Category: International issues

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International Trade and California Agriculture

AIC Issues Brief

No. 3, October 1997

International Trade and California Agriculture

Colin A. Carter and Daniel A. Sumner*

International trade, long important to California agriculture, is becoming increasingly central to the state’s agricultural economy. There are crucial opportunities and challenges for the state’s farm-related industries in world markets. The current debate over a “fast track” for new trade agreements highlights some of the important policy issues. Meanwhile, major forces are shaping international markets and the future of California agricultural trade. (See box for global trends.)

One quarter of the more than 250 agricultural commodities produced in this state are exported. Six of California’s top 10 commodities in terms of value of production also rank in the state’s top 10 exports. As a result, California not only leads the US in farm production, but also is the nation’s largest exporter of agricultural products. California exports more food and fiber than most countries, including such major exporters as Australia and Canada (1995 data).

MAJOR EXPORT PRODUCTS

California’s exports, including bulk commodities as well as consumer-ready foods, reflect the highly diversified nature of its agriculture. Table 1 lists the value of important export commodities and the 1992-95 growth rate in exports. Of the commodities listed, the largest rates of export growth were experienced by dairy (22.1%), grapes (10.4%) and almonds (9.6%).

All the commodities listed have a long history of exporting, but the nature of those exports differs. Most California cotton is exported—mainly in the form of raw cotton that is milled and further processed overseas, especially in Asia. The almond industry also ships the majority of its output to foreign markets, especially to Europe.

For other products, the domestic market remains larger than exports. California oranges are sold fresh to Asia and Canada, but the largest market is in the US. Grapes are sold fresh, as raisins, and as grape juice and wine. Exports in all these forms have been increasing, but the domestic market remains larger.

California’s Main Agricultural Exports

1995 export value
($ million)		 1992-95 annual
growth rate
Beef 993 0.4%
Cotton 780 2.0%
Almonds 799 9.6%
Grapes 674 10.4%
Oranges 335 -0.9%
Dairy 236 22.1%
Total (1-6) $3,817 4.4%
California Total $11,506 4.5%
Source: California Agricultural Resource Directory, CDFA, 1995.
a) CDFA value for almonds was $488,439 and was considered to be inaccurate. More than 99 percent of U.S. almonds are grown in California. The almond value used was obtained from the USDA’s FATUS.
b) Grapes includes table grapes, wine, and raisins.
c) The California total uses the USDA’s FATUS for the almond data and excludes fish and timber.
d) The choice of the time period for the annual growth rate was dictated by the 1992 change in the way state export statistics were reported.

As measured by farm sales, the dairy industry is the largest single agricultural industry in California. Farm value of milk was $3.1 billion in 1995 and the processed value, including fresh milk, is several times larger. Therefore, even though less than 8 percent of dairy output is exported, the total value of exports was well over $200 million in 1995. Dairy exports have been aided by the US Dairy Export Incentive Program (DEIP), which is being curtailed as a result of the Uruguay Round Trade Agreement.

Beef is often listed among the top exports from California agriculture and the beef industry, including pasture-based and feedlot operations, remains a major part of agriculture in the state. However, the way export data are collected makes it difficult to determine whether the meat products originated from California farms or were simply processed and shipped from here. Thus, both beef and pork export figures attributed to California seem implausibly high. For beef, the 1995 data indicate exports of almost $1 billion. (See Data Issues section at end of Brief.)

MAJOR EXPORT MARKETS

California tends to specialize in commodities that are usually sold to high income countries. The top six destinations, shown in Figure 1, are Japan, Canada, European Union (EU), South Korea, Hong Kong, and Mexico. (Unofficial trade sources indicate that somewhere between 10 to 60 percent of agricultural exports to Hong Kong may be re-exported to mainland China. If accurate data were available, China might well replace Hong Kong as one of the top six California markets.)

In order to highlight some of the trade issues that California faces, market developments in important receiving nations are briefly discussed below.

JAPAN

Japan has a highly protected market in some important commodities, but is also the world’s largest importer of agricultural products. Japan is California’s largest export market for agricultural products, with beef, cotton, and oranges ranking among the top commodities. The US accounts for roughly one-third of Japan’s agricultural imports and about 20 percent of that amount originates in California.

Rice is the focus of Japanese agricultural policy and the stated goals are to enhance food security and raise farm incomes. In the recent Uruguay Round Trade Agreement, however, Japan pledged to gradually increase the import share of its domestic rice consumption from 4 to 8 percent over six years. In 1996, Japan imported about 500,000 tons, or about 5% of domestic use. Of this total, about half came from California. In addition, tariffs are being significantly lowered for beef, oranges, grapefruit, certain dairy products, peaches, wine and vegetable oils.

CANADA

The implementation of the Canada-United States Free Trade Agreement (CUSTA) in 1989 followed by NAFTA in 1994, has led to expanded agricultural trade between the two nations. Between 1989 and 1995, US exports to Canada grew about 60%, from $3.6 billion to $5.74 billion, while imports from Canada increased about 90%, from $2.9 billion to $5.56 billion. Fruits and vegetables account for more than one-third of Canada’s agricultural imports from the US and thus California plays an important role in this north-south trade.

Trade disputes seem to be a byproduct of increased farm trade on the North American continent. A continual and contentious disagreement has focused on increased Canadian exports of wheat and barley to the United States, some of which makes its way into California. In 1997, with wheat imports rising again, there are renewed US complaints, many focused on the Canadian Wheat Board.

In 1995, the United States complained formally about Canada’s high tariffs on dairy, poultry, and egg products. The US argued that these tariffs, which replace import quotas as a part of the Uruguay Round trade agreement, conflict with Canada’s NAFTA commitments. In 1996, a NAFTA dispute settlement panel unanimously supported Canada. (But, this result did not satisfy most US dairy industry advocates.)

EUROPEAN UNION

The wealthy nations of Western Europe have been a traditional market for US agricultural exports. Although high trade barriers and other rules limit its imports of grains, meat and many other products, the EU remains a key destination for US and California exports. In the case of California, the EU is a major buyer of almonds and other nuts, as well as wine and raisins.

California agriculture is also affected by EU export subsidies. These policies depress the world market prices for many items including beef and dairy products.

SOUTH KOREA

South Korea imports significant amounts of beef, cotton, and hides from California. South Korea is also a growing market for horticultural products.

Although the overall economy continues to grow rapidly, Korean agriculture is under serious economic pressure. Under the Uruguay Round Agreement, South Korea has committed to trade liberalization. Like Japan, it agreed to import a small but growing share of its domestic rice consumption. (In exchange for limits on its rice liberalization requirements, South Korea agreed to substantially lower citrus and other fruit and nut tariffs, and substantially open beef markets.) Most observers agree that South Korean imports of rice will likely exceed their minimum commitment and imports of California rice seem likely in the near future.

HONG KONG AND CHINA

Hong Kong’s population is only 6.3 million, compared with China’s 1.2 billion. However, Hong Kong’s GDP is equivalent to 21 percent of China’s and its income per head, nearly $24,000, is higher than in most Western countries. Hong Kong is highly dependent on the rest of the world for food.

The California farmer plays an important role in supplying this market and Hong Kong is a rapidly growing market for California’s agricultural commodities. There are no import tariffs on food. Non-tariff barriers, such as phytosanitary or plant quarantine regulations, are almost nonexistent.

On July 1, 1997, China regained sovereignty over Hong Kong. China pledged, however, that Hong Kong will retain its status of a free port, and that Hong Kong’s free trade structure will remain in effect.

China was an original member of General Agreements on Tariffs and Trade (GATT), but withdrew in 1949, and has been trying to rejoin since 1986. Entry into the World Trade Organization (WTO), which now enforces GATT, would mean better and increased food imports. However, the US has maintained that to enter the WTO, China must pledge to comply with basic international standards of trade.

Currently, China bans the importation of most fruits for consumption in China. (Table grapes recently became one exception to this rule.) However, fruit imports are permitted if the products are subsequently re-exported after further processing. This system is open to abuse and some produce likely remains in China.

China has the long-term potential to export high-quality food to Hong Kong, Japan or Korea. The hurdles are lack of incentives and inadequate infrastructure. Hong Kong entrepreneurs may now produce higher quality food products in China for sale in Hong Kong and other markets. This could affect California’s competitiveness in the Hong Kong market and perhaps elsewhere.

MEXICO

Mexican agricultural trade is highly dependent on its two NAFTA partners. Under NAFTA, US and Mexican agricultural tariffs and non-tariff barriers will be phased out over time periods up to 15 years.

However, it remains difficult to assess the impact of NAFTA on Mexico or on agricultural trade. Beginning with the devaluation of the peso in late 1994 and early 1995, the Mexican economy experienced a two-year economic crisis that halted the expansion of trade and the economic growth that was expected to result from the January 1994 implementation of NAFTA. The peso went from 3.4 per dollar in 1994 to 7.9 per dollar in 1996. Inflation in Mexico went from single digits in the early 1990s to over 50 percent in 1995. This crisis had a huge impact on Mexico’s trade in agricultural products. Imports dropped dramatically due to the declining real incomes in Mexico. At the same time, Mexican exports of agricultural products benefited from the peso devaluation. Mexico’s key exports are tomatoes, orange juice, coffee, fruits, cattle, beer, and grapes.

In 1996, the US partially opened its market to Mexican avocados for the first time in 82 years. Prior to this ruling, phytosanitary rules banned unprocessed Mexican avocado imports and provided protection to California growers. The US decision to import avocados into selected markets indicates a US commitment to rules-based trade which will probably help in alleviating US-Mexican trade tensions over peaches, nectarines and cherries.

Unlike Florida, many of the labor-intensive crops grown in California do not compete directly with Mexican produce. In the case of fresh tomatoes, for example, the major market periods of Mexican and Californian tomatoes do not overlap. Still, with lower labor costs and improving conditions for infrastructure, management and technology, Mexico is likely to be a formidable competitor in the future. Of course, as the Mexican economy improves, Mexico will also become an even more important export destination.

CONCLUSION

For the foreseeable future, growth in trade of agricultural products is expected to be most vigorous in the Pacific Rim. As a major food exporter, California is well situated to participate in this growing market. California agriculture is highly diversified and produces a range of high-valued food products destined for sale in relatively high income countries. Thus California is likely to experience continued growth in profitable agricultural exports.

 

FIVE GLOBAL TRENDS
ARE SHAPING AGRICULTURAL MARKETS
  • First, income growth, especially in the Pacific Rim, is driving increased demand for food and fiber. In poor countries, income growth results in more food purchased and improved diet quality. In middle income countries, income growth encourages a shift to fresher produce, more meat and poultry and higher quality products in general. In the strong economies of East Asia, agricultural imports have grown dramatically during the 1990s.
  • Second, international agreements and unilateral actions are gradually opening more foreign markets to California exports. Improved market access is occurring for many products, but this phenomenon is not universal and is certainly not complete. The North American Free Trade Agreement (NAFTA), and the Uruguay Round Trade Agreement, are already having significant impacts on California agriculture.
  • Third, US import barriers are also falling, which allows foreign products better access to US markets. This means domestic competition facing California products is stronger.
  • Fourth, technical trade barriers based on animal and plant health, food safety and related concerns must now be based on scientific evidence that satisfies international review. Barriers are not required to be standardized or harmonized, but they are subject to international challenge in the World Trade Organization, or before bilateral dispute resolution committees.
  • Fifth, investments by multinational firms, joint ventures, and trade in highly processed products or ingredients are changing the very meaning and substance of international agricultural trade. As California firms invest overseas and foreign firms invest in and source raw materials from California, we must broaden our concept of international commerce beyond the traditional exchange of commodities across national boundaries.

DATA ISSUES

Information on international trade of agricultural commodities and products is reported for the US as a whole by the USDA in a series of publications known as Foreign Agricultural Trade of the United States (FATUS). However, consistent data on the export value of agricultural products by state of production are simply not available and may be approximated only with varying degrees of confidence. The Agricultural Issues Center and the California Department of Food and Agriculture are initiating a study to assess the uses of and improve the accuracy of state agricultural trade statistics.

This Issues Brief presents export figures for 1995 based upon information from the California Department of Food and Agriculture, FATUS, and industry sources. Similar information for 1996 is not available. The major points we make in this Brief are unaffected by the approximate nature of the trade data.

*Carter is a professor in the Department of Agricultural and Resource Economics at the University of California, Davis, and an Associate Director of the Agricultural Issues Center. Sumner is the Frank H. Buck, Jr., Professor in the Department of Agricultural and Resource Economics at UC Davis, and the Director of the Center. The authors thank Ray Coppock of AIC for editing.

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AIC Quarterly: Volume 11, No. 3, 1997

THE UC/AIC QUARTERLY

THE NEWSLETTER OF THE UC AGRICULTURAL ISSUES CENTER
VOLUME 11. NO. 3. 1997

DIRECTOR’S MESSAGE BY DANIEL A. SUMNER

Several articles in this UC/AIC Quarterly highlight the importance of international trade and global relationships to agriculture in California. This issue is once again in the news as the US Congress debates the President’s negotiating authority for new trade agreements. AIC has contributed to the dialog over trade policy in the past and we will continue to provide analyses of these issues.

Among the most dramatic economic trends in recent years has been the growth of the Asian market for agricultural imports. Not only has the market grown in such places as Japan, South Korea, Taiwan and Hong Kong, but markets in other Asian countries are now poised to expand rapidly over the next decade or so.

While this AIC Quarterly is being finalized and distributed I am getting a first-hand look at one of the most important and dynamic economies in Asia. During the month of October, Hyunok Lee, UC Davis agricultural economist, and I will be in China, teaching graduate courses in agricultural policy analysis and gathering information and contacts for future research. We will then proceed to South Korea for one week to gather data related to ongoing research on Korean markets and policy.

The Agricultural Issues Center will continue to deal with many topics of interest to California agriculture. None are more important than improved understanding of international markets and related policies.

HAROLD O. CARTER RECEIVES
TOP COLLEGE AWARD

Harold O. Carter, recently retired founding director of the Center, has been given the 1997 Award of Distinction, the highest recognition granted by the UC Davis College of Agricultural and Environmental Sciences to those whose contributions have advanced the mission and enhanced the image of the College. He is one of 11 recipients from industry, agriculture and research institutions, including UC.

The awards were presented October 17, during the College’s annual Fall celebration and award ceremony. Carter, now professor emeritus in the UCD Department of Agricultural and Resource Economics, was honored for, among other achievements, a landmark study of world hunger and food supply, contributions to economic programs in Egypt, and development of the Agricultural Issues Center as “a forum where crucial trends and policy issues affecting agriculture and natural resources in California and the West are analyzed.”

 

INTRODUCING NEW AIC ASSOCIATE DIRECTORS

As indicated in the last AIC Quarterly, the Center has created program areas, each led by an Associate Director. The background and expertise of the fifth new AIC Associate Director is described below.

Jerry Siebert
Agribusiness Issues

Jerry Siebert is an economist in the Department of Agricultural and Resource Economics, University of California, Berkeley. Prior to this assignment, he was Director of U.C. Cooperative Extension. In addition to his academic experience, he has held positions in both business and government. In the latter assignments, he was special assistant to four U.S. Secretaries of Agriculture. He also has a farming background on a family farm in Madera, California.

His work centers on research and education involving the impacts on California agriculture of changes in public policies affecting production and marketing of California agricultural commodities. In particular, he analyzes the use of market mechanisms to evaluate the potential economic effects of changes in public policy. His current focus is the role of technology in California agriculture and changes needed in industry and research institutions to facilitate the development and application of agricultural biotechnology. He is also an active participant in a Russian project to facilitate the transfer of technology in a market economy.

In addition to his work at the University of California, he is an “ex-officio” member of the California State Consolidated Farm Services Committee, a public member on the California Walnut Commission and chairman of the Walnut Marketing Board, president of the San Francisco Farmers Club, and a member of the Board of Directors of the International Agribusiness Management Association.

 

AIC RURAL/URBAN PROGRAM

BY AL SOKOLOW

In each of the next issues, the AIC Quarterly will introduce the new AIC program areas. Interactions between California agriculture and the larger society, particularly the urban populations and communities of the state, are the focus of this AIC program. Up to now, we have concentrated largely on the impacts of rapid urban growth on farmland—emphasizing farmland preservation and other land use policies as they are established and carried out by California’s state and local governments. Looking ahead, we would like to stretch the boundaries of this program area to include other types of interactions critical to the future health of California agriculture. We are looking for challenging issues that call for new research or new syntheses of existing data and knowledge, that have state and local public policy dimensions, and that can generate useful educational outcomes in publications, conferences and other forms. Readers of the AIC Quarterly with ideas along these lines are invited to contact me. (Phone: 916-752-0979. E-mail: ajsokolow@ucdavis.edu)

What have we done so far, and what are the projects in the pipeline or planned for the near future?

The origins of this program go back to two projects carried out by AIC in the late 1980s, a study of the Williamson Act commissioned by state government and the Central Valley Confluence of Change project. The Williamson Act study had a positive although unanticipated effect on policy when, late in the 1993 deliberations on the state budget, the subvention to local governments for property tax losses was doubled and the formula for allocating the payments was revised to pay less for parcels close to cities—both recommendations of the 1989 study. The two-year Confluence of Change project culminated in two large conferences in Sacramento and Fresno in 1990, produced several reports and videos, and brought together more than 60 UC researchers in a comprehensive review of the implications of population growth on the Central Valley’s agricultural and other resources, residents, and local governments. Much of my outreach work as a Cooperative Extension specialist has followed in the footsteps of that 1989-90 project.

More recently, AIC held two conferences on farm-urban “edge” issues. They were (1) Farmers and Neighbors (October, 1995) that primarily examined pesticide application controversies, and (2) California’s Future: Maintaining Viable Agriculture at the Urban Edge (December, 1996) that covered a large set of edge concerns. The published proceedings of both conferences are available from the Center, as is the widely-used Farmers and Neighbors video.

An ongoing feature of our program area is the research report series on California Farmland and Open Space Policy. Three reports in the series have been published so far: studies of (1) preservation programs in four North Bay counties, (2) farmland provisions in county general plans in the Central Valley, and (3) municipal density patterns and policies in the Central Valley as related to farmland protection. Currently under preparation are two candidate reports for the series—a study of the effects of Measure A (restricting new urban growth to cities) in Solano County and a comparison of farmland protection policies and their political roots in seven Central Valley counties.

Scheduled for publication early next year is a book-length collection of articles, California Farmland and Urban Pressures: Statewide and Regional Perspectives,that has been peer-reviewed. The approximately ten pieces in this collection include statewide studies of population and farmland trends, dimensions of the edge problem, state policy, California agricultural history, and the experience of local land trusts. Also included are case studies of farmland preservation problems and programs in Marin, Napa and Ventura counties and the San Joaquin and Sacramento valleys.

As to possible future activities, we are considering a project on generational change in California farm families that would integrate research from several different disciplines—agricultural economics, sociology, anthropology, and law. The issue has implications for agricultural industry and farmland preservation as well as individual families, since shifts from one generation to the next in the ownership and management of farms often provide the impetus for selling farmland for development purposes. I welcome comments about this possible project.

 

AIC INTERNATIONAL TRADE PROGRAM

BY COLIN CARTER

International trade has long been important to California agriculture and that importance is growing. Recent domestic and international policy and market developments have created both new opportunities and new challenges for California agriculture. AIC Issues Brief Number Three documents the importance of trade to California agriculture and raises a number of trade issues facing the industry. The AIC program related to international trade cannot deal with all of the topics raised in the Brief, but we have plans to research some of the issues identified.

A substantial focus of the AIC’s upcoming international efforts will deal with the Pacific Rim. For instance, we will be looking at the growing agricultural markets of Korea and Japan and investigating how trade policy changes in those countries will affect demand for California’s imports. We are also studying the growing potential of competition from mainland China crowding out California exports to Asia. We will study factors affecting trade in high-valued processed food versus trade in bulk commodities.

The international trade program at the Center is also devoting effort toward better understanding of state trading enterprises (STEs). These government organizations established to monopolize foreign trade play an important role in global agricultural trade. STEs are expected to come under increased scrutiny under the new World Trade Organization. AIC’s work on STEs will investigate their role in Australia, Canada, and China. We will investigate both domestic and international market impacts.

Finally, applied research must begin with reliable data and trade statistics, which are notably problematic, especially at the state level. A brief article on page 5 mentions a new project initiated by the AIC and designed to improve the quality of published data on state agricultural exports. This work has a very practical objective of allowing states to more accurately gauge the value and destination of exports. It will also improve the AIC’s program on trade by developing a set of state-level trade data for California.

 

EXECUTIVE SEMINAR SCHEDULED FOR DECEMBER 11

The AIC will co-sponsor an Executive Seminar on Agribusiness Issues at the Sacramento Hyatt on December 11, 1997. The theme of the seminar will be: “Where in the World are the Markets for California Agriculture?” Registration for the seminar will be $110. To receive registration materials, call AIC at 916-752-2320. Registration is limited to 150 participants.

 

NEW CENTER PUBLICATION SPOTLIGHTS STATE’S FOREIGN AGRICULTURAL MARKETS

With international trade increasingly important to California agriculture, AIC Issues Brief Number Three examines the role of international trade in the economic progress of California agriculture.

California is the largest agricultural exporter in the U.S. Exports are crucial to the state farm economy—one-fourth of all agricultural commodities produced here are shipped abroad, a volume of trade greater than that of such major agricultural nations as Australia and Canada. In the Pacific Rim, particularly, international market trends will be a crucial factor in the future of California agriculture.

Meanwhile, the world’s food and farm product markets are being re-shaped by income growth in third-world nations, trends toward reduced trade barriers, and globalized economic enterprises. All these create opportunities and challenges for California’s agricultural industry.

The new Center publication is International Trade and California Agriculture, AIC Issues Brief Number Three, by Colin A. Carter and Daniel A. Sumner. It integrates statistics from several sources to identify California’s most important agricultural exports, their relation to domestic markets, and recent growth rates. The authors then analyze trends in the most important foreign markets for California farm products: Japan, Canada, the European Union, South Korea, Hong Kong and China, and Mexico.

Carter and Sumner are professors in the UCD Department of Agricultural and Resouce Economics. Carter is an associate director of the Center, and Sumner is director.

Those on the mailing list for this newsletter will receive a copy of International Trade and California Agriculture. Additional copies are available from the Center. Also available are the first two in the AIC Issues Brief series: Economic Impacts of Irrigation Water Cuts in the Sacramento Valley and A Measure of Subsidy to California Agriculture.

 

EXPORT DATA PROJECT TEAMS AIC AND CDFA

In recent years California state agricultural export statistics have been reported based upon several different methodologies. At the request of CDFA’s Secretary Ann Veneman, the Center is initiating a new project to investigate, review and develop a consistent methodology and approach. The research will:

  1. Survey appropriate uses of state export statistics by government and the private sector.
  2. Review current and potential ways of reporting export statistics by community and location.
  3. Develop the most accurate and appropriate measurement for values of the state agricultural exports.

With the participation of agriculture departments in other states, the project will be conducted jointly with research counterparts at several land grant universities. Thus, while the analysis here focuses on California, the project will be national in scope.

We anticipate a preliminary set of results and a proposed methodology by mid-1998. We also hope to produce a prototype set of California export statistics by the summer of 1998.

 

FUND-RAISING UPDATE

BY RICK SWANTZ, A&ES DEAN’S OFFICE COLLEGE RELATIONS

In our last issue it was announced that Hal and Carol Sconyers had named the Harold O. Carter Endowment as one beneficiary of a charitable trust they established to be shared equally by four UC Davis campus programs. Their gift to the Endowment is valued at $147,500 and is a tremendous kick-off for our fund-raising effort.

Co-chairs and steering committee members are being recruited for the fund-raising campaign and the candidates are demonstrating 100% willingness to serve. Plans to honor Hal Carter and officially launch our campaign are in their early stages.

More good news on the fund-raising front: the Dean’s Office was contacted earlier this summer by a representative of the State Attorney General’s office, asking whether the college has visible programs that provide maximum benefit to agriculture in California. The AG’s office has received money from a settlement to be awarded to programs benefiting agriculture. It was suggested to them that support of the Center’s programs through the Harold O. Carter Endowment would have substantial long range benefits for California agriculture and California residents. All indications are that $20,000 is on the way!

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AIC Quarterly: Volume 11, No. 2, 1997

Volume 11, No. 2, 1997 (html)

THE UC/AIC QUARTERLY

THE NEWSLETTER OF THE UC AGRICULTURAL ISSUES CENTER

Volume 11. No. 2. 1997

DIRECTOR’S MESSAGE

BY DANIEL A. SUMNER

The Agricultural Issues Center has been active these last few months completing projects and planning new work. New publications have been released, other studies are progressing to the editing stages, and some research is just now underway. Also, a few additions to the slate of AIC activities have begun.

We have initiated a new publication series, the AIC Issues Brief. As the name implies, these will be short summaries of research on topics of interest to California agriculture. Our objective is bring to a broad audience information from studies that might not otherwise be widely accessible. The first Issues Briefhas been released and the next few are on the way.

We are actively preparing for AIC participation in the Sacramento Conference of the International Association of Agricultural Economists. I am particularly excited about the plenary session on California agriculture that will include an address by California Secretary of Food and Agriculture Ann Veneman.

In the last AIC Quarterly, I introduced four new associate directors who have agreed to provide leadership to ongoing programs for AIC. In this newsletter, we provide a bit more background on each of these new associate directors and give some further information on plans for the Science and Technology Program led by Professor Julian Alston.

It gives me great pleasure to announce here that UC Berkeley Cooperative Extension Specialist Jerry Siebert has agreed to take on the added role of AIC Associate Director for Agribusiness Issues. Many of you know Jerry from his multi-faceted work with Cooperative Extension. In the next newsletter we will provide more information on Jerry’s background and his plans for the agribusiness area.

Finally, I want to express my appreciation for the job AIC Advisory Board Chair William Allewelt is doing in getting the Harold O. Carter Endowment off to such a great start. Bill Allewelt has long been a great citizen of the university community. I am sure he and his co-chairs will appreciate all the support you can provide as he broadens the Carter Endowment fund-raising efforts.

INTRODUCING NEW AIC ASSOCIATE DIRECTORS

As indicated in the last AIC Quarterly, the Center has created program areas, each led by an Associate Director. The background and expertise of four new AIC Associate Directors are described below.

Julian M. Alston
Science and Technology

Julian M. Alston is a professor in the Department of Agricultural and Resource Economics of the UC Davis. He teaches graduate and undergraduate classes in microeconomic theory and the analysis of agricultural markets and policies.

Prior to beginning his current position in 1988, Alston was Chief Economist in the Department of Agriculture in Victoria, Australia, where he had been employed in various capacities since 1975. His experience in public policy analysis and advice, and in administration of a large scientific organization has shaped Alston’s research interests in the economic analysis of agricultural markets and public policies concerning agricultural incomes, prices, trade, and agricultural research and promotion. Along with many articles in professional journals, he is a co-author of two recent books:  Making Science Pay: The Economics of Agricultural R&D Policy and Science under Scarcity: Principles and Practice for Agricultural Research Evaluation and Priority Setting.

Alston was raised on the family farm in northern Victoria, Australia. He has a Bachelor’s degree in Agricultural Science from the University of Melbourne in 1974; a Master’s degree in Agricultural Economics from La Trobe University in 1978; and a PhD in Economics from North Carolina State University in 1984.

Colin A. Carter
International Trade

Colin A. Carter has been a Professor of Agricultural and Resource Economics at UC Davis for 12 years, after serving as a professor at the University of Manitoba. His research investigates problems related to agricultural policy and trade, with a focus on grain markets in the Pacific Rim. He has written extensively on state trading enterprises in grains. Carter has studied the internal grain economy in China and China’s participation in the international market. From 1986-89, Carter held a fellowship in international food systems from the Kellogg Foundation. Along with scores of professional journal articles, chapters and reports, Carter has co-authored several books, the topics of which include China’s grain markets, futures markets, and U.S. agricultural policy.

Carter was raised on a grain farm in Alberta, Canada, and received his B.S. and M.S. degrees from the University of Alberta. His PhD in Agricultural Economics is from UC Berkeley in 1980.

Alvin D. Sokolow
Rural/Urban Interactions

Alvin D. Sokolow is a Public Policy Specialist with UC Cooperative Extension, housed in the Department of Human and Community Development on the Davis campus. Formerly a Professor of Political Science at Davis for 27 years, his research and extension activities deal with issues and processes of community and state governance. He has published 72 journal articles, monographs and other reports. Current and recent work concentrates on farmland and land use policy in California, state-local public finance, and politics and policy in small communities. Sokolow has been a key participant in AIC projects since 1989, including the Williamson Act, Central Valley, and urban-agricultural edge projects. He is the editor of the Center’s series, California Farmland and Open Space Policy.

A Chicago native, Sololow’s degrees from the University of Illinois are: undergraduate in Journalism, and M.A. and PhD in Political Science. He has taught at Western Michigan University, Michigan State University, and the University of Illinois, and has been a visiting scholar at Montana State University and Miami University.

Keith Knapp
Resources and the Environment

Keith Knapp was born in Wichita, Kansas, and raised in Minnesota, Illinois and Iowa. He received a B.S. in Economics from Iowa State University in 1972. After two years of military service, his educational career resumed at Johns Hopkins University where he received a PhD from the College of Engineering in 1980, specializing in resource and environmental economics. He has been with UC Riverside since September of 1980. He is currently Professor of Resource Economics and Resource Economist in the Department of Soil and Environmental Sciences at UC Riverside.

Professor Knapp teaches four courses in resource and environmental economics at the undergraduate and graduate level. He has conducted research on irrigation management, salinity and drainage problems in the San Joaquin Valley, renewable resource management with an emphasis on groundwater, agricultural markets (grain reserves and perennial crops), and the implications of exhaustible resources for economic growth. Current research interests are generally the economics of natural resource use and environmental quality as related to irrigated agriculture with an emphasis on water management.

 

AIC CO-SPONSORS SEMINAR

The AIC will co-sponsor an Executive Seminar on Agribusiness Issues at the Sacramento Hyatt on December 11, 1997. The theme of the seminar will be: “Where in the World are the Markets for California Agriculture?” Registration for the seminar will be $125. Watch for a detailed announcement and registration materials in early October.

 

AIC SCIENCE AND TECHNOLOGY PROGRAM

JULIAN M. ALSTON

In each of the next issues, The AIC Quarterly will introduce the new AIC program areas. New technology, resulting from private and public investments in agricultural R&D, has been the mainspring of agricultural economic development, and has driven the growth of agricultural productivity that sustains California’s competitiveness in domestic and world markets. Understanding the relationship between science and technology and agriculture, and the rural sector, has always been important.

A variety of newer policy issues relate to changes in public perceptions of, and policy related to, science and technology, evolving policies for public and private funding of agricultural R&D, changing institutional arrangements governing intellectual property, and changes in the technology of science itself, such as the development of modern biotechnology and information sciences. Emerging concerns about such issues as the relationship between agriculture and the environment, animal welfare, and food safety are bringing new challenges to agricultural science and technology policy.

The Science and Technology program in the Center is devoted to work on these issues. The current program of work includes (a) state-level analysis of the causes of growth in U.S. agricultural productivity over the post-war era, (b) analysis of the state-level variation of funding patterns of agricultural R&D at State Agricultural Experiment Stations during 1890-1990, (c) the effects of the U.S. Plant Variety Protection Act on U.S. wheat variety improvement, (d) the relationship between U.S. agricultural productivity and U.S. investments in international agricultural R&D, (e) measurement of the benefits from policy-oriented social science research, (f) the economics of biodiversity policy, and (g) international comparisons of agricultural R&D institutions and investments.

 

PROJECT ON MANAGEMENT OF FARM RESOURCES

The AIC joined with the Farm Foundation and the Economic Research Service of the USDA to sponsor a study on farmers’ and managers’ responses to the 1996 FAIR Act. Warren Johnston, Professor Emeritus in the Department of Agricultural and Resource Economics, UC Davis, along with Dr. Lyle Schertz, retired from the USDA, conducted intensive round table discussions with producers and farm managers in eight regions nationally, including one in northern California. The results of this national study will be published by the Economic Research Service, USDA, and the results from the northern California round table will be featured in a forthcoming AIC Issues Brief.

 

AIC ISSUES BRIEFS

The AIC is initiating a new publication series to provide results of research and analysis in a convenient, non-technical format. The AIC Issues Briefs will cover a variety of topics of interest to California agriculture. The first AIC Issues Brief is now available (see page 5) and the next three are under way. They will appear this summer and be distributed to our newsletter mailing list:

  1. Economic Impacts of Irrigation Water Cuts in the Sacramento Valley
    by Hyunok Lee, Daniel A. Sumner and Richard E. Howitt
  2. A Measure of Subsidy to California Agriculture
    by Daniel A. Sumner and David S. Hart
  3. Agricultural Trade and California Agriculture
    by Colin A. Carter
  4. Technology Innovations in California Agriculture
    by Julian M. Alston and David Zilberman

 

HAROLD O. CARTER ENDOWMENT UPDATE

WILLIAM ALLEWELT, AIC Advisory Board Chair

At its spring meeting Dan Sumner and I proposed that the AIC Advisory Board initiate a campaign to establish a Harold O. Carter Endowment fund to help support Agricultural Issues Center programs. We suggested this as a highly appropriate and lasting tribute for Hal’s invaluable leadership as the Center’s founding Director. With the AIC Board’s encouragement, we formalized the proposal, just recently receiving Chancellor Vanderhoef’s authorization to commence fund raising.

With this, we are now recruiting friends of the Center to join us in providing leadership and direction to the fund-raising campaign. As we set out to identify prospective donors and set a campaign goal, we would very much appreciate help from readers of this newsletter.

If you can join us in this worthy effort, or know someone who might, simply inform an Advisory Board member or the Center. Your help can be vital. A successful campaign will depend on a broad base of support from everyone who has been touched by the Center’s important work.

It is most satisfying to be able to close this reporting with word that the campaign has already secured a very generous gift from Hal and Carol Sconyers. Hal is a Davis graduate and now serves on the Board of Trustees of the UC Davis Foundation. Carol is actively engaged with UC Davis affairs, most especially UC Davis Presents, an annual series of performing arts events sponsored by the campus.

Recently the Sconyers named the campus as beneficiary of a charitable trust to be shared equally by four designated programs. The College of Agricultural and Environmental Sciences is one of the four, but no specific college program was identified initially. Well, now it is. Their gift to the Harold O. Carter endowment is valued at $147,500! That’s a great start. Let’s make it grow!

 

AIC ISSUES BRIEF NUMBER ONE LAUNCHES NEW SERIES

With “Economic Impacts of Irrigation Water Cuts in the Sacramento Valley,” the Center initiates the AIC Issues Brief publication series.  AIC Issues Brief, Number One, by Hyunok Lee, Daniel A. Sumner and Richard E. Howitt focuses on the relationship between water, agriculture and the local economies of eight Sacramento Valley counties. Using a simulation model, the authors show that a 25 percent cutback in surface water supply for irrigation in a normal non-drought year (and without supplemental groundwater pumping) would result in substantial loss of farm revenue, jobs, and personal income in the Sacramento Valley counties most dependent upon agriculture. Moreover, the poorest counties would be hardest hit.

Our first AIC Issues Brief precedes the more extensive AIC publication which will describe the economic model and the complete results of this scenario, and three others.

 

IAAE MEETS IN SACRAMENTO

On August 10-16, 1997, Sacramento hosts the triennial conference of the International Association of Agricultural Economists. The Center is well represented at these meetings with presentations by the Director and Associate Directors. The AIC is also sponsoring a display to make information on the Center more widely available.

Among the conference highlights is a plenary session on California agriculture chaired by AIC Director Dan Sumner. This session leads off with a presentation by California Department of Food and Agriculture Secretary Ann Veneman. It also features presentations by UC faculty on the economic history and breadth of California agriculture, marketing and resource issues, and agricultural policy. These faculty presentations are based on chapters from the book, California Agriculture: Issues and Challenges, edited by Jerome B. Siebert, UC Giannini Foundation, August 1997.

 

REPORTS NOW AVAILABLE

California’s Future: Maintaining Viable Agriculture at the Urban Edge

Who holds the keys to maintaining agriculture at the urban edge? What are the roles for legislators, genetic engineers, planners and waste management specialists? These questions, and the more specific challenge of reducing conflicts at the agricultural-urban edge, were issues that the AIC posed to a select group of experts that included farmers, developers and land use planners. The Center’s summary report on its December 1996 conference, California’s Future: Maintaining Viable Agriculture at the Urban Edge, is now available.

The report explores in detail the complementary roles of agricultural production technologies/practices and public sector policies and land use planning tools. Innovative agricultural technologies discussed include precision spraying, use of bioengineered disease-resistant crops, integrated pest management, proper manure management, and others. The public policy chapters focus on farm-city and regional cooperation, urban growth boundaries, buffer and edge design, parcel sizes and appropriate uses in agricultural areas, and fiscal policies.

For long term stability at the edge, approaches that “cry for attention,” according to contributing author Alvin Sokolow, Òinvolve state support and guidance of local land use decision-making.Ó Most important is changing the state’s fiscal rules under which local governments in California operate. California’s Future: Maintaining Viable Agriculture at the Urban Edge is available from the UC Agricultural Issues Center for $15.

 

Pathogens Excreted by Livestock and Transmitted to Humans through Water

Reviewing knowledge about pathogens which could be transmitted from livestock to humans, Pathogens Excreted by Livestock and Transmitted to Humans through Water is our latest joint publication with the UC Davis Animal Agricultural Research Center. It is available from the AIC for $10.00

 

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