The San Joaquin Valley is the agricultural powerhouse of the United States and California. California accounts for an eighth of U.S. farm sales, largely because it produces high value fruit and nut, vegetable and melon, and horticultural specialty (FVH) crops such as nursery products and flowers. Over three-fourths of the state's $37 billion in farm sales in 2010 were crop commodities, and almost 90 percent of the $28 billion in California crop sales represented labor-intensive FVH commodities.

About half of California's farm sales and farm employment are produced in the eight-county San Joaquin Valley with four million residents that stretches from Stockton in the north to Bakersfield in the south. The leading U.S. farm county is Fresno, which had farm sales of almost $6 billion in 2010.

Philip Martin

Philip Martin

Philip Martin is Professor of Agricultural and Resource Economics at the University of California- Davis, chair of the University of California's Comparative Immigration and Integration Program, and editor of the monthly Migration News and the quarterly Rural Migration News.

California's farm sales fell from $54 billion in 2014 to $47 billion in 2015, largely because of the declining price of milk, whose value fell from $9.4 billion to $6.3 billion. The value of almonds fell by $0.5 billion, and the value of walnuts by almost $1 billion.

However, farmers are continue to plant more nuts. Bearing almond acreage has more than doubled from 418,000 acres in 1995 to 900,000 in 2016, and yields rose even faster from 370 million pounds to over two billion pounds. Walnut acreage rose from 177,000 in 1988 to 315,000 in 2016, and production more than doubled to 670,000 tons. California has 310,000 acres of pistachios expected to generate 555 million pounds in 2016.

Most nut farmers generate profits of $1,000 to $2,000 an acre, with pistachios the most profitable nut crop.

More acres of nuts are expected to come into production, including 220,000 acres of almonds, 70,000 acres of pistachios, and 65,000 acres of walnuts. The cost of establishing an acre of walnuts is estimated to be $3,800, an acre of almonds $2,300, and an acre of pistachios $1,900. Much of the new nut acreage is being developed by pension and hedge funds seeking current returns and capital gains as land prices rise.

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California enacted a law in 2016 (SB 3) raising the minimum wage from $10 to $15 an hour by 2022 and requiring farmers to pay 8/40 overtime (AB 1066), that is, 1.5 times normal wages after eight hours a day and 40 hours a week by 2022 (employers with 25 or fewer employees have extra time to comply). The state's minimum wage went to $10.50 an hour on January 1, 2017.

Western Growers surveyed its members in November 2016, and 150 growers reported that they plan to increase mechanization (77 percent) and reduce production of labor-intensive crops in California (33 percent), including 60 growers who hired fewer than 100 workers at peak.

Responding growers reported that their employees worked an average 9.6 hours a day and 56 hours a week at $12.40 an hour, suggesting 5.5 day workweeks. Instead of paying overtime wages, most farms said they will reduce hours to 8/40, so that workers would be employed 16 fewer hours a week. A third of respondents said they would reduce benefits provided to farmworkers because of higher minimum wages and 8/40 overtime by having employees contribute more for heath insurance or reduce employer 401K and retirement contributions.

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Fresno was the leading U.S. farm county until 2013, when the drought reduced irrigation water available to large farmers on the western side of the county. Fresno's farm sales for 2015 were $6.6 billion, down from $7 billion in 2014, and led by $1.2 billion worth of almonds from 186,000 acres and followed by $900 million for grapes from 195,000 acres. Fruit and nut crops worth $3.3 billion were half the value of Fresno farm sales.

Tulare county's farm sales dropped from $8.1 billion in 2014 to $6.9 billion in 2015, with lower milk prices for the county's 285 dairies explaining the drop.

There were many commodity stories in summer 2016. California's 900,000 acres of almonds are expected to produce a record two billion pound crop in 2016. Grower prices are expected to be about $2.50 a pound.

Table grape acreage is expanding to over 83,000 bearing acres. Workers in the San Joaquin Valley were being paid $10 to $10.50 an hour in summer 2016, plus $0.30 to $0.50 per 22-pound box, with a trio of two pickers and one packer sharing the piece rate. A trio picking 12 boxes an hour would share $3.60 to $6, or earn $11 to $13 an hour or $100 a day. Working six-day weeks for 18 weeks or 108 days, grape pickers could earn $10,800 or more a season.

Table olives have declined to 15,000 acres and 63,000 tons in 2016, in part because of the $500-a-ton cost of getting olives picked by hand. Many growers are shifting to nuts, which can be harvested mechanically.

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There is not enough farmworker housing. A combination of economic incentives, stricter regulation of housing quality, and worker preferences suggests there will continue be a shortage of affordable and decent housing for seasonal farmworkers.

Until the 1960s, many farmers housed seasonal workers on their farms in a bid to attract them and to have workers available when they were needed. On-farm housing was often offered at little or no cost, and workers did not incur costs to commute to work.

Unionization and tenant rights, as well as tougher regulations and enforcement, encouraged many farmers to eliminate on-farm housing, which they could do in the 1970s, 1980s and 1990s and continue to attract workers because unauthorized migrants flooded into the United States. Today, most farmworkers live in farmworker cities, often crowded into single family homes, and many commute in car- and van-pools to work.

Federal and state governments operate farmworker housing centers, most of which give preference to families and offer a range of health, education and other services to workers and their children. Solo males generally live off of the farm and away from subsidized centers, especially when they work in short-season crops, such as the three-month table grape harvest in the Coachella Valley.

California needs more housing, but zoning laws that require developers to "maintain neighborhood character" and limit how many unrelated people can live together raise housing prices and slow the migration of poorer people to boom areas such as San Francisco. Many of the tech workers in San Francisco earn $150,000 to $200,000 a year, and the city's median house price in summer 2016 was $1.1 million.

By some estimates, United States GDP could be increased by 10 percent if zoning restrictions were eased so that poor people could move to richer areas and enjoy higher wages without spending their extra earnings on housing. A state law supported by Governor Jerry Brown would make it harder for cities to saddle developers with open-ended design, permit and environmental reviews. Many people in desirable places want to pull up the drawbridge, arguing that allowing more people into their cities would degrade the quality of life.

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Labor 

California's labor force in summer 2016 was 19.1 million, including 18.1 million who were employed. Los Angeles County has a labor force of five million, followed by 1.6 million each in Orange and San Diego counties, and almost one million each in Riverside and San Bernardino countries, that is, the five major southern California counties have almost 55 percent of the state's labor force.

About 16.5 million California workers are employed in nonfarm wage and salary jobs; there are 430,000 hired farm workers. Four sectors include two-thirds of the state's wage and salary workers: trade, three million, followed by professional and business services, education and health services, and government, which each employ 2.5 million.

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California had a "normal" water year in 2010-11 and again in 2015-16. Droughts reduced the availability of water for the 2012, 2013, 2014 and 2015 crop years. However, farm sales climbed during the drought years, from $43 billion in 2011 to $47 billion in 2012 to $51 billion in 2013 and $54 billion in 2014. Sales in 2015 are expected to set another record.

The reason that farm sales rose even as the availability of water fell from the long-run average of 50 million acre-feet to a low of 31 million for the 2014 crop year was that farmers switched scarce and expensive water from low-value and water-intensive crops such as alfalfa to more valuable crops such as fruits, nuts and vegetables. About 500,000 acres were fallowed in 2014 and 2015, usually land that would normally be used to produce low-value field crops, and farmers pumped ground water to substitute for less surface water.

Monterey County, the nation's salad bowl, had farm sales of $4.5 billion in 2014, led by leaf lettuce worth $775 million, strawberries worth $709 million, and head lettuce worth $651 million. Vegetable crops were worth $3.1 billion and fruit crops $1 billion. A Farmworker Advisory Committee meets quarterly with the Agriculture Commissioner's office to discuss labor issues.

California is projected to have a record crop of table grapes in 2016, some 117 million 19-pound boxes worth almost $2 billion. The state has 100,000 acres of table grapes, and the Scarlet Royal and Autumn King varieties are replacing Thompson seedless, Crimson seedless and Red Globe varieties. Autumn King can generate 2,000 boxes an acre, compared with 1,000 boxes from an acre of Thompson seedless. A third of the state's table grapes are exported.

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The 2015-16 water year was close to normal; the state's 154 major reservoirs held almost 22 million acre-feet of water on April 1, 2016, more than 85 percent of normal. Federal and state farm water contractors are likely to get half or more of the water that they want. Each water district contracts for a specific share of the surface water available to the federal Central Valley Project and the State Water Project, and CVP and SWP managers provide a percentage of each district's contracted water based on availability.

The California water system accumulates water as snow in northern California mountains and moves the water south via the Sacramento-San Joaquin river delta as the snow melts in summer. However, pumping water from the delta into the aqueduct that moves water south is often restricted to preserve juvenile fish that can be sucked into the pumps.

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California requires overtime pay for farmworkers, one of four states to do so. In 1976 the 10/60 standard (that requires overtime after 10 hours a day or 60 a week, different than the standard eight hours a day and 40 hours a week for non-farmworkers) was established in 1976.

Across the U.S., workers hired directly by the farm that employed them averaged 41 hours of work in July 2015; California farmworkers averaged 43.6 hours. Most harvest workers are employed less than eight hours a day, but some work six days a week during the harvest. Workers most likely to be affected by an 8/40 overtime pay requirement are irrigators and equipment operators, who often work 60 or more hours a week during busy periods.

Sonoma County farm labor contractors (FLCs) Four Seasons Vineyard Management and Ridge Vineyards were fined $42,000 by the Department of Labor (DOL) in February 2016 for poor housing for farmworkers. Four Seasons deducted rent from the wages of workers and turned rental payments over to Ridge.

Two California Court of Appeals decisions in 2013 required employers to pay piece rate workers for nonproductive time and to pay them for rest periods at their average piece-rate earnings. Before these 2013 rulings, employers could pay only piece-rate wages to workers as long as their piece-rate earnings exceeded the minimum wage.

Many workers planned to sue for back wages. AB 1513 gave employers a "safe harbor," allowing them to pay any back wages due piece-rate workers after July 1, 2012 without penalties. However, employers who faced suits for unpaid productive time and for using fictitious workers to reduce wages were excluded from the safe harbor.

Two farms are affected by these exclusions, Gerawan Farming and Fowler Packaging. Both face United Farm Workers-initiated suits, and both sued in January 2016 to have the AB 1513 exemption declared unconstitutional.

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California's minimum wage went to $10 an hour January 1, 2016.

California in April 2016 approved SB 3 to raise the state's $10 an hour minimum wage to $15 by 2022 for large employers, and by 2023 for employers with 25 or fewer workers. The minimum wage will rise by $1 an hour in January each year beginning in 2017, and increase with inflation from 2024. The governor can suspend minimum wage increases for a year in recessions or if there are serious budget crises.

SB 3 was enacted to head off a $15 an hour union-sponsored initiative on the November 2016 ballot that was expected to be approved by voters.

The minimum wage increase is expected to affect 5.4 million of California's 15.1 million workers, raising their wages by an average $2.20 an hour or $3,700 a year. The University of California, Berkeley's Center for Labor Research and Education estimates that almost 40 percent of those affected by the $15 minimum wage are 20 to 29, and that over half have a high school education or less. Over 55 percent of those expected to benefit from the rising minimum wage are Latino. A third of California workers affected are in retail trade and food services; less than five percent are in agriculture.

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County agricultural commissioners released reports of the value of commodities produced the year before. Tulare County had farm sales of $8 billion in 2014, led by $2.5 billion worth of milk, followed by Kern country's $7.5 billion led by grapes worth $1.7 billion. Fresno county had farm sales of $7 billion, led by $1.3 billion worth of almonds.

California produces 20 percent of U.S. milk, but the state's milk output declined in 2015 as farmers grappled with higher feed costs attributed to drought. California surpassed Wisconsin as the leading dairy state in the early 1990s, but in recent years milk output has increased in Michigan, New York and Wisconsin, states with lower-cost land and plenty of water for pasture and feed. Milk prices have also fallen to less than $17 a hundredweight in Fall 2015, reflecting a global surge in milk production.

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California's minimum wage rose from $9 to $10 an hour January 1, 2016.

AB 20, which would have required the state to initiate discussions with the federal government to seek a waiver that would allow the state's Employment Development Department to issue work permits to unauthorized farm workers if there are not enough U.S. workers to fill available jobs, stalled in the Legislature in 2015 and was not approved. Under AB 20, the immediate family members of workers with permits could have received permits to reside legally in California.

Kansas, Utah and Colorado tried to create similar state-facilitated guest worker programs, but the federal government did not grant required waivers, so these states wound up with state-run programs to help farm employers to apply for guest workers under the H-2A program.

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California endured its fourth year of drought in 2015, but farm sales appear headed for another record. Water was shifted from low-value crops such as alfalfa to higher-value nuts, and prices for many farm commodities were strong.

California agriculture "normally" uses about 33 million acre feet of water. In 2015, agriculture used 30 million acre feet. Two-thirds of the nine million fewer acre feet of surface water available in 2015 was replaced with groundwater pumped from underground aquifers. Groundwater is normally 40 percent of the water used by agriculture, and 60 percent in dry years.

The water in underground aquifers accumulated over centuries, and cannot be replaced quickly. California in 2014 became the last western state to regulate groundwater pumping, enacting laws that created local groundwater sustainability agencies to register private wells, monitor the water-measuring devices that must be attached to pumps, and regulate groundwater pumping. The agencies are financed by fees charged to farmers and other water users.

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Don Villarejo, a leading farm labor researcher, highlighted 40 years of continuity and change in California agriculture and farm labor. The continuities include low incomes and poverty for many seasonal workers, while the changes include fewer and larger growers, more intermediaries who bring workers to farms, and fewer union contracts.

There have been important regulatory changes aimed at protecting farm workers, from the federal MSPA (1974) to the state ALRA (1975), but they have not prevented declining earnings. In 1974, California farm employers reported an average $2.60 per hour, which BLS says is $12.49 in 2014 (http://data.bls.gov/cgi-bin/cpicalc.pl), when reported earnings were $11.33. California farm worker earnings were 52 percent of manufacturing worker earnings in both 1974 and 2014 despite a raft of federal and state laws that aimed to protect and empower farm workers.

The shift to hiring workers via farm labor contractors (FLCs) and other intermediaries is also associated with fewer benefits, from housing to health insurance. There were 9,300 farm labor contractors registered with DOL in May 2015, including 4,100 or 43 percent in California.

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Commodities

Almonds are irrigated with 3.5 acre feet or 42 inches of water, and the typical 124 almond trees per acre yield an average 2,270 pounds of nuts. One cubic foot of water is 7.5 gallons, and one acre is 43,560 square feet, so 502 gallons of water are used to produce a pound of almonds: (7.48 x 3.5 x 43,560 )/2,270 = 502. With about 380 almonds per pound, each almond requires about 1.3 gallons of water.

California's acreage of long-staple Pima cotton declined as more farmers switched to almonds. California had over 300,000 acres of Pima cotton in 2011, and fewer than 100,000 acres in 2015. Despite cotton yields of over 1,200 pounds per acre, nuts and processing tomatoes require less water per dollar of revenue.

Over 70 percent of California grapes and almonds are irrigated with drip or a similar low-water technology. However, less than 10 percent of the alfalfa and corn used to feed dairy cows uses water-saving technologies; flood irrigation is typical.

A Fresno State study (www.fresnostate.edu/academics/drought/) focused on the effects of the drought in the eight-county San Joaquin Valley, emphasizing that areas most dependent on surface water suffered most. The report called for water budgeting, that is, recognizing the true value of water and pricing it accordingly.

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Drought 

 

The drought was the major farming story during summer 2015.

 

An estimated 542,000 acres were fallowed in 2015, up from 490,00 acres in 2014, as farmers used about 10 percent less water than in non-drought years. In 2010, agriculture consumed 33 million acre feet of irrigation water, while urban uses, including landscaping, consumed 8.3 million acre feet. One acre foot is 326,000 gallons.

 

In 2015, agriculture was expected to use about 30 million acre feet of water. The rain deficit between 2012 and 2015 is equivalent to one year's rain, which averages 20 inches across the state.

 

Senior holders of water rights were required to report how much water they were withdrawing from rivers and streams, and faced fines for taking excess water set at $1,000 a day and $2,500 an acre foot.

 

Forecasters are predicting record rainfall in California in 2015, as conditions for a wet El Nino rainy season in 2015-16 are apparent in the Pacific Ocean. Most of California's rain is from atmospheric rivers that bring water from the Pacific Ocean inland.

 

In recent years, fewer winter air currents reduced these so-called Pineapple Expresses, which are like hurricanes without wind. The last major El Nino was in 1997-98. 

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California suffered its fourth year of drought in 2015, prompting the federal government to deliver no water to its Central Valley Project farm customers and the state to deliver 20 percent of contracted water to farmers.  Agriculture uses about 80 percent of the state's developed or storable water that can be delivered via dams and canals. Annual farm sales of about $43 billion account for less than two percent of the state's $2 trillion GDP.

Governor Jerry Brown in April 2015 ordered urban water districts to reduce water consumption through incentives and fines by 25 percent in 2015. The State Water Resources Board enforces the water reduction plan via local water districts. Brown exempted agriculture from the cuts, prompting criticism. One commodity spotlighted was almonds, since the state's 900,000 acres require about four-acre feet of water per acre, twice as much as cotton, grapes or tomatoes.

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Beginning July 1, 2015, all California employers must give their employees three paid sick days a year or allow them to accumulate paid sick leave at the rate of one hour for every 30 hours worked. Many employers plan to grant employees three days of sick leave at the beginning of each year.

Cal/OSHA tightened its heat-safety regulations effective May 1, 2015 to require "fresh, pure, and suitably cool" water to be located as close as practicable to workers. Employers must provide shade for all workers when the temperature tops 80 degrees, down from 85, and must monitor workers for signs of heat stress when temperatures exceed 95 degrees. All outdoor workers must be trained in a language they understand about the dangers of heat illness.

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California is in its fourth year of drought http://ca.gov/drought). After a wet December 2014, there was little rain in January 2015. February rains partially filled some reservoirs, including Shasta Lake, which rose from 40 percent to 60 percent of capacity, but the entire state was declared a drought emergency area.

Agriculture, which uses about 80 percent of the state's developed or storable water that can be delivered via dams and canals, fallowed 400,000 or about five percent of crop land in 2014, but over 500,000 acres are expected to be fallowed in 2015. The U.S. Bureau of Reclamation said that most of its Central Valley Project farm water customers would receive no federal water in 2015, while the State Water Project said it would provide 20 percent of contracted water to its farmer customers.

By one estimate, the state's 860,000 acres of almonds each year require three times more water than the city of Los Angeles.

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Beginning July 1, 2015, all California employers must give their employees three paid sick days a year or allow them to accumulate paid sick leave at the rate of one hour for every 30 hours worked. Many employers plan to grant employees three days of sick leave at the beginning of each year.

 

Cal/OSHA tightened its heat-safety regulations effective May 1, 2015 to require "fresh, pure, and suitably cool" water to be located as close as practicable to workers. Employers must provide shade for all workers when the temperature tops 80 degrees, down from 85, and must monitor workers for signs of heat stress when temperatures exceed 95 degrees.

 

All outdoor workers must be trained in a language they understand about the dangers of heat illness.

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California is in its fourth year of drought (http://ca.gov/drought). After a wet December 2014, there was little rain in January 2015. February rains partially filled some reservoirs, including Shasta Lake, which rose from 40 percent to 60 percent of capacity, but the entire state was declared a drought emergency area.

Agriculture, which uses about 80 percent of the state's developed or storable water that can be delivered via dams and canals, fallowed 400,000 or about five percent of crop land in 2014, but over 500,000 acres are expected to be fallowed in 2015. The U.S. Bureau of Reclamation said that most of its Central Valley Project farm water customers would receive no federal water in 2015, while the State Water Project said it would provide 20 percent of contracted water to its farmer customers.

By one estimate, the state's 860,000 acres of almonds each year require three times more water than the city of Los Angeles.

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