Almonds

Almonds are grown in regions that experience a Mediterranean climate, providing mild, wet winters and calm, hot and dry summers.

Australia is one of only five locations worldwide with the right conditions for almond production (outside the Mediterranean Sea). Being located in the southern hemisphere, Australian almonds are harvested in the months of February to April which is counter seasonal to the Californian industry which typically harvests from August to October.

Global almond production 20151


1Source: Almond Board of Australia. US 2014 Crop Production figures as at June 2014

The industry is growing very rapidly in terms of production and value. In 2015, almonds were Australia’s number one horticultural export by value, representing more than a third of the value of all Australian horticultural exports. Australia exported almost 60,000 tonnes valued at over $740m in 2015.

The rapid growth in production has meant the supply of Australian almonds now far exceeds consumption by the domestic market. For every tonne of almonds sold in Australia, nearly three tonnes are exported.

Fifty countries now buy Australian almonds, with India being Australia’s largest overseas market. Almonds have long been a part of India’s culture, especially during festive periods and weddings. The Indian market has a preference for in-shell product, which is then hand cracked. European markets are also large importers due to their use of almonds in the confection industry.

Australian almond export destinations2

2Almond Board of Australia

As at February 2016, there were 31,115 hectares (ha) of almonds planted commercially across five major growing areas of Australia, predominantly along the Murray River corridor in South Australia, Victoria and New South Wales (NSW).  The commercial life of an almond tree is considered to be between 25 and 30 years with trees bearing nuts in their third year, reaching full production at seven to eight years.

The Rural Funds Group (RFF) is a significant holder of Australian almond orchards with around 1,800ha of mature orchards and 3,100 ha of orchards recently planted or under development on properties in the NSW Riverina. Around 1,200 ha of established orchards are leased to Select Harvests and 2,500 ha planted or under development are leased by Olam Orchards Australia, with the balance leased to RFM almond funds or RFM directly.

The Australian almond processing industry is dominated by four key players (data as at 2014):

  • Olam Orchards Australia, a wholly owned subsidiary of Singapore based Olam International, processing 40,000 tonnes p.a.;
  • Select Harvests, an ASX listed nut and health food company, processing 30,000 tonnes p.a.;
  • Almondco, a South Australian based horticultural co-operative, processing 30,000 tonnes of almonds p.a.; and
  • Nut Producers Australia, an almond processor which also specialises in pistachios, producing 10,000 tonnes p.a.

Three key factors provide a promising outlook for the Australian almond industry:

  1. Global demand for Australian almonds remains strong and will be supported by the recently signed Free Trade Agreements with Asian trading partners;
  2. The lower Australian Dollar in recent years has favoured Australian exporters as almonds are traded in US Dollars; and
  3. California (growing around 80% of the world’s almonds) continues to experience drought conditions despite some relief in 2015-16. The State faces long-term, systemic issues of unsustainable levels of groundwater extraction.

In contrast to California, Australia is internationally recognised as a leader in sustainable water resource management where water entitlements are regularly traded in transparent secondary markets. RFM calculates water requirements on a high security equivalent (HSE) basis, which takes into account the reliability of water entitlements. This provides RFF, and its lessees, with water security in respect to the ongoing operation of each almond asset.

The range of advantages outlined above make the Australian almond industry a suitable sector for the RFF property portfolio.

Sources

  • Almond Board of Australia
  • Almond Board of California
  • Agricultural Market Resource Center (AgMRC)
  • Select Harvests