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By DEBRA KAHN and HANNAH FARROW 

With help from Meredith Lee

— Almonds are California’s biggest crop, but growers are now reconsidering whether to continue harvesting the nut. Strong supplies, shipping logjams and persistent drought are combining to drive up costs and lower almond prices, leading to razor-thin margins.

— Key labor groups are pushing back on an effort in Congress to temporarily lift shipping restrictions on U.S. commodities sent abroad as food aid, as war continues to rag in Ukraine. Supporters argue it would cut down on costs, but some labor and shipping industry groups say it would be harmful to U.S. workers.

— Several CBD companies received a warning letter from the FDA regarding illegal animal products, marking the first time the agency has addressed concerns with CBD products for food-producing animals.

HAPPY TUESDAY, MAY 31. Welcome to Morning Ag. I’m your guest host Hannah Farrow, and I’m back after a relaxing weekend filled with boats and BBQ to bring you the latest in all things ag. Let me know how you spent your holiday: [email protected] or @hannahjfarrow, and follow @MorningAg.

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Almond trees are seen at dawn near Bakersfield, Calif. | David McNew/Getty Images

A RECKONING FOR ALMOND GROWERS: Have we reached peak almond?

It's a question of intense discussion among California farmers right now. Almonds are the state's biggest crop, and California in turn is the world's biggest supplier of the nutrient-rich nut (much to the chagrin of environmentalists, who lament permanent crops like nuts' inflexible thirst for water).

But now, a combination of strong supplies, shipping logjams and persistent drought may be coalescing to produce peak almond.

Because almond trees take seven years to begin producing, it's a long-term decision to stop planting them. Almond acreage actually expanded during the last drought, from 2012 to 2016, as farmers made the economically rational choice to spend their scarce water on the high-value crop. But the latest drought, which started in 2020, is forcing a reconsideration.

"If every three years you're going to pay $1,000 per acre-foot for water, it doesn't take a supercomputer to figure out that's not going to pay," said Dan Sumner, an agricultural economist at the University of California, Davis.

Almond prices are lower this year than they were in 2021, in part because pandemic-induced supply chain disruptions have prompted shipping companies to send their ships from the West Coast back to China empty, rather than taking the time to load up their containers with almonds and other exports. Ample inventory is expected to dampen prices for the next year, if not two.

"Almond growers I know are following this really closely," Sumner said. "They're doing all kinds of calculations. How much of this price drop this year is due to the container problem and how much is due to everybody else in the world is trying to grow almonds, and [how much is] 1.3 million acres [of almond crops] is double from a half dozen or a dozen years ago?"

Meanwhile, other California crops like canning tomatoes, onions and garlic are scarce and fetching record-high prices, prompting some almond farmers to consider switching over.

"The margins are razor thin, if not upside down, on a nut crop," said Stuart Woolf, a grower on the southwestern side of the Central Valley. "Maybe we're better off pulling the trees out prematurely and using what water we have on tomatoes."

It's too early to tell from satellite images whether acreage is down this year, but some growers and economists think it is.

"We think we have seen peak almond," Woolf said. "Almond acreage in the state from this point forward will likely be declining and over the course of time we will find a new normal market for almonds that may have fewer acres."

FIRST IN MA: KEY LABOR GROUPS OPPOSE FOOD AID SHIPPING REFORMS: Transportation labor unions and shipping industry groups are speaking out against an effort in Congress to temporarily ease restrictions on how the U.S. delivers international food aid amid the war in Ukraine and rising global food insecurity.

Current law requires 50 percent of all U.S. food aid sent abroad be shipped via U.S.-flagged vessels. That measure can increase shipping costs and delays.

As we’ve reported, leading humanitarian organizations are backing a concurrent resolution introduced by Sens. Joni Ernst (R-Iowa) and Chris Coons (D-Del.) urging lawmakers to “help ease the increasing burden of rising shipping costs on lifesaving, hunger-reducing programs.” Rep. Jackie Walorski (R-Ind.) recently introduced a companion measure in the House.

But in a new letter to House lawmakers today, the Transportation Trades Department of the AFL-CIO, representing 37 labor unions, and Maritime USA, a shipping industry group, are calling on Congress to oppose the effort.

The groups argue it would risk U.S. jobs and the readiness of U.S. shipping companies to fill any emergency military surge requirements for future conflicts — a concern that sparked the original requirements to be established a century ago.

“When foreign flag shipping companies are currently making record profits amidst global supply chain disruptions, now is not the time to weaken critical policies that would come at the expense of American businesses and working families,” the groups write in the letter.

View from the White House: President Biden has the power to waive the shipping restrictions by himself. But the opposition by key labor unions is a major concern for the White House, which is leaning into labor support ahead of the fall midterms. Coons, a close Biden ally, understands Congress will need to push this effort alone, since the measure does not require the president’s signature.

FDA WARNS AGAINST ANIMAL CBD: The agency sent warning letters to four companies selling illegal CBD products for food-producing animals, marking the first time FDA has sent letters addressing concerns with CBD products for animals. FDA cited concerns with the lack of data on safety of human food products from animals who have consumed CBD, adding that the agency has not had enough time to evaluate CBD residues.

"After a food-producing animal is treated with a drug, residues of that drug may be present in the milk, eggs, or meat if the animal is milked, eggs are collected, or the animal is sent to slaughter before the drug is completely out of its system," they said in a statement.

More issues: The four companies — Haniel Concepts dba Free State Oils, Hope Botanicals, Plantacea LLC dba Kahm CBD and Kingdom Harvest — claim that their animal CBD products will help alleviate anxiety and other ailments, which FDA warned could lead consumers to postpone seeking professional medical care for their animals. The companies have 15 working days to respond before the agency takes legal action. Our Mona Zhang has more here.

VILSACK TO LAY OUT NEW FOOD VISION: Secretary of Agriculture Tom Vilsack will detail the USDA’s plan to transform the nation’s food system in remarks at Georgetown University on Wednesday.

The USDA announced plans to invest over $4 billion last June to “strengthen the food system, create new market opportunities, tackle the climate crisis, help communities that have been left behind, and support good-paying jobs throughout the supply chain.” The investment is in response to President Joe Biden’s executive order on America’s Supply Chains.

Strawberries are pictured. | AP Photo

— The FDA issued a warning about a hepatitis A outbreak in fresh, organic strawberries across the U.S. and Canada purchased between March 5 and April 25.

— Four JBS Foods USA subsidiaries and affiliates have agreed to create an infectious disease preparedness plan with independent help for seven of its meat processing facilities following health violations over Covid-19 hazards for workers.

— Muskegon Lake in Michigan could soon be removed from the Great Lakes Areas of Concern listas a “toxic hot spot” after years of working with NOAA to improve its water quality and to restore its habitat.

— NOAA Fisheries has published a Notice of Intent announcing its preparation of Southern California’s Aquaculture Opportunity Areas Programmatic Environmental Impact Statement.

THAT’S ALL FOR MA! Drop us a line: [email protected] and [email protected] .