Olam hit at almond 'villain' claim over water use

Disagreement has broken out between leading agribusiness chiefs over the cultivation of almonds in drought-stricken California.

Sunny Verghese, the chief executive of Olam, dismissed suggestions that the Californian almond industry used 10 per cent of the state's water as "nonsense".

Although the almond industry was being cast as a "villain" for its water use, the figure was more like 3 per cent, he said.

Speaking at the FT Commodities Global Conference in Lausanne, Switzerland this week, Mr Verghese said California's comparative cost advantage meant the state would remain a leading grower of almonds.

"I have no doubt in my mind that California will still be the largest producer of almonds, not only in 2020, but in 2100 as well. The central valley in California is blessed with the right agro-climatic conditions to grow almonds," he said.

His comments followed those of David MacLennan, Cargill chief executive, who earlier at the same conference said it was "almonds versus people" in California, and the state needed to reconsider whether it was the best place for almonds to be grown in the face of its severe water crisis.

Olam cultivates almonds in California, where it farms 7,000 acres of almond orchards and in Australia, where it has 30,000.

Almonds are grown on a large scale in countries with warm sunny weather, and California had the comparative cost advantage, said Mr Verghese.

"Let the country that has the natural comparative advantage to produce the particular commodity, be allowed to produce the commodity. So in 2100 we will still be eating almonds grown in California."

The US state accounts for 80 per cent of global almond supplies and the industry is facing growing criticism amid the worst drought in decades.

Demand for almonds and other nuts has grown sharply over the past few years because of the widely cited health benefits. Almonds contain antioxidants and other nutrients as well as being non-glycemic, meaning they do not raise blood sugar levels after consumption.

After hitting a record $5 a pound late last year, almonds prices are about $4.95. But despite the high prices, demand has remained strong, encouraging farmers to increase acreage. The health benefits of tree nuts has supported demand for almonds especially in the US, India and the Middle East.

Mr Verghese identified water security as one of the leading challenges facing the global agricultural industry.

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