When it comes to setting, pollination prices Beekeepers are their own worst enemy.
Beekeepers are the ones that drive the pollination prices down.
Stop and think for a moment what would happen if there were no bees available to pollinate almonds!
There are few, if any, other industries in California that are experiencing such an increasingly wide disparity between the balances of supply and demand for services than the almond pollination industry. In economic terms, the demand for almond pollination services is almost a Perfectly Inelastic Demand. That is, the demand for bee colonies SHOULD exhibits zero responsiveness to price changes; no matter what the price, the quantity demanded remains the same.
There are no substitutes for bee pollination of almonds. Bees are essential to almond production: if the tree is NOT pollinated, it will NOT produce nuts.
In the classic Supply and Demand Curve, the demand curve slopes down from left to right indicating as price increase, demand decline; the Inelastic Demand Curve is vertical, if the almond grower requires an average of two colonies per acre, then the demand for 705,000 acres requires (demands) 1.4 million colonies. This represents over 57% of all the colonies in the United States.
California has approximately 500,000 colonies locally. Over one million, 71% of all colonies used to pollinate next season’s Almond crop will be imported from other states and incurring substantial freight costs which should be passed on to the growers.
Theoretically, growers will pay whatever pollination price they have to if they can pass the cost on to the buyer. Growers as a group “bid for,” or “bid up” the price of colonies.
While pollination services set the minimums, cost demands drive the cost of the hive up.
Obviously, from a practical standpoint growers will not pay pass a point for which they cannot recover their expense. Currently pollination fees account for 20% of the cost of production of almonds. The growers have a dilemma, if they do not pay for pollination services, the trees will not produce nuts. Current the world almond inventory supply is between 5–6 percent, which is considered a very low surplus. Those growers that do pay for pollination services will receive a premium for their almonds.
Demand for almonds are not Perfectly Inelastic, consumers do not and will not pay a higher price for almonds without affecting the demand. There are substitutes for almonds.
Nuff Said!