The Sacramento Bee* reported bad news for California almond growers, but the director of the UC Agricultural Issues Center, Dan Sumner, still had encouraging words for the industry.

According to the Bee story, written by Jim Downing, almond prices dropped more than 30 percent from August to December, the market for orchard real estate has gone cold, and the industry expects to be left with a 300 million pound surplus when the 2009 harvest begins in August.

Making matters still worse is a looming drought. West Side farmer John Diener told the reporter he plans to fallow 3,000 acres of land in order to concentrate what water he will have available on his 750 acres of almonds, which represent millions of dollars of investment.

But Sumner expressed confidence in California almonds. The state, he said, is the dominant global almond producer, holding more than 80 percent of the market. There are no serious competitors on the horizon.

"I still think they have a very strong long-term future," Sumner was quoted in the article.

Speaking of Dan Sumner, the UC Davis ag economist was also cited in a Reuters story today about President Barack Obama's pledge to cut subsidies to big U.S. farm businesses.

Some trade experts believe reducing payments to U.S. farmers would be looked on favorably by the rest of the world and that the move would renew the Doha round of WTO talks. But Sumner indicated that direct payments are not as trade-distorting as other subsidies that go up when prices plunge or crops fail.

"A cut in direct payments would do little or nothing for the talks," Sumner was quoted in the article. "It is hard to see the current (U.S.) leadership moving forward on trade opening or paying much attention to the WTO."

*The almond story was attributed to the Sacramento Bee, moved on the McClatchy wire and was picked up by various outlets, however, I could not find it on the SacBee Web site.