Contributions of the California Almond Industry to the California Economy
The California almond industry is large, dynamic, and closely linked to other parts of agriculture and the California economy. Almonds generate billions of dollars of direct economic activity and interactions with complimentary industries create a linked chain of indirect economic impacts from the production and processing of almonds. Despite relatively low prices during the 2017/2018 crop year, wholesale revenue of California almonds was $7.4 billion and the industry generated 110 thousand jobs in California.
UC releases new cost studies for mechanized winegrape production
UC Agriculture and Natural Resources’ Agricultural Issues Center has released four new studies detailing the costs and returns of wine grape production in the southern San Joaquin Valley. All four cost studies illustrate the cost and benefit of nearly full mechanization on wine grape production.
The studies estimate the cost of establishing a vineyard and producing wine grapes, focusing on four wine grape varieties – Cabernet Sauvignon, Chardonnay, Rubired and Colombard.
“Those studies take into consideration mechanical pruning, leafing, shoot thinning, and harvest on a typical wine grape vineyard with the average production level for this region,” said George Zhuang, UC Cooperative Extension viticulture advisor in Fresno County.
“With farming labor becoming more scarce and expensive, growers will opt to transition into more mechanization,” Zhuang said. “These studies provide detailed information about the trellis type, planting density, cost and potential benefit of vineyard mechanization. Based on these studies, fully implemented mechanization reduces the production cost from $3,000 to $2,500 per acre and that represents 17% cost reduction. This information will ultimately help growers to guide their production practices to more profitable and competitive ways under the new era of farming labor.”
Wine grape growers should look at the costs, particularly expenses associated with mechanization, Zhuang said.
“The investment to purchase and own equipment can be high,” Zhuang said. “Fortunately, it is easy to find a contractor in this region to perform certain vineyard tasks, if the initial investment to purchase equipment is prohibitive.”
Numerous studies, including UC studies, have confirmed the benefits of vineyard mechanization to grape and wine quality with lower production costs.
“It is a win-win-win situation,” Zhuang said. “Growers can improve their farming margins, wineries and juice processing plants can get reliable and higher quality grapes and juice from farms, and average consumers can enjoy better wine and more healthy grape products at an affordable price.”
The studies are based on 200-acre farms with the vineyard established on 40 acres using two types of trellis systems – quadrilateral cordon system and bilateral cordon system. In addition to regular grape production expenses – such as irrigation, fertilization and pest control – the researchers broke out the differences between machinery costs and hand labor hours required for thinning, pruning and harvesting for each variety.The prices for labor, materials, equipment and custom services are based on October 2019 figures.
The California minimum wage law will gradually decrease the number of hours employees can work on a daily and weekly basis before overtime wages are required. For more information and to view the California minimum wage and overtime phase-in schedules visit cail.ucdavis.edu.
Input and reviews were provided by UC Cooperative Extension farm advisors, specialists, grower cooperators and other agricultural associates. The authors describe the assumptions used to identify current costs for wine grape establishment and production, material inputs, cash and non-cash overhead. A ranging analysis table shows profits over a range of prices and yields.
The new studies are:
- 2019 – Sample Costs to Establish and Produce Winegrapes in the Southern San Joaquin Valley – Chardonnay Variety
- 2019 – Sample Costs to Establish and Produce Winegrapes in the Southern San Joaquin Valley –Cabernet Sauvignon Variety
- 2019 – Sample Costs to Establish and Produce Winegrapes in the Southern San Joaquin Valley – Rubired Variety
- 2019 – Sample Costs to Establish and Produce Winegrapes in the Southern San Joaquin Valley – Colombard Variety
All four winegrape studies can be downloaded from the UC Davis Department of Agricultural and Resource Economics website at https://coststudies.ucdavis.edu/. Sample cost of production studies for many other commodities are also available on the website.
For additional information or an explanation of the calculations used in the studies, contact Donald Stewart at the Agricultural Issues Center at (530) 752-4651 or destewart@ucdavis.edu.
For information about local grape production, contact George Zhuang, UCCE viticulture advisor for Fresno County, at gzhuang@ucanr.edu; UCCE viticulture specialist Matt Fidelibus at mwfidelibus@ucanr.edu; UCCE viticulture specialist Kaan Kurtural at skkurtural@ucdavis.edu; Karl Lund, UCCE viticulture advisor for Madera, Merced and Mariposa counties, at ktlund@ucanr.edu; or Gabriel Torres, UCCE viticulture advisor for Kings and Tulare counties, at gabtorres@ucanr.edu.
UC ANR updates cost estimates for growing almonds
UC Agricultural Issues Center has released new studies estimating the cost and returns of establishing an almond orchard and producing almonds for three growing regions of California.
“These cost studies are valuable for agricultural producers all along the continuum – growers considering entering into a new crop production business, less experienced growers, and those with decades of experience,” said Emily Symmes, UC Cooperative Extension integrated pest management advisor for the Sacramento Valley. “The information in these cost studies allows growers to evaluate their production practices and associated costs relative to an exemplary hypothetical orchard specific to their geographic region, and can help with development of business models, crop insurance and lending.”
In 2018, almonds ranked third among California commodities with almond growers receiving nearly $5.5 billion in cash receipts.
The cost analyses are based on hypothetical farming operations of well-managed almond orchards, using cultural practices common to the region. Local growers, UC Cooperative Extension farm advisors and supporting agricultural representatives provided input and reviewed the methods and findings of the studies.
“The recent almond updates for the Sacramento and San Joaquin valleys reflect costs associated with the continually evolving conditions facing agriculture,” said Symmes, who co-authored the almond cost studies. “Some of the notable updates include labor, irrigation and pest management costs – all integral to producing and delivering a high-quality crop.”
The researchers based one study in the Sacramento Valley, one in the northern San Joaquin Valley and the other in the southern San Joaquin Valley.
The southern SJV study is based on an orchard that uses double-line drip irrigation, whereas the other two locations use microsprinkler irrigation. All are multi-year studies, estimating costs from removal of the previous orchard, through almond orchard re-establishment and the production years. The economic life of the orchards used in these analyses is 23 to 25 years.
Navel orangeworm (NOW) is a major pest in almond production; Symmes and her co-authors describe in detail the pesticide applications and winter sanitation methods for each location for NOW control and include the costs.
The authors describe the assumptions used to identify current costs for orchard establishment, almond production, material inputs, cash and non-cash overhead. A ranging analysis table shows net returns over a range of prices and yields.
The new studies are titled:
- Sample Costs to Establish an Orchard and Produce Almonds in the Sacramento Valley – 2019
- Sample Costs to Establish an Orchard and Produce Almonds in the Northern San Joaquin Valley – 2019
- Sample Costs to Establish an Orchard and Produce Almonds in the Southern San Joaquin Valley – 2019
The studies are available for free download at the UC Davis Department of Agricultural and Resource Economics website at https://coststudies.ucdavis.edu/. Sample cost of production studies for many other commodities are also available on the website.
For additional information or an explanation of the calculations used in the studies, contact Donald Stewart at the UC Agricultural Issues Center at (530) 752-4651 or destewart@ucdavis.edu. To contact a local UC Cooperative Extension advisor, find the UCCE office in your county at https://ucanr.edu/About/Locations/. The Agricultural Issues Center is a statewide program of UC Agriculture and Natural Resources.
AIC released new report “Contributions of the California Dairy Industry to the California Economy in 2018”
AIC Project Scientist William A. Matthews and Director Daniel A. Sumner and have released a new study, “Contributions of the California Dairy Industry to the California Economy in 2018.”
UC releases latest cost and returns for ranchers raising beef cattle
Among California’s agricultural commodities, cattle rank fifth in revenue. The University of California Agriculture and Natural Resources’ Agricultural Issues Center has released a new study showing the cost and returns of a beef cattle operation.
“Ranchers can use UC beef-cattle cost studies to guide their production decisions, estimate their own potential revenue, prepare budgets and evaluate production loans,” said Rebecca Ozeran, UC Cooperative Extension livestock and natural resources advisor for Fresno and Madera counties.
The study estimates costs and returns of a representative owner-operated beef cattle operation located on rangeland in the Central San Joaquin Valley and foothills of Madera and Fresno counties. The study describes a 200-head cow-calf operation and includes pasture costs on the basis of the rental per animal unit month.
The analysis is based upon a hypothetical cow-calf operation, where the cattle producer both owns and leases rangeland. The “typical” ranch in the Central San Joaquin Valley is an owner-operated cow-calf operation, often relying on multiple private leases. The operations described represent production practices and materials considered typical of a well-managed ranch in the region.
Input and reviews were provided by ranch operators, UC Cooperative Extension farm advisors and other agricultural associates. The study describes in detail the assumptions used to identify current costs for the cow-calf herd, material inputs, cash and non-cash overhead. The cost calculations in this study are based on economic principles that include all cash costs and overhead costs. The study also includes a “ranging analysis” to show potential net returns over a range of market prices. Other tables show the average costs and revenues, the distribution of monthly costs and revenues over the year, and the annual equipment, investment and business overhead costs.
“In addition to producing meat, cattle play an important role in California’s landscape and environment by grazing on vegetation that could fuel wildfire,” Ozeran said. “Ranching therefore has ecological and social impact on rural and fire-prone communities. If we can help ranchers remain economically viable, then we help support local stewardship of productive natural landscapes and contribute to fire resiliency and food security.”
The new study, “Sample Costs for Beef Cattle, Cow-Calf Production – 200 Head Operation, Central San Joaquin Valley – 2019” is authored by Ozeran, Donald Stewart, staff research associate of the University of California Agricultural Issues Center; and Daniel A. Sumner, director of UC Agricultural Issues Center.
This study and other sample cost of production studies for many commodities are available for free download at https://coststudies.ucdavis.edu. The program is supported by UC Agriculture and Natural Resources, including both Agricultural Issues Center and UC Cooperative Extension, and the UC Davis Department of Agricultural and Resource Economics.
For more information, contact Stewart at (530) 752-4651 or destewart@ucdavis.edu. To discuss this study with a local UC Cooperative Extension farm advisor, contact your county UC Cooperative Extension office https://ucanr.edu/About/Locations or contact Rebecca Ozeran at (559) 241-6564 or rkozeran@ucanr.edu.
AIC research economist Karen Jetter presented “Costs to manage invasive aquatic weeds in the California Bay-Delta 2013 -2017” at the Delta Stakeholders meeting in Stockton
AIC research economist Karen Jetter presented “Costs to manage invasive aquatic weeds in the California Bay-Delta 2013 -2017” at the Delta Stakeholders meeting in Stockton.
Former AIC researcher John Bovay and AIC director Dan Sumner published implications of the US Food safety regulations
Former AIC researcher and UC Davis PhD graduate John Bovay and AIC director Dan Sumner has published implications of implementation of the US Food safety regulations. They highlight that important features of the rules had already been implemented by California producers and one implication is to cause other regions, including imports, to match the California standards.
Journal Article
Economic Effects of the U.S. Food Safety Modernization Act
John Bovay, Daniel A Sumner
Applied Economic Perspectives and Policy, Volume 40, Issue 3, 1 September
2018, Pages 402–420, https://doi.org/10.1093/aepp/
Abstract
The Food Safety Modernization Act (FSMA) substantially expands the authority of the U.S. Food and Drug Administration to regulate fresh produce marketed in the United States. This article uses an equilibrium-displacement framework incorporating stochastic food-borne illness outbreaks to simulate long-run market effects of FSMA using the North American fresh-tomato industry as a case study. We demonstrate how, under FSMA, certain categories of suppliers will gain advantage over others. Growers and suppliers within the United States, and their buyers, are likely to gain relative to foreign producers and importers because FSMA imposes specific requirements for importers. Among fully regulated growers, large growers will benefit relative to small growers. Many producers have already adopted food-safety standards that closely resemble the FSMA rules, and the cost of implementing the FSMA requirements for these producers will be much lower than for other producers.
AIC paper analyzes production losses from Porcine Reproductive and Respiratory Syndrome (PRRS) in selected midwest US sow farms
Results show that PRRS has a lingering negative effect on weaned pig production for an unexpectedly long period of time in sow farms. Considering only the decay of output, PRRS caused on average of about 7.4% yearly decrease in the value of production.
New tariffs tax economic prospects of tree nut and fruit industries
[Updated – August 14, 2018]
Among the consequences of ongoing international trade turmoil has been increases in import tariffs and other access barriers facing many significant U.S. agricultural commodities in important markets.
This brief report summarizes potential impacts of higher tariffs facing major U.S. fruits and tree nuts. We calculate these potential impacts using recent trade and production data and some plausible assumptions. We provide here the key data and explain the economic reasoning and calculations. Available data files provide details on data, sources, and methods.
Click here to download the full report (pdf)