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California Drought Means Higher Almond Prices for Asia

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Pacific Money

California Drought Means Higher Almond Prices for Asia

A severe water shortage leaves Californian farmers taking drastic measures.

California Drought Means Higher Almond Prices for Asia
Credit: California almonds via

California is no stranger to exhausting droughts; 2013 was the state’s driest year in history. Recently, though, the weather has become more severe. At the same time, international demand for Californian almonds has increased, prompting farmers to take extreme measures to safeguard this lucrative crop.

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

People really want their Californian nuts.

The state’s prized export is dominating international almond markets, accounting for 82 percent of global production. 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 brought with it 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 the popularity of Californian products, the Almond Board of California has partnered with Indian celebrities to promote the nutritional snack, culminating in some hilarious advertisements.

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

Farmers are taking water-saving precautions, but because of 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, 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 help.

California’s legislature recently passed Governor 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.

Unfortunately, the correlation between greenhouse gases and the drought is lost on the Governor. Indeed, $40 million of the relief package is coming out of a state fund designed to reduce greenhouse gas emissions, which is linked to California’s pioneering “cap and trade” program.

Showers last weekend may have eased farmers’ tensions, but if a long-term solution isn’t found for the water shortage, Asia may look to other markets, like Australia or Spain, to satisfy its demand for almonds.

Karam Singh Sethi was born and raised in Southern California. He recently returned home from teaching English in rural Malaysia on a Fulbright Scholarship.