Spend Matters welcomes another guest post from Abigail Green of Mintec.
To fight the obesity epidemic, governments across the world are promoting health foods. As young professionals with higher disposable incomes are becoming more health-conscious, they turn to foods such as almonds for snacking. Almonds are widely consumed as a health snack food, as they are high in vitamin E and consist of mainly monounsaturated fats – the good kind of fat!
However, there are growing concerns about almond availability. The US is the world’s largest producer of almonds, responsible for approximately 80% of the world’s supply. For the 2013/14 season, US production has been forecast down 2% year-on-year to around 0.8m tons. As a result prices have risen sharply, and are currently at levels not seen since 2005. While production is not down sharply on 2012/13, there are several factors that have helped support rising prices.
Firstly, the falling number of honeybees has caused extra costs to almond producers. The bee population has fallen at a sharp rate over the past 10 years, with 30-40% of US honeybee colonies being under pressure during 2012/13. The phenomenon has been termed “colony collapse disorder,” and with no current scientific explanation or remedy, declines are expected to continue. It is common practice for Californian almond producers to pay bee keepers from across the US to bring bees to pollinate their orchards, and now as hive numbers dwindle, this has become more expensive. Consequently, costs for almond producers are rising.
Secondly, earlier in 2013, the initial forecast estimate stated production would be up year-on-year, closer to 0.85m tons. However, once harvesting had begun, this figure was revised downwards, surprising the market. While yields were excellent and the weather had been good during development, the size of the almonds was down on previous years, causing concern that supply of larger-sized almonds would be restricted. There are differing opinions on why this has happened, including a shorter bloom period and last year’s drought affecting the trees more than previously thought. However caused, prices for all almonds have risen, but the larger size prices have risen more sharply.
In addition, consumption of health and convenience foods in China has increased sharply over the past decade, with Chinese import figures of shelled almonds up from 30,200 tons in 2008/09, to 150,000 tons in 2012/13, and imports expected to continue to rise in 2013/14. Demand from Europe for Californian almonds is also expected to rise this year, as the crop in Spain (Europe’s largest producer) has suffered from dry weather, and current indications suggest production will be, at most, a meagre 30,000 tons. That is a 50% fall y-o-y and European buyers are expected to look to the US to fill their contracts. These factors have caused a rise in global demand that the rate of production has been unable to match, causing prices to gradually increase.
The almond market therefore faces many challenges in the coming months, and with demand currently remaining at high levels, prices are expected to continue to climb until activity for the 2014/15 US crop gets underway next spring. For the meantime, it looks like the cost of being healthy just got a bit more expensive!