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With rising prices, almonds seem to be digging out of a downcycle that has plagued the industry for the past four years. However, as with many other agricultural products, it appears that almond farmers will continue to be squeezed financially in the coming year due to market uncertainty and high input prices.
The 2024-25 crop year, which spanned from Aug. 1, 2024 to this July 31 saw the farm price per pound of almonds increase above $2 per pound for the first time in five years, reaching $2.14. Rising prices were attributed mostly to the steady chipping away of an oversupply of almonds, with supply and demand becoming more in balance. As we move into the 2025-26 crop year, prices have continued to climb upwards.
Underlying the increased prices are several years of reduced yields and steady demand. In addition to weather, reduced yields have been brought on by water scarcity, reduced inputs, and pest pressure. While total almond acres have declined, bearing acreages have continued to climb slightly as trees planted several years ago begin to mature. However, there have also been increases in orchard removals, stressed orchards, and abandoned orchards – which should result in a reduction in bearing acres within the next few years.
Trade Remains Resilient
Almonds are one of the U.S.’s most export-reliant agricultural commodities: 75% of almonds exported to foreign destinations in 2024-25. California grows approximately 80% of the global supply of almonds, so no matter where a consumer is in the world, it’s likely that he or she is eating a California almond. Despite the trade policy uncertainty of 2025, total almond exports have remained steady due to market diversity – with exports to over 100 countries.
From 2023-24 to the 2024-25 crop year, almond exports to China and Hong Kong fell by over half with a decline of 55.2 million pounds of almonds. Five years ago, exports to China and Hong Kong were triple what they are today. California almonds, which currently face a 35% tariff in the Chinese market due to several layers of retaliation, have been mostly replaced by Australian almonds, which enter China duty-free.
However, exports to various other countries have increased to compensate for the major declines in the Chinese market. Of the 71 countries that imported over 500,000 pounds of California almonds in the 2024-25 crop year, 49, or 69%, saw an increase in imports. India remains the top export market for California almonds, purchasing 423 million pounds last year. Over the past five years, exports have shifted away from East Asia and Europe towards India, the Middle East, and Southeast Asia.
The almond industry has also avoided a worst-case scenario on trade in 2025. Both Canada and the EU threatened retaliatory tariffs on U.S. almonds, but to this point they have not entered into force.
Despite the administration applying up to 50% tariffs on imports from India, the top U.S. almond export market has not retaliated. In fact, India lowered a domestic tax on nuts from 12% to 5%, creating a more favorable tax situation for almonds.
Other wins on trade have included Turkey removing a 10% retaliatory tariff dating from 2018 ,and Japan removing a 100% inspection rate for California almonds.
In the year to come, the EU has a proposal that would create a duty-free tariff rate quota of 500,000 metric tons for U.S. tree nuts, a substantial amount as 2024 was a record tree-nut export year to the EU at 545,873 metric tons. While exports have remained steady, the back-and-forth trade policies have led to “hand-to-mouth” buying patterns, with buyers reluctant to do big, long-term purchases.
On the other hand, the domestic market, the most important single market for almonds, has been in decline. Domestic almond shipments fell 8% in 2024-25 to 671 million pounds, the lowest level in 10 years. In the first four months of the 2025-26 crop year, domestic shipments fell 19%, indicating softening demand. The state of the general U.S. economy will play a crucial role in determining demand for almonds, as consumers may reduce snacking in times of economic distress.
Input costs squeeze margins
While the increase in almond prices has helped the industry, soaring input costs are heavily impacting profit margins as well. Input prices have risen substantially, as indicated when comparing the operating costs regionally between the 2019 and 2024 UC Davis cost and return studies. While these studies are not perfectly comparable, they are indicative of the large leaps in input prices in recent years. Depending on the region, input prices increased between 27% and 40% over six years, driven primarily by increased cost for irrigation, pest control, and interest rates.
Moving forward, input prices may rise further due to tariffs on imports for products or component parts for fertilizer, pesticides, and machinery. Continued increases in labor costs also appear to be influencing input prices.
New challenges are also arising, namely in the form of the roof rat, a pest that has wreaked havoc in the southern and western San Joaquin Valley orchards. Long-term, structural issues with water availability will continue to push the costs of irrigation up and lead to the removal, stress, or potential abandonment of almond orchards.
Looking ahead, it seems that almond farmers will have to continue to make tough decisions regarding their farming operations. But, due to the steadying of almond supply with reduced acreage, it appears that the worst of their downturn is over.
Betty Resnick is an agricultural economist based in Monterey, California.
