Thursday, 01 March 2012 14:57
Central Valley farmers, ranchers wield powerful economic force Featured
Written by Craig W. Anderson
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Almond trees near Modesto are blossoming. Almonds are among the top-10 crops for San Joaquin and Stanislaus counties.Business Journal photo by Elizabeth Stevens
Central Valley farmers produce a hefty percentage of the food consumed throughout California and beyond.
The 2010 farm gate value, or net value of a product when it leaves the farm, tallied for Stanislaus and San Joaquin counties combined, was more than $4.5 billion. That was greater than the total crop value of 29 states. After all, California is the top farm state with $37.5 billion in agricultural production, far ahead of second place Texas at $21.5 billion.
“American farmers and ranchers are still able to produce more with less, that is, more food with fewer labor hours and less land than was used 30 years ago,” according to a report by the Economic Research Service (ERS), the economic analysis agency of the U.S. Department of Agriculture. “Over that time, U.S. farm productivity has increased nearly 50 percent.”
This stellar production drives the economy and prevents a food crisis, among other things, according to the ERS report.
Food found on supermarket shelves does not simply and magically appear; it is the end product of a far-reaching agricultural system with a basic farm gate value and an often overlooked component – the economic multiplier of $3.50 to $4.50.
The economic multiplier works like this: For every dollar’s worth of Central Valley agricultural commodities, an additional amount – that $3.50 to $4.50 – is generated by ancillary businesses such as transportation, processors, packers, equipment makers, container makers, and much more.
Central Valley agriculture reaches every corner of society, providing food, jobs, income, and taxes, creating a food/work web across two counties with an estimated annual value of $15.75 billion to $20.5 billion.
A key reason why Central Valley residents enjoy such a wide variety of affordable and safe foods is due to farmers and ranchers being “incredibly hard workers and, thanks to better education, training and technology, they also work smarter,” said Stewart Truelsen, agriculture industry consultant and frequent contributor to the American Farm Bureau Federation’s “Focus on Agriculture.”
Of course, farmers must battle invasive pests that would devour their grapes, walnuts, almonds, tomatoes and every other crop if pesticides were not available. Agriculture supports research and development of materials for treating pests, which puts people to work in companies doing business with agriculture.
Farmers are a resilient bunch, able to overcome the tsunami of regulations, mandates, policies, rules, commands, and directives promulgated by legislatures, agencies, and departments. Farmers and ranchers know this is part of doing business, so they work within the rules and continue to be productive and competitive.
While the top-10 crops in Stanislaus and San Joaquin counties comprise about two-thirds of the Central Valley’s agriculture economy, the farm gate value of “other” crops accounts for $1.3 billion of the farm gate total. Stanislaus County’s other crops are valued at $723.6 million and San Joaquin County’s other crops add $484.9 million. As another indicator of California’s massive agricultural power, those other crops are worth more than the total agriculture value of 10 states.
The Central Valley’s top-10 crop, based on the most current figures available from the agricultural commissioners in both counties, include:
No. 1: Milk (For both counties – Total: $940.2 million)
Dairies are still recovering from the downturn of 2008 when “demand disappeared and prices declined,” said Annie AcMoody, director of economic analysis for Western United Dairymen headquartered in Modesto.
The slump continued into 2009 and 2010 with improvement finally arriving in 2011 with “pretty good prices and still rising feed costs, very similar to 2010,” AcMoody said.
Despite the challenges, California still produced 21 percent of the nation’s milk supply in 2011, 15 million pounds ahead of second place Wisconsin.
“Exports have improved,” said Michael Marsh, Western United Dairymen’s chief executive officer.
“Demand was very, very good and 14.4 percent of California’s total dairy production in September was exported.”
No. 2: Grapes/Almonds (San Joaquin: Grapes, $248.9 million; Stanislaus: Almonds, $390.5 million – Total: $639.4 million)
It was a great year for grapes in 2011, according to Mark Chandler, president of Chandler and Co., a wine industry consulting firm in Lodi. “Prices were good, and quality was good despite late rain.”
With the new “LoCA” label and a social network-based marketing campaign reaching consumers via Twitter, Facebook, print ads, and TV coverage, the wineries that depend on the 95,000 acres planted with 60 varieties in the Lodi area should do well for the foreseeable future.
Mel Machado of Blue Diamond Almonds said supply and demand for the 2011 almond crop “was good. Almond production grew 13 percent and exports are up 9 percent in Europe and 22 percent in Asia.”
Almond supply drives industry growth, and that growth will be determined by firm prices, emerging export markets, and new product development.
No. 3: Chickens/Walnuts (Stanislaus: Chickens, $308.1 million; San Joaquin: Walnuts, $207.2 million – Total: $515.3 million)
This shows the diversity of Central Valley agriculture – chickens with more value than walnuts, but both equally important to their respective counties.
No. 4: Cherries/Cattle and Calves (San Joaquin: Cherries, $184.5 million; Stanislaus: Cattle and Calves, $187.3 million – Total: $371.8 million.) The contrast of cherries – a very labor intensive crop harvested by hand during a narrow spring window – and cattle and calves – very dependent on good pasture and subject to quickly rising production costs if dry pastureland forces ranchers to purchase very expensive feed – demonstrates the mix of Central Valley agricultural commodities.
No. 5: Tomatoes/Almonds (Stanislaus: Tomatoes, $147.6 million; San Joaquin: Almonds, $156.9 million – Total: $304.5 million)
Tomato processors are projected to contract for 12.7 million tons of tomatoes for 2012, which would be the second biggest crop in history. However, the dry weather may force farmers to change their plantings and that, said Mike Montna, California Tomato Growers Association president, “could have implications for two tomato seasons.”
“Every once in a while, Mother Nature reminds us that farming is not without risks,” said Montna, speaking at the association’s 65th annual meeting in Modesto recently. “If we don’t get some rain and snowfall, it’s going to be tough for 2013, as well.”
No. 6: Tomatoes/Walnuts (San Joaquin: Tomatoes, $115.7 million; Stanislaus: Walnuts, $116.3 million – Total: $232 million)
No. 7: Silage/Cattle and Calves (Stanislaus: Silage, $107.6 million; San Joaquin: Cattle and Calves, $60.2 million – Total: $167.8 million)
Silage is an expensive commodity for dairy farmers and ranchers in need of acquiring extra feed for their herds. The subsequent increase in cost has pushed some to the brink financially.
No. 8: Hay/Deciduous Fruit/Nursery (San Joaquin: Hay, $59.8 million; Stanislaus: Deciduous Fruit and Nursery, $77.5 million – Total: $137.3 million)
The nursery business is doing reasonably well, considering the construction industry’s nosedive took landscaping with it and nurseries took a severe financial hit.
No. 9: Turkeys/Apples (Stanislaus: Turkeys, $72.1 million; San Joaquin: Apples, $52.1 million – Total: $124.2 million)
Apples made a comeback two years ago and are holding their own, albeit not returning to past production levels.
Turkeys were ninth last year, too, indicating the bird is a steady, worthwhile commodity.
No. 10: Silage Corn/Peaches (San Joaquin: Silage Corn, $48.4 million; Stanislaus: Peaches, $54.9 million – Total: $103.3 million).
Peaches were also No. 10 in 2010.
Read 92 times Last modified on Thursday, 01 March 2012 15:20
Published in Local News
Tagged under economy agriculture California
Craig W. Anderson
Craig Anderson has been with the Central Valley Business Journal since Vol. 1, No. 1. He was born and raised in the Central Valley - Tracy, Stockton, Linden - and attended San Jose State. He owned and managed the Tracy Camera Shop in Tracy with his father; worked as a business consultant; in international sales with Dole Pineapple; writer for 25 years on business, agriculture, sports; book and fiction published in national venues; has coached at Linden High School for 19 years.
Email cawriter@velociter.net
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