Perhaps you were musing to yourself, “What could coax OtPR out of retirement?” What could it be? A pressing new dilemma? An insightful new book to discuss? A cogent new analysis? No, my friends. I have not returned for any of those. I am only here for a minute, and only here to point out that I was so fucking right. The almond bust is upon us and will cause the ag counties all of the difficulties I described.
Nine years ago I wrote this and this, describing exactly what we are seeing today. Had those been taken seriously by the counties, they’d have averted the pain they’re about to go through. Sadly, I’ve come to believe that there is no local nor state political will to avert bad outcomes by advance planning. We are going to do this the hard way, no matter how foreseeable the crashes. Well, I will get some decent gloating out of it and I am petty enough to enjoy it.
On the public record 
Hey it’s nice to hear from you.
Of course you were right.
Jill
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Well, well, well. I drive through the Central Valley frequently – and the thousands of acres of brand new Almond orchards in the South end and along the 46 near Lost Hills had me shaking my head.
Now what?
Yyyyup. And now here we are. The water savings may be phenomenal.
I agree that everyone walked willingly to the cliff and the consequences are brutal. But how do you prevent it in a capitalistic system. Should the counties have limited almond acreage? And how would they crystal ball the saturation point and coordinate with dozens of other CV counties to not cross it. I sure wouldn’t want to be a Kern County supervisor telling landowners what they can grow.
You simply regulate the industry, as we do with every industry. You simply enforce the existing laws. You decide the fate of California is more important than running for governor or president. And yes, you absolutely limit and define what CA wants to grow with its water. What we use our water for should not be decided only by those that are becoming billionaires with it. Funny how billionaire capitalists demand freedom to do whatever they want, but want to suck up everyone else’s water. Freeloaders! Stuart Resnick and his fellow billionaires are using our water to get rich.
Indeed. But you also forsaw endless drought. Moderate your gloating please.
THANK 👏 YOU 👏
Heh, I was just thinking how OTPR oughta be feeling pretty vindicated these days and here you go riding the gloat float down the Friant-Kern canal.
there is a solution…force the SWRCB to uphold the law…the 2009 Delta Reform Act; the Public Trust Doctrine and the California Constitution Article 10 Section 2 Against Waste and Unreasonable Use. A Benefit/Cost analysis including the economic value of non-market public trust resources will show it is feasible and the ONLY way to fix the problem.
OK. Lets whoa up for a minute and actually look at what the article says.
One of CA “largest almond growers” goes bankrupt. Largest? How do we know? That isn’t that many acres. 8,600 statewide. Compared to 1,500,000 statewide. So Trinitas, if they have every acre planted to almonds (which no one does) is %0.57 of the acreage in the state. Which, I agree is too high, but I think we should caution ourselves against thinking this is some sort of watershed moment where FrontPoint finds neighborhoods of empty houses…
Trinitas began buying land in 2015. So, they were late to the party. They had to pay record high prices for marginal almond ground. There’s been some good almond ground developed since 2015, but it was expensive to make productive. Most of the ground planted after 2015 (except guys renovating old orchards) was far from prime ground. It was these investment groups who don’t know good ground from bad.
One of the orchards they developed was in the delta. Sure, it has good water rights. Riparian. But it’s also below sea level. They had to bury drain tile deep, and then pump it 24/7 in order to keep the water table low enough to grow trees. That’s expensive up front, and expensive to maintain. There’s a reason no one else had developed it first. Real farmers are smarter than that.
They also focused on “young almonds”. Sure they did. Because productive 10 yo almonds are already locked up. Stuff that someone planted in the hills without dealing with hardpan, or drainage, or high water table, or being flood prone, that’s what was for sale. It was planted just to sell to these kind of investors.
The rest of it is merely talking the usual aspects of agriculture. Inputs costs are going up, price for commodities is going down. Shocking… Anyone who though almonds would stay at $4.00 forever was clearly delusional. The best thing that could happen is for these speculators to go broke and get out of the market. Leave it to those who are trying to make a living in agriculture, not speculators. That’s never been good. When you see that kind of money explode into any sector, it’s time to get out… the crash is imminent.
Again, I don’t think this is the beginning of the crash, but as time goes on we will see more of this. Kinda like the Big Short, we will see the riskier, marginal farms (in the Big Short the BBB’s) defaulting first. Question is how much are they intertwined with good farms? (The AA’s) Unlike the housing market I don’t see them being as connected. Many long time, and new but honest, farmers would be fine if these investment firms would get out of speculating in crops that support so many families in the Central Valley.
-BD
Those are all good points. OtPR
it’ll be a while before investors stop thinking they can be the next Resnicks.
Interesting regarding the Delta almonds, I have been wondering how those recent Delta almond plantings would do, and how many more marginal almond acres could be in similar situation. I think you are right. Most will be fine.
This is why I wish you’d keep writing. Your insight is so valuable for the rest of us.
Predicting that a tree will fall is a sure bet any day it’s just a matter of time. So is the nature of boom-and-bust farming in California where it has always been and will continue to be the arena of optimists, entrepreneurs, and gamblers. Particularly in purely competitive market structures like nuts, corn, soybeans, etc. It is a shame that with all your significant economic background you have mislead your readers into thinking that this one bankruptcy happened in some preordained vacuum. The truth is that the last three plus years of irresponsible, calamitous economic policy on the part of the federal and state governments played a significant part in this story. Why would you leave that out? Just ask any average Jane about her struggles making ends meet today in her family life or small business and amplify that by billions to see what it is costing large complex industries. Costs of inputs have skyrocketed beyond sustainability. Trade deficits with ag buyers like China are completely out of control with no end in sight. Government is still on the war path demonizing business with California being the number one anti-business state in the Union. Anyone who can pull up stakes has done it or is sure as hell thinking about it. Unfortunately, the poor out-voted farmer is stuck here, held hostage, government bureaucrats and farm unions banging on the front gate and shoving their greedy hands into her pockets any chance they get. Her property can’t be moved to Idaho or Florida, and you know it. The fact is California farmers (capitalists) have become the most efficient businesses in the world providing more food per acre than at any time in human history. They have employed all the sophistication of high-tech water management systems, robotics, automation, and manufacturing to produce the cheapest food ever. Just remember back to your first Econ 101 class. Government does not pay the bills, business, capitalists do. Oh, and you shouldn’t begrudge her a tidy profit either, she deserves it.
Respectfully,
Dirtwater