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January 2017, Volume 23, Number 1

California Agriculture

California's farm sales fell from $54 billion in 2014 to $47 billion in 2015, largely because of the declining price of milk, whose value fell from $9.4 billion to $6.3 billion. The value of almonds fell by $0.5 billion, and the value of walnuts by almost $1 billion.

However, farmers are continue to plant more nuts. Bearing almond acreage has more than doubled from 418,000 acres in 1995 to 900,000 in 2016, and yields rose even faster from 370 million pounds to over two billion pounds. Walnut acreage rose from 177,000 in 1988 to 315,000 in 2016, and production more than doubled to 670,000 tons. California has 310,000 acres of pistachios expected to generate 555 million pounds in 2016.

Most nut farmers generate profits of $1,000 to $2,000 an acre, with pistachios the most profitable nut crop.

More acres of nuts are expected to come into production, including 220,000 acres of almonds, 70,000 acres of pistachios, and 65,000 acres of walnuts. The cost of establishing an acre of walnuts is estimated to be $3,800, an acre of almonds $2,300, and an acre of pistachios $1,900. Much of the new nut acreage is being developed by pension and hedge funds seeking current returns and capital gains as land prices rise.

Olives. Table olives are mostly hand picked, while olives for oil are mostly harvested by machine. Contractors charge $400 to $500 a ton to hand harvest table olives, for which growers receive about $850 a ton; yields are about four tons an acre. Olive growers reported sufficient labor to harvest the 2016 crop.

There are over 40,000 acres of olive trees for oil, and 15,000 for table olives. Chico-based California Olive Ranch, controlled largely by Spanish investors, is the largest US olive oil producer, producing about two-thirds of US olive oil from 1.3 million trees on 2,200 acres; sales were $82 million in 2015. Its three major varieties are arbequina, arbosana and koroneiki.

High-density olive oil trees, more like bushes that are less than ten feet tall, can be harvested mechanically for about $250 an acre. Italy, Spain and Tunisia are the world's leading exporters of olive oil, with most of their production from traditional low-density orchards where olives are harvested by hand. Demand for US olive oil exceeds the US supply.

Raisins. The Raisin Bargaining Association negotiated a $1,600-a-ton price for its 1,000 members with 13 packers in 2015. The RBA, which represents a third of the 3,000 raisin producers, says the cost of producing raisins is $1,350 a ton. The Sun-Maid cooperative has about 650 members who produce 30 percent of California raisins.

Raisin grape acreage has fallen from 280,000 in 2002 to 165,000 in 2016, and Turkey is poised to overtake California as the producer of over a third of the world's raisins. About half of the 2015 California crop was harvested mechanically.

Raisins have been subject to federal and state marketing orders that, for instance, allow some raisins to be held in storage in order to prop up prices. The US Supreme Court declared the federal marketing order's reserve pool unconstitutional in 2015; in 2002-03, growers got $745 a ton for "free tonnage" offered for sale, and $205 a ton for the 47 percent of the crop that went into the reserve pool. There has been no reserve pool since 2009.

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