Temporary Insanity


I am reading today in the Mother Jones online magazine about the California almond industry. Almond production now has grown to the point that it is an ‘industry’ and Wall Street traders are beginning to swoop into the market for the newest commodity crop. If Wall Street is in it, can disaster be far behind?

The value, in dollars, to the California almond is second only to it’s dairy production. The most recent number is 4.8 billion dollars in 2012. If you are a long time reader of this blog, you will remember that I feel that money is a poor indicator by which to measure anything, and it is especially poor at measuring what the value of the almond crop is. For one thing, the almonds are very thirsty trees. The only time that California almond trees do not require watering is for the couple of weeks just before harvest, and that is to force the almond to ripen and so that the nuts don’t drop into mud when they fall. At all other times the trees require irrigation to survive. California almonds are grown in a desert. They take three times as much water as do the California grape crop grown right next door. Four almonds require more water to grow than a head of lettuce, and they require it every week for the life of the tree, not just when they are growing.

The number of almond trees being planted in California is actually going UP. Last year twenty five percent more new trees were planted compared to the year before. there are a lot of new players getting into the ‘almond game’, and they are all famous names.

Take TIAA-CREF, a New York-based retirement and investment fund with nearly a half-trillion dollars in total assets under management. The firm, which owns 37,000 acres of California farmland, claims to be one of the globe’s top five almond producers…Then there’s Hancock Agricultural Investment Group, a subsidiary of the sprawling Canadian insurance and financial services giant Manulife Financial. It manages $2.1 billion worth of farmland, mainly for large institutional investors like pension funds. Individuals can buy in—for a minimum investment of $5 million. HAIG owns at least 24,000 acres of almonds, pistachios, and walnuts, making it California’s second-largest nut grower.

Here is what the hedge fund managers say about why they want to get almond growing land and plant trees in a desert, where they currently have to rely on well water for irrigation, during the most epic drought in decades:

According to Howitt, the flow of big money into almonds is a “rational response” to two broad economic factors: low interest rates, which make safe investments like bonds unattractive, and that ever-rising demand from China.

We are eating and drinking almonds at an ever-growing rate. Almond milk manufacture and sales are taking off. I have advocated buying raw almonds and making almond milk in the pages of this blog, even though I knew that the almonds were a specialty crop grown fifteen hundred miles from my home. Normally I would not advocate a crop that I cannot get from a local grower, but I rationalized my decision at the time. Knowing that big money is going in and growing the amount of almonds grown by twenty five percent per year changes that math for me, and it should for you, as well.

The problems with almonds, first, they are responsible in a large way for the stress on the European honeybee. These bees are sent by semi-trailer from all parts of the nation to fertilize the almond groves. These groves are so big that natural bees could never get to the center of them to fertilize them without starving for all the rest of the year, because there are no other flowering plants anywhere close. The bees are manhandled and mingled with other bees for the almond flowers fertilization period, allowing mites and diseases to be spread and strengthened, and then trucked all over the country to spread whatever they caught even to wild bees. I recommend the documentary “More Than Honey”. Here is an excerpt:

Second, the almond crop is being watered using irrigation water when it’s available, but by using groundwater when it’s not. Groundwater in California is unregulated. Groundwater in California is also free, or essentially so, because all it costs it to sink a well and the electricity to pump it out. That means the most essential ingredient to an almond farmer costs him nothing. This gets back to the value of the almond. Is the almond worth it to California if it means that people and animals must go thirsty?

There’s a financial metaphor that helps to explain California’s dilemma. To live off surface water is to live off your paycheck. To rely on groundwater is to tap into your 401(k). Every draft you take is one that you won’t be able to replenish, at least not easily.

Third, there is the fact that irrigating water from deep wells causes salts that are dissolved in groundwater to be brought to the surface. The salts stay on the surface and have long been known to kill land for agricultural uses. Bankers don’t care about this like farmers do, so they will irrigate with well water and kill their fields for the ages, but they will have gotten their ‘return on investment’ by then. Dealing with the wreckage is the business of the State. This is what we call socializing risks, privatizing profits.

But an ongoing almond boom will bear ecological costs along with vast profits. As the water table drops from overpumping, the remaining water picks up higher concentrations of minerals from deep in the earth. When orchards are irrigated with such hard water, the salts build up in the soileventually killingthe trees. In Fresno County, I saw entire groves of almond trees looking yellow and wan, signs of salt stress. The land around Alpaugh is already too salty to support almonds; that’s why the pistachio is the nut of choice there.

Back before the Great Depression and Dust Bowl days of the midwest, the invention of the tractor caused a boom in farming there. Back then Wall Street bankers were buying up property from Texas to Montana and paying to have every acre tilled for wheat. Back then wheat was the almond crop of the day. Then it quit raining, the cheap money ran out, and the bankers went on to the next thing that had more ‘value’. The midwest was left with a Dust Bowl that lasted until the Civilian Conservation Corp of the New Deal administration of Franklin Roosevelt recovered the ability of the fields to heal themselves.

Don’t think history can’t repeat itself. The insanity over the California almond is temporary. The second they have to buy water, and pay Californians for the value of that raw ingredient then there won’t be near the market for buying new almond trees. Make them pay for water and they won’t put so many trees in that they cause a permanent water shortage for people and other uses. The second the money goes from the almond to some other place, the money men will abandon this venture and move to that one. They don’t care about almonds, or water, or bees, or you and me. All they care about is money.

For my part I have stopped making my own almond milk ever week, I have stopped eating my oatmeal every day moistened with almond milk. The wife is no longer making almond milk smoothies every day. We have went to locally grown milk from Shatto dairy here in Kansas City and she is eating kefir milk and kefir cheese made from it. I am eating home grown bacon and home grown eggs for breakfast. I have found a way to quit eating or drinking so many almonds, I hope you can, too. Together we can restore sanity to the California almond growers. There are more valuable things in the world than nuts, like water and bees.

About dcarmack

I am an instrument technician at the electric utility servicing the Kansas City Missouri metropolitan area. I am in the IBEW, Local 412. I was trained to be a nuclear power plant operator in the USN and served on submarines. I am a Democrat, even more so than those serving in Congress or the White House.
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