High Heat, Low Demand Hurt Walnut Crop

By Christine Souza, California Farm Bureau

California farmers are tearing out walnut orchards, such as at this farm near Winters, in response to quality concerns due to a September heat wave, lower demand and prices, and other market issues. The California Walnut Commission estimates $1 billion in damages to the 2022 crop.

Walnut farmers are tearing out older trees and less desirable varieties as the price for the nut has plummeted well below the cost of production, causing some growers to rethink walnuts and look for alternative crops.

“I’ve seen several younger orchards that have come out already in Fresno, Merced and Madera counties,” said Kings County farmer Brian Medeiros of Hanford, who farms walnuts, almonds and row crops. “My neighbor had a walnut orchard that was about six years old, and he tore the whole thing out. He just said, ‘I’m losing money hand over fist. I’m not going to keep doing it.’”

A heat wave last September cooked the walnuts on the trees during a critical time of the growing cycle. High temperatures were followed by rain that led to mold problems.

“We had extremely high temperatures—up to 117 degrees for three to four days in some areas—and this occurred when walnuts were at their most sensitive stage in growth,” said Robert Verloop, president and chief executive officer of the California Walnut Board and California Walnut Commission. “We conducted our own informal survey of about 75% of the industry and documented pretty clearly that the range is anywhere from 30% to 40% of the (walnut) volume that was impacted. That means if the handler opens up 100 pounds of walnuts, 30 to 40 pounds is absolutely not usable.”

Walnut growers in Stanislaus County demonstrated to the county agricultural commissioner that there was 36% loss in crop volume, Verloop said. The growers provided damage information within the required 60 days, which led to a federal disaster declaration.

On Jan. 13, U.S. Agriculture Secretary Tom Vilsack designated a disaster declaration for Stanislaus County and contiguous counties of Alameda, Calaveras, Mariposa, Merced, San Joaquin, Santa Clara and Tuolumne for walnut losses due to the heat wave last September.

Farmers in qualifying counties have eight months from the date of the declaration to apply for emergency loans through the U.S. Department of Agriculture Farm Service Agency. The California Walnut Commission is working with federal lawmakers on additional aid, including walnut purchases by USDA for food banks and tree-pull programs.

With the price to growers for the 2022 walnut crop at about 40 cents per pound or less—and well below last year’s break-even price of between 70 and 90 cents per pound—walnuts were the obvious choice for removal for Medeiros, he said. He pulled out 16 acres of walnut trees to scale down his water use to comply with groundwater regulations and manage his allotment.

“Our orchard is only 15 years old, so when I was pulling out those 16 acres, it literally broke my heart because I’m pulling out beautiful trees that look gorgeous, and I’m bulldozing them over,” Medeiros said. “The (walnut) price is making it much easier, much quicker for us to move ahead because—unless this price changes dramatically in the coming year or we have some outstanding support from USDA—we’re probably pulling the rest of them out next year.”

Stanislaus County farmer Gordon Heinrich of Modesto, who farms walnuts and operates a huller and dehydrator, said the price of walnuts is at a 30-year low, and input costs have gone up substantially.

“We’re actually operating below the cost of production right now, and everybody’s scratching their heads trying to figure out where you can cut back on your inputs to survive this market situation,” Heinrich said.

“There’s not a lot of places you can cut,” he added.

Handlers are advising walnut growers to remove older, darker-kernel varieties such as Vina, Serr and Hartley, to maintain the supply of light walnuts, Chandler, Tulare and Howard, that global buyers demand.

“Growers are starting to realize that all those older varieties need to be taken out and replanted with a more modern variety, such as a Chandler,” Heinrich said. “The quicker that we can change our market strategy as far as being able to put a better product on the market, the longer this is going to last. It is going to right itself in time, but there’s a lot of farmers out there who are going to have a real tough time.”

Verloop said handlers reported 20% to 50% of the 2022 walnut crop was substandard in quality and is better suited for cattle feed. He said the commission estimates the farm-gate loss to growers is $1 billion.

Aside from quality problems, Verloop said many different factors affect the market for California walnuts, much of which are exported to Europe, Turkey, India, Spain, Japan, Korea and the Middle East.

“The problem is the pipeline to the consumer has a lot of walnuts in it already,” Verloop said. The carryover from the 2021 crop of about 135,000 tons, he said, and the 2022 crop is expected to be between 750,000 tons to 780,000 tons and much larger than the 720,000-ton crop forecast last September.

Retaliatory trade tariffs and the COVID-19 pandemic added to the walnut supply-demand imbalance and led to trucking and transportation challenges, congestion at the ports and a slowing of consumer demand. Inflation, the higher value of the dollar and the war in the Ukraine also are affecting customer confidence and buying power, Verloop said.

“We’re in the middle of that perfect storm,” Heinrich said of the global and economic stressors impacting the walnut market. “We’re hoping that we can just hang on. We’re lucky with our operation that we’re somewhat diversified, but even almonds are struggling with some of the same problems.”

Bill Carriere, president of Carriere Family Farms—a grower, processor and marketer of walnuts in Glenn County—said it is a very nervous time for growers and handlers.

“Sales were slow in general, and you had quality concerns that doubled the problem. That really hurt storage, so our storage is full. There are walnuts in warehouses that are not normally in warehouses,” said Carriere, who added that 20% of the 2022 walnut crop he received is not salable. “In our operation, we’re losing much more money as a grower than we are as a handler, but we’re losing in both.”

To recover from this year’s challenges, Verloop said, “the goal right now is to remove all of the substandard quality product off the market and let the good quality product price start to come up a little bit.”

For the next year or two, Verloop said he expects a downsizing of the walnut sector as growers remove less productive acres and less desirable heritage walnut varieties.

“We’re working with all of our trade agencies around the world to take a look at what can we do to recover from this year,” Verloop said. “We think there’s a lot of trust and confidence long term in our product from California because it’s been the gold standard. We’re working hard on several different fronts to make sure that we’re better positioned in the future.”

Growers seeking more information about disaster assistance and other program relief are encouraged to contact their local Farm Service Agency.

California Ag Today2023-02-01T14:36:16-08:00February 1st, 2023|

2023 Cattle Market Outlook

By Bernt Nelson, Economist, American Farm Bureau

2022 was filled with mountains for U.S. cattle producers to climb. From high feed costs to the third consecutive year of drought, there was no shortage of complex obstacles, many with effects that will carry through well beyond 2023. This Market Intel is a deep dive into the 2023 cattle outlook, and what producers can do to position themselves for what lies ahead.

Inventory

All eyes will be on USDA’s semi-annual cattle inventory report, set for release on Jan. 31. This inventory of cattle and calves in the United States will set the tone for 2023. Many industry experts are forecasting the inventory to be 4-5% below 2022, which was 2% less than the Jan. 1, 2021, inventory. If the report estimates are 3.9% or more below Jan. 1, 2021, the inventory of all cattle and calves in the Unites States would be the lowest since 2013. If the inventory comes in near 5% below 2021, the inventory would be the lowest since we approached 82.08 million in 1951. The last time the Jan. 1 cattle inventory declined by 3% or more was in 1987.

The most recent Cattle on Feed (COF) report estimates that all cattle and calves on feed in U.S. feedlots with capacity of 1,000 head or more were 11.7 million on Dec. 1, 2022. This is 3% below 2021. Placements of cattle into feedlots in November were 1.93 million head, down 2% from the same time in 2021. Marketings of fed cattle in November 2022 totaled 1.89 million head, 1% above the same time last year. This is a record high for November marketings since the survey began in 1996 and comes after a record low for cattle placed into feedlots in October. Marketings of fed cattle outpaced placements of cattle on feed for much of 2022. This is an indicator that farmers are culling cattle and reducing herd size. This was mostly due to farmers facing higher feed costs, and extreme drought conditions, especially in the West and Southern Plains. The next COF report will be released on Jan. 20, ahead of the semi-annual inventory report mentioned earlier.

Production

Beef production for November 2022 was 2.42 million pounds, 2% higher than the same time in 2021. Accumulated production was estimated to be 26.07 billion pounds, 2% higher than 2021, which was a record year for beef production. Production has been aggressive through much of 2022 with packers taking advantage of profitable margins that may not be as easy to come by in 2023. Supplies of cattle will be tighter in the upcoming year, which may force packers to pay more to secure cattle and meet demand. If inventory drops between 4% and 5%, the U.S. will be looking at a 400,000-500,000 metric ton decrease in production in 2023 and will provide price support.

Dressed and live weights were also up for much of 2022, with the average live weight for November coming in at 1,384 pounds. This is up 2 pounds from this time last year. USDA’s Economic Research Service (ERS) raised estimates for fourth quarter beef production by 70 million pounds, to 28.4 billion pounds, due to higher expected cattle slaughter and heavier carcass weights. The combination of increased cattle slaughter and higher average dressed weights should make 2022 a record year for production. ERS estimates 2023 production to slow year-over-year, dropping 7% to 26.4 billion pounds. This is largely due to the expectations for a smaller cattle inventory for the upcoming year.

Weather

For the third consecutive year, drought has plagued much of the U.S. in 2022. The West and Southern Plains experienced some of the worst drought conditions in recent history. This has taken a toll on pasture and rangeland conditions in regions of the country with the highest concentrations of cattle. On Oct. 30, 2022, 64% of the cattle in the U.S. were in regions where more than 40% of pasture and rangeland conditions were rated as poor to very poor. These conditions were among the top reasons we saw contraction in the cattle industry in 2022.

To begin with, the Southern winter wheat crop was damaged because of the drought. Then temperatures dropped during the last week of December before there was adequate snowfall to protect crops from the cold. Winter kill of the winter wheat crop would be another incentive for famers to market cattle and continue contraction of the cattle industry into the spring.

The good news is there have been signs that La Nina has started to weaken. The National Oceanic and Atmospheric Administration’s National Climate Prediction Center updates the Nina status on the second Thursday of every month. According to the most recent summary, La Nina is still present. However, there is an equal chance that ENSO-neutral (El Nino Southern Oscillation – Neutral) status will develop between January and March, and a 71% chance of an ENSO-neutral event occurring in February through April 2023. An ENSO-neutral event is one where neither El Nino or La Nina are present. The ENSO-neutral event is one of the most important climate phenomena because it can change circulation patterns of the global atmosphere. What this means in plain language is that chances are pretty good for breaking the La Nina trend that has caused the drought.

Prices

For the week ending Dec. 6, the U.S. Drought Monitor reported 78% of the United States was experiencing some level of drought. While winter weather has provided some much-needed moisture since the beginning of December, much of the U.S. remains under threat of drought conditions for 2023. The winter weather has given packers some trouble securing cattle, causing a drop in cattle slaughter last week and a jump in beef prices.

Cash asking prices in the Southern Plains have been holding at $158/cwt for fed cattle. So far packers have not been willing to pay that, but the declining cattle marketings reported by COF will force them to eventually pay some higher prices as supplies continue to tighten. In Midwestern states such as Iowa and Nebraska, prices been as high as $160/cwt for fed cattle with the greatest volume of trade occurring near $158/cwt. Prices have been much higher for replacement heifers with desirable genetics, especially in the Midwest. The 5-market weekly regional weighted average fed steer price for the week ending Dec. 4 was $156.42/cwt, the highest price since May 31, 2015, when the average price was $155.59/cwt.

Outside markets such as corn and stock markets are playing a major role in futures price volatility in live and feeder cattle. When stock markets move upward on the day, this is supportive of upward movement in livestock futures because it means consumers have more money to spend. Corn futures are reflective of a primary feed source for livestock. When the price of corn drops, it is supportive of livestock futures. On the other hand, when corn futures increase, it puts pressure on livestock futures.

Feeder cattle are changing the market situation. Recently, feeders and live cattle have really broken out to the upside in the futures markets. Recall placements in the most recent COF report were down 3% year over year. The tighter supply is first felt in feeder cattle contracts. The market is becoming current. This means that the fundamental events are changing futures prices. The January feeder cattle contract is currently trading at $185.22 with the deferred (months outside the nearest contract month) months being much stronger. This really puts things in perspective when the deferred contracts are analyzed. May feeder cattle were trading at $191.86 on Jan. 4, which indicates the expected supply/demand effects later in the year. Live cattle have moved higher as well but not at the same rate as feeders. Lower numbers of placements of cattle on feed are being built into feeder cattle contracts. Live cattle are still available in good numbers from a time when placements were still strong, so the live cattle futures contracts aren’t moving higher as fast.

Cutout

The choice/select spread (the price difference between choice grade and select grade beef) narrowed a bit after getting quite wide during the holidays. When the spread is particularly wide, it can be an indicator of consumer willingness to pay a premium price for higher grade beef (choice grade). Choice beef was up $9.12 for week ending Dec. 23, 2022. Beef prices continued to jump during the first week of January due to weather issues, with choice up $4.97 at $286.95/cwt and select up $3.70 at $254.63/cwt on Jan. 3. Positive packer margins will spark aggressive buying because packers will want to take full advantage of profitability when it occurs. Packers will be facing periods of negative margins in 2023. The growing spread between choice and select beef combined with record production are an indicator that demand for beef is very strong. If it holds, strong demand with tighter cattle supplies should keep a very positive environment for cattle producers in 2023.

Production Costs

One obstacle to profitability in 2023 will be the cost of production. Net farm income for farmers reached record levels driven by record percent increases in cash receipts across many sectors of agriculture. However, there were other records set as well. Production expenses were also estimated up $70 billion, or 19%, to a record $442 billion in 2022. Costs for feed, fertilizer, chemicals and fuel to maintain pastures are expected to stay elevated in 2023.

Drought has further exacerbated production costs, driving up prices for hay and feed, especially in regions particularly hard hit. Corn prices have come down since their highs in May and June. At that time corn prices approached $7.50 for fall delivery while soybeans were near $15.50 in many production regions of the country. The futures price for the March contract was $6.52, while the December 2023 contract was $5.91. While feed prices have come down from their highs, in most cases these prices are still nearly double what they were just a few years ago.

The cost of debt is another concern for farmers. Farming in general requires a great deal of working capital to continue operating. Interest rates for operating loans will be double or even triple what they were just a couple years ago. This is largely due to the series of interest rate hikes by the Federal Reserve to combat inflation. Inflation has many negative effects including dropping land values, which were recently at record levels.

Consumer Demand

With beef prices expected to go up in 2023, what about consumer demand? Stock market variability and the threat of a recession are on the minds of many and would affect the amount of money in the pockets of U.S. consumers. Households will likely consume as much beef as they can afford. Government programs for nutrition benefits are also supportive of beef demand. The question is, how high will beef prices have to go before consumers start looking for substitutes such as pork and poultry? Retail prices for pork and poultry remain elevated as supplies are tight and avian influenza is continuing to cause problems.

Retail beef prices have been elevated over the last couple of years, reaching as high as $7.55 per pound in October 2021 due to supply chain issues. Since then, beef prices have remained elevated with the average retail price at $7.37 per pound on Nov. 22, 2022. Demand has the potential to drop off if prices move higher but so far it has remained resilient.

Total red meat in cold storage decreased 4%, from 9.75 billion pounds to 9.42 billion pounds in the month of November, but it is up 10% compared to the same time in 2021. Beef in freezers on Nov. 30 was 521.87 million pounds, rising 2% and up 6% from 490.41 million pounds last year. A drop in total red meat in cold storage is typical in the month of November, with an average decline of about 3% ahead of the holiday season. These strong levels of meat in cold storage should help keep retail prices tempered for a while. This is good for producers who rely on keeping consumer demand strong.

Global Market/Trade

With the U.S. looking at reduced production and continued demand, the question then becomes who can satisfy this appetite? Beef importers will be looking to benefit from the decline in production but where will the product come from? Canada and Mexico are historically the top two suppliers in the U.S. market. However, Canada is currently in the contraction phase of their cattle cycle as well. Australia is beginning the expansion phase of their cycle, which will limit beef available for export. South America has the potential to satisfy some of the demand gap. USDA has recently moved to allow trim to be imported into the U.S. from Paraguay under certain conditions. Brazil has enough beef to export but lacks sufficient infrastructure to move beef product efficiently.

On the export side of things, accumulated U.S. beef exports through November 2022 were just under 1.087 million metric tons, about 4.5% ahead of the same time last year. The top buyers of U.S. beef so far in 2022 in order are South Korea, Japan, China, Mexico and Canada. These five countries are responsible for 82% of all U.S. beef export sales. South Korea, Japan and China alone are responsible for 70% of all export sales.

China has been in the spotlight lately. 2022 is forecast to be a record year for U.S. red meat exports with China buying huge amounts beef. China has begun loosening COVID restrictions, resulting in growing cases of the virus. Last year analysts were expecting loosened COVID restrictions to stimulate demand. On the contrary, when restrictions let up, COVID cases skyrocketed, keeping consumer demand from rising. Beef prices in China have remained strong despite a weakening economy. However, beef prices are also nearly twice that of pork, which is a substitute. This may limit the ability of beef prices to continue their climb in China, which should keep demand strong.

Summary and Outlook

The beef outlook for 2023 is very positive. Cash prices have gone up and still have room for more. A decreasing cattle supply resulting from contraction in the cattle industry should combine with adequate demand to provide support for prices throughout the year. Tighter supplies are showing up through smaller placements of cattle on feed. Lower placements have driven feeder cattle futures higher with live cattle trailing. The deferred months are higher than the nearby and are accounting for the tighter supply and demand. There will be many factors that have the potential to offset higher prices. Farmers will be up against weather, high input costs, inflation and potentially a recession that would leave consumers with less money to buy beef. The good news is demand for beef is very strong in domestic and global markets after what was likely a record year for beef production. Cattle producers will be looking for relief from drought so damaged pasture and rangeland can begin to recover before contraction in the cattle business can come to an end.

California Ag Today2023-01-10T10:32:18-08:00January 10th, 2023|

Snow and Rain Great, But Regulations Continue for Growers

Richard Matoian: Regulations, Cost of Production Impact Growers

As we enter the winter months of the year after this production season of pistachios, we’re wondering what’s on the growers’ minds.

“I think the focus of growers in more recent times have been all that they’re having to deal with to grow a crop, harvest a crop and successfully market that crop,” Richard Matoian is President of American Pistachio Growers. It has a lot to do with input costs, whether it be water or labor, or fertilizer or other inputs.”

“It has to do with regulatory situations that are impacting the grower’s ability to effectively grow and harvest their crop, and it has to also do with what the future looks like for any one of the commodities.

And in the case of pistachios, we have more and more acres going into production, more and more crop to sell, and we need to make sure that we develop these export markets. “Because the vast majority are 60%-70% of pistachios are exported around the world,” said Matoian.

“In order for growers to be successful, they’re having to deal with all that they deal with in a given year, we need to help them be successful in the marketing side by developing new markets,” noted Matoian.

And besides the need for new markets, one of the big stressors for growers is having enough water to provide for their crops. So far, this winter, there is record snowfall and substantial rain.

California Ag Today2022-01-04T10:36:42-08:00January 4th, 2022|

Record Beef Demand

CattleFax Forecasts Record Beef Demand; Prospects for Tighter Supplies

By Russell Nemetz with the Ag Information Network

The beef cattle industry is bouncing back from the pandemic, and continued progress is expected in 2022. Beef prices are near record high, and consumer and wholesale beef demand are both at 30-year highs as the U.S. and global economy recover. While drought remains a significant concern with weather threatening pasture conditions in the Northern Plains and West, strong demand, combined with higher cattle prices, signal an optimistic future for the beef industry, according to CattleFax. The popular CattleFax Outlook Seminar, held as part of the 2021 Cattle Industry Convention and NCBA Trade Show in Nashville, shared expert market and weather analysis today.

According to CattleFax CEO Randy Blach, the cattle market is still dealing with a burdensome supply of market-ready fed cattle. The influence of that supply will diminish as three years of herd liquidation will reduce feedyard placements. As this occurs, the value of calves, feeder cattle and fed cattle will increase several hundred dollars per head over the next few years.

Kevin Good, vice president of industry relations and analysis at CattleFax, reported that the most recent cattle cycle saw cattle inventories peak at 94.8 million head and that those numbers are still in the system due to the COVID-19 induced slowdown in harvest over the past year.

“As drought, market volatility and processing capacity challenges unnerved producers over the past 24 months, the industry is liquidating the beef cowherd which is expected to decline 400,000 head by Jan. 1 reaching 30.7 million head,” Good said.

The feeder cattle and calf supply will decline roughly 1 million head from its peak during this contraction phase. Fed cattle slaughter will remain larger through 2021 as carryover from pandemic disruptions works through a processing segment hindered by labor issues, he added.

“While fed cattle slaughter nearly equals 2019 highs at 26.5 million head this year, we expect a 500,000-head decline in 2022,” Good said. “This, combined with plans for new packing plants and expansions possibly adding near 25,000 head per week of slaughter capacity over the next few years, should restore leverage back to the producer.”

Good forecasted the average 2022 fed steer price at $135/cwt., up $14/cwt. from 2021, with a range of $120 to $150/cwt. throughout the year. All cattle classes are expected to trade higher, and prices are expected to improve over the next three years. The 800-lb. steer price is expected to average $165/cwt. with a range of $150 to $180/cwt., and the 550-lb. steer price is expected to average $200/cwt., with a range of $170 to $230/cwt. Finally, Good forecasted utility cows at an average of $70/cwt. with a range of $60 to $80/cwt., and bred cows at an average of $1,750/cwt. with a range of $1,600 to $1,900 for load lots of quality, running-age cows.

Consumer demand for beef at home and around the globe remained strong in 2021, a trend that will continue in 2022, especially as tight global protein supplies are expected to fuel U.S. export growth.

Aftershocks from the pandemic continue to keep domestic demand at elevated levels not seen since 1988. Government stimulus and unemployment benefits are fueling the economy with demand outpacing available supplies as restaurants and entertainment segments emerge from shutdowns.

According to Good, the boxed beef cutout peaked at $336/cwt. in June, while retail beef prices pushed to annual high at $7.11/lb. “Customer traffic remained strong at restaurants and retail – even as those segments pushed on the higher costs, proving consumers are willing to pay more for beef,” he said.

Wholesale demand will be softer in 2022, as a bigger decline in beef supplies will offset a smaller increase in beef prices with the cutout expected to increase $5 to $265/cwt. Retailers and restaurants continue to adjust prices higher to cover costs. Good added the retail beef prices are expected to average $6.80/lb. in 2021 and increase to $6.85/lb. in 2022.

Global protein demand has increased and U.S. beef exports have posted new record highs for two consecutive months, even with high wholesale prices. The increases were led by large, year-over-year gains into China, and Japan and South Korea remaining strong trade partners for protein. “The tightening of global protein supplies will support stronger U.S. red meat exports in 2022. U.S. beef exports are expected to grow 15 percent in 2021 and another 5 percent in 2022,” Good said.

Mike Murphy, CattleFax vice president of research and risk management services, expects summer weather patterns – and their affect on corn and soybean yields – to be the focus of market participants.

“As China rebuilds its pork industry following their battle with African Swine Fever, they are looking for higher quality feed ingredients, such as corn and soybeans” Murphy said “Exceptional demand from China is leading U.S. corn exports to a new record in the current market year, and strong demand for U.S. soybeans has elevated prices in the last 12 months.”

Spot prices for soybeans are expected to be $13 to $16 per bushel for the remainder of the next 18 months along with spot corn futures to trade between $4.75 to $6.25 per bushel in the same time frame.

Murphy noted that drier weather in the Northern Plains and West will pressure hay production and quality in the 2021 season – supporting prices into the next year. “May 1 on-farm hay stocks were down 12 percent from the previous year, at 18 million tons. The USDA estimates hay acres are down 700,000 from last year at 51.5 million acres. So, expect current year hay prices to average near $170/ton, and 2022 average prices should be steady to $10 higher due to tighter supplies and stronger demand,” he said.

All session panelists agreed that weather is a major factor impacting the beef industry, and agriculture as a whole in 2021 and going into 2022. A forecasted return of La Niña this fall would lead to intensifying drought for the West and Plains into early 2022, according to Dr. Art Douglas, professor emeritus at Creighton University. Douglas indicated that the precipitation outlook in the fall of 2021 going into the early part of 2022 could see drought push harder in the Pacific Northwest with above-normal precipitation across the inter-mountain West – leaving the Midwest drier, and less tropical storm activity to reduce Southeast rainfall into late fall. Also, the western half of the country will be drier into early spring with a returning La Nina.

Blach concluded the session with an overall positive outlook, expecting margins to improve as cattle supply tightens and producers gain leverage back from packers and retailers, beef demand to remain solid with expected export growth, and utilization and packing capacity to improve over the next few years. He also noted that the economy has made gains in 2021 and should stay stronger with low interest rates and government stimulus fueling consumer spending.

California Ag Today2021-08-17T18:56:15-07:00August 17th, 2021|

Lemon Economics in Ventura County

Lemons Became More Popular, But then COVID Hit

By Tim Hammerich, with the AgInformation Network

A recent study on the costs and returns of establishing and producing lemons in Ventura County was released by UC Cooperative Extension in Southern California and UC Agricultural Issues Center.

“We grow lemons along the coast because it doesn’t get hot, and we do a really good sour lemon. The trees flower year-round, and so there’s production year-round,” said Ben Faber, a Farm Advisor based in Ventura County.”

He says lemon prices had been stagnant for a long time but started to really rise in the past decade or two with the popularity of restaurant dining.

“And so the consumption just soared. Prices had been around five or six, eight dollars a box, and boy, they went up to $18 – $20 a box. So people saw a lot of money there.

“And so what do you do? You respond to it, and you plant. The market for strawberries had fallen, labor availability diminished. So along the coast here, a lot of people had said, ‘I don’t care. I’m going to risk it. I’m going to plant lemons’. And it doesn’t take a whole lot of labor to do, it takes less water. We’re stressed about water availability along the coast. And so, you know, the choice of lemons sounded really good until…boom…COVID.”

The pandemic has certainly taken its toll on lemon prices. Faber is hopeful they will recover but also concerned about the threat of citrus greening disease.

California Ag Today2021-01-14T18:10:18-08:00January 14th, 2021|

New Director of Trade At CA Fresh Fruit Assoc

Caroline Stringer is New Director of Trade. at CFFA

The California Fresh Fruit Association (CFFA) is pleased to announce the hiring of Caroline Stringer as its new Director of Trade. Ms. Stringer comes to the Association after serving as a Public Affairs Representative at Pacific Gas & Electric. Prior to her role with Pacific Gas & Electric, Caroline served as the Senior Specialist on Global, Technical and Regulatory Affairs for the California Almond Board.

The Chairman of the Board for the Association, Randy Giumarra of Giumarra Vineyards Corp., stated, “We are very pleased that Caroline has agreed to become a part of the team at CFFA. Her personal background and education, as well as her extensive experience working in the area of trade will bring immense value to our membership.”

Association President Ian LeMay added, “We are extremely fortunate to have Caroline joining the CFFA team. The issues of trade and access into foreign markets is of paramount importance to our membership, possibly now more than ever. Caroline brings an extensive educational and professional background to this position and we are excited to see the work she does on our member’s behalf. We believe that Caroline is a natural fit, along with our current staff, to continue to bring value to CFFA members and to serve the California fresh fruit industry.”

Ms. Stringer is a graduate of San Francisco State University where she earned her bachelor’s degree in International Relations. She also earned a Master of Arts in International Trade Policy from the Monterey Institute of International Studies. Ms. Stringer’s first day at the Association will be Monday, January 6th.

California Ag Today2019-12-18T13:25:55-08:00December 20th, 2019|

Act Now to Help Pass the USMCA

House to Take First Step Towards Full Ratification of USMCA

Provided by California Farm Bureau Federation

This Thursday, the House will take the first step towards full ratification of the renegotiated NAFTA known as the “US-Mexico-Canada Agreement” (USMCA). California agriculture exports $6.6 billion in goods to Canada and Mexico and supports more than 56,000 jobs.

Since NAFTA was implemented, U.S. agricultural exports to Canada and Mexico quadrupled from $8.9 billion in 1993 to $39 billion in 2017. After President Trump renegotiated NAFTA, the International Trade Commission determined that the USMCA would have a positive impact on the U.S. economy and a positive impact on U.S. agriculture. An additional $2.2 billion in exports is expected once this agreement is ratified.

Congress must pass USMCA to preserve the proven successes of NAFTA while enjoying greater access to dairy, chicken, and eggs. The agreement has positive updates for fruit exports, improvements in biotechnology, protected geographical indications, and strengthened sanitary/phytosanitary measures.

All in all, the USMCA is needed to bring more stability to the volatile trade market. Please reach out today to your U.S. Representative to urge their YES vote on this important agreement.

Click Here: ACT NOW for USMCA House Passage

California Ag Today2019-12-25T14:06:59-08:00December 18th, 2019|

California Hemp Industry in the Making

California Hemp Growth Registrations Skyrocketed in 2019

By Robert W. Selna, Califonia Ag Today Contributor

California hemp growth registrations skyrocketed in 2019 due to federal decriminalization and a nationwide demand for hemp-derived products. A full-fledged statewide hemp industry has not quite arrived however, due to new regulations and limitations placed on hemp-based CBD products.

Hemp is defined as cannabis with extremely low concentrations of THC (not more than 0.3 percent on a dry weight basis). The Food and Drug Administration (FDA) prohibits CBD in food, beverages and cosmetics, regardless of whether the CBD is derived from cannabis that includes THC (the psychoactive constituent of cannabis) or from hemp.

California Hemp Field

On Oct. 29, the U.S. Department of Agriculture (USDA) released its long-awaited interim rule for domestic hemp production, which is a key step in implementing the 2018 Farm Bill and allows the USDA to approve hemp production plans developed by individual states. California is in the process of creating such a plan, and once it is approved, the state’s hemp industry is expected to expand.

Federal and State Laws

During the past year, California’s fledgling hemp businesses have waited patiently for the federal interim rule and closely monitored two bills that state legislators introduced to take advantage of a vast new hemp business opportunity. As the legislative session came to a close, results on the bills were mixed.

In mid-October, Governor Gavin Newsom approved SB 153, which modified California hemp regulations so that they would align with the anticipated interim rule. In contrast, state lawmakers failed to decide on AB 228, which would have legalized the statewide manufacture and sale of food, beverages and cosmetics that include hemp-derived CBD. The bill died in the Senate Appropriations Committee without a vote.

Following the lead of a handful of other states, including Colorado and Oregon, California Assemblymember Cecilia Aguiar-Curry (D-Winters) tried to address the federal CBD disconnect through AB 228. AB 228 contradicted the FDA, which deems products with CBD as “adulterated,” and prohibits them from being introduced into interstate commerce.

The FDA’s position is based on its decision to approve CBD as an active ingredient in the pharmaceutical drug Epidiolex, which treats a rare form of epilepsy. In turn, the FDA deems CBD to be like all other active drug ingredients, which may not be added to food and dietary supplements. Aguiar-Curry vowed to bring back AB 228 in early 2020.

Thus far, the California Department of Public Health (CDPH) has followed the FDA’s restrictions on CBD. Meanwhile, one can find hemp-derived CBD wellness products in small health food stores, as well as large chain supermarkets, which has caused confusion among consumers statewide.

The FDA and CDPH prohibition is seen by many as inconsistent with the spirit of the 2018 Farm Bill, which generally approved the production and sale of hemp, as well as the interstate commercial transfers of hemp and hemp products, including hemp-derived CBD. The Farm Bill decriminalized hemp by removing it from the Controlled Substances Act, but the bill did not remove marijuana. The federal government has long described marijuana as cannabis that includes more than trace amounts of THC. California, however, regulates a commercial cannabis industry separate from hemp.

Representatives in Congress are starting to awaken to issues surrounding the FDA’s CBD prohibition. Senate Majority Leader Mitch McConnell has taken baby steps to resolve the problem. In mid-September, McConnell introduced a bill that could result in the FDA adopting a more lenient framework for hemp-derived CBD products. Specifically, the legislation directs the FDA to issue “an enforcement discretion policy” that would give the agency latitude and possibly lead to recognition that CBD products are safe.

Industry Growth

Legislative hiccups and regulatory confusion aside, the California hemp industry is gaining momentum. Q3 statistics from the California Department of Food and Agriculture show that the number of registered hemp growers in California increased from 74 in June 2019 to 292 as of August 26. In addition, there are now at least 629 registered hemp cultivation sites and 17,571 acres associated with growers and seed breeders.

Under the 2018 Farm Bill, counties may only allow limited cultivation pilot programs until the USDA confirms that their state’s hemp plan conforms with federal rules. However, until the USDA’s interim rule issuance on Oct. 29, there was a chicken-and-egg problem. California and other states have struggled to draft federally compliant hemp plans not knowing exactly what to expect in the interim rule. As a result, at least half of California countries have temporary bans or restrictions on hemp cultivation.

The federal interim rule clarifies states’ hemp regulation responsibilities, including practices for record keeping, methods for testing hemp to ensure that it is below the legal THC limit, and plans for the proper disposal of non-compliant hemp. In addition, the interim rule makes it clear that states and Native American tribes may not prohibit the interstate transport of hemp that has been legally grown under federal and state laws.

California is said to now be working on its hemp conformance plan. SB 153 aids that effort by adding testing, enforcement, and other administrative provisions and extending the state’s deadline for completing a federal hemp conformance plan from Jan. 31, 2020 to May 1, 2020.

Despite an evolving legal landscape, the California hemp industry is gearing up for a big 2020. The publication of the interim rule and support for legalizing hemp-derived CBD products should propel the California hemp industry closer to a wide-open market.

Rob Selna an attorney for Wendel Rosen, with offices in Oakland an Modesto. He is an active member of the firm’s Land Use, Real Estate, and Cannabis practices, and represents clients in a wide range of transactional and regulatory matters. He chairs the firm’s Cannabis practice group and frequently writes and speaks on related legal issues.

California Ag Today2021-05-12T11:05:01-07:00November 4th, 2019|

Generic Pistachio Marketing Has Big Value

Analysis: Export Markets Shows Nearly $3 billion Post-Tariff Shipment Increase Resulting From U.S. Pistachio Industry’s Generic Program.

American Pistachio Growers’ (APG) efforts to reduce or eliminate trade barriers in several key overseas markets have been a significant boon to pistachio exports and to growers’ bottom-line. A new study, “An Analysis of the Effects of the American Pistachio Growers’ Program to Reduce/Eliminate Tariffs on U.S. Pistachios,” has quantified, for the first time, the direct benefit to the U.S. pistachio industry from APG’s strategic program to vanquish trade barriers.

The analysis from Dr. Dennis H. Tootelian, an emeritus Professor of Marketing, sought to determine what shipments of U.S. pistachios would have been if tariffs had not been lowered or eliminated in Israel, Mexico, China and Hong Kong, and the European Union which are the export markets prioritized for focus by APG. Many of his analyses centered on the period from 2009 through 2017 — the period in which tariffs were reduced in all five geographic areas.

Tootelian’s study showed that actual shipments of U.S. pistachios after the tariffs were reduced or eliminated for each export market were more than 2.3 billion pounds greater than what would have been expected had the tariffs remained in place. Equated in economic terms, the boost in export volume after the trade barriers had been removed amounted to nearly $3 billion greater value than what would have been expected had the tariffs remained in effect.

While Tootelian did not have any prior expectations of what his study would show, he was surprised by the findings.

“To see this kind of an increase in shipments on a before and after basis with the tariffs did surprise me. I did not expect this kind of result in the marketplace. These are not small numbers,” Tootelian said. “What the data tell me is that there is latent demand for U.S. pistachios and once the tariffs come down, foreign markets want to buy them.”

Tootelian said the projected economic boon to U.S. growers is even more profound if the fluctuations in prices in China and Hong Kong were eliminated from the analysis.

“If you take the price fluctuations in China and Hong Kong out, the increase in value of pistachio shipments amounts to nearly $355 million more dollars per year — nearly $4.5 billion in total from the time when tariffs were in effect to after they were reduced or eliminated,” said Tootelian.

Data from the analysis estimated that more than 1.7 billion pounds of U.S. pistachios in total, or an average of more than 192 million pounds annually, may have gone into storage if they were not diverted to other markets. While the effect of the projected added supply on the world market is unknown in terms of lower prices, Tootelian said that it would surely have had a detrimental impact on U.S. growers.

“It is unknown what that would have done to the price,” he said. “In order to divert from storage and into other markets, prices probably would have had to come down considerably and whether they would have been able to market that much supply is an unknown.”

Underlying Tootelian’s analysis is the fact that price is not the sole determinant of the volume of U.S. pistachio exports. He said when tariffs are lowered or eliminated, traditional economics would dictate that increased shipments would lead to lower prices, but his data show demand for U.S. pistachios in some key markets remained high in the post-tariff era. Several factors, he said, appear to be in play.

“One is the reputation of U.S. pistachios, which carries a very positive market image with consumers and importers. Second, it could be the quality of the product is better or more consistent, or both, for what consumers can buy from other countries,” said Tootelian. “And third, there are a lot of reputable health studies that show nuts are healthy and nutritious. APG has invested considerable resources raising consumer awareness of the healthful attributes of pistachios, and consumers appear to be willing to pay a higher price. That is pretty clear from the data.”

APG has aggressively worked in the halls of Congress, with U.S. trade officials and with foreign governmental bodies to alleviate burdensome trade barriers and create a more open market for U.S-grown pistachios.

“Quantifying the value of APG’s efforts to growers has been difficult up to now, but this new study gives us some tangible answers to the importance of the work we are doing on behalf of the U.S. pistachio industry,” said Richard Matoian, APG’s executive director. “Frankly, we were quite surprised at the magnitude of these numbers. It’s our strong belief that whenever and wherever trade barriers exist to the free flow of American-grown pistachios around the world, we will confront them vigorously.”

In a postscript to his analysis, Tootelian added, “If I were a grower, I would be encouraging APG to be doing this more in other markets because the greater the demand there is for the product, the less goes into storage and that helps boost the price.”

California Ag Today2019-08-10T09:33:07-07:00August 10th, 2019|

Activist Groups Promote Fear on Consumer Food Choices

Activists Driving Consumers to Organic Food Only—Beyond Consumer Affordability

By Safe Fruits and Veggies

Despite recent and repeated calls by scientists and nutritionists to increase efforts to improve consumption, activist groups have created and promoted new webpages and infographics designed to raise fears among consumers about the safety of the more affordable and accessible fruits and vegetables.

These groups continue to ignore peer-reviewed research, which has shown these tactics don’t just negatively impact consumers’ purchasing decisions regarding conventionally grown produce—consumers’ reluctance also includes purchasing of organic produce as well. In other words, the work of these activists isn’t meeting their goal of driving consumers toward organics and maybe driving them away from produce altogether. How crazy is this?

Let’s review just some of the study findings, which have been released during the time these groups chose to create and promote new fear-based content:

“Prescriptions” for healthy foods could save more than $100 billion in healthcare costs. The healthy foods included fruits and veggies plus seafood, whole grains, and plant oils. The study concluded: “These new findings support the concept of ‘Food is Medicine.’”

Eating and drinking better, including increasing consumption of fruits and veggies, could prevent one in five deaths around the world. The study concluded: “Our findings show that suboptimal diet is responsible for more deaths than any other risks globally, including tobacco smoking, highlighting the urgent need for improving human diet across nations.”

Low fruit and veggie consumption resulted in an estimated three million deaths from heart disease or stroke. “Our findings indicate the need for population-based efforts to increase fruit and vegetable consumption throughout the world.” Click here to continue reading and to “like” and share this blog post.

California Ag Today2021-05-12T11:05:02-07:00July 19th, 2019|

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