Almonds

Originally published September 22, 2022. This article was edited to meet broker-dealer compliance guidelines in April of 2023.

In the past two decades, almonds have been transformed from a simple, protein-packed snack to a dietary staple fueled by a rise in vegan and vegetarian living. Related to stone fruits rather than other nuts, there’s more to these healthy morsels that are more in demand than ever.

Contents

• Intro to Almonds
• Major Almond Growing Regions
• Major Almond Varieties
• Almond Life Cycle
• Almond Market Size
• Almond Uses and End Markets
• Almonds and Water
• Final Thoughts

Intro to Almonds

Not truly a nut, almonds are the edible kernel of the fruit of the almond tree. The drupe (the growing fruit of the almond tree) looks like an apricot until it is mature. When it ripens, the outer hull splits, curling open to reveal the almond that we know.

In the northern hemisphere, almond trees send their sweet fragrance across the orchard as their light pink or white flowers start to open in January, just the first step on the road to harvest that begins in August and ends by October.

So how do almonds grow?

Major Almond Growing Regions

Where do almonds grow? Native to southwestern Asia, almonds have found a home in California, which produces the entirety of the commercial supply in the United States.

Approximately 7,600 commercial growers are spread out across over a half million acres in the “breadbasket” of the San Joaquin and Sacramento valleys. These climates resemble the Mediterranean, with hot, dry summers and foggy, rainy winters — perfect for almond cultivation.

Major Almond Varieties

Although California cultivates more than 30 different varieties of almonds, 98% of the yield is represented by just 13. Of those, the top five are:

1. Nonpareil
2. Monterey
3. Independence
4. Butte/Padre
5. Wood Colony

Nonpareil is more than 120 years old and accounts for ~40% of the crop on its own, commanding a premium price because of its market dominance.

Typically, orchard plantings will be split between two varieties with similar bloom cycles, with one variety functioning as a pollenizer. The other four varieties on the list above have been developed as pollenizer pairings to Nonpareil.

For marketing purposes, commercial almonds are also categorized by size, shape, shell type, and use. The primary three are:

• Nonpareil: This variety has a commercial type all its own and is classified for the widest range of uses. With a thin outer shell and smooth kernel, Nonpareils are easily blanched and cut for processing.
• California: Encompassing many varieties including Monterey, Independence, and Wood Colony, almonds in this category are generally “blanchable.” They’re well-suited for most processes but primarily used in manufactured products. California almonds’ size and shape can vary depending on the variety but are generally narrow and range from shorter kernels to long and slender.
• Mission: Mission almonds are small with fatter kernels and dark brown, wrinkled skin. Butte/Padre and other varieties are marketed under this classification for roasting and use in candy.

Almond Life Cycle

Chill Hours

Looking at the bare branches of a quiet field of almond trees in the winter, you might think that there’s nothing significant going on. But an almond farm is not inactive from November to January. During this period of dormancy, trees might lose their leaves but almond orchards are capitalizing on the cooler, wet winter of California.

Almond trees, like most perennial crops, need to meet a chill hour requirement during this time period for proper bud development and energy come bloom season. The ideal temperature is between 32°F and 54°F, with 45°F being the optimal temperature for achieving these chill hours. Almonds need 200-300 chill hours during a winter season.

Pollination

As trees move out of dormancy, buds appear on branches, the first sign of life. The almond orchard is at its most picturesque from mid-February to mid-March. This is when flowering trees are surrounded by the buzz and activity of beehives, stationed in the almond orchard to help pollinate the trees.

Almond trees are almost entirely dependent upon bees for pollination, as the male and female reproductive structure of almonds is reliant on their help to carry the pollen from flower to flower. This is a symbiotic relationship between bees and trees, as the bees use the pollen and nectar flow as their first food after a long winter. Honey bees are a critical part of the almond lifecycle — every almond produced is because of their hard work in the spring.

Well-pollinated almond kernels work to reach their full size from March to June. The shell hardens and the fuzzy outer hull protects it and its valuable contents. As spring rains begin to dwindle in California's hot, dry summer, irrigation begins.

As summer wears on, the outer hull cracks, exposing the kernel and helping it dry. Eventually, the hulls lose their fuzzy green hue, turn straw-yellow, and open wide.

In mature nuts, the weight of the kernel generally accounts for 27% of the nut’s total weight, the hull for 54%, and the shell 19%. While consumers only eat the kernel, the hull and shell are important coproducts used in livestock feed.

Almond harvest starts in August and runs through October, with mechanical shakers sending the nuts to the ground. The almonds dry in the open air for 7-10 days before a sweeper organizes them in a row. It’s easy to vacuum the almonds up and transport them to their next stop in processing.

Because every variety is harvested separately, this harvesting process can be repeated multiple times at a single almond orchard. Trees then head into their dormant period, and the cycle begins again.

How long does it take to grow almonds? Almond trees take about 3 years to begin producing fruit. They have a productive life of approximately 25 years. Even as an alternate-bearing fruit (meaning some years show high yield followed by a low- or non-yielding year), a healthy tree can yield 50 to 65 pounds of almonds annually.

Almond Market Size

California produces over 75% of the world’s almonds, with Australia and Spain taking the next two spots at 8% and 6%, respectively. Almonds are the top agricultural export out of California, and in terms of dollar value and acreage, almonds are a top tree nut crop in the U.S.

Since the 1990s, California’s yield has quadrupled, with total acreage growing and production value reaching $5.6 billion in 2020. Currently, however, almond production is falling after seeing a potential production peak in 2020. California’s almond crop was down 7% year over year in 2021 and has since fallen another ~11% year over year in 2022.

Almond Uses and End Markets

The U.S. almond supply is heavily export focused, with approximately 70% of production marketed across the globe. The European Union receives ~30% of this total, while India imports ~16%.

At home and abroad, almonds are used as a raw material for baking, cooking, and beverages. They are also used in prepared foods and are being developed as a healthy alternative protein to meat.

Almonds and Water

How much water does it take to grow almonds? Almonds are a water-intensive crop—as an orchard matures the typical water demand is roughly 42 acre-inches or 3.5 acre-feet per irrigated acre. This compares to other major California crops such as alfalfa (5 acre-feet per acre), rice (4.6 acre-feet per acre), irrigated pasture (4.1 acre-feet per acre), corn (2.8 acre-feet per acre), and vegetables (1.5 acre-feet per acre).

As location is the key barrier to entry for planting these perennial crops, the combination of the Central Valley’s unique Mediterranean climate with the historical availability of water has made California the world’s leading producer of almonds, as well as other high-value crops.

Historically, water in California was believed to be widely available; growers utilized groundwater resources without constraint due to certain crops’ dependency on the resource. This has begun to change as water scarcity and groundwater depletion has become increasingly evident in parts of the state.

In 2014, California passed the Sustainable Groundwater Management Act, which established a comprehensive policy approach to the sustainable use of groundwater resources. SGMA, as it is known, provides for infrastructure and groundwater usage caps based on the status of a given groundwater basin’s overdraft.

The goal of SGMA is to address currently overdrawn basins and bring them into a state of sustainability in which inflows (recharge) match outflows (pumping) on a long-term basis. SGMA has major implications for all of California, including almond growers, strictly regulating how much groundwater they are able to use.

The implementation of SGMA regulations presents a potential supply constraint for the U.S. almond industry: Acreage that does not have reliable surface water resources may have to be fallowed in the coming years.

Alternative Almond Uses

It is worth noting that each tree is not just a single product. While humans enjoy the plant-based protein of the actual almond kernel, livestock consumes the hull and shell, which is the casing that protects the kernel. California has 1.7 million dairy cows, and the state produces more milk than any other.

Typically cows consume silage from corn, distillers’ grains, soybean meal, canola, and roughage, mostly from alfalfa hay. Alfalfa is the most water-intensive crop in California, and the fiber content, sugars, and protein from almond hulls make an excellent substitute for alfalfa hay.

In addition, almond orchards may have a positive climate impact in that the trees themselves are capable of storing carbon in the soil, and removed trees and biomass are often used to generate alternative energy. Managed properly, orchards can potentially be harnessed for carbon sequestration at every stage of their lifecycle.

Final Thoughts

As consumers add plant-based sources of protein into their diets, demand for almonds is still growing. Chances are, you have an almond product or two in your kitchen.

The California almond industry is a major player in global agriculture and in discussions about climate and sustainability. Take a look at our offerings page to keep an eye out for upcoming orchard investments.

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