010, but that price shot up to
$2,400 per dry ton in 2014.
“The prune thing looks
pretty promising now,” Buch-
ner said. “I think we’re going
to see some interest.”
But Buchner and others
also point out the price cycles
the nut industries have expe-
rienced.
For instance, almond pric-
es “peaked around 1995, then
again around 2005, and most
recently in 2015,” Chico
State’s Houk said.
Each time, the peak was
followed by short-term lulls
in planting and production,
but the overall trend has been
an increase in acreage and
production and prices have
recovered as global demand
has increased, he said.
“I think the industry is
probably going to focus on in-
creasing its marketing efforts
and the lower prices will like-
ly start increasing the quantity
demanded in world markets,”
Houk said. “When or if we
get back to the peak prices
we saw in 2015 is anybody’s
guess.”
Staying hopeful
While he doesn’t see as
much interest from investors
now that prices are lower, UC
Cooperative Extension po-
mology farm Advisor Roger
2015*
Alan Kenaga/Capital Press
Duncan is still contacted al-
most daily by growers who
send him soil and water tests
to determine if they can grow
almonds, he said.
“I think at this point, you
still have to look at almond
farming as a profi table busi-
ness,” said Duncan, who is
based in Modesto. “I don’t
see any reason to believe ... it
won’t continue to be that way.
Where the ceiling is, I have
absolutely no idea.
“We’ve always felt like
we’re approaching the ceil-
ing,” he said. “Since then
we’ve more than doubled the
industry since I’ve been here.”
For their part, industry
leaders remain hopeful. The
Walnut Commission’s Balint
said the domestic market for
walnuts rose by more than 11
percent this year because of a
variety of factors, including
lower prices.
“So although I wouldn’t
advise people to run out and
plant more walnuts, I don’t
think that we necessarily have
what I would call a serious
problem,” at least yet, Balint
said.
Over the past 20 years,
the almond industry has “po-
sitioned itself well” by pro-
moting the image of nuts as
a healthful food, the Almond
Board’s Waycott said.
“As we look out into the
future, people have to eat
and what should they be
eating? Plant-based proteins
are certainly preferred,” he
said. “It’s going to be nutri-
ent-dense products like ours
that are going to be very
much a part of the dietary
mix, and you can’t grow
them in many places.”
Veronica Nigh, an econo-
mist for the American Farm
Bureau Federation, agrees.
Tree nuts are “more of a
foodie food” than many other
commodities, and they’re an
important part of many cul-
tures around the world, partic-
ularly in the Middle East, she
said.
“If you’ve been using al-
monds in recipes for thou-
sands of years, that’s not
going anywhere,” Nigh said.
“Just like anything else, we’re
going to have some fl uctua-
tions, but it’s certainly a good
long-term market.
“There’s still probably
plenty of room for folks to
get into the market and have a
good business,” she said.