AFR Article - outlook for Australian almonds

Victorian almond farmer Neale Bennett has plenty to smile about at the moment after US President Donald Trump’s trade war with China sent prices rocketing to the highest in a decade.

Beijing’s punitive tariffs slapped on the US – and more specifically Californian almond producers – has allowed Bennett and other farmers to start charging China huge premiums for their produce.

Neale Bennett and other almond farmers have been making the most of the spike in Californian prices by charging a hefty premium of their own. Excitations

While China was already a big buyer of Australian almonds thanks to a free trade agreement between Beijing and Canberra, the trade war has effectively locked out California, which provides 80 per cent of global supply.

That has provided Australian farmers with a rare opportunity to steal market share and bolster their pricing power as Californian growers grapple with the 35 per cent tariff slapped on by Beijing.

“We’ve got a perfect storm at the moment,” said Tim Jackson, chief executive of the Almond Board of Australia. “We’ve got a trade war, which is hampering the California almond industry from selling at a competitive price into key markets like China. We have a low Australian dollar, and the global crop has reduced.”

This month, the wholesale price for a non-pareil variety – the most common type in Australia – soared to the highest in a decade, above $12 per kilogram, according to industry data. And early indications for this season suggest prices could rise by another $1 per kilo or even $2, depending on quality.

It is welcome news for Australian farmers following several years of doing it tough after prices took a hit from a glut in California and rising energy and fertiliser costs squeezed profit margins.

Profits on the up

“The price has shifted north because before, there was a lot of excess stock around the world,” said Bennett, who owns 18 hectares of orchards near Mildura, Victoria.

“So our profit margin will go up, which is good. We probably have about two years to get back what we had lost since COVID, when prices were down due to rising costs of production.”

Bennett’s harvest, which began in March, is expected to be down due to mild and wet conditions the previous spring that hampered the farm’s nutrition program. Still, he and other farmers have been making the most of the spike in Californian prices by charging a hefty premium of their own.

Stratamarkets, which tracks the global tree-nut market, said Australia was achieving a 10 to 15 per cent premium to the US price.

“After Trump’s tariffs last month, Australia was even trying to get more of a premium out of China,” said Michael Easterbrook, managing director of the US-based data provider.

While there are reports that suggested that the premium could be as high as 40 per cent, Easterbrook said he was unsure of the outcome.

A 7 per cent decline in the Australian dollar since September has also helped, making exports more attractive and boosting competitiveness.

Over half of Australian almond exports are going to China, but there’s a good chance to steal market share from other regions, including the European Union, which is threatening to impose heavy tariffs on US almonds in retaliation for Trump’s policies.

Almonds are one of Australia’s most valuable horticultural crops, alongside avocados, grapes, and citrus. Last season, they generated $762 million in exports, up from $570 million the year before, according to Australian horticulture data.

“This year is expected to be one of the largest crops on record,” said the ABA’s Jackson, noting that many first-time buyers are likely to rely on Australia as an alternative source.

The huge lift in Australian almond prices has not as yet flowed through to supermarket shelves. Retail prices at Coles have been stable in the past 12 months at $17.33 per kilogram. Woolworths is offering the same price, but Aldi’s Forresters natural almonds are the most competitive at $14.65 per kilo.

However, Woolworths and Aldi declined to provide information about whether their prices have moved.

And it is not just almonds that are gaining market share. Australia’s native macadamia nuts are also gaining traction.

Mostly grown in Queensland and NSW, macadamia exports shot up to $227 million last year, a big jump from $146 million the year before, driven by strong sales to China and Vietnam.

And the future looks bright – production is expected to nearly double by 2029, according to Clare Hamilton-Bate, chief executive of the Australian Macadamia Society.

While the rise in macadamia and almond exports is good news for horticulturalists and the broader economy, there are bigger concerns looming over farmers, including gaining access to water.

One major worry is the federal government’s water buyback program, which is aiming to recover 3200 gigalitres of water rights from agriculture by 2027 for environmental purposes.

For almond growers in particular this is a big problem because the trees require a steady water supply year-round.

“It’s a major concern,” said Bennett. “There’s not as much water in the market that can be purchased, and demand for food production is going up.