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July 2002, Volume 8, Number 3

California Commodities

In 1997, California's FVH sales-- fruits, nut and berries, vegetables and melons and horticultural specialties that range from nursery and greenhouse crops to Christmas trees, mushrooms, and sod- were $14 billion, or over half of the state's farm sales.

Fruits and Nuts. Between 1999 and 2001, U.S. fruit and tree nuts farm cash receipts averaged $12 billion, a seventh of sales for all U.S. agricultural crops. California accounted for $6.7 billion of fruit and tree nut receipts, or 57-58 percent of the total, followed by $1.8-$1.9 billion in Florida, 15-16 percent, and Washington, $1.3-$1.4 billion, or 10-11 percent-these three states accounted for 85 percent of fruit and tree nut receipts.

Annual per capita use of fruit and nuts during the 1990's averaged about 285 pounds, fresh-weight equivalent, up slightly from the 1980s. Oranges, apples, grapes, bananas, and grapefruit were the most consumed fruit, while almonds, pecans, and walnuts were the most popular nuts. Per-capita consumption of bananas rose from 17.4 pounds in 1970 to 29.2 pounds in 2000, and strawberries from 1.7 pounds to 4.8 pounds.

Grapes. California has 951,000 acres of grapes, reflecting a 40 percent increase in wine-grape acreage in the 1990s.

Raisins. There are 100,000 tons too many of US-produced raisins, so growers have asked the federal government to approve the removal of 8,000 acres in 2002 to reduce production. About 4.5 pounds of green grapes are dried into one pound of raisins, most growers get about two tons of raisins per acre, so at least 50,000 tons of raisin grapes must be removed.

The 5,000 California raisin growers are anticipating a crop approaching the 2000 record of 430,000 tons; the cost of production is estimated to be $750 a ton. Growers got $880 a ton for "free" or salable raisins in 2001, but their average price was much lower because many of their raisins went into an industry reserve established under federal marketing guidelines, and sold at low prices to food processors. Growers who agree to cut off their growing grapes, or remove vineyards entirely, will receive payments based on assessments paid by other growers. Some growers want those who receive payments for removing vines to not be allowed to replant; if raisins are replanted for mechanical harvesting, yields can triple.

Most raisins are hand harvested. However, a technique called Dried on the vine (DOV) facilitates machine harvesting, using wine-grape harvesting; yields are often higher, and there is less risk of rain damage while grapes are drying in the sun. The key to DOV is pruning-the fruiting vines (this year's crop) are separated from the renewal vines (next year's crop). After the grapes mature, the fruiting vines are cut so that the grapes begin drying while still on the vine, so that vineyards often appear as alternating green and brown zones. Under the Sunmaid system, fruiting vines are on the south side of the trellis and renewal vines on the north side.

Wine Grapes. California produced 450 million gallons of wine in 2001, with a retail value of $13.4 billion. Some 80 million gallons worth $550 million were exported, including 24 million gallons to the UK.

The general rule is that the more expensive the grapes, the more likely they are to be harvested by hand. Over 75 percent of the wine grapes in California and Washington are harvested mechanically, and mechanical harvesting is spreading to more expensive grapes.

Vineyard land prices are dropping everywhere except in Napa and Sonoma counties. For example, in Madera county, vineyards worth $5,000 to $11,000 an acre in 1999 were worth $3,500 to $5,000 an acre in 2002. In Napa county, by contrast, vineyard land sold for $85,000 to $180,000 an acre, and in Sonoma from $85,000 to $105,000 an acre.

Almonds. California is expecting a record almond crop of 940 million pounds in 2002, up from the previous record of 833 million pounds in 1999; the US accounts for 80 percent of global almond production.

Olives. California produces about 325,000 gallons of olive oil a year, and the US imports 22 million gallons. The California olive industry has been changing because of international competition, and some growers are switching to Arbequina, a semi-dwarf tree from Spain that produces 40 to 50 gallons of olive oil per ton of olives, and lends itself to mechanical harvesting, using a Gregoire grape harvester that harvests one to two acres an hour for $150 to $200 an acre. Yields in high-density plantings are five to seven tons an acre.

Avocados. California grows 90 percent of U.S. avocados on 60,000 acres; in 2000, avocados were worth $362 million, with leading counties San Diego, Ventura, Riverside and Santa Barbara.

Vegetables. Vegetable and melon receipts are about $15 billion a year, including $9 billion for fresh vegetables and melons, $2.8 billion for potatoes, and $1.5 billion for processing vegetables.

Asparagus. The price of California asparagus, which is sold in 28-pound crates, dropped from $45 in March 2002 to $15 to $20 a crate in April 2002, prompting many growers to plow under their crops. About 200 California farmers grow half of US-grown asparagus; growers say they need $1 a pound to break even, with harvesting and packing accounting for 50 to 75 percent of grower costs. Asparagus produces a crop for 60 to 90 days three years after it is planted.

Horticultural Specialties. Santa Clara county, home to Silicon Valley, also has 12 mushroom growers who produce about $40 million worth of mushrooms a year. Mushrooms are grown in areas in which the temperature is about 60 degrees in a six-phase, 15-week process that includes composting, spawning, casing, pinning, and cropping.

Flowers. The number of California cut-flower growers has been dropping, from 375 who had annual sales of $300,000 or more in the early 1990s to 108 in 2002. The same trend of getting bigger or going out of business is occurring across the US; there were about 11,000 cut-flower growers in 2001. Imports of carnations, roses, and chrysanthemums, especially from Colombia and Ecuador, rose to $400 million in 2001, so that 85 to 95 percent of the carnations, roses and chrysanthemums sold in the US are imported.

Honey. The US produced 200 million pounds of honey in 2001, and imported 200 million pounds. US and imported honey is assessed a $0.01 a pound fee to cover the cost of generic advertising and research. White honey is worth $0.50 to $0.75 a pound; $0.65 a pound is considered the break-even point for California producers.

Dairy. Milk is the number one California commodity, with annual sales of $4 billion, and large dairies are spreading throughout the state. Large mega-dairies, with 6,000 cows, including half that are milked, are spreading to Solano county from Tulare county, Southern California and coastal Sonoma County. The San Francisco-based Center for Race, Poverty and the Environment has sued to stop the construction or expansion of 125 mega dairies since 1998, contending that county supervisors cannot approve them until environmental studies on their effect on water and air are completed.

In 1950, California had 19,400 dairies with an average 40 cows. In 2001, the state had 2,200 dairies with an average 725 cows. Many of the new dairies proposed plan for 10,000 to 12,000 cows, since there are economies of scale in milking cows. Tulare county has 300 dairies and 357,000 cows, the most concentrated dairy region in the US.

Assessments for Promotion. The producers of many commodities have voted to assess themselves a fee to be used for research and promotion. Once a certain percentage of producers representing a certain percentage of production agree to the assessment, paying the fee is mandatory and enforced by USDA.

Some US producers do not believe they get enough value from the promotion, and they are seeking to have mandatory assessments declared unconstitutional; they argue that the First Amendment's guarantee of free speech is also a guarantee against mandatory fees that fund commercials. The US Supreme Court in 2001 held that a mushroom assessment was unconstitutional.

In June 2002, a federal judge ruled that fees collected for the "Beef: It's What's for Dinner" advertising campaign violate the free-speech rights of cattle producers, and ordered USDA to stop collecting $1 per head of cattle. In 2001, cattle and calf sales were $40 billion, or 20 percent of the total $202 billion in farm sales.

Water/Agribusiness. Westlands Water District agreed to pay $108 million to retire land and shrink from 600,000 acres to about 500,000 acres by 2007. Westlands has been receiving about half of its 1.15 million acre-foot federal water allotment following 1990s environmental reforms that kept more water in Northern California rivers, the source of the district's imported supply. One acre-foot of water is about 326,000 gallons, which supplies a family of four for 12 to 18 months.

Santa Monica-based Cadiz Inc. said that its Sun World subsidiary, which grows and sells grapes and citrus, planned to merge with Kingdom Agricultural Development Co., or Kadco, owned by Saudi Prince Al Waleed ibn Talal ibn Abdulaziz al Saud, a member of the Saudi royal family. Cadiz, which has a very heavy debt load, is negotiating with the Metropolitan Water District of Southern California to build a $150-million water storage project in the Mojave Desert. Kadco-Sunworld are cooperating on a farming project in Egypt, but in July 2002, Cadiz announced that the merger had fallen through.

Egypt's $7 billion Toshka project is expected to take water from Lake Nassar, behind the Aswan High Dam and pump it via a 72-km canal to irrigate 540,000 acres of land that would grow early season fruits and vegetables for Europe. The aim of the project is to draw residents out of overcrowded cities-a third of Egypt's 66 million people live in Cairo and Alexandria. Tourism, Egypt's number one source of foreign exchange, flucuates with arrivals- there were a record 5.5 million in 2000, but only 4.5 million in 2001.

Dole Food Co., the world's largest fruit and vegetable producer, reported higher than expected profits in the second quarter of 2002 on sales of $1.1 billion. Dole said the flower industry has proved less attractive than the company anticipated when it made four acquisitions in the industry in 1998.

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