I wouldn’t presume that even half the farmers have made rational decisions with all the facts at hand. Agriculture around the world seems to be the most prone industry to boom and bust cycles at the commodity level. There is always over compensation - one commodity does well and everyone pours into it until it’s in oversupply. I’ve been involved in the Aus wine industry on and off for more than 20 years. The few successful growers (long term) I know in that industry have one tactic: do the opposite to everyone else around them. When all their neighbours are ripping out Chardonnay, they plant Chardonnay. When everyone is ripping out Shiraz, they plant Shiraz. By the time the dust settles they always seem to have what is in short supply.
Part of the key appeal of almonds is the lack of labour required. Fresh vegetables require much more labour and the cost of that labour has skyrocketed. If you’re a veggie grower whose going broke and watching your crop rot in the field, envy of the neighbouring almond farmer, without any of those worries, starts to grow. But you’ve never grown almonds. Don’t despair, there is a nursery down the road that can deliver the rootstock next week, a local machinery dealer to lease all that specialised equipment from, and plenty of agronomists with experience in almonds to sell you advice. There is no consideration whether almonds are going to be viable in the long term, it is just the path of least resistance.
I think our open water market in Australia with low and high security water is what California is lacking. We have a cotton industry of about 500,000Ha when low security water is available throughout the catchment. We have about 50,000Ha of almonds which has grown due to a reduction in other permanent crops, not annual crops (cotton, rice, etc). Yes, some cotton and broadacre land converted to almonds, but not the water. California has an unsustainable shift to permanent crops as they move water away from annual crops. I don’t know the exact numbers off the top of my head, but let me be creative. Let’s say that 20 years ago 50% of the California water was used on annual crops (rice, cotton, corn, alfalfa, etc) while 50% was used on permanent crops, and many farmers had both types of crops on their farm. If allocations were cut by 50% then the farmer would shift the remaining available water to the permanent crops. But now the water used on annual crops has dropped to 30% and water for permanent crops has grown to 70%. The internal farm mix is even worse, most farms are now either all annual or all permanent crops. And finally, the restrictions are more severe. So when a 80% cut to water allocations happens now it has the potential to have a devastating effect.
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