It might be in a flat white, in a lunch box or post-gym protein shake, you don’t need to look far to see that Australians are seemingly nuts about almonds.

Per person, per capita, we have one of the highest consumption rates in the world, with each of us consuming just over a kilo each year.

We’re not just eating them, Australia is now growing almonds at a rapid rate.

This year, for the first time, the industry expects to sell more than $1 billion worth of almonds, making it one of the country’s most valuable horticulture crops.

While roughly 80 per cent of the world’s almonds are grown in California, Australia has slid into second place aided by soaring exports to China and India.

In the case of China, it recently bought 50,000 tonnes of Aussie almonds, up from 3,000 tonnes just six years ago – that’s phenomenal growth.

“There’s no real awareness about the industry and we have come from nowhere in the last 20 years to be fair,” says Tim Jackson, chief executive of industry group The Australian Almond Board.

In the year 2000, there were just 3,500 hectares of almond orchards planted across the country.

Today, that figure is greater than 62,500 hectares.

The tiny nut with a reputation for providing all sorts of health benefits is changing the way land and water are put to use.

Take a drive through South Australia’s Riverland, Victoria’s Murray region or the Riverina in southern New South Wales and you can see the trees – which are dependent on bees for pollination and take about seven years to reach full production — stretching to the horizon.

Here farmers have had the soil, climate and most importantly, access to water to grow their crops.

Almond trees are thirsty.

Unlike rice or cotton which is planted each year, almond trees are planted once and can produce nuts for decades.

They are known as permanent plantings and require water year-round.

Mr Jackson says water use for almonds is on par with other permanent plantings, such as citrus, table grapes and stone fruit.

According to the federal Agriculture Department, almonds use about 10 megalitres per hectare, per year.

Farmers growing rice, cotton or pasture for dairy cattle would typically use less.

One Victorian study published in The Journal of the Science of Food and Agriculture found that Australian almonds used less water than their international competitors.

But it also found almonds had the highest water footprint when compared to eight other irrigated crops grown here.

As water-intensive as they are, there’s a reason why Australian farmers, including a growing number of corporate farmers, have turned to planting almonds in their droves.

Typically, almonds offer a higher return than other crops.

And, that’s return on water.

The water market

While once upon a time farmers would measure their enterprise by returns per hectare or acre, the way Australia’s water market works means farmers must now consider investment in terms of returns per megalitre.

The change in mindset is almost as large as the change in land use.

At the turn of the century, during a horrid drought, it was determined by state and federal governments that water ownership should be separated from land ownership allowing water to be traded between farms.

“It was seen that there is much greater potential for economic value to be achieved, where water can be freely traded between different uses,” explains ACCC Deputy Chair Mick Keogh.

Mr Keogh led a competition study of Australia’s $2 billion water market in 2021, making several recommendations to the government.

He says the boom in almonds and expansion of the cotton industry in southern New South Wales is showing that water is moving to higher value returns, acknowledging it’s come at the cost of traditional irrigation sectors like dairy and rice which are contracting.

“I think it is evidence of the market working,” Mr Keogh says.

“Some people may criticise that and say it has an adverse impact on communities. That’s true. But it also means that for example, a retiring farmer can realise the value of their assets and retire and have succession occur. And a whole range of those sorts of things can happen.

“There’s pluses and minuses associated with the trade, but generally, I think the overall impact is positive,” he says.

Less water for irrigated farming expected

Trading water is not like trading stocks or cryptocurrencies on a spreadsheet.

It relies on rainfall and rivers.

While man-made interventions like dams, channels and locks attempt to neutralise the impact of floods and droughts it’s clear there are parts of the climate that can’t be controlled.

Ensuring water can be delivered to grow food and fibre, for First Nations people and the environment is a major challenge in Australia’s largest river network.

Last year the federal government changed the law, allowing more time, to allocate more water, to the environment across the Murray-Darling basin.

With more than the equivalent of a Sydney Harbour-and-a-half to be allocated to the environment in the next three years, the amount of water available for irrigated farming is expected to shrink considerably.

That’s expected to put more pressure on those irrigators who remain to make sure they get the very best bang for their waterbuck.

If that ends up in the form of flat whites, lunch boxes and protein shakes, the market will decide.