Background Data and Related Information on the Outlook for California Agriculture April 25 Daniel A. Sumner and Henrich Brunke University of California Agricultural Issues Center California Cash Receipts by Commodity Group, 23 Greenhouse & Nursery 12% Field crops 6% Other crops 3% Fruits & Treenuts 28% Animal products 25% Vegetables & Melons 26% Source: Economic Research Service/USDA http://www.ers.usda.gov/data/farmincome/finfidmu.htm 1
Top 1 States by Cash Receipts, 23 3, 25, 2, $ Million 15, 1, 5, - California Texas Iowa Nebraska Kansas Minnesota Illinois North Carolina Florida Wisconsin Source: Economic Research Service/USDA Percent of California Gross Production Value by Commodity Group and Production Region, 22 Fruit and Tree-Nuts Livestock Products Vegetables Field Crops Nursery, Forestry and Flowers All Com Central Coast 8.3 2. 39.3 1.7 21.8 14.2 Desert 3.8 15.8 11.8 1.9 6.8 9.5 Mountain.4 2.6.8 4.6 2. 1.7 North Coast Sacramento Valley San Joaquin Valley 9.5 7.5 58.1 3.7 4. 7.2.2 3.4 32. 1. 22.9 58. 2.6 2.8 14.1 4.3 7.2 5.4 South Coast 12.4 1.8 12.5 1.1 49.8 12.6 Source: National Agricultural Statistics Service 2
Top 5 farm commodities in California, 23 Commodity Percent of state total sales Percent of US value Dairy products Greenhouse and nursery Grapes Lettuce Almonds Source: National Agricultural Statistics Service 14.5% 11.9% 8.3% 6.2% 5.8% 19% 21.8% 89.2% 82.4% 1% Crops for which California is the Sole or Major Producer, 23 99% or more: Almonds, Artichokes, Dates, Figs, Kiwi, Nectarines, Olives, Clingstone Peaches, Pistachios, Plums, Prunes, Raisins, Walnuts Between 7% and 98%: Apricots, Avocadoes, Broccoli, Cauliflower, Celery, Cotton (Pima), Garlic, Grapes, Lemons, Lettuce, Proc. Tomatoes, Spinach, Strawberries Source: Economic Research Service/USDA 3
in million acres 4. 3.5 3. 2.5 2. 1.5 1..5 California Acreage Changes of Horticultural and Field Crops, 196-22 Avg 6-65 Avg 98-2. Horticultural Crops Source: Agricultural Issues Center Field Crops Number of Farms and Acreage, 1945-22, California and United States California U.S. Number of farms Land in Farms Average Size Number of farms Land in Farms Average Size (1 acres) (acres) (1 acres) (acres) 1945 138,917 35,54 252 5,859,169* 1,141,615* 195 1964 8,852 37,11 458 3,154,857 1,11,187 352 1987 83,217 3,598 368 2,87,759 964,471 462 1997 74,126 27,699 374 1,911,859 931,795 487 1997** 87,991 28,796 327 2,215,876 954,753 431 22** 79,631 27,589 346 2,128,982 938,279 441 Sources: US Bureau of the Census, Census of Agriculture 1945-87 (*) Excludes Hawaii and Alaska(**) 1997 Census data was Adjusted for coverage in 22 4
in mil $ 31, California Cash Receipts, 1996-24, in 24 dollars (preliminary 24 data) 3, 29, 28, 27, 26, 25, 1996 1997 1998 1999 2 21 22 23 24 California Farm Expenditures, 1983-23 7. 6. 5. Billion 2$ 4. 3. 2. 1.. 1983 1993 23 Interm Inputs and Utilities Total labor Marketing, customwork and other Rent, taxes, interests and fees 5
in mil $ 12, California Net Farm Income, 1996-24, in 24 dollars (24 preliminary) 1, 8, 6, 4, 2, 1996 1997 1998 1999 2 21 22 23 24 Farm balance sheet 22 Variable Farm assets Real estate Non-real estate Farm debt Real estate Nonreal estate Equity Debt/equity Debt/assets $ Billion 93 8 13 19 12 8 73 26.5% 21% 6
Agricultural Land Use in California, 22 Woodland 4% Other land 5% Cropland harvested 31% Pasture and range land 51% Cropland pastured 5% Source: USDA NASS, 22 Census of Agriculture a cover crops failed, summer fallow, idle Cropland other a 4% California Land Conversion to Urban and Other Uses,1988-22 Cropland Grazing Land Other Land Total Acres Converted 1988-9 4,3 2,863 57,364 118,23 199-92 39,141 14,729 45,394 99,264 1992-94 23,453 1,464 2,39 54,37 1994-96 25,954 13,33 19,185 58,442 1996-98 37,585 17,57 34,919 89,997 1998-46,859 24,43 57,816 129,161 2-2 59,144 35,126 89,973 184,243 Cumulative Total 272,139 135,945 325,41 733,644 Source: California Department of Conservation, Farmland Mapping and Monitoring Program 7
$1, $9, $8, $7, $6, $5, $4, $3, $2, Fresno County Land Values, Selected Crops, 1994-23 Almonds Table Grapes Cropland Raisin Grapes Wine Grapes Tree Fruit 1994 1995 1996 1997 1998 1999 2 21 22 23 Source: American Society of Farm Managers and Rural Appraisers in dollars 7, 6, California Land Value, Irrigated and Non- Irrigated Cropland, 2-24 5, 4, 3, 2, 1, Irrigated Cropland Non irrig. Cropland 2 21 22 23 24 Source: USDA National Agricultural Statistic Service 8
in dollars 7, 6, California Land Value, All Land, Pasture and Cropland, 1997-24 5, 4, All land Pasture Cropland 3, 2, 1, 2 21 22 23 24 Source: USDA National Agricultural Statistic Service 6, California Hired Farm Workers, 199-24, Monthly 5, Number of Workers 4, 3, 2, 1, Farm Labor 12 per. Mov. Avg. (Farm Labor) Jan-9 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan- Jan-1 Jan-2 Jan-3 Jan-4 Source:California Employment Development Dep. http://www.calmis.ca.gov/htmlfile/subject/indtable.htm 9
Trends in Contract Labor and Total Hired Labor Cost on California Farms, 199-23 million $ 7, 6, Contract labor Employee compensation (total hired labor) Total Labor Expense 5, 4, 3, 2, 1, 199 1992 1994 1996 1998 2 22 Source: USDA Economic Research Service Characteristic of California s Central Valley Farm Workers, 21 Born in Mexico Born in other countries Very Limited English Males Mean age Married or Common Law Mean Number of years in the U.S. Percent 91 4 87 76 33 63 11.2 Source: Alvarado and Luna (22) 1
Labor Expenditure per Acre Dollars per Acre 4, 3,5 3, 2,5 2, 1,5 1, 5 Almonds Broccoli Source: Agricultural Issues Center Wine Grapes Cotton Oranges Strawberries Peaches/Nectarines 12,121 31 59 Cauliflower-Field Packed Processed Tomatoes Wheat Lettuce-Field Packed Raisin Grapes Pears Rice Fresh Tomatoes For irrigation water information, see the accompanying water background in this conference briefing book 11
Price Index of Top-4 California Commodities, Weighted by Value of Production, 196-24 14 Based on constant 2 $ 13 12 11 1 9 8 (1=196-1962) 7 6 196 1964 1968 1972 1976 198 1984 1988 1992 1996 2 24 199=1 16 14 12 1 8 6 4 2 Price Indices for California Field Crops, 199-24 (adjusted for inflation) 199 1992 1994 1996 1998 2 22 24 Cotton, Upland Hay, All Rice, All Tomatoes, Processing Source: USDA-NASS 12
199=1 2 18 16 14 12 1 8 6 4 2 Price Indices for California Vegetables, 199-24 (adjusted for inflation) 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 Broccoli, All Carrots, All Lettuce, Head Tomatoes, Fresh Source: USDA-NASS 199=1 Price Indices for California Citrus, 199-24 (adjusted for inflation) 2 18 16 14 12 1 8 6 4 2 199 1992 1994 1996 1998 2 22 24 Source: USDA-NASS Lemons, All Oranges, All 13
199=1 18 16 14 12 1 8 6 4 2 Price Indices for California Wine and Table Grapes and Raisins, 199-24, adjusted for inflation 199 1992 1994 1996 1998 2 22 24 Source: USDA-NASS Grapes, Raisin Grapes, Wine Grapes, Table Price Indices for California Almonds, Walnuts, Avocados, 199-24 (adjusted for inflation) 199=1 25 2 15 1 5 199 1992 1994 1996 1998 2 22 24 Source: USDA-NASS Almonds Walnuts, English Avocados, All 14
Price Indices for California Apricots and Peaches, 199-24 (adjusted for inflation) 12 1 199=1 8 6 4 199 1992 1994 1996 1998 2 22 24 Source: USDA-NASS Apricots Peaches Expected prices Expected prices hinge on the interaction of expected long run supply conditions in competitive regions and long run tree crop demand conditions in relevant markets. Expected future demand includes the US market and potential export markets. In all markets, expected future demand depends on expectations about prices of substitute foods, new product developments, nutritional benefits, income growth, demographic trends such as age distributions, ethnicity and etc. In export markets, tariffs and other barriers to access also determine relevant demands. 15
Expected prices Expected future supply in competitive regions depends on changes in costs per unit of output if output were to expand or contract. Important competitors are in Europe, South America, and Asia, but also, for some crops, in other parts of the U.S. Must project resource constraints faced by other producers, their input prices and potential technological improvements Also land prices and competition from other crops is crucial in other regions, as in the local area For some regions (Europe) farm subsidies drive current supplies and subsidies will likely be declining over the decades to come. Ratio of Agricultural Price Received and Prices Paid by U.S. Farmers, 1975-23 18 16 14 12 1 8 6 4 2 1975 198 1985 199 1995 2 Source: USDA-NASS 16
Index of Prices Paid by Farmers, Jan 95-Dec 3 2 18 16 14 199-2=1 12 1 8 6 4 2 1996 1997 1998 1999 2 21 22 All Production Items Fertilizer Fuel 23 24 in 23 billion $ California's Agricultural Exports 1995-23 8. All Commodities Top-1 7. 6. 5. 4. 3. 2. 1.. 1995 1996 1997 1998 1999 2 21 22 23 Source: Agricultural Issues Center 17
Top-1 California Exports, 23 in million $ Rank Commodity 22 23 Change % 1 Almonds 829. 1,81.2 3% 2 Cotton 51.7 676.4 32% 3 Wine 485. 548.5 13% 4 Table Grapes 367.3 386.3 5% 5 Oranges 33.2 343.9 13% 6 Dairy 3.9 326.2 8% 7 Tomatoes, Processed 215.2 23.8 7% 8 Rice 183.3 217.1 18% 9 Beef and Products 167.7 214.7 28% 1 Walnuts 183.9 213.9 16% Agricultural Exports to Main Destinations, 23 Rest of the World 19% EU-15 23% Taiwan 3% Korea 5% China/H.Kong 7% Mexico 7% Canada 22% Japan Source: Agricultural Issues Center 18
Agricultural Exports by Commodity Group, 23 Mixtures & others 17% Fruits 23% Wine 7% Animal products 8% Vegetables 8% Tree-nuts 19% Field crops 18% Source: Agricultural Issues Center Ratio of Farm Quantity Exported to Farm Quantity Produced, 23 22 23 Commodity Grapes all Percent 21 25 Almonds 61 65 Cotton 1 93 13 Oranges 27 4 Dairy 2 5 N/A Tomatoes, Processed 11 14 Rice 43 48 Beef and Products 7 7 Walnuts 39 39 Strawberries 12 12 Lettuce 1 1 Pistachios 29 7 Dry plums 48 42 Peaches & Nectarines 1 12 Hay 7 7 Weighted Average 3 18 21 Source: USDA/NASS and AIC estimates 1 Cotton ratio is higher than 1% because part of w hat is exported in one year comes from accumulated stocks from previous season 2 There is no reliable data on farm based quantity exported. The ratio reported here is from 22. 3 Average ratio of the 5 principal commodities, w eighted by production value of each commodity. 19
Budget projections for farm subsidies ($Billions) Feed grains Soybeans Wheat Cotton Rice Dairy Other commodity Disaster Other Total Fiscal Year 24/5 8.2 2.1 1.6 3.3.6.8.5 2.6 1. $2.7 Billion Source: U.S. Budget, 25, Office of Management and Budget Direct Federal Payments to Farmers, 196-23 US California Payments in California Year Payments ($ million) as % of United States 196 72 22 3.1% 197 3,717 132 3.5% 198 1,286 14 1.1% 199 9,298 252 2.7% 1995 7,279 24 3.3% 2 22,896 667 2.9% 21 2,727 587 2.8% 22 1,961 451 4.1% 23 15,949 654 4.1% Source: USDA, Economic Research Service 2
Producer Support Estimate by Commodity Group, 1999-21 % 6% 5% 4% 3% 2% 1% % Field Crops Dairy Fruit/Nuts Vegetable/Melons California Average Source: Agricultural Issues Center Producer Support Estimate in California, by Commodity or Commodity Group, 1999-21 7% 6% 5% 4% 3% 2% 1% % Dairy Livestock Cotton Rice Wheat Feed grains Sugar Beets Alfalfa/Hay Other Field Crops Fruit/Nut/Nursery Veg/Melons Average Source: Agricultural Issues Center 21
Share of Support by Policy, California, 1999-21 Dairy Marketing Order Research 5% 5% Other Marketing 8% Economy Wide Policies 4% Import Barriers 41% Input Assistance 2% Source: Agricultural Issues Center Government Programs 16% Export Assistance 1% Share of Total Producer Support by Commodity, California, 1999-21 Alfalfa/Hay, 1% Livestock, 3% Veg/Melons, 6% Other Field Crops 1% Fruit/Nut/Nursery 13% Sugar Beets 1% Wheat/Feed grains 3% Rice 1% Dairy 51% Source: Agricultural Issues Center Cotton 16% 22
Projected Changes in Food Consumption, 21 to 23 California United States Commodity Group ---Percentage growth-- Fruit, nuts and vegetables Food grains Dairy Meats Other Total 62 54 51 49 52 54 34 26 23 21 24 26 Source: Agricultural Issues Center Changes in California food production 21 23, in value terms Source Technical change: yield growth (1.2% per year) Climate change: yield growth Crop shifts (high value/acre) Land loss, urbanization, etc. Net production change Percent change + 43 + 15 + 1-1 + 58 Source: Agricultural Issues Center 23
Outlook Dairy Nationwide, the all milk price is projected to $14.85 to $15.25 per cwt for 24/5 Cheese demand shows continued strength and class III prices are forecast higher ath $13.8 to $14.2 per cwt and class IV at $12.35 to $12.95 per cwt. Dairy exports are expected to repeat the previous season strong showing California Milk Production, 2-25, by Month (in billion pounds) 3.2 3.1 25 3. 2.9 2.8 2.7 2.6 2.5 2.4 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 2 21 22 23 24 25 24
California Average (Statewide Blend) Dairy Price by Months ($/cwt), 2-25 $19 $18 $17 $16 $15 25 $14 $13 $12 $11 $1 $9 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 2 21 22 23 24 25 Outlook Citrus California orange production forecast at 2.4 million, 23 percent up from last season and highest since 99/. Grower prices have been averaging above last season due to intermittent rains hampering harvest. Fruit quality is also good contributing to higher prices 25
Citrus Outlook Continued U.S. lemon crop is forecast at 832, tons, 4 percent higher than last season, with a bigger crop in California. Lemon prices are likely to decline through the season. U.S. grapefruit crop (8% Florida) this season is only expected to reach 985, tons, 54 percent below last season. If realized, this season s crop would be the lowest since1935/36. Cotton Outlook The 24/5 U.S. cotton crop is projected to reach 23 million bales, up from 18.3 million last year. With beginning stocks, U.S. supply will be highest in nearly four decades Demand is projected to reach 19.5 million bales, which results in ending stocks of 7.1 mil bales and stock-to-use ratio of 36% California acreage is projected unchanged from last season. Pima acreage is expected slightly higher 26
Rice Outlook U.S. production in 4/5 projected at record $23.8 million cwt, up 16% from previous year. U.S. ending stocks for 4/5 are estimated at 4 million cwt, the largest since 86/87 and season average price projected at $7.25 to $7.55 per cwt, down from over $8 in 3/4 U.S. supplies of medium/short grain rice in 4/5 remain projected at 77.5 million cwt, the largest since 83/84. Other California Crop Outlook Almonds: Growers optimistic about successful pollination and likely good crop Strawberries: After initial setbacks due to rain, Calif. production is recovering and might reach new production record (California Strawberry Commission) Processing tomatoes: Early intentions report indicated 9 percent fewer tons contracted 27
Wine Grapes California wineries shipped record 428 million gallons of wine in 24 Wine sales in the U.S. grew 4% to 668 million gallons in 24 (table wine sales were 88%, desert wines 7.5% and champagne/sparkling wine 4.5% U.S. wine consumption has increased 63% since 1991 Source: The Wine Institute Table Wine Volume Share by Color in U.S. Supermarkets Color 1991 1995 24 Red 17% 25% 41% White 49% 41% 4% Blush 34% 34% 19% Total 1% 1% 1% Source: The Wine Institute 28
8 Wine Sales in the U.S. 1991-24, millions of gallons 25 millions of gallons 7 6 5 4 3 2 1 1991 1993 1995 1997 1999 21 23 Source: The Wine Institute Total Wine Retail Value 2 15 1 5 billion $ Expected Quantity Future crop yields for each crop will be driven by the specific parcel used for that crop, technology available in the future and choice of inputs Each parcel has different relative yields so the decision must start there. Obviously, some land is just not well suited to some crops Also, high crop price or low input prices may stimulate higher yields Future technology must be projected to see how relative yields grow across crops 29