Virus spread continues at local dairy and poultry farms
The California Department of Public Health (CDPH) as of November 25, is warning the public to avoid consuming one batch of cream top, whole raw milk produced and packaged by Raw Farm, LLC of Fresno County due to a detection of bird flu virus in a retail sample. At the state’s request, the company has issued a voluntary recall of the affected raw milk with lot code 20241109 and Best By date of 11/27/2024 printed on the packaging.
No illnesses associated with this lot of raw milk have been reported.
Out of an abundance of caution, and due to the ongoing spread of bird flu in dairy cows, poultry, and sporadic human cases, consumers should not consume any of the affected raw milk. Customers should immediately return any remaining product to the retail point of purchase. CDPH is also notifying retailers to remove the affected raw milk from their shelves.
The County of Santa Clara Public Health Laboratory has been testing raw milk products from retail stores as a second line of consumer protection. The county identified bird flu in one sample of raw milk purchased at a retail outlet. The testing was then verified by the California Animal Health and Food Safety Laboratory System.
Virus spreading here
Meanwhile, bird flu continues to spread in Central Valley dairy and poultry farms.
The current strain of avian flu has been spreading in Central California dairies over the past two months and as of November 22 the number of affected dairies jumped by 66 in California infected with bird flu putting the number of Valley dairy farms impacted at over 400.
On the poultry front, cases in the Central Valley are increasing as well with the latest discovery reported by USDA November 22 in Merced County where an egg ranch with more than 500,000 birds had to be destroyed to stop the spread. New finds were also discovered in Tulare County on that date with a detection at a farm with almost 100,000 ducks. There were other finds announced the same day in Madera County with no number listed. New finds were also announced in Idaho, Arizona,Oklahoma and Utah as of Nov 21.
Consumers are noticing the rapid increase in egg prices at their local grocery store due to around 3.6 million hens in California being lost in the past week. That is about one third of the state’s flock of egg laying hens.
Risks Associated with Raw Milk
Public health experts have long warned consumers against consuming raw milk or raw milk products due to elevated risks of foodborne illness. Outbreaks due to Salmonella, Listeria monocytogenes, toxin producing E. coli, Brucella, Campylobacter, and many other bacteria have all been reported related to consuming raw dairy products. Raw milk products are not pasteurized, a heating process that kills bacteria and viruses such as bird flu.
It’s a difficult time for many California winegrape growers. During the past couple years, prices have plummeted, and wineries have allowed contracts with growers to expire. This year, many of the state’s uncontracted grapes were left to rot on the vines.
Imported bulk wine has flooded the U.S. market and driven down demand for California-grown wines and grapes.
A downturn in wine consumption is partly to blame. But weak demand is not the only problem. During the past two decades, imported bulk wine has flooded the U.S. market and driven down demand for California-grown wines and grapes.
Here in Lodi, I can walk into my local grocery store and see bottles of imported wine sitting on shelves while unharvested grapes hang on vines less than a mile away.
In the store, the imports can be hard to identify. That’s because imported bulk wine is blended with homegrown wine, and as long as the imported wine makes up less than 25% of the blend, it can be labeled “American.” Consumers may inadvertently purchase these wines believing they are supporting California farmers.
The real tragedy is that the U.S. government incentivizes these imports. Since 2004, a program called “duty drawback” has subsidized bulk wine imports by refunding wineries for up to 99% of the duties and alcohol taxes paid on the imports. To qualify for the refunds, the wineries must export the same quantity of “interchangeable” bulk wine within five years.
The terms of the program give participating wineries tremendous latitude. “Interchangeable” wine is broadly defined as any wine that is the same color and within 50% of the price point. Furthermore, because wineries are given five years to find matching exports, any emerging shortages of California-grown grapes are quickly extinguished by bulk wine sourced from overseas.
The adoption of duty drawback led to an explosion of bulk imports from virtually zero in 2003 to nearly 400,000 tons in 2022. To put that in perspective, in 2022, California growers harvested 3.35 million tons of winegrapes, meaning the imports totaled close to 12% of the state’s production.
Meanwhile, during the past decade, data on California’s purchased grape crush, which does not include winery-owned acreage, shows that the rolling five-year average has declined by 535,000 tons, or about 15%.
This outsourcing of winegrapes is being aided by duty drawback.
The imported bulk wine ends up on American store shelves virtually tax-free, giving it a “substantial tax advantage over domestically produced wine,” according to U.S. Customs and Border Protection, the agency that manages the program. The tax break helps large importing wineries drive down prices, hurting small local wineries that do not have the economies of scale to conduct import-export business and must pay alcohol taxes on their domestically produced wine.
From 2006 to 2010, seven large wineries accounted for 80% of the bulk wine exported from California, according to the Gomberg Fredrikson Report. From 2018 to 2022, after a decade of duty drawback had reshaped the market, those seven wineries accounted for 95% of bulk wine exports, meaning the share of exports shipped by other wineries had shrunk from 20% to just 5%.
Duty drawback has done far more to stimulate imports than exports. In a 2018 review of the program, CBP found that the volume of bulk wine imported by the U.S. grew by 875% between 2004 and 2016. During the same period, exports increased by less than 6%.
The agency concluded that the “economic effects of the practice do not support the view that it is an effective or efficient export promotion measure.” The downstream damage to the domestic grape market far outweighs the benefits.
Later that year, CBP ended the program, but it was reimposed in 2021 after groups representing the beverage industry sued and a court ruled that CBP did not have the authority to halt the program on its own. Only Congress could do that.
Today, millions of gallons of bulk wine continue to pour in from overseas while California winegrapes go unharvested and rural farming communities struggle.
Duty drawback, as it is being implemented with wine, is an anti-local trade policy that has significantly damaged the California winegrape market. This destructive policy subsidizes the state’s largest wineries to replace California-grown grapes with cheap imports.
The program also allows importers to circumvent the environmental and social regulations required on California farms by importing wine from countries that do not have similarly stringent standards. And it increases carbon emissions by encouraging the shipment of tens of thousands of containers across the world in lieu of local grape purchases.
Some blame SGMA – Then there’s the decline in nut prices, chill hours, more heat, trade wars and other factors
The value of farmland in parts of the San Joaquin Valley, California’s agricultural heartland, has fallen rapidly this year as both commodity prices lag and implementation of the state’s Sustainable Groundwater Management Act casts a shadow on the future of farming in the region.So reports a recent California Farm Bureau story.
In 2014, when SGMA was adopted, the value of farmland without reliable surface water access began to decline. But within the past several months, those values have plummeted, according to appraisers, realtors and county assessors.
“It’s very dramatic,” said Janie Gatzman, owner of Gatzman Appraisal in Stanislaus County, who until last month served as president of the California chapter of the American Society of Farm Managers and Rural Appraisers.
Last month, Gatzman presented data based on hundreds of real estate transactions to congressional staff. Her analysis showed San Joaquin Valley vineyards and nut tree orchards had declined in value by 25% to 50% within the previous eight months.
In parts of Tulare County, Gatzman said, some pistachio orchards have sold this year for a quarter of what they were worth last year.
But there are other factors at play here.
Low crop prices, rising input costs and high interest rates have also played a big role in the decline of farmland values, experts said.Farmers have overplanted key crops and current disappointment may simply reflect crop prices half of what they were just a few years ago unrelated to water. A sudden decline in wine consumption has hurt vineyard values along with an influx of cheap foreign grapes.Chinese retaliatory tariffs has reduced ag exports and profitability of nut orchards and vineyards irrespective of SGMA
Global warming effects
Then there is the unmistakable impacts of global warming with both summer heat and warm winter nights affecting fruit and nut production and quality with more insect damage and chilling effect of reduced chilhours.Huge wildfires can blanket the Valley create smoke with high levels of ozone that can damage a plants ability to photosynthesize and can lead to smaller lower quality fruit. Global warming can negatively impact California agriculture in many ways, including:
Water availability: California’s agriculture is dependent on water storage in snowpack, but warming temperatures reduce this storage. Climate change is also causing more precipitation to fall in fewer, heavier events, which can increase the risk of flooding. In 2023 flooding covered thousands of acres of productive farmland in the south valley forcing the government to spend millions to help both farmers, homeowners and cities to survive an unprecedented deluge.
Water demand: Warming temperatures increase the rate of evaporation, which increases the amount of water crops need.
Sea level rise: Rising sea levels can contaminate water supplies with saltwater. In the Sacramento-San Joaquin Delta, which supplies water to 25 million Californians, more freshwater will need to be pushed through to keep out saltwater. Weather variability: Climate change is making California’s climate more volatile, with more dramatic swings between wet and dry conditions. Wildfires: Wildfires can damage agricultural fields with intense heat. Pests: Global warming can increase the risk of pests. Crop sensitivity: Some crops, such as almonds, walnuts, tomatoes, stone fruit, and wine grapes, are sensitive to warming temperatures.This month north Valley walnut growers reported unusual heat damage.”The October heat has pummeled California’s Central Valley as the walnut harvest has gotten underway. Walnuts are the sixth-highest commodity throughout San Joaquin County, but production could be a lot lower this year compared to last year. One grower said that almost one out of every five walnuts he’s grown are bad or gone because of the heat. “
And yes there is the issue of groundwater. Groundwater has supplied about 40% of water used in California in typical years and as much as 60% in drought years, serving as a lifeline for orchards and vineyards that need water year in and year out.
“Pumping is the buffer stock for fluctuations in the surface supply,” said Richard Howitt, professor emeritus of agricultural and resource economics at the University of California, Davis. “That is what enables you to have perennial crops.”
But experts said—and farmers agreed—overdrafting aquifers was not sustainable. It shrank underground water storage, caused swaths of land to sink, damaging water delivery infrastructure, and dried up shallow wells including hundreds of homestead wells.
In Madera County, some farmers in “white areas” that do not receive surface water from an irrigation district must pay penalties this year on any water they pump that exceeds 27.4 inches. But almonds, the county’s No. 1 crop, need 40 to 50 inches of water per year.
Amrik Singh Basra, who farms 300 acres of almonds in a white area in the county, said he has minimized pumping to keep his trees producing without incurring too costly a penalty. But he is still paying a price, both in penalties and production.
“When we look at the trees,” Basra said, “we can see they are not getting enough water.”
He has lost yield, with some of the crop turning out flat and shriveled, and his land’s reduced farming capacity has caused it to lose more than half its value.
Justin Morehead, a former banking manager whose family farms in Tulare County, spoke last month at the state probation hearing for the Tule Subbasin, spelling out the crisis facing some farmers.
“The banks, now looking at appraised land values that have shed 60% to 70% in five years, are reluctant to lend to the local family farm. Unable to continue farming, the owner will either be forced to sell or foreclose with the bank,” Morehead said. “This is not a hypothetical exercise to us. This is the reality our family is facing”. White areas are the areas where historically rivers have not flowed and where irrigation districts were never formed.Of course investing in a permanent crop in those areas is very risky.
Kern real estate agent Brian Neufeld points out that farmland revenues across the board in 2024 are looking to be lower than in recent years, but this is especially true in the almond tree farm market of central California where I operate. Investors interested in purchasing an almond tree farm should beware that good deals are coming in 2024, particularly for those with cash on hand.
The commercial production of almonds is currently going through a market crash that will likely prompt a large number of almond-producing farmland owners to consider selling in 2024. An oversupply of almonds has caused grower pricing to be so soft that revenues to recapture costs to produce are falling short. Even the best-yielding almond tree farms with no debt to service are struggling to cover cultural, water, harvesting, and property tax expenses.
Tough time for walnut growers
A decline in walnut prices preceded the SGMA issue with the price per pound crashing to $.38 last year compared to $1.67 in 2014. This chart shows the steady drop in walnut returns for farmers. Walnut farmers who got $2500 a ton in 2007 saw their return decline to $1200 a ton in 2020 and $840 a ton in 2023. That’s a 2/3 decline in take-home pay. Rather than blame water issues, retired farm advisor Bob Beede suggests that the farmer who is producing the walnuts may be getting as little as 40 cents a pound while the end product, after going through middlemen, is sold for $8 a pound.
Farmers are pulling trees with the 2024 California walnut production forecast standing at 670,000 tons, says USDA. That is down 19% from 2023 production of 824,000 tons.
Climate issues are clear – hot summers and low chilling hours. Last year several late winter and spring storms boosted the Sierra Nevada snowpack and significantly added to reservoir storage in California to normal condition.Some instances of blight showed in walnut groves because of heavy rains, then summer brought record high temperatures to California and growers were forced to increase irrigation. The latest objective measurement survey has indicated nut quality will be decreased from last year.
Almond prices
California’s biggest crop is almonds that covers 1,300,000 acres in the state – up from 760,000 acres in 2011. At the same time growers planted all those trees,it coincided with prolonged drought.But now prices have dropped over the past several years and the state’s almond acreage has started to decrease.
The Fresno Bee reported earlier this year that” financially troubled almond farm with ranches in Fresno and Tulare counties, as well as other parts of California, is on the verge of becoming the latest farming company to call it quits. Trinitas Farming LLC, an Oakdale-based company funded by a private equity firm, is getting ready to take offers on nearly 8,000 acres of young almond trees.”
Farmers enjoyed four dollars a pound for their almond production in 2014. It has headed lower since.In 2017 they received about $2.53 pound says USDA.In 2022 that fell to $1.40 a pound. Production in 2014 was 1.95 billion pounds – 3.1 billion pounds in 2020. Now in 2024 California almond production is expected to be around 2.8 billion pounds.
The brutal impact of Chinese retaliatory tariffs needs to be looked at. Last year, Dr. Steinbeck of UC Davis concluded that the retaliatory Chinese tariffs cost the US almond industry almost $875 million in export value or more than 320 5,000,000 pounds of shipments between April 2018 and April 2022. The impact of these tariffs has reduced the value of California farmland.
Pistachio returns
Operating costs for pistachio growers have been steadily increasing over the past few years, while average prices have been trending in the opposite direction. Assistant Professor in Cooperative Extension in the Department of Agricultural and Resource Economics at the University of California, Davis, Brittney Goodrich has been working on preliminary estimates to update the cost and return study from 2020. She said that costs have increased by about five percent on average since 2020.
“What I have is about $3,300 per acre, in operating costs. That doesn’t include any overhead or investment,” Goodrich noted. The 2020 study shows the cost to produce pistachios as $3,210 per acre. While costs increased, prices declined further. “I have the average price of pistachio, which includes an average on in-shell and the shelled product as well, which is about $1.86. So our revenues are down about 12 percent from 2020,” Goodrich explained.
Reported prices show a decline from 2019 of $2.81lb to about $2 pound in 2023.
Trade wars
California tree nut producers were among the biggest losers of the trade war that began under the Trump Administration, a UC study has found.
In fact, California’s farmers and food processors were hit harder than their counterparts in any other state. And, despite compensation from USDA’s Market Facilitation Program, most California farmers were not made whole by the aid, said lead author Colin A. Carter, a Distinguished Professor of Agricultural and Resource Economics at UC-Davis.
“California’s losses from the trade war far exceeded the government compensation payments,” Carter noted.
The study, “2018 Trade War, Mitigation Payments, and California Agriculture,” was released in late 2020.
Before the trade war, California’s share of the tree nut market in China had been growing rapidly. But almost all California products exported to China— one of the world’s largest importers of agricultural products—lost significant market share due to the trade war and resulting retaliatory tariffs. The U.S. market share for almonds, pistachios and walnuts fell from 94% to just 53%.
Overall, tree nuts suffered substantial trade war losses of about $239 million, with US government subsidy MFP payments accounting for just 52% of the loss, the report found.
About 68% of almonds, 78% of pistachios and 65% of walnuts produced in 2017 were exported to foreign markets. Among the various export markets, China is the third largest market for California agricultural exports by value, worth about $2.2 billion in 2017, constituting 11% of total Ag exports
Still another factor is the increase in the dollar index that has hurt exports of our crops – about 10% in the past five years.
By the way it is not just California farmers who worry about a ratcheting up of trade wars.National Corn Growers have reported that such a trade war would lead to” a steep drop in soy and corn prices, resulting in a ripple impact across the U.S., particularly in rural economies” where farmers live, purchase inputs, use farm and personal services, and purchase household goods.”
“It’s unusual to have so many crops struggling at the same time” – Ag Secretary Karen Ross
Betting on more pistachios
Production report from American Pistachio Growers estimates California acreage will top 811,000 acres and production will reach 2.08 billion pounds in 2031
A new production report, commissioned by American Pistachio Growers (APG), underscores an undeniable fact – the U.S. pistachio industry’s preeminence as a world leader in growing the popular nut will continue in the coming decade. With a projection of annual bearing acres in California running at a 5 percent annual growth clip, the state’s pistachio growers are on a trajectory to shake more than 2 billion pounds from their trees by 2031.
The projections by Dennis H. Tootelian of the Tootelian Company of Sacramento forecasts annual pistachio production from 2023 through 2031. His study focused on California, which provides 99 percent of total U.S. production. Pistachios are also grown in Arizona, New Mexico and Texas.
For the 2023 pistachio crop, which California growers are currently harvesting, Tootelian pegs the crop as 1.36 billion pounds from 453,750 bearing acres. His study projects the rise in new plantings, number of new bearing acres and total annual production in California for each of the next nine years.
New plantings of pistachios are projected to mirror what growers have planted on an annual basis in the past decade. Tootelian said that will mean the total number of acres in California will grow by 28,489 per year, from 2023 through 2031, to total nearly 811,300 acres.
As new orchards mature, the number of bearing acres is expected to grow at a rate of 5.1 percent annually. That will mean the 2031 crop will come from 668,850 bearing acres. Non-bearing acres are counted as trees in their first year of being planted through year five. Measurable production begins in the 6th year, the year they are considered “bearing” acres.
Location Location
The prospect of receiving water is and has always varied by location. The eastside of the Valley has always been more productive, dotted with more small farms and cities than the dry west side of the Valley. The east side- close to the Sierra – is favored with more permanent plantings that require regular annual water supply over decades. These vineyards and orchards have sprung up on the river fans coming off the Sierra like the Kaweah River or the Kings. But areas in between those fans are dryer, soils are poorer and often less productive.Now some of these areas are termed White lands.
Ag West Farm credit reports that areas not served by district water, known as ‘White Land’ areas, have seen values decrease 9% to 16% annually since 2015.Elsewhere in the State, land values are becoming increasingly tied to projected long-term groundwater availability and the access to reliable surface water supplies. The Sacramento Valley, because of its wetter climate and closer access to the Sacramento area rivers, is one area in the state to enjoy more reliable water.
Water availability, particularly access to surface water, is the primary driver of land values in the San Joaquin Valley. Pumping restrictions and state intervention will increase the importance of groundwater recharge. Secondary drivers include elevated interest rates and falling commodity prices.
Declining commodity prices are beginning to put downward pressure on land values in the San Joaquin Valley, notably in the tree nut and table grape sectors. This trend is also present in tree nut orchard values in the Sacramento Valley.
Listing times are increasing as supply outpaces demand, a trend that has been compounded by the liquidation of multiple large vertically integrated grower/packers and agricultural investor groups based in the southern San Joaquin Valley. Tens of thousands of additional acres are on the market.
Dairy facility demand is decreasing due to weak domestic markets. There is a limited pool of buyers and they prefer newer, more efficient facilities. Less efficient facilities are typically purchased and redeveloped into feed cropland or used as heifer facilities.
Increased orchard plantings over the last several years reduced available land for sale in the Sacramento Valley, leading to higher land values. More recently, this trend is slowing as commodity prices fall. Rice ground values are diverging on opposite sides of the valley – west-side values are trending lower due to water supply curtailments while east-side values are trending higher due to relative water security.
Glut of wine
Premium wine grape vineyards in the Central Coast, with the exception of those located in the desirable western Paso Robles area, are seeing reduced demand due to a glut in the U.S. wine industry. Established winery sales activity appears to be slowing.
Water availability, particularly access to surface water, is the primary driver of land values in the San Joaquin Valley. Pumping restrictions and state intervention will increase the importance of groundwater recharge. Secondary drivers include elevated interest rates and falling commodity prices.
In the South Valley there has always been a huge difference in natural precipitation that replenishes our groundwater.The east side has more small farms, while the west and south have more larger farms.
Eastern San Joaquin Subbasin: Precipitation ranges from 11 inches in the southwest to 25 inches in the northeast.There is a tremendous variation in the amount of precipitation that falls that can be seen comparing precip at Giant Forest in the Sierra receiving about 45 inches a year, Three Rivers just above the valley floor receiving an annual rainfall of about 27 inches. Lindsay, California at the base of the foothills gets 12.5 inches annually and Visalia receives about 11 inches of rain annually. Further west Hanford receives around 9 inches and Lost Hills on the extreme west side of the Valley gets just 7 inches of annual rainfall.Besides rainfall, the eastern portions of the SJV, close to where rivers spill out onto the valley floor, are the beneficiaries of the best water runoff and recharge with a dense network of district canals and ditches criss crossing the ag land and replenishing the groundwater there.
In order to bring water to areas along the eastside that do not enjoy river runoff, the federal government in the 1940s funded a canal (Friant Kern Canal) that brings San Joaquin River water south past Bakersfield offering a steady reliable supply to otherwise dry areas like Orange Cove and southern Tulare County where little river runoff exists and/ or the soils have little groundwater.Likewise on the westside the state has brought northern California water south to extremely dry areas although on a less reliable and reduced quantity level allowing a huge planting of pistachios near Lost Hills, for example.
Statewide drought has reduced the annual average California Aqueduct volume prompting vigorous groundwater pumping by farmers who have invested in trees. But in recent years pumping has caused adjacent land to sink along both the east and west side canals with subsidence (sinking land) damaging canal infrastructure to the tune of millions of dollars. So far the state has picked up the tab, but the issue is in litigation.
The water and land value issue is not just SGMA but drought. Land close to a surface water source has always been more valuable than land without the choice.Westside rangeland can go for $500 an acre while pistachio orchards can fetch $45,000 an acre.
The whole picture is complicated. Karen Ross, Secretary of the California Department of Food and Agriculturw says it’s a difficult situation for farmers, particularly due to low commodity prices and increasing production costs. “It’s unusual to have so many crops struggling at the same time,” she said in a recent interview.
The California Farm Bureau contributed to this story.
captions: Winter chill brings summer fruits (and nuts). But warmer, shorter winters can disrupt the chill that fruit and nut crops—and related local economies—depend on.Chart shows winter chill hours measured in Fresno.
USDA says the California walnut crop this fall is likely to be down 19% from last year as lower acreage, lack of chill hours and other weather events reduce the size of the nut crop.The September Objective Measurement survey indicate nut quality will be decreased from last year.Survey data indicated an average nut set per tree of 761, down 24% from 2023’s average of 1,004.
Walnut growers have faced low prices and increased costs along with this summer’s record high temperatures as growers were forced to increase irrigation, says USDA.
Faced with red ink growers have pulled about 30,000 acres of trees in the state in the past two years.
Of all the challenges facing California walnut growers, market uncertainty may be the toughest to overcome, observes California Farm Bureau. A record-size 2023 crop, below break-even prices for growers and higher input costs are placing many walnut growers in precarious financial positions. Pricing is forecast to be under pressure until tonnage approaches an estimated 625,000 tons.
The latest USDA report expects tonnage this year to be 670,000 tons.
At the 52nd annual Tri-County Walnut Day in Tulare this spring, it was noted “some growers are out of business, but they just don’t know it yet.”
Low returns for walnuts in recent years has sparked record numbers of orchard removals.
“Walnut farmers are getting their a– kicked” as small farmers in both Kings and Tulare County “are rapidly losing their livelihoods.” -Farm advisor Bob Beede
Retired farm advisor Bob Beede says “Walnut farmers are getting their a– kicked” as small farmers in both Kings and Tulare County “are rapidly losing their livelihoods.”
It’s a tragedy” for them and the local economy. Before retiring, Beede says he spent 35 years helping local growers on 40 to 80 acre plots build their businesses but now they are just “going broke.” Beede still advocates for these farmers, his friends, who are sometimes forced to let their orchards go unwatered and “turn to firewood or maybe mulch”. To clear the land for another crop requires $2500 an acre to remove but Central Valley farmers have few choices to replace this once staple nut crop.
The problem is price. Walnut growers have seen the average price for their nut fall from $1.80 a pound 10 years ago to just $0.30 a pound last year and now around $0.35 – well below break even.
“These guys need a dollar a pound to stay in business “argues Beede”. Rising costs are happening along with the lowest pricing in decades.
Beede maintains that the farmer who is producing the walnut may be getting as little as $.40 a pound while the end product, after going through middlemen, is sold for eight dollars a pound.
“Hope springs eternal” adds Beede sarcastically, as processors promise growers $0.70 a pound but the price remains at $0.35. “The long downturn in price is unprecedented.”
Sentiment is gloomy as can be seen in a quip making the rounds recently at the 52nd annual Tri-County Walnut Day in Tulare, held this February. It was noted “some growers are out of business, but they just don’t know it yet.”
Never had to borrow
Hanford area farmer Mike Miya says there are lots of guys that are just letting their walnut orchards die. “Our farm has been around since the 1920s and we’ve never had to borrow money to pay operational costs – until now” says Mike.
Beede predicts walnut plantings in King County in the recent past at 16,000 acres, will likely fall to just 5000 acres by next year.
An April 2024 USDA survey found that farmers in Kings County removed 1380 acres with 13,600 acres left standing while in Tulare County, farmers removed 2500 acres with 30,500 acres left.
Beede says part of the problem was that since 2020 the walnut industry, doubled the acreage.Then the Covid epidemic hit followed by a port strike that hurt shipments, even as stiff competition from foreign countries reduced US exports.”Last holiday season Chile took over the Christmas market” – the busy walnut sales period popular for baking.
The long-term trend is clear, as California walnuts’ share of the world market dropped from 68% in 2016-17 to 44% in 2021-22 .
Meanwhile, as the sales price stayed low for a number of years, farmers input costs have risen and the strong dollar has made our exports more expensive overseas. Add in the drought and now SGMA and the obstacles to profitability mount.
Without a price increase this industry is doomed, say advocates.
Chill hours
Farmer Miya says heat has been a growing issue in the past year, not just with this summer’s record temps but this past winter’s lack of chill hours hurting as well.
The winter 2023-24 is going down in history as the hottest on record for the contiguous U.S. in 130 years of record keeping, according to NOAA.Excessive levels of solar radiation can deform nuts during critical development stage.
One study says the winter of 2024 was much milder, and the number of chill hours recorded from November 1 through February 29 were almost 50 percent lower in some parts of the state.
Cold winters are important for good nut production and they also reduce pest populations that will attack trees.. Populations of three major insect pests – codling moth, peach twig borer and oriental fruit moth — are projected to increase mainly due to rising temperatures, according to a study recently published in the journal “Science of the Total Environment” by a team of researchers at University of California.
Of course the NWS Hanford just announced that this summer’s high temps set a record as hottest ever.
California cotton plantings once covered more than 1 million acres annually, producing a crop worth more than $1 billion a year to the California agriculture economy. But by 2020, according to National Ag Statistics, cotton acreage in California was down to about 246,000. Tree crops, vines, alfalfa and corn replaced the acreage that used to be dedicated to cotton as the availability and price of water were an issue.
But last year the spring rain deluge led to a record low cotton crop -well under 100,000 acres. Now that the Tulare Lakebed has dried out and farmers have returned to their fields. California Cotton Growers exec Roger Isom expects the harvest will be around 164,000 acres this year. “It would have been more but the state did not give us a full allocation” although he is happy acres have bounded back.
In 2023 California saw just 85,000 acres compared to 115,00acres in 2022.Kings farmers harvested just 33,000 acres in a county where cotton was once king. Once a big crop in Tulare County cotton was planted on just 1500 acres.There were 30,799 acres in Fresno County (down from 34,290 acres in 2022), 7,226 acres in Kern County (down from 9,591 acres in 2022.
Just how the 164,000 acre estimate in 2024 -double what we had in 2023 – breaks down between Upland and Pima varieties is not yet released by the state Pink Bollworm program but most of it will be in long staple Pima, favored by the mills.
Kings County acreage could top 50,000 this year.
On the price front, Isom is less bullish with “guys getting just about $1.25 for their pima” and lackluster demand from China facing trouble in their economy.
Upland cotton, more widespread across the South, is fetching just $0.69 a pound after pricing closer to $1.00 this spring.It jumped to $1.40 in Spring 2022.
USDA’s Planted Acres report issued on June 28 showed that U.S. cotton growers planted an estimated 11.7 million acres of upland and Pima cotton in 2024 – up 14% from 2023. For 2024, Upland area is estimated at 11.5 million acres, a 14% increase from last year. American Pima plantings are estimated at 182,000 acres, up 24% from 2022.
The current Associated Equipment Manufacturers report says tractor sales are down 14.1% in July compared to the year before and are down 11.9% year-to-date.
Sales are down reflecting lower crop prices including the big two – corn and soybeans.Corn futures that were at $6 a bushel last summer are down to $3.90 today.
That means incomes are down. By the end of 2024,USDA expects farm income will have decreased by more than 25% from 2023.
News reports say tractor giant John Deere is facing a backlash after announcing it was laying off hundreds of workers across the Midwest — even as it continues to operate a manufacturing hub in Mexico.
The Illinois-based company, which is the world’s largest seller of large tractors and other farm equipment, informed hundreds of employees in Iowa last month that they were out of a job.
The downturn is affecting used equipment as well.Another report says “With inventories of new equipment filling lots while consumer demand is down, dealers are taking a cautious approach with used machinery.
Members of the California Air Resources Board (CARB) along with CARB and San Joaquin Valley Air Pollution Control District staff toured the Bar 20 farm owned by Steve Shehadey in western Fresno County recently looking to evaluate the dairy community’s emissions trends and see the technology farms are using to cut harmful air emissions. These visitors are responsible for regulating greenhouse gas emissions, such as methane, as well as air quality pollutants including oxides of nitrogen (NOx) and volatile organic compounds (VOCs). For some on the tour, whether CARB Board Members or staff, this was their first time visiting a dairy.
The regulators are under tremendous pressure to end the state incentive program that the dairy industry is fighting to save.
A recent report says California has 238 dairy digestive projects from 259 dairy farms with 129 of these in operation and the remainder in development
According to a report in last week’s Milk Producers Council(MPC) newsletter ” thanks to the Shehadey family, we were able to showcase a variety of sustainable technologies on a single dairy, which we noted are being employed on many dairies throughout the San Joaquin Valley. Our regulator audience learned about animal care, carousel milking parlors, weeping walls, nutrient management, digesters, fuel cells, electric feed-mixing wagons, feeding byproducts, solar panels, as well as hydrogen production from dairy biogas.”
Milk Producers Council notes that” We’re more than halfway toward meeting the State’ 2030 goal of reducing manure methane emissions by 40% from 2013 levels, anaccording to expert analysis by CARB, we will hit that mark.”
“How have California dairy families achieved this impressive milestone? Collaboration. Thanks to CARB’s voluntary, incentive-based approach, our dairy families have significantly reduced greenhouse gas emissions from the atmosphere, all while creating renewable energy and carbon-negative transportation fuel.”
There are about 20 digesters in Kings County and over 50 in Tulare County where milk is the top crop.
But anti-dairy activists want to end the state program helping dairies cut emissions.
Last year nearly 200 environmental groups called on the U.S. Department of Agriculture to reconsider extending federal funding to farms that turn manure into biofuel through anaerobic digestion, arguing it undermines the agency’s effort to fight climate change, says one report,″Manure biogas entrenches factory farms, worsens market consolidation, deepens environmental injustices with air and water pollution, fails to address climate change, and is a waste of taxpayer resources,” the groups wrote in a letter to USDA Secretary Tom Vilsack.
MPC says the activists promulgate several myths:
MYTH #1 The California dairy industry is growing due to incentive-based programs to install digesters. FACT If you’re done laughing (or crying), here are the numbers. More than 1,000 dairy farms have gone out of business in California over the past 20 years. But surely you’re thinking those cows just went to other dairies so that the total California herd size remained the same, and according to activists, probably even grew so digesters could be built, right?!? Nope. Look at the graph below. You’ll see that since the adoption of SB 1383 to regulate methane, the California milk cow population has been in steady decline.
And now for the icing on the cake. At the hearing in Fresno on Thursday, CARB staff reported that an “analyses of dairy trends suggest that there has not been any relationship between the installation of digesters and dairy growth rates.” That’s from CARB’s own detailed analysis from years of work to accurately quantify California’s herd size.
MYTH #2 Lagoon manure-holding ponds are being built on dairies just because of digesters. FACT Lagoons have been an integral part of California dairy farming since the 1980s. Their advent – and prevalence today – has nothing to do with dairy digesters or methane. In short, lagoons were designed to promote cow health, improve manure management, and protect water quality. Lagoons help keep cows clean, thanks to a gravity flush system that removes manure from barn floors with recycled water. This flush water is stored in the lagoon where it is recycled throughout the year as a nutrient-rich fertilizer to grow feed for cows. Having a lagoon on a dairy also provides stormwater protection to ensure that all water used on the farm stays on the farm, where it can be recycled multiple times.
MYTH #3 Dairies are actively working to maximize methane production from manure due to the installation of digesters. FACT Dairies – including those with digesters – are doing the opposite. As we showed our tour guests on Wednesday, the Shehadey family is avoiding methane production from manure thanks to its use of a weeping wall in front of its digester. Conservatively, the weeping wall is reducing methane emissions by 60%. Many dairies are using some type of mechanical solids separator in front of a digester, which can reduce methane emissions from manure by up to 30% before hitting the digester.Weeping walls offer non-mechanical separation of manure solids from water that reduce methane production while improving management of nitrogen.
Voters Strongly Support State’s Dairy Methane Reduction Efforts
Recent statewide and San Joaquin Valley voter research demonstrates that California’s current incentive-based programs to reduce livestock methane are broadly supported. This means voters share the views of state and local elected leaders who support the incentive-based approach.
As shown below, the current incentive programs provided by the state to California’s dairy farmers for reducing greenhouse gas emissions and producing renewable natural gas are strongly supported.
The current programs are supported by 69% of voters statewide with 42% of voters “strongly” in support. Support is strongest among democrats (80%) and independent voters (73%).
Voters also recognize farming and food production as essential to the state’s economy with 86% of voters describing the industry as “very important,” leading all industries by a wide margin.
California has implemented a highly successful incentive-based approach to dairy methane reduction. Support for these incentives is clear and unmistakable. Two-thirds of voters (65%) statewide and three-quarters (72%) in the San Joaquin Valley oppose having the state directly regulate dairy farms and eliminate current incentive programs.
The USDA, NASS May Crop Production forecast for California peach production in 2024 is 510,000 tons, a 6 percent increase from 2023. California is the top peach-producing state.
A larger California peach crop is expected in 2024 despite a warm winter resulting in the second lowest chill hour accumulation in the last 50 years.
Growers reported abundant fruit set and generally good spring weather conditions. However, persistent high summer temperatures in the Central Valley may negatively impact fruit quality, sizing, and lead to increased fruit drop.
Table grapes affected
News reports say “The prolonged heat wave has slowed the supply of California table grapes, with vines shutting down and picking crews working fewer hours just as the state’s main growing region ramps up harvest.
San Joaquin Valley growers, who produce most of the nation’s fresh-market grapes, say the excessive heat has begun to damage some varieties while inhibiting growth of others. Pickers have been working mostly six-hour shifts in the morning to avoid sweltering afternoon temperatures, leaving fruit on the vine, as they can’t pick it all.
“It’s just taking longer to pick it,” said Kern County grower Mark Hall.
Temperatures soared to triple digits just as the region began harvest in early July. Though some of Hall’s early Flame Seedless were fine, he said the extended heat spell is now affecting quality. Overripe fruit that didn’t get picked on time turned mushy and melted. His Sugraone grapes—a greenish-yellow seedless variety—may be a total loss due to heat damage and mildew, which weakens the skin and causes the berries to crack and rot. Autumn King, another light-green variety, shows some sunburn.
With other valley growers in the same boat, Hall said there’s not as much fruit on the market, which has helped prices. In more typical years, prices tend to drop in the middle of summer and rise later in the season as supplies wane.”
Table grape imports reach record high in 2023/24, exceed domestic production for the first time
USDA says fresh table grape imports reach record high in 2023/24, exceed domestic production for the first time: Fresh grape imports for the 2023/24 marketing year were 1.75 billion pounds, exceeding the 2022/23 record volume of 1.64 billion pounds. Imports continue to make up an increasingly larger share of fresh grape availability, accounting for 56 percent of fresh table grape supply on average in 2020/21–2022/23. The share of imports has trended upward for 5 consecutive years, reaching a record high (63 percent) in 2023/24 as imports exceeded domestic production volume for the first time .
Key animal feed crops from soybeans to corn and hay to oats are all down nearly 25% this summer. Likewise for that other critical grain -wheat- the stuff we break bread for.The yearly market price trend for these hugely important ag commodities is strikingly similar -all heading down.
Abundant supplies as well as worldwide competition has helped nudge prices lower.
Soybeans are a huge world crop. You might connect soy to making tofu or soy milk or even biodiesel. But 75% of the crop goes to feed animals, including poultry, pigs and cattle. Grown on 87.5 million acres in the US, soybean prices have dropped about 26% in the past year and stand at four-year low.
An even bigger crop that covers much of the Midwest, is corn not only converted into your morning Cornflakes but more importantly – 40% of the crop is fed to animals.Ethanol manufacturers also use about 40 percent of the U.S. corn crop for ethanol fuel and related co-products.The majority of the ethanol is consumed in the domestic transportation fuel market.Here again the price of corn has dropped over 22% in the past year to $3.84 a bushel this week in the futures market – falling from $8 dollars a bushel in 2022.USDA projected corn acres to rise about 2.4 million acres, to 91 million, with production boosted by a larger area planted.
Corn futures are reaching a low not seen since October 2020, driven by an improved supply outlook and lackluster demand, according to one analysis.
The other big grain crop – wheat – was selling for over $7 dollars a bushel a year ago and is down to $5.16 today.Wheat is the second largest grain worldwide based on grain acreage and second largest based on total production volume. Wheat is the best of the cereal foods and provides more nourishment for humans than any other food source. Wheat is a major diet component because of the wheat plant’s agronomic adaptability, ease of grain storage and ease of converting grain into flour for making edible, palatable, interesting and satisfying foods .Wheat is grown on 49.5 million acres in the US.
California’s top ag industry- dairy -depends on feed to keep it running. Today, dairymen are breathing a little easier when it comes to their feed – not just because corn prices are down but alfalfa hay prices too. Alfalfa hay prices have dropped this summer. In May California premium hay sold for $320 a ton compared to $280 in May 2024 and $240 as of late July 2024, another feed ingredient registering about a 25% drop
Godsend? Dairymen will tell you they have plenty of other challenges that are driving up their costs including tough regulation and labor costs.Still one popular dairy magazine’s cover story this month reports ” Declining Grain Prices: A Godsend for Dairy Producers.” And lower feed price isn’t the only factor affecting what you pay at the market for meat for example. While the cost of feeding poultry may be down this year,poultry prices have declined only 4% according to the Trading Economics website.
Beef has decreased 12.74% since the beginning of 2024.
Now what?What will all this mean to food prices as the Fed considers lower interest rates? Now a new report by the U.S Department of Agriculture indicates that the price of food will continue to decelerate throughout the year.
In 2024, prices for all food are predicted to increase 2.2%, with food-at-home prices projected to go up just 1%.
Looking beyond this year, the U.S. Department of Agriculture is forecasting the price for all food to increase 2% in 2025. Food-at-home prices could increase 0.7%.
Then there is the impact on fuel prices based on a 23% decline in corn prices. This is already happening with ethanol blended with gasoline wholesaling at $2.40 a gallon a year ago today down to $1.76. That’s a 27% decline. At the same time the gasoline it is blended with has dropped $.50 wholesale since April.
Lower transportation costs will mean truck deliveries to the grocery store will cost less as well as your trip to the grocery store.
One more benefit of lower oil prices translates into lower fertilizer cost for farmers.One report says anhydrous fertilizer costs less than half of what it did in 2022, as the nitrogen fertilizer’s average retail price continues its summer shrinkage.
Oil turmoilBut as of July 31 oil prices jumped on fear of war in the Middle East and supply disruptions.One factor holding down oil prices is reduced demand from China with their fuel imports down 11% in the first half of 2024.
At deadline oil analyst Tom Kloza writes that “Petroleum price disinflation on full view as July 2024 ends. OPIS/AAA average gas price of $3.492/gal is 26.5cts (-5.9%) below the same day last year. Diesel value of $3.815/gal is 22.1cts/gal beneath 2023. Even more disinflation for jet fuel prices.”
Coastal counties so far are reporting a decline in crop value values in 2023 and much of the drop appears weather related.
Santa Barbara County farmers reported a gross production value of $1,875,978,000 which is a decrease of 2.8% or $54,467,000 from 2022.
Strawberries top crop
Once again, in 2023, strawberries held the top spot as the number one agricultural crop, with a gross production value of $775,282,000 even though it reported a decrease of 4.4% from 2022 primarily due to weather related factors.
Nursery Products moved up to the 2nd most valuable crop at $122,301,000 with an increase of 28% as a result of market demand, product stabilization, and increased production.
Wine Grapes remained as the 3rd most valuable crop at $98,562,000, a 2.3% increase from 2022. Broccoli moved up to the 4th spot with a value of $86,737,000. Cauliflower moved down to the 5th spot with a total value of $84,078,000, a decrease of 13%.
Although the 2023 Santa Barbara County Crop and Livestock Report includes figures on cannabis production, it is not factored into the total value of agricultural products but it tracks sales. The report says cannabis operators produced nearly 9.9 million pounds of packaged harvest weight with a total value of just under $329 million in 2023.
Adding in the value of seeds, clones and immature plants ,the total gross production value comes to a little more than $333 million. That is up from $260 million 2022.
Monterey Report
Monterey County is one the first major ag production counties in California to report crop values for 2023. The report reflects a production gross value of $4,353,338,000 – a decrease of 6.1% from 2022.
Major crops drop in value
Top valued commodities this year include Strawberries which maintain the top spot with a gross production value of $903,791,000, a 5.7% decrease from 2022. Leaf lettuce, including Romaine and other leaf lettuce varieties, continued to be the 2nd most valuable crop at $782,134,000 with a decrease of 7.2%, and Head lettuce as the 3rd most valuable crop at $493,464,000 with a decrease of 9.8%. Broccoli remained in the 4th place ranking with a 9.7% decrease to $468,871,000.
Overall, the Vegetable Crops category saw a decrease in value of 7.9% to $2,882,975,000. The Fruit and Nuts category had a decrease of 3.5% to $1,191,221,000.
Wet weather impact
Decreased production values in Monterey County were widespread among vegetable and fruit crops and can be attributed in part to a very wet winter that shortened the growing season, decreased production rates, and decreased growing acreage. Perennial crops such as wine grapes and seed crops that were less impacted by the increase in rain saw production values improve. Wine Grapes increased and ranked 5th in production value in 2023. Seed Crops and Livestock & Poultry also saw increases, while Field Crops remained steady.
Cannabis higher
One of the few counties that tracks cannabis as a crop, Monterey County reported $363 million in sales in 20223, up from $283 million in 2022. That value compares to $493 million in sales for head lettuce, one of the county’s top crops.
