Almonds, the beloved snack that recently overtook peanuts as the most consumed nut in America, 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 famously water-intensive crop, requiring more than a gallon of water 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.”
A significant 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.
