Looking to Reduce Expenses? Don’t Cheat on the Essentials, Say Experts
For the first time in two decades, almond growers in 2020 faced significantly lower prices. Coupled with increased input costs, some may have seen a net loss on the year’s profit and loss sheet – prompting a closer examination of all operating costs for the coming growing season. Calculating the right mix of inputs to maintain profitability while also ensuring long-term orchard health is a difficult balance, and such was the subject of a panel discussion last month at The Almond Conference 2020.
“In difficult times, we hope to hear about a silver bullet that will save costs and maximize profitability,” said Gabriele Ludwig, director of Sustainability and Environmental Affairs at
the Almond Board of California (ABC) and moderator of the “Optimizing Orchard Profitability” panel. “What we heard during our panel discussion is that growers really need to focus on the basics, or what they know works, really making sure they know how to execute for their particular situation.”
The panel of experts included Franz Niederholzer of the University of California-Agriculture and Natural Resources, Bill Brush of B&B Consulting, Mike Griffin of Blue Diamond Growers, and Scott Severson of Mid Valley Ag Services. This group represented more than 100 years of combined almond growing experience.
“Our panelists made it clear in their opening statements that managing water, nutrients and pests can’t be ignored,” Ludwig said. “Even in lean times, you must have a longer-term vision for how you manage the orchard, and if you short something this year to save costs, you’ll pay for it down the road.”
Cutting back on water isn’t an option
Brush noted that one of the first things he does when evaluating cost savings is focusing on the areas that can’t be cut.
“Number one is always water,” Brush said. “That’s the key, not only to the life of the plant and keeping it actively growing, but maximizing production. I’ve seen people try to reduce irrigation by up to a foot per acre. Research has shown that over a 10-year period the average yield reduction was 800 pounds per acre by moving down from 55 inches to 43 inches.”
Niederholzer concurred, noting that understanding tree physiology and water’s role is critical.
“Flower buds start to develop the summer before they bloom the following spring, so growers are farming two crops starting in August every year,” Niederholzer said. “Research suggests that flower numbers are more important to yield than nut set. They’re both important, but yield is more sensitive to flower numbers: water stress during the summer is going to impact flower numbers the next year because that’s when the flowers start to form. Good irrigation and nutrition deliver balanced vegetative growth and replace spurs to maintain good flower numbers and yield potential year in and year out.”
Griffin and Severson echoed the importance of water, noting that the dry winter season means that decisions about pre-irrigation need to be made now.
“Pre-irrigation or a wet winter does wonders when we hit those real hots spells in August, so getting water down into that deep profile is critical, and you don’t even get to see the benefit of that until late July or August,” Griffin said. “This last year we were thinking mites weren’t bad, and I think a big part of that is due to the deep-water profile, keeping the trees healthy and green going into harvest.”
Rethink your approach to costs
Brush encourages growers to think about practices in terms of their benefits rather than their costs.
“You don’t put on the spray because it’s $50 or $100 an acre. You put it on for the effect it gives you and that effect has to be proven over time,” he said.
“I always like to use the cost per day-of-control,” Severson said. “If you think of it in those terms, some of your more expensive chemistries may appear to be more costly, but they have a lot longer residual or better efficacy, so your actual cost per day-of-control can be similar or sometimes less than a less expensive chemistry. It’s very easy to be attracted to a lower-cost product, but sometimes that maybe isn’t the most economical approach on a certain pest.”
Niederholzer noted that successful growers are profit maximizers, not cost minimizers.
“You can’t skip somethings, otherwise you won’t have a marketable crop in the long run. The solution isn’t to cut to the bare bone and cross our fingers.”
Track your costs in detail
Griffin said a professor once told him that any time you have a big decision to make, you should run a spreadsheet.
“A spreadsheet is only as good as what you put together,” he said. “I list production and harvest costs in one group and then there’s also overhead costs we have to consider. Every time I hear somebody say a new product will cost $40 per acre, that doesn’t include starting up that tractor, the wear-and-tear on it, and paying somebody to drive that tractor, so you have to add that on. After talking to some growers, I’ve heard them say, ‘Well, geez, it’s more like $100 per acre for an application of any sort.’”
Ludwig noted that the UC Cooperative Extension produces a cost of production estimate for almonds, which includes input costs specific to growing regions throughout the state as well as irrigation methods.
“That’s where I went first when I put together my spreadsheet,” Griffin said. “They have it broken down very well and it covers all the different categories, so I advise that.”
Build a good team around you
According to Severson, one of the important components for growers looking to optimize profitability is the creation of a trusted team, such as PCAs, UC Cooperative Extension advisors, irrigation specialists and industry experts.
“Having a team help you build out and execute a plan gives you the best opportunity in your quest to maximize your return on investment on your operating expenditures,” Severson said. “Look at fellow growers, and if there are some producers out there that you admire, I’d ask them for referrals.”
Growers can also use the many – and FREE – resources the Almond Board of California has developed over the years, such as the "Almond Irrigation Improvement Continuum" and tools in the California Almond Sustainability Program (CASP) website, such as the Irrigation Calculator and the Nitrogen Budgeting Tool.
“ABC has a vested interest in growers’ economic security,” Ludwig said. “Improving their bottom line is something we heavily consider when choosing which research projects, partnerships and resources to invest in.”
Watch the entire panel discussion to learn more about optimizing orchard profitability, and view all sessions from The Almond Conference 2020 on ABC’s YouTube Channel.
