“I would love to stay in the dairy business forever, but I had to have a secondary plan,” says Melvin Simoes, a Tulare, Calif., dairyman who is converting 160 acres to an almond orchard.
More of the state’s dairies are diversifying into permanent crops.
The future will look a whole lot different for California dairy producer Melvin Simoes.
Two of Simoes’ 80-acre blocks near his Tulare, Calif., dairy were transformed late last year by ground-digging equipment, 4'-deep trenches and PVC irrigation pipes. This spring, those 160 acres—normally devoted to corn silage and wheat to feed his dairy herd—will be filled with young almond trees.
Although he’s never grown almonds or any crop other than feed for his dairy, Simoes has embarked on what he calls a "nerve-wracking but exciting" venture.
"Dairying is not what it used to be," says the 49-year-old dairyman. "I want some financial security. I want to leave my children something they can manage."
Simoes is one of a growing number of California dairy producers who are diversifying into lucrative permanent crops like almonds, walnuts, pistachios and grapes.
"Since 2009, the dairy numbers have just not been lining up," he says. "I was in denial of just how bad it is. Now we’re all weathering the storm. Even some of the top dairymen are going out of business. I would love to stay in the dairy business forever, but I had to have a secondary plan."
In California farming circles, it’s hard to ignore the success of almonds. The Golden State grows virtually 100% of the nation’s supply and 80% of the world’s almonds. In 2013, the state reached an all-time high of 810,000 acres for producing almond trees. Only hay production takes up more acreage in California.
Increasing global demand for the nuts has absorbed the ever-larger crops, and prices have remained strong. The 2013 farm-gate price for almonds rose to $2.58 per pound, the second highest in 10 years.
For dairy farmers, almonds also offer other attractions. The orchards use less water than feed crops and don’t come with increasingly complicated manure management regulations. The nut harvest occurs once a year, not every day. And almonds can head straight into storage for shipment as needed.
"Most land being sold [in the San Joaquin Valley] is being purchased by people who intend to plant trees or some type of permanent planting," says Cornell Kasbergen, who owns a large dairy near Tulare. "Many dairies are being removed. Land being farmed to grow feed for dairy cattle is not the highest and best use of land today. I have had some dairymen tell me that for the dairy to compete with permanent plantings, milk would have to be more than $25 per cwt."
Even with California’s expanding almond production, prices continue to rise on increasing global demand for the nuts.
Kasbergen himself plans to plant trees in two years.
Some 80% to 85% of the state’s dairies are looking at or are already diversifying into permanent crops, says Tom Mendes, a longtime dairy producer who exited the industry about a year ago when he sold his facility. His property is now being converted to almond production.
"If you’re a dairy that’s not diversifying, your chances of staying in the dairy industry will be very small," Mendes says.
The transition from feed crops to trees and vines is likely to impede the state’s dairy competitiveness. "Having less acreage devoted to feed crops will drive up costs," Mendes says. "That means dairies are not going to expand here, and much of supplying world markets with dairy products will come from other states."
- February 2014