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.

2023-02-01T14:36:16-08:00February 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.

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

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.

2021-08-17T18:56:15-07:00August 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.

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

Big Exports Numbers Mean Big Responsibilities for California

California Exported $20 Billion in Food Products in 2016

By Mikenzi Meyers, Associate Editor

It’s no secret that California’s agricultural exports are a huge part of the state’s economy—but to put it in perspective, over $20 billion worth of food and agricultural products were exported in 2016 alone (the latest figures). With numbers like these, people like Glen Roberts of the U.S. Department of Commerce and International Trade Administration are kept busy.

Roberts, who is part of the Global Markets sector and based in Fresno, not only works with what he calls “easy” exports like Mexico and Canada, but other places across the globe, shipping anything and everything from food to machinery.

exports

Glen Roberts

When it comes to his role in California, Roberts explained, “Our office covers from the top of the Grapevine, Kern County, all the way up to Stanislaus County from San Louis Obispo over to Nevada.”

His sector, which handles more of the commercial side of things, acts as a gateway to other government programs that help out with international trade.

Although Roberts’ main focus is commercial, he’s still one of the go-to guys in agriculture exports.

“What happened when the almond prices dropped? I got the calls because Foreign Ag Service doesn’t handle contractual disputes,” he said.

Roberts further added, “I had to help out our local almond growers because the buyers didn’t want to pay the higher contracted price. They wanted to buy the new lower market price.”

2019-03-19T16:41:17-07:00March 19th, 2019|

California Crop Values for 2017 Released by CDFA

Full Statistics Now Available For the Crop Year 2017

News Release

The California Agricultural Statistics Review for crop year 2017 has been released. It reports that California’s farms and ranches received more than $50 billion in cash receipts for their output. This represents an increase of almost 6 percent in crop values compared to 2016.

California’s agricultural abundance includes more than 400 commodities. Over a third of the country’s vegetables and two-thirds of the country’s fruits and nuts are grown in California. California is the leading U.S. state for cash farm receipts, accounting for over 13 percent of the nation’s total agricultural value. The top producing commodities for 2017 include:

Dairy Products, Milk — $6.56 billion

Grapes— $5.79 billion

Almonds— $5.60 billion

Strawberries— $3.10 billion

Cattle and Calves — $2.53 billion

Lettuce— $2.41 billion

Walnuts— $1.59 billion

Tomatoes— $1.05 billion

Pistachios— $1.01 billion

Broilers— $939 million

Complete Report at this Link:

https://www.cdfa.ca.gov/Statistics/PDFs/2017-18AgReport.pdf

2019-01-10T15:52:42-08:00January 10th, 2019|

Almond Alliance Helps Growers with Advocacy

Almond Alliance Lent a Hand on Tariff Relief

By Jessica Theisman, Associate Editor

Like many agricultural sectors, almond growers have also been affected by recent tariff wars. However, almond growers have a true friend in the Modesto-based Almond Alliance.

“We are definitely an advocacy organization, that is the core of what we do,” said Elaine Trevino, president of the Almond Alliance.

Elaine Trevino

“The Almond Alliance educates our legislators, their department officials and cabinet about issues that are important to the almond industry. It is very critical that our elected officials, specifically the urban [ones] that are not familiar with agriculture, understand agriculture. They need to understand … the inputs and the natural resources needed for agriculture, and also understand the best practices that we put into place to be good corporate and small businesses,” Trevino said.

“Obviously with almonds, you have hulls and shells and the biomass that comes with almonds, and so we focus on all aspects of that,” she explained.

Almond growers are being affected by tariffs increases into China. Beginning on April 2nd, the first 232 retaliatory tariffs was seen that affected China. Since then, our turkey has also been affected by the tariffs.

The almond industry exports 67 percent of its production to more than 100 countries.

“Looking at export markets and how they impact the industry is critical. Secretary Purdue came out with the mitigation package,” Trevino said.

The almond industry fought very hard to be included in direct payments. While many say it’s just three cents a pound, the allocation to almonds was $63.3 million.

“It’s our intention that the alliance fight for every penny of that goes back to the growers, and if they are not eligible for the direct payments, then we’ll make sure that they receive it through market promotion that will help move their product and hopefully get those prices back up if they haven’t been affected,” Trevino said.

2018-12-18T15:07:08-08:00December 18th, 2018|

2018 Raisin Price Still in Limbo

Discussions Continue Over Raisin Price

News Release Edited by Patrick Cavanaugh

The Board of Directors of the Fresno-based Raisin Bargaining Association have offered to sell the 2018 Natural Seedless Raisin Crop for $2,250.00 per ton. Also, the board has offered to sell both the 2018 & 2019 crops for $2,150.00 per ton. This 2-year Memorandum of Understanding (M.O.U.) at $2,150.00 per ton has safeguards in it for the second year in case there are changes that could force the raisin price to go higher or lower, with a lower bottom not to fall below $2,000.00 per ton.

Last year, they had 12 signatory packers agree to the M.O.U. negotiated at $1,800.00 per ton. This year, they have been instructed that Sun-Maid has rejected both the $2,250.00 one year contract and the $2,150.00 two year contract. They have also advised the RBA to try and move the 2,000 tons of RBA growers to other packers, which we are in the process of doing.

Of the remaining 11 packers, 6 have agreed to accept the $2,150.00 2-year plan. Those six packers are Central California Packing Company, Chooljian Brothers Packing Company, Inc., Del Rey Packing Company, National Raisin Company, River Ranch Raisins, LLC., and Sun Valley Raisins, Inc.

The 5 remaining packers who have rejected both the one year price at $2,250.00 per ton and the $2,150.00 per ton two-year M.O.U. include: Boghosian Raisin Packing Company, Inc., Caruthers Raisin Packing Company, Inc., Fresno Cooperative Raisin Growers, Inc., Lion Raisins, and Victor Packing Company.

In the discussion with the packers who have not agreed to M.O.U. terms, their arguments were that the $2,250.00 price was too high and the $2,150.00 price was acceptable but not for 2 years. Discussions will continue until Friday, October 12. For updates please go to our website at www.RaisinBargainingAssociation.com and click on the “From the Office” tab.

2018-10-12T16:49:55-07:00October 12th, 2018|

Federal Milk Marketing Order in California in Effect Nov. 1

Questions Arise Regarding Milk Quota

Edited by Patrick Cavanaugh

Dairymen and women throughout California are working hard to provide milk and other dairy products for consumers in California and the world. Because the industry has struggled over the past decade with price swings that have often landed dairies in red, many dairies have gone out of business. Still, other operations relocated to others states where regulations are a fraction of what they are in California.

In June 2018, California dairy producers voted to establish a new Federal Milk Marketing Order (FMMO) for the state. The vote was a paramount step in a long process that would culminate with the new order taking effect on November 1. The order will adopt the same dairy product classification and pricing provisions currently used throughout the FMMO system.

California accounts for more than 18 percent of U.S. milk production and is currently regulated by a state milk marketing order administered by the California Department of Agriculture (CDFA). Once this new FMMO takes effect, more than 80 percent of the U.S. milk supply will fall under the FMMO regulatory framework.

Western United Dairymen is a trade association based in Modesto. Annie AcMoody is the Director of Economic Analysis. She explained that there have been questions from the industry regarding the upcoming FMMO.

Among the often asked question revolves around when the state switches to FMMO in November, what will happen to their quota if a dairy ships milk out of state?

Annie AcMoody: When our California state system goes away to make way for the Federal Milk Marketing Order (FMMO) in November, the Quota Implementation Plan (QIP) will be the language in place to ensure the quota system’s smooth transition into the FMMO system.

When we enter that new world, all market milk received from California producers at a California plant will be assessed for quota. By “received”, the language defines “to convey milk physically into a milk plant where it is utilized within the plant, or stored within such milk plant and transferred to another plant for utilization. This means that a milk truck driver cannot drive by a plant, wave hello to an operator, and keep on going out of state and still call this milk received in California. Basically, if your California milk leaves the state, you will not be assessed for quota.

But you also will not be paid for it. But, if your milk is 60% quota and only 40% of your milk goes out of state, you will be assessed on 60% of your milk and get paid quota on that same 60%. If your quota covers 100% of your milk and 40% of your milk goes out of state you will be assessed on 60% of your milk and get paid quota on that same 60%. In this instance, one could wonder if it makes much sense to keep your quota.

While it may not make much economic sense to hold on to quota you are not paid for, some reasons may validate that decision (perhaps it is expected milk will be shipped to a California plant in the near future). If you were to decide to hold on to that quota, it is important to keep in mind that “if quota is not made active by shipments of market milk to a California plant or cooperative association or is not transferred within the 60-day period, such quota shall revert to the Department”.

This excerpt from the QIP means that if your quota milk is not paid on for over 60 days, you will lose it, so you better sell it. This is likely going to be an issue if you ship to a proprietary plant and all your milk goes out of state. If you ship milk to a cooperative, there is more flexibility because that coop has the ability to combine quotas assigned to it by its members.

So as long as the quota total within the coop is not larger than the total amount of market milk produced and received in California, then there should be no issue for you as a quota holder.

What 
is 
defined 
as 
market 
milk?


Answer:
 Grade A milk.

If your milk is Grade B, you cannot have quota now and will not be able to under the QIP. You will not be assessed for it either. Currently, only around 3% of the milk in California is Grade B. WUD will keep an eye out on this topic to ensure that percentage does not deviate significantly. As a reassurance, this is not something that could grow from 3% to 50% in a month since fluid milk is not allowed to take in Grade B milk and the three largest coops in the state (CDI, DFA and LOL) committed to not taking in any more Grade B milk after the transition to the FMMO.

2021-05-12T11:17:09-07:00September 23rd, 2018|

2017 Tulare County Crop Report Tops $7 Billion

Tulare Crop Report Shows 10 Percent Growth in Single Year

By Patrick Cavanaugh, Editor

Big numbers announced today from Tulare County Ag Commissioner Marilyn Wright on the 2017 crop year.

“Our value is 10.5 percent up from last year, at 7,039,929,000. So, that’s 669 million more than the previous year,” Wright said.

Marilyn Kinoshita, Tulare County Ag Commissioner

Marilyn Wright, Tulare County Ag Commissioner

And, of course, more water in the system probably helped, as it did in Fresno County, which announced $7.028 billion in its 2017 Crop Report, released earlier this month.

The dairy industry, which is prominent in Tulare County, came in number one again, representing 25 percent of the total value.

“Milk prices were stronger in early 2017, but they went down later in the year. And they continue to go down, but still it was a big part of the Tulare County ag receipts in 2017,” Wright said.

Following dairy were grape products—including juice grapes, raisins, and table grapes. Table grapes had a stellar year.

Navel and Valencia oranges were next. Cattle and calves ranked fourth, down from category number three in 2016, because cattle prices were off last year.

Tangerines, also known as mandarins, were number five, followed by almonds, cling peaches, and freestone peaches.

Lemons, were ninth on the crop list.

We only have just over 10,000 acres of lemons in the County, Wright said.

Wright said the value of this year’s crop report, $7.39 billion, is the third highest value Tulare County has ever reported.

2018-09-18T16:39:21-07:00September 18th, 2018|
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