By Valley Ag Voice Staff
The agricultural industry in California is one of the largest economic drivers in the state with over 400 commodities which account for over a third of the country’s vegetables and three-fourths of the country’s fruits and nuts.
Tulare, Fresno, and Kern counties ranked in the top 5 for U.S. agricultural sales according to the recently released 2022 USDA Census of Agriculture — a report taken once every five years. Despite a continuous decline in the total number of farms in California, the value of agricultural sales in California increased.
Since 2023, the Central Valley has received ample rainfall coming off of three drought years, but rising labor costs, high inflation rates, and the push for SGMA compliance still hinder agriculture production. Three of the region’s top commodities — grapes, almonds, and dairy — are seeing the effects of these obstacles, but the industries are optimistic in 2024.
WINE GRAPES
Despite higher-than-average yields per acre for wine grapes, consumer demand continues to decline, creating an excess market cycle for the California wine market according to Turrentine Brokerage.
The California Department of Food and Agriculture’s preliminary Grape Crush Report reflected a total of 3.67 million tons during the 2023 harvest, but this figure failed to account for soft demand and mounting disease concerns which left several acres unharvested, Turrentine Brokerage explained in a press release.
The wine grape industry initially faced unexpected challenges to meet demand due to the pandemic, leading to shortages in 2021 and 2022. However, by last year, the industry dealt with a surplus of wine. This oversupply is expected to persist for about three years due to various economic factors, Brian Clements, vice president of Turrentine Brokerage said in the release.
In the Central Valley, wine grapes remained unpicked primarily due to reduced sales and disease issues.
“If all grapes were harvested, this could have potentially been the largest grape crop in California’s long history,” Mike Needham, California interior Grape Broker said in the release.
Despite this, the quality of the 2023 vintage is praised by winemakers for its richness and structure. However, the industry now faces the challenge of attracting new customers to enjoy these wines.
TREE NUTS
Tree nut production, specifically almonds, faced a tumultuous year in the Central Valley from heavy rainfall, increased pests and diseases, and a lack of overall demand. In the most recent news, almond grower Trinitas Farming — including its investment organization and 17 subsidiary almond ranches — filed for Chapter 11 bankruptcy protection in February.
The bankruptcy filing was attributed to low almond prices, high-interest rates, and rising capital costs. Trinitas Farming covered 7,856 acres in Solano, Contra Costa, San Joaquin, Fresno, and Tulare counties.
In 2022, tree nut prices fell to their lowest levels in decades — almonds at $1.01 per pound, hazelnuts at $0.51 per pound, and walnuts around $0.25 per pound.
Still, the tree nut industry is hard to crack, and a five-year outlook published by RaboResearch anticipates a strong recovery in the global demand for almonds along with record increases in production, domestic, and export shipments.
DAIRY
According to the USDA’s 2024 Dairy Outlook, the industry will face a smaller dairy herd but will see overall industry growth and broadly strengthening prices for both dairy products and fluid milk production.
Dairy cow inventories from Jan. 1 were 41,000 head lower than the previous year coupled with about 14,00 fewer dairy replacement heifers, according to the USDA. However, cow numbers in milk production are expected to stabilize in 2024, ending the year at roughly the same level as the beginning of the year.
While the expected number of cows combined with milk per cow is expected to continue its growth, it will be at a slower rate than historical averages. One additional milk day will also result in milk production growing at an annual rate of .7%.
Milk prices will reflect the modest increases in production, with all milk prices projected to be $20.95 per cwt — up from $20.48 in 2023. Class 4 milk prices are projected at $20.20 per cwt, up from 2023 prices at $19.12.
Class 4 milk prices are projected to outpace Class 3 prices due to the relative strength of butter and dry milk over cheese and whey.
TECHNOLOGY
Bushel — an independently-owned software technology company — released its 2024 State of the Farm Report with surveyed information from U.S. farmers on technology, grain marketing, sustainability, and more.
Most of the respondents represent larger farms, with 58% of respondents farming 500 acres or more. One of the key findings showed concern over the price of equipment, profitability and high inflation rates.
In terms of technology, farmers under 40 viewed software’s value beyond convenience and were even split between helping them manage costs and increasing revenue. Of the respondents, 70% utilize farm record-keeping tools compared to 11% who prefer pen and paper records.
Further, 40% said they are willing to share data with accountants and crop insurance providers — more than a third would share with their agronomist and banker or lenders.
2022 CENSUS OF AGRICULTURE
The USDA’s 2022 Census of Agriculture highlights a few key trends for the state’s farming landscape. Despite a decrease in the number of farms to 63,134 — representing a 10% decline from 2017— there has been an increase in the average farm size by 10%, averaging 383 acres.
Market value for agricultural products saw a surge to $59.0 billion, an increase of $13.8 billion compared to 2017. Similarly, total farm production expenses have also increased, totaling $49.3 billion — an $11.5 billion increase from 2017 figures.
California continues to embrace renewable energy systems within agriculture, with 16,699 farms utilizing these technologies. Solar energy is the primary renewable energy source adopted by farms and ranches throughout the Golden State.
The average age of California farmers has increased to 59.9 years, up from 59.2 in 2017, suggesting potential implications for the future of agricultural leadership and succession in the state.
