San Joaquin Farm Bureau Federation

By Craig W. Anderson

San Joaquin County's almonds could yield a record crop this year but the industry's attention and concerns are focused on tariffs.

"Tariffs are a tax by the importer and the increase is passed along to consumers,d"said Holly King, chair, Almond Board of California (ABC), "Which means the ABC's very effective worldwide marketing efforts will be relied upon to hold customers until the tariff issues are resolved."

Playing field stabilization
The trade tariffs proposed by the Trump administration on goods from China and other nations are an effort to stabilize the playing field for almonds and all other American goods in the international marketplace. The trading partners affected by the new tariffs subsequently slapped tariffs on U.S. products and the international trade wrangling began.

Carry-in good news
Fortunately, the 2017 almond crop was unaffected by the tariff troubles. "At this point, 100 percent of the 2017 crop carry-in has been sold and shipped,d"said Dave Phippen, Ripon almond grower and partner in processor Travaille and Phippen. "Last year's crop was committed to prices before the tariffs hit, which resulted in no problems with countries that accepted those prices.d"He also said the industry is behind on new-crop commitments. 

Sellers, buyers, confusion
Tariffs are one of the reasons for slow new-crop commitments in 2018. Part of the problem was the varied estimates of the crop's size. An initial estimate was 2.5 billion pounds, followed by ABC's estimate of 2.2 billion pounds and July's objective estimate from The USDA National Agricultural Statistics Service – Pacific Regional Office of 2.45 billion pounds.

"The estimates, along with the tariff threat in the early spring and summer confused buyers and sellers,d"Phippen said, "because crop estimates can make it difficult to settle on a price.d"

Pricing
Price has become the issue due to the reciprocal tariffs and China, which imports about 10 percent of California's almond crop, has implemented a 15 percent nut tariff, an increase that could affect 2018 prices and crop movement. Earlier, shelled almonds exported to China carried a 10 percent tariff so they're now saddled with a tax of 25 percent.

"We're still awaiting clarification on the tariff situation,d"King said. "It could change by this summer.d"With Chinese tariffs on the verge of 50 percent, the United States stopped shipments to China. India's tariffs began in August and, said Phippen, officials are currently working feverishly to reach trade agreements.

"China imports 150 million to 200 million pounds annually and those numbers have gradually increased,d"he said. "India's been setting records for pounds and prices and the EU hasn't experienced much disruption except for hesitation in booking shipments.d"He added, "Keep in mind that we can handle tariffs with one country but not five.d"

Almonds affect 
"With these tariffs there are more questions than answers,d"said Phippen. "With the amount that we export, it will be a rough go if tariffs are in effect for a long time. The damage, whatever it might be, will be determined by how long free trade is disrupted. There's bound to be a hit no matter how things go.d"

New crop shipments begin in September and results will be revealed in more detail in early October. "Stand by,d"said Phippen. "Headlines in 60 days! I think by then all parties will have kissed and made up and gotten trade going again.d"

Marketing remains strong
"The ABC has done a lot of work to develop the China market and we'll continue to have a significant marketing presence in China and throughout the world,d"King said. Over the past 40 years the Almond Board of California has invested more than $70 million in its almond marketing campaign, the majority directed toward the global marketplace. "In the international arena, it's all about competitive prices and tariffs complicate pricing.d"

Almonds, and other industries hit by foreign retaliatory tariffs, have no control over them because, noted King, "It sits with the President to establish trade policies.d"

Major economic driver
The almond industry hopes the trade squabbles will be resolved quickly because almonds are a huge contributor to California's economy via 106,000 jobs and $11 billion generated annually for the state's coffers. California grows 50 percent of the nation's produce but, said King, unlike the Midwest – "When agriculture – soybeans, corn, hogs, etc. – take a hit, the Midwest goes to D.C. to state their case. Almonds and other California crops, are considered to be just ‘California crops', a diversified bunch without the traditional ‘punch' of Midwest products.d"

Time's impact
King added, "How long the industry will need to recover [from a trade dispute] depends on how long the tariff situation's in effect and when customers will be forced to look elsewhere.d"The primary customers for California almonds are Spain, India, the EU and China.

Phippen pointed out that cancelled or significantly delayed shipments face a difficult recovery because "they'll have to double up in the following months.d"And with $100 million in shipments heading overseas monthly, doubling sales would be a serious challenge.

Possible record crop
If the Objective Forecast holds true, the state could set a record for almond production. But Phippen says that "Predictions are estimates, not a sure thing, a best guess and not something you can package. The crop looks to be very good but we won't know the details until January.d"

He said the industry has room to expand and to create more opportunities to purchase almonds. 

Yield very good
"Last year we harvested 1 million bearing acres and this year we should harvest 1.07 million acres,d"said King. "2018 looks to be a milestone year for California almonds.d"

Solid advances
She credits the solid advances in almond production to nutrient management, using water with improved irrigation methods, continual adequate pollination and other cultural practices. 

"We're using less of our resources and producing more almonds per acre, with a smaller footprint per nut. In fact, the almond industry has reduced water use by 30 percent to grow a pound of almonds,d"King said. "Research, innovation and the board's staff working with growers in the irrigation continuum, along with increasing mechanization, have combined to help bring us to where we are today.d"

"California is home to the world's most efficient almond farmers who produce more than 80 percent of the world's supply,d"said Richard Waycott, president and CEO of the ABC. "California's almond community continues to meet the steadily growing demand for almonds, supporting healthy and diverse diets around the globe.d"The health benefits of almonds have become one of the most impactful of sales points for those global consumers who are searching for healthy foods.

SJC's production
Of that supply, San Joaquin County's farm value for the 2016 almond crop was $349 million, grown on 71,100 bearing acres, which produced 1.02 tons per acre according to the most current figures available from the Agricultural Commissioner's Annual Crop Report.

Over time, with or without tariffs, King said consumer demand will have an effect on what eventually happens. The marketing by ABC will continue and almonds will remain on the menus of health-conscious consumers worldwide.