Sud­denly al­monds are in­ex­pen­sive again

Prices for the nut have fallen by about 25 per­cent since late 2014.

The Denver Post - - BUSINESS - By Roberto A. Ferd­man

Al­monds, the beloved snack that re­cently over­took peanuts as the most con­sumed nut in­Amer­ica, might have got­ten a lit­tle too pop­u­lar for their own good.

Af­ter years of steady price in­creases, thanks in large part to sky­rock­et­ing de­mand, the pro­tein-packed nut sud­denly has be­come much cheaper. Al­mond prices, which reached record highs early last year, have fallen by roughly 25 per­cent since late 2014.

“They dropped a lot faster and fur­ther than any­one had ex­pected,” to about $3 per pound, said Ver­non Crow­der, who is a se­nior an­a­lyst Radobank, a food and agribusi­ness re­search firm.

The price plunge is putting a strain on the in­dus­try. And it’s aso ex­pos­ing the com­pli­cated and of­ten un­pre­dictable cir­cum­stances that dic­tate why cer­tain nuts cost what they do.

Be­fore al­mond prices fell, they rose to record highs, sell­ing for as much as $5 a pound for pre­mium va­ri­eties. The rise had a lot to do with de­mand, which grew by more than 200 per­cent be­tween 2005 and 2012.

But it also had to do with wa­ter — or the lack thereof.

Al­monds are a fa­mous­ly­wa­ter­in­ten­sive crop, re­quir­ing more than a gal­lon ofwa­ter per al­mond. And Cal­i­for­nia, which is re­spon­si­ble for pro­duc­ing roughly 80 per­cent of the world’s al­monds, has en­dured a crip­pling drought in the past few years.

For al­mond grow­ers, this hasn’t been a huge prob­lem. They sold fewer nuts but made up for the har­vest short­falls by sell­ing them at a pre­mium.

They also passed on the cost of the ir­ri­ga­tion needed to com­bat the drought to con­sumers. And ev­ery­one paid the ex­tra bit, at least at first.

In the case of al­monds, vol­ume sales fell by about the same amount as the crop yield fell, but dol­lar sales re­mained strong.

But then the Amer­i­can dol­lar be­gan to strengthen, flex­ing its mus­cles against for­eign cur­ren­cies, turn­ing high but man­age­able prices into headaches for any­one pur­chas­ing al­monds abroad. Be­tween 60 per­cent and 70 per­cent of al­monds pro­duced in the U.S. are ex­ported. The vast ma­jor­ity go to Europe and China.

“It was un­for­tu­nate for the in­dus­try,” Crow­der said. “Buy­ers didn’t re­spond well to the high prices. We know some prod­ucts were dropped or switched out. Some mixes were ad­justed to use less al­monds.”

Asig­nif­i­cant por­tion of al­mond sales goes to food man­u­fac­tur­ers, who chop, slice and crush them into var­i­ous candy bars, trail mixes, cakes, pie crusts and other desserts.

And this is where com­pa­nies, re­act­ing to swollen prices in re­cent years, have skimped.

To­tal ship­ments of al­monds fell by 12 per­cent last year, while ex­ports fell by 15 per­cent, ac­cord­ing to the most re­cent num­bers re­leased by the Al­mond Board of Cal­i­for­nia.

Then, last year’s crop turned out to be far big­ger than ex­pected.

With ex­tra al­monds on hand, thanks to the un­ex­pected glut, and even fewer peo­ple to buy them, the in­dus­try has had to sell its nuts for less.

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