Get ready for really expensive almonds

Any takers?
Any takers?
Image: Reuters/Naseer Ahmed
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Bad news for almond lovers: A growing pile of setbacks is pinching global production and sending prices through the roof.

The wholesale price of almonds is already up by 10-15% in the US, and by as much as 70% in Germany (paywall) since last year. While those price hikes haven’t yet been fully reflected in the retail price of almonds, that’s likely to change come next year.

At the heart of the problem are both shrinking supply and growing demand.

Californian farmers, who produce 80% of the world’s almond supply, are having a tough time with their crops. Regional droughts have scaled back this year’s output, and the waning population of bees, which help pollinate nut trees, is forcing farmers to spend a fortune on renting beehives. As we pointed out before, 60% of the US’s bee colonies are now being used to pollinate almond trees. Spain’s almond-growing regions, which produce an additional 6% of global supply, have seen their output fall, too, on the heels of heavy rains.

The world, however, seems to be growing fonder of the protein-rich nuts by the day. Almond consumption has been growing in the double digits each year for over four years now, Ashok Krishnan, head of the edible nuts business at commodities trader Olam International, told the Financial Times (paywall). A lot of that growth is due to marketing that touts almonds as a health food, but demand from China is a big factor too: The Chinese market for almonds has grown by over 100% over the past five years, and will be nearly 100,000 tons (91,000 tonnes) in 2013/2014, according to data from the Specialized Committee for Roasted Seeds and Nuts of China National Food Industry Association.

The outlook for next year isn’t great. “Global almond production for 2013-14 is forecast lower while consumption is expected to continue rising, drawing stocks down sharply, particularly in the United States,” according to the USDA (pdf). US wholesale almond prices have already doubled over the past five or so years. If demand continues to soar, and California continues to suffer amidst a disappearing bee population or experiences another unexpected drought, the coming five-year spike could be even more drastic.