Nov 3, 2022Time for a hard look at walnuts: cost and expense considerations
Current tree crop economics are tougher now than at any time in the last 20 years. The outlook is not encouraging.
Costs are way up and may not ease anytime soon. Net acreage is up, sustaining market volume and soft pricing. Labor is hard to find, and expensive if found, while labor-saving solutions often require major capital investments. Water, if you can get it, will most probably cost more over time. More water per acre will be needed for good crop health and production if average temperatures continue to rise. The way forward to a better future is not clear. All is not lost (despite how this paragraph reads), but forging ahead with the same practices and expecting a natural return to better times is looking like a long shot.
Given all the above, this off-season should be a good time to take a particularly hard look at your operation. Every farm is different, so solutions — and especially decisions — must come from inside the operation. However, basic guidelines for finding the best way “out of the woods” follow four simple steps: stop, think, observe and plan.
Stop Block out some time on the late fall/winter calendar to think, observe and plan. If time is not set aside, the final planning may be incomplete or not done at all.
Think about the current state of the operation. Use the most recent UC Davis Cost of Production studies to build a spreadsheet, entering past and/or projected costs and income for each orchard. Consider production history along with soil salinity and irrigation water quality trends when evaluating the production potential of an orchard.
Observe Talk with neighbors, friends, PCAs, industry members, your local University of California farm advisor, bankers, and others to see what they think about the future. Read up on world energy and trade trends. Compare what is heard and read to the reality of your situation. Attend industry meetings. The following steps are just examples. The North Valley Nut Conference will be held on January 19, 2023, in Chico. Check the Events page (sacvalleyorchards.com) for upcoming meetings. Read about world trends in energy and fertilizer (examples include the Midwest and California). Be a healthy skeptic but look around.
Plan for several futures (costs, water, production, prices) as nothing is certain. Prepare to move into 2023 with flexible practices but a solid, realistic goal. With the current world and local conditions unimaginable just a few years ago, it may be necessary to make previously unthinkable decisions. Go big? Sell out? Lease? Shift crops? Limit personal spending? Invest in technology? All options should be on the table. This is a difficult process, but one that should lead to a better outcome than just plowing ahead.
Best wishes to all as the holidays approach.
– Franz Niederholzer, farm advisor, University of California