October 25, 2012

By Mike Karst

While the newspaper headlines about drought and crop performance in many parts of the heartland are depressing, the mood on California farms these days is generally upbeat.

Inside our largest agricultural producing state there exists a very active and prosperous microcosm that’s bucking the trends of an otherwise struggling state economy and agriculture performance all over the country.

California agriculture finished last year with record-setting incomes, and things appear to be on a decent track in 2012. This paints a rosy picture; but to achieve this success, California ranchers and specialty crop growers are continually overcoming very real and unique challenges. From the outside, one might assume this prosperous industry exists in its own protected bubble, when in reality it’s far from it. This region deals with hurdles unprecedented in other parts of the country—notably as they pertain to water and land availability and the domineering, ever-changing regulatory environment.

Every time you blink, it seems there’s a new regulatory mandate coming down the pike. The volume and complexity of regulations is recognized as one of the greatest challenges to California agriculture. Application, labor, emissions, food safety, sustainability, environmental requirements, compliance, documentation, certification and the like are at an all-time high. This is a costly and cumbersome burden to California farmers. But, as people all over the country enjoy their fresh, California-grown produce year-round, it’s no surprise the government has its hands all over it. California farmers have a more direct link to the consumer than growers from any other part of the U.S. 

Competition for resources is also a growing challenge. Water supplies are becoming more and more scarce as environmental, economic and political interests have blocked large-scale water storage and conveyance projects. So farmers are definitely competing for the resources they need to manage a viable operation.

The success in California is remarkable when you consider also the diversity of crops grown in the state—California farmers produce 400 different commodities. Suffice it to say, prosperity doesn’t come easy, and farming in California certainly requires some gusto.

My Entira partner and native Californian Karol Aure-Flynn once told me California ag is like the canary in the coal mine—undeservedly subjected to difficult and threatening conditions beyond their control. Unlike the doomed canary however, California farmers time and time again have proven their ability to anticipate and withstand adverse conditions, and they are proficient at responding to unexpected curveballs. What’s important for those of us outside the region to be cognizant of is that those obstacles can serve as an indicator of what’s going on inside their hearts and minds. The obstacles encountered in California and how growers respond to them can teach valuable lessons to farmers and agribusinesses in other parts of the country.

Karol lives on a cattle ranch in the Central Valley of California and has production experience with table grapes, almonds, figs, field crops, and, of course, cattle. She’s worn hats as a produce broker, farm manager and entrepreneur. Karol is our eyes and ears on the ground in California, so through Karol’s nudging Entira has developed a keen interest in what’s going on in the region.

And it’s not just California. All along the western edge of the United States, producers of specialty crops are rising to their unique challenges. How are they doing it? We’re curious about that, too.

It’s Karol’s unique vantage point that prompted one of our latest qualitative research studies, which will dive deep into the behaviors and attitudes of western U.S. farmers. When you’re dealing with such diversity in crop operations –strawberries, table grapes, pistachios, citrus, tree fruits, etc.—it’s definitely not an apples-to-apples comparison. Historical market assumptions and commonly used demographics are not accurate indicators about what’s going on in western markets. If suppliers, processors, and other stakeholders are relying on aggregate market data alone to drive decisions about serving and marketing to western farmers, it can lead to costly mistakes.

Impact of the Drought

Most of the western U.S. region escaped extreme drought conditions but they’ll feel the effects indirectly, nonetheless. The drastic cut in corn production means feed shortages, and in extreme cases costs will be high enough that ranchers will have to reduce head count. Then there’s dairy, which has its own unique pain, even for California. As feed costs take their toll on this sector, trending headlines seem to focus on “milk scarcity” and “price of milk to double.” California dairies are heading for bankruptcy in droves, and many more are on the brink.

But one thing we know about California farmers—they’re resilient. Whether it’s the weather, markets, consumer preferences or regulations, they’ll face the challenge head-on and provide some valuable lessons for the rest of the country in the process. And at the end of the day, they’ll be sure families all over the country won’t be deprived of their kiwi and artichokes this winter.

If you’d like to learn more about our proprietary research study on western U.S. farming, please contact us. You can also read a more detailed perspective on the unique challenges of the region in a piece written by one of Entira’s collaborative partners.