India expecting almond price hikes due to california drought

Photo by Hasha KR. Creative Commons Licensed.

Photo by Hasha KR. Creative Commons Licensed.

By Karam Singh Sethi
March 4, 2014

California is no stranger to exhausting droughts — 2013 was California’s driest year in history. But times have gotten even tougher recently, and the effects are beginning to ripple. California is the world’s top producer of almonds, and international almond demand has increased and farmers are taking extreme measures in order to safeguard the lucrative crop.

In an attempt to keep up with demand, farmers are swapping their cotton plants for thirsty almond trees, ignoring water scarcity.  In the past two decades alone cotton acreage has dwindled to 400,000 from 1.3 million while almonds have doubled from 400,000 to 800,000.

The state’s prized export is dominating international almond markets, producing 82 percent of the world’s almonds.  In 2012, almonds even surpassed wine as the largest agriculture export from California.  Where are the nuts going?  Mostly India and China.

The rapid growth of middle-income families in Asia has led to increased demand for high quality agriculture goods.  But with the almond harvest only  six months away, California growers may be in trouble.

The increased price of raw almonds for processors means higher prices for consumers.  This has boosted prospects for Australian growers like Select Harvest Ltd.  To reinforce popularity in California products, The Almond Board of California has partnered with Indian celebrities to promote the nutritional snack, culminating in hilarious advertisements. For instance:

The pressure is on.  People really, really want their nuts.

Farmers are taking water-saving precautions, but due to the sheer growth of the industry water is bound to be a problem.  Some have already taken drastic measures.

Barry Baker, head of Baker Farming Company in Firebaugh, California is employing tractors to tear out 20 percent of his almond trees.  “There’s simply not enough water to satisfy 5,000 acres…Hopefully I won’t have to take out another 20 percent,” he said during an interview last week.  Don’t worry Barry, government’s here to the rescue.

California’s legislature recently passed Gov. Jerry Brown’s $687 drought relief initiative but admits the package means to alleviate immediate water issues, not cure long-term problems.  “This is not going to solve the drought crisis,” but hopefully it can keep farmers farming, he said.

Unfortunately, the correlation between Greenhouse Gases and the drought is lost on the Governor.  $40 million is coming out of Greenhouse Gas Emissions and Reduction Funds, both connected to California’s pioneering “cap and trade” program.

The expected showers this weekend should ease farmers’ tensions, but if a long-term solution isn’t found for the water shortage, Asia may satisfy almond demands in other markets, like Australia or Spain.

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Posted by on March 4, 2014. Filed under Economy,Recent News,World. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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