Cattle ranchers lock horns with almond investors
Kathy Smith actually heard the almonds coming before she saw them.
“It’s 11:30 at night, we are trying to sleep, and those tractors are ripping the land right outside our bedroom,” she recalls.
She woke up to find giant patches carved out of the grassy foothills above her house, making way for new almond trees.
Smith is rolling along in a golf cart, calling her 35 cows to dinner. “Come boss! Come boss!” she brays.
“That’s how my father did it. That’s how I do it,” she says. “And my mother used to do it by coming out and playing on her trumpet.”
Smith’s family has grazed cattle on this ranch near Oakdale, in California’s Central Valley since 1943.
Mural in Kathy Smith’s kitchen that visitors to the ranch have been signing since the 1940s. Her mother sketched the foothills around the ranch; today many of them are planted with almond trees.
But now she’s worried that an explosion in investor-backed almond orchards might threaten that livelihood.
Caifornia almonds have come under fire lately as a particularly water-intensive crop. But they seem to be weathering the drought very well. And some of the latest “farmers” to cash in on California’s almond boom are investors who are locking horns with cattle ranchers.
“I can’t tell you how upset I am to have to look over there every single day and see what’s happening to those beautiful foothills. It’s sickening,” says Smith, who had to drill a new well after her household well went dry four years ago. She blames almond growers for sucking down the groundwater.
“It was a shock to the whole neighborhood,” says Smith’s neighbor, Gail Altieri. “It’s almost like the Confederate army is coming towards the east, and we didn’t see their bushy little heads until they were there. ”
Altieri raises mules and cattle, and lives in a log cabin decorated with cowhides and saddles. Oakdale bills itself the “Cowboy Capital of the World.” But Altieri worries that almonds may threaten that way of life.
Gail Altieri and her horses and mules in Oakdale—the ”cowboy capital of the world.”
“The water’s disappearing,” Altieri says. “There will be no grazing land for the cattle. And if the cowboys don’t have cattle, how can this be the cowboy capital of the world?”
Altieri points to a well drilling rig high up on a hill above her house. She says it makes a loud booming noise and flashes bright lights into neighbors’ homes at night. She says investment companies growing almonds here have no concern for neighbors.
“They’re not farmers. They are investors. They are out for the almighty buck and for greed, bottom line,” she says. “Their product is an export. And also, it is a snack. It’s not a food.”
Paul Wenger, president of the California Farm Bureau Federation, is a local almond grower himself, and he doesn’t like the almond-bashing he’s been hearing recently. But he calls the current almond investment rush “bizarre.”
“We are seeing investors come from all over the world trying to get in on it. It’s kind of like the Gold Rush,” Wenger says.
The latest federal statistics, from 2012, classify 90 percent of almond growers as “family farms,” even though some of the operations are quite large. But investors are increasingly seeing almonds as a better bet than the stock market.
View of almond orchards planted on former cattle rangeland in California’s Central Valley.
“As a grower, I think they’re making foolish investments,” says Wenger. “They look at what the prices of almonds are today. They weren’t there 10 years ago, and they won’t be there 10 years from now.”
So just exactly who are these almond investors? Some are banks or investment funds like TIAA-CREF. Even the Michigan Municipal Employees’ Retirement System is getting into the almond game (albeit in Australia).
Near Kathy Smith’s house, the target of frustration is Trinitas Partners, a private equity investment company based in Silicon Valley that’s planted more than 10 square miles in almonds here.
Ryon Paton’s one of the company’s three principals. He says they have been unfairly painted as the bad guys for an operation they started eight years ago, before the current drought began.
Dan Kaiser, Dave Germano, and Ryon Paton of Trinitas. Kaiser and Germano are local farmers who help manage day-to-day operations. Paton’s background is in real estate investment. His company has bought up about 10 square miles in almonds near the California town of Oakdale.
“We understand real estate, we understand how to finance. We did not understand how to grow almonds,” Paton admits.
“But we did enough of our supply-and-demand studies to understand that supply was growing more slowly than demand worldwide, and if that imbalance continued, there would be not an outrageous Silicon Valley profit in almonds, but a reasonable, responsible profit in growing almonds.”
Paton takes me through the gates of his ranch to the top of a steep hill where you can see the peaks of Yosemite — and acres of almond trees planted in neat rows across the rolling terrain.
“Not all of what we produce goes overseas, by any stretch of the imagination, but we have customers all over the world because of our sustainable, responsible farming practices,” Paton says.
Typically, California farmers put more than 3.5 feet of water onto every acre of almonds they grow. Paton says his operation uses about three feet an acre because its scale allows it to use advanced water-saving technology.
“We irrigate at night during off-peak hours, so there’s less evaporation,” explains Paton, pointing to the lines of drip systems running through the orchard. “But we also have a technique for making sure there’s no runoff, that every drop goes into the root systems.”
Spring almonds ripening on the trees on the Trinitas ranch.
Trinitas also says they’ve stopped planting new trees in this area because of the drought. And they’re carefully checking their wells, and those of neighboring farmers, to make sure there’s no overdraft.
“Our hydrology folks are always measuring the situation,” Paton says. “Because I’m always asked this question, ‘Are you affecting your neighbors adversely?’ And to this point, I can honestly say, we are not.”
In fact, Paton says he hopes to wean the farm from groundwater entirely by getting river water from the local irrigation district instead. Problem is, the Oakdale Irrigation District is imposing first-time cutbacks on its customers this year, and farmers with more senior water rights want to make sure they get their allotment before newer customers like Trinitas.
So Paton feels like he’s getting conflicting messages: some neighbors don’t want them to drill wells for groundwater; others don’t want them using surface water.
“We have a history of listening and responding in a pretty conciliatory way when there’s an acute problem with the neighborhood,” says Paton. “On the other hand, they need to respect that this is an ag community and we have the right to farm.”
An almond harvester on the Trinitas ranch.
The guys who are actually managing this ranch day to day are fourth-generation farmers, who use the local pronunciation — “AM-mundz” instead of “ALL-mundz.”
And by the way, no matter what you call the nuts – there’s going to be a lot of them this year. Despite the drought, the USDA predicts just a one percent dip in this year’s lucrative almond harvest over last year. That’s about 1.85 billion pounds.
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