Troubled times feared for almond supply

By Sarah Hills

- Last updated on GMT

Related tags Blue diamond Nut

Food manufacturers who have benefited from record almond crops over the last few years could see supplies dry up as growers warn of a turbulent year ahead amid “unrelenting global demand”.

A bumper almond crop is forecast for 2008 but a water crisis in California could mean that supply will be tight next year with fluctuating prices, according to Blue Diamond Growers, a cooperative that claims to be the world's largest tree nut processing and marketing company.

The nuts’ vitamin E, cholesterol-free and mono-saturated fat status means that almonds appeal to food manufacturers catering to nutritionally-aware consumers, and they are pitched at the premium end of the nut market.

In the US, the majority of almonds are consumed as ingredients in manufactured goods including cereals, snacks, confections and desserts, with remaining consumption coming from snacking. California is the main supplying region but nearly two-thirds of production is exported to more than 90 countries abroad.

The US National Agricultural Statistics Service (NASS) recently announced an almond crop forecast for 2008 of 1.5 bn pounds, which is eight percent higher than 2007 and a record for the third consecutive year.

However Blue Diamond said that there are two issues “concerning to all in our industry”​, which are the weather and the impact of California’s water crisis.

In 2005 the crop was reduced by nearly 25 percent due to inclement weather and now, “after three record crops in a row it is reasonable to at least consider that conditions next spring may be less than ideal”.

The current drought, along with legal wrangles over endangered species has also caused concern for thousands of acres of farmland on the west side of both the Sacramento and San Joaquin Valleys.

The cooperative said: “In the mix of land in jeopardy are over 250,000 acres of almonds: 50,000 acres in the north, and over 200,000 in the south.

“At this point, roughly 20 percent of these acres are being negatively affected by water shortage and stress.

“The affected acres described above will yield lighter kernels for the 2008 crop and a much lighter bud set for 2009.

“If the drought and pumping constraints continue, we could see reduction in future almond production projections, leading to a much tighter supply picture. The result of this could be turbulent prices and lost consumption.”

US market

Almonds are the sixth largest US food export and the California crop is valued annually at over $1bn.

In 2007 shelled almonds pulled in prices of $1.87 a pound. Blue Diamond said that market levels for 2008 are trading at prices that are higher than last year and are expected to remain firm, mainly because of strong global demand.

Recent research from market analysts Mintel shows consumers are increasingly turning to seeds, dried fruit and nuts to fill the gap between mealtimes, pushing sales of those snacks to the £0.5bn, with 50 per cent growth in the category since 2001.

Sales of luxury nuts - Brazil nuts, walnuts or almonds - have almost doubled in five years to £189m and, in 2005, overtook peanut sales.

The popularity of high-fat peanuts has waned in recent years on the back of increased concerns over peanut allergies, and anti-obesity campaigns that seek to slash fat from consumer diets.

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