CALIFORNIA — Grappling with higher costs and challenges related to water, labor, regulations and trade, some California farm leaders question whether the nation’s No. 1 agriculture state has reached a tipping point.
California Farm Bureau President Shannon Douglass discussed the high cost of operating a farm in California during the Agri-Pulse Food & Ag Issues Summit West in Sacramento on June 10.
“When we talk about the things that are keeping me up at night, it really comes down to what is going to keep our members in business,” Douglass said.
Citing the most recent U.S. Census of Agriculture, she noted how the state has lost 20% of its farms during the past decade, with a disproportionate number of them being small and medium in size. This loss, Douglass said, is evidence that agriculture in the Golden State is at a tipping point.
The summit, of which California Farm Bureau was a sponsor, brought together farmers, agricultural leaders, state and federal officials, environmentalists and researchers to discuss topics including navigating costs and government regulations, and to discuss policy related to trade, pesticides, labor and water.
Pointing to the rising regulatory pressures facing farmers, Douglass cited a regulatory cost study released early this year by California Polytechnic State University, San Luis Obispo. The study, commissioned last year by the Monterey County Farm Bureau, found regulatory and compliance costs for Salinas Valley lettuce growers increased nearly 1,400% in less than 20 years.
Cal Poly professor Lynn Hamilton, who prepared the study, said she found the cost of environmental, labor and food safety compliance was $1,600 per acre, an increase of 63.7% from 2017. Regulatory costs are now 12.6% of total production costs, while farm-gate values for lettuce increased 0.37% from 2017 to 2024, the study found.
Western Growers Association President and CEO Dave Puglia said he worries California farmers may be past the tipping point, with years of policies and regulations that put them at a competitive disadvantage to farmers in other states and countries who do not face the same regulatory environment.
Regarding trade and tariffs, Alexi Rodriguez, president and CEO of the Almond Alliance, said China was the No. 1 export market for the state’s almonds until 2018, when shipments dropped sharply after retaliatory tariffs were implemented.
“After this year, China is likely to drop out of the top 10 export markets for almonds as a result,” she said, adding that with new tariffs on a 90-day pause, it is too early to know the full impact.
“We remain cautious about the risk of retaliation, especially since we are so reliant on exports,” Rodriguez said. “At the same time, we are very encouraged by the signs of renewed talks in several of our key markets.”
David Magaña, a senior analyst with Rabobank, spoke about the state’s tree nut sector and how trade wars, tariffs and the Make America Healthy Again movement may influence inflation, interest rates and consumer confidence. Despite the challenges, he said, prices are recovering for almonds and he anticipates a balanced supply-demand position.
Panelists discussed a new era of California pesticide regulations, including new requirements for the California Department of Pesticide Regulation to meet timelines for review of new pesticide applications and re-evaluation of registered pesticides. In addition, those who purchase registered pesticides saw an increase of the state’s mill tax assessment rate, which is a fee per dollar of sales.
Chris Reardon, California Farm Bureau vice president of policy advocacy, called for greater investment in pest prevention to help reduce the need for pesticide applications by growers.
“As we look forward, let’s fund pest prevention in California where it needs to be funded,” he said, urging discussion to ensure the California Department of Food and Agriculture has the resources it needs to combat and prevent pests.
Reardon and other panelists advocated for continued collaboration. He said farmers and their families often live where they apply the materials, “so we care about this, and we want to make sure that we’re working with all our regulatory agencies.”
While regulations, labor and water challenges continue, there are opportunities for farmers, including automation and other technologies to increase efficiency and reduce costs.
Walt Duflock, senior vice president of innovation for Western Growers, said a small percentage of growers have already automated nonharvest tasks with tools such as laser weeders. He said adoption of nonharvest automation will continue, but technology to automate harvest still has a long way to go.
Some agricultural leaders agree that regulations can block greater adoption of the technology by agriculture. San Francisco has autonomous, or driverless, vehicles, Douglass said. However, driverless tractors are prohibited in California, even though they can operate in some other states.
“We already talked about the competitive disadvantage we are at, but here we are in the tech center, certainly of the United States, and we’re behind on that front,” she said.
Mike Way, co-owner of Coachella-based Prime Time, talked about impacts of costs and regulations. His company grows bell peppers and other produce in Southern California and out of state.
“We’re sitting here in California and getting our brains beat in with costs that are through the roof and going up against my competitors in the East Coast paying $8 to $9 an hour for labor, and we’re dealing with the same customers,” Way said. “What’s my choice? My choice is to shrink my acreage and go elsewhere.”
As part of a discussion on how the state’s rice fields feed consumers, wildlife and the economy, California Natural Resources Secretary Wade Crowfoot called efforts to build healthy landscapes a “paradigm shift.” He said the approach is a departure from conflict, adding, “these partnerships are achievable and happening across California.”
In discussing the future of the U.S. Department of Agriculture Natural Resources Conservation Service, agency Chief Aubrey Bettencourt said, “We’re looking at every aspect of the agency — our policy, our operations and our technology — through the lens of our customer and through the lens of the staff at the front desk.”
Christine Souza is senior editor of Ag Alert. She can be reached at cs****@**bf.com. Article courtesy of California Farm Bureau.
