Taking a Closer Look at Today’s U.S. Almond Market

The almond industry is emerging from a period of below break-even pricing to one where prices are at or just above breakeven. While current economics remain much weaker than the conditions that defined the 2010s, today’s environment is meaningfully more stable than in 2022 or 2023. After several years of widespread orchard removals, some growers are now even considering whether replanting makes sense.

As the almond market moves from a pronounced supply-demand imbalance toward greater stability, this is a natural moment to take stock of what drove past success, where constraints have emerged, and how present conditions may shape what lies ahead.

Strengths

Despite recent challenges, it is important not to lose sight of the remarkable success that transformed California almonds from a niche crop into the state’s second largest agricultural commodity by value. USDA data show that from 1990 to 2024, almond production expanded at a compound annual rate of roughly 4.3%, supported by the Central Valley’s ideal climate for almond production.

Growth was further supported by powerful demand tailwinds as global incomes rose and diets shifted toward convenient, healthy foods. Almonds fit neatly into modern consumption patterns and became increasingly embedded in value-added products such as butter, flour, oil and dairy alternatives. That innovation has resulted in almonds appearing in nearly every aisle of the grocery store.

As demand expanded, the industry also built a diversified buyer base. Export growth outpaced production growth, with shipments rising at an estimated 5.6% annually. Measured by the Herfindahl–Hirschman Index (HHI), almond demand is less concentrated than total agricultural exports, helping mitigate country-specific risk when geopolitics or weakness in a particular country interrupt trade flows.

Production, by contrast, is highly concentrated and has become more so. California accounts for about 75% to 80% of global almond supply, far surpassing producers Australia, Spain and Portugal. While foreign competition continues to grow, California remains the world’s dominant supplier, allowing the industry to capture the benefits of scale, innovation and expanding demand.

Over time, success reinforced itself. Growers, handlers and service providers built a dense and specialized ecosystem with about 7,600 almond farmers, nearly 100 handlers, nearly 3 million bee colonies during harvest, and numerous irrigation and farm machinery companies ready to support farmers. One economic study from the University of California’s Agricultural Issues Center put the industry’s direct and indirect contribution to employment at roughly 110,000 jobs. These economies of agglomeration have generated efficiencies, facilitated expertise, and enhanced productivity gains that remain a quiet but durable advantage over competitors, even while costs continue to rise.

Weaknesses

Like most growth models, these strengths came with tradeoffs, many of which surfaced simultaneously in the early 2020s. Following an exceptionally strong decade, the industry encountered a convergence of challenges from pandemic-related shipping disruptions to inflation to water constraints to trade frictions. As one farmer told me, it was Murphy’s Law in action: “What could go wrong, did go wrong.”

Export dependence proved an obvious vulnerability. During the pandemic, congestion at the Port of Oakland slowed outbound shipments, leading to inventory buildup and a sharp drop in prices. While the buyer base is geographically diversified, the episode revealed how exposed the industry remains to systemic global shocks even if it’s reasonably hedged against individual country shocks.

Shortly after, pandemic-induced inflation showed that the high cost of farming in California could rise even further, exposing farmers to record-high losses. The cost of inputs, labor and regulatory compliance all increased. With prices depressed, break-evens moved higher, intensifying financial stress across the industry.

Water policy introduced a structural constraint. The rollout of Groundwater Sustainability Plans (GSPs) under the Sustainable Groundwater Management Act (SGMA) (due in 2020 or 2022 depending on the basin) introduced a constraint that, along with low prices, resulted in acreage removals.

Groundwater limits will remain a binding long-term challenge. Statewide estimates suggest that hundreds of thousands of acres, many of them in permanent crops, may be repurposed.

Trade policy has also become a risk. Though not immediately visible in aggregate shipment data, market-trading trends show shifts in competitiveness. China (and Hong Kong), once our top destination, now consistently imports more almonds from Australia due to preferential trade agreements, despite Australia producing a fraction of California’s volume. Though re-exports through Southeast Asia can complicate how much California product gets to China, rerouting introduces more trade risk, friction and cost into the supply chain.

For more on opportunities, threats, and what lies ahead regarding the almond market, continue reading the original article in its entirety at terrainag.com.