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A U.S.-China trade war would cost California farmers
Loss of China's preferred trade status could hurt crop, dairy and livestock exports
The Biden administration recently announced large, increased tariff rates for Chinese electric vehicles, solar cells, semiconductors, and aluminum and steel products. This raises the possibility of another trade war with China that could impact agriculture.
Economists from UC Davis and North Dakota State University evaluated the potential implications of the U.S. revoking China's Permanent Normal Trade Relations (PNTR) status. They found that if China retaliated against a change in China's PNTR status, it could lead to a 9.5% increase in China's agricultural import tariffs, resulting in potential trade losses to California agriculture of around $1 billion annually.
California agriculture was hit hard by the 2018-19 trade war with China, and many industries have still not recovered from its effects. Despite this, there is increasing support in Congress for further restrictions on trade with China, with proponents asserting that China is not complying with the World Trade Organization's regulations.
The authors' research suggests that some product groups – such as horticultural products, dairy, livestock and meats – would likely experience even steeper than average increases in import tariffs.
“The impact on import tariffs for non-agricultural sectors would be even larger, with the average import tariff going up from 3.9% to 32.5%,” said co-author of the study Colin A. Carter, Distinguished Professor in the Department of Agricultural and Resource Economics at UC Davis.
For all California agricultural exports, they estimated an average decline in export value between 28.4% and 34.8% when comparing a scenario where China's PNTR status is revoked to one where it is not. This translates into an estimated trade loss of between $800 million and $1 billion, using 2023 California agricultural exports. Some crops that rely heavily on China for exports, such as tree nuts, would be more severely impacted by these effects, particularly considering that some of them are still subjected to residual tariffs from the 2018-19 trade war.
The last trade war between the United States and China led to significant decreases in crop prices and lost export opportunities. As co-author Sandro Steinbach, Associate Professor in the Department of Agribusiness and Applied Economics and the Director of the Center for Agricultural Policy and Trade Studies at North Dakota State University notes, “Once access to a market is lost, gaining it back is difficult, as the 2018-19 trade war has shown.”
To learn more about the potential implications of the United States revoking China's preferred trade status, read the full article by Carter and Steinbach: “Revoking China's Preferred Trade Status Would Be Costly for California Agriculture,” ARE Update 27(4): 1–4. UC Giannini Foundation of Agricultural Economics, online at https://giannini.ucop.edu/filer/file/1715033514/20982/.
ARE Update is a bimonthly magazine published by the Giannini Foundation of Agricultural Economics to educate policymakers and agribusiness professionals about new research or analysis of important topics in agricultural and resource economics. Articles are written by Giannini Foundation members, including University of California faculty and Cooperative Extension specialists in agricultural and resource economics, and university graduate students. Learn more about the Giannini Foundation and its publications at https://giannini.ucop.edu/.
New UC study estimates costs for growing strawberries on the Central Coast
A new study that can help growers and other readers estimate costs and potential returns for growing strawberries on California's Central Coast was recently released by UC Agriculture and Natural Resources, UC Cooperative Extension and the UC Davis Department of Agricultural and Resource Economics.
“This study provides growers with a baseline to estimate their own costs, which can help when applying for production loans, projecting labor costs, securing market arrangements, or understanding costs associated with water and nutrient management and regulatory programs,” said Brittney Goodrich, UC Cooperative Extension specialist and study co-author.
The cost study models a management scenario for a 50-acre farm, 45 acres of which are planted to strawberries, located in Santa Cruz, Monterey or San Benito counties. The remaining acres are for the irrigation system, roads and buildings. The study describes the cultural practices used in strawberry production and harvest, including land preparation, soil fertility and pest management, irrigation and labor needs.
The 19-page study shows costs for each operation, material inputs and costs, and cash and non-cash overhead costs in a variety of formats for one production and harvest cycle. A ranging analysis is also included and shows potential profits or losses over a range of prices and yields.
The new study, titled “2024 Sample Costs to Produce and Harvest Strawberries” can be downloaded from the UC Davis Department of Agricultural and Resource Economics website at https://coststudies.ucdavis.edu.
For a detailed explanation of the assumptions and calculations used to estimate the costs and potential returns for each crop, readers can refer to the narrative portion of each study.
For more information, contact Mark Bolda, University of California Cooperative Extension farm advisor, at mpbolda@ucanr.edu, or Jeremy Murdock in the Department of Agricultural and Resource Economics at jmmurdock@ucdavis.edu.
Sample cost of production studies for many other commodities grown in California are also available at https://coststudies.ucdavis.edu.
REC System Director Haver encourages systemic approach to agriculture
Agriculture generates $59 billion and employs nearly 400,000 individuals in California. The industry, however, is often threatened by challenges like climate change, land conversion and water scarcity. Motivated to act, Sustain Southern California – an organization associated with UC Irvine Beall Applied Innovation – hosted a roundtable discussion on Feb. 20 featuring subject matter experts including Darren Haver, director of UC Agriculture and Natural Resources' Research and Extension Center System.
During his keynote address, Jose Arriaga, Orange County Agricultural Commissioner, defined sustainability as food and fiber production that does not compromise the ability for future generations to meet their needs. In doing so, he acknowledged the benefit of discussing such timely topics with key players, especially for places where agriculture is not as prevalent as it used to be.
“Many people don't think of Orange County as a place for agriculture. It's probably because less land is being reserved for agriculture, not like back in the day. And that worries me,” said Arriaga.
The first roundtable discussion centered on sustainable agriculture, with Haver participating alongside other industry leaders based in Southern California, including A.G. Kawamura of Orange County Produce, Steve Brazeel of Sunterra Produce and Elevated Foods, Anthony Curci of Buttonwood Ranch and Parker Cohn from Performance Resource Management.
In discussing today's generation, Haver said that he has seen a shift over the last few decades away from yield alone, which used to be the most important aspect of production in agriculture. Today, much more attention is dedicated to sustainability – a change that Haver attributes to the younger generation of researchers and plant scientists working in agriculture.
There has also been an emphasis on sustaining the environment while maintaining economic progress. Haver recognized these important elements, but highlighted the social impact of sustainability, too.
“I don't have all the answers, but I do believe that addressing the environmental, economic and social aspects of agriculture is important. I also think that these factors should be addressed systemically rather than in silos,” said Haver.
Southern California agricultural producers, in particular, are responsible for $7.8 billion in gross receipts and nearly 100,000 jobs directly related to agriculture. In Orange County alone, where Haver is based at the South Coast Research and Extension Center, agriculture makes up $86 million of total economic output, with nurseries leading as a top commodity followed by fruit trees, vegetable production and livestock and apiary.
Date palm irrigation research provides economic, environmental benefits
Historically, date palms are grown along riverbeds or in areas with groundwater because they require an abundance of water to produce a good crop. Unlike lettuce or table grapes, date palms are deceptive in that they do not immediately wilt if underwatered. Eventually, however, the lack of water hurts yields and fruit quality.
The default for date growers is to apply excessive water, but doing so is neither economically nor environmentally sound. To help growers, Ali Montazar, UC Cooperative Extension irrigation and water management advisor for Imperial, Riverside and San Diego counties, has developed knowledge that enables growers in the region to establish irrigation guidelines they can use with confidence.
“Water issues in California's desert are very different than in the Central Valley,” said Montazar. “There is no groundwater to recharge so growers in the desert only have the Colorado River.”
Since 2019, Montazar has been focused on irrigation management for date palms in the Coachella Valley, the largest producer of dates in the United States. Montazar's research identifies how much water is needed for the crop and the best water delivery method according to location, soil type and conditions, and date cultivars.
“Dates require a lot of heat and light, which is why they do well in the desert. But they also need a fair amount of irrigation,” said Robert Krueger, a U.S. Department of Agriculture horticulturist and Montazar's co-author of a paper on date palm irrigation management.
Much of what we know about date palm production comes from the Middle East, which has a climate similar to the low desert of California. “That information is from many, many years ago though,” explained Montazar, whose research shows that drip irrigation cannot be the only form of irrigation for date palms.
“Ali is the first to really look at micro-sprinklers and flood irrigation for date palms,” said Krueger, adding that the other advantage of Montazar's research is that it prepares growers for production during times of reduced water supply.
Albert Keck, president of Hadley Date Gardens, Inc. and chairman of the California Date Commission, described Montazar's research efforts as “subtle yet incredible and profound,” adding that his findings not only benefit other farmers but also cities relying on water from the Colorado River.
Keck, one of the largest date growers in California, is well aware of how disruptive, expensive and time-consuming irrigation for date palms can be. Montazar has enabled growers like Keck to irrigate less without sacrificing yield or quality.
“Ali might save us a tiny percentage of the amount of water we're using. It might be a 5 or 10% savings. It doesn't seem like much, but it's an incremental improvement in efficiency,” said Keck. “And if you add all of these improvements up, say, along the U.S. Southwest, then that has a pretty profound impact.”
Montazar recommends that date growers in his region use a combination of drip and two to three flood irrigation events to manage salinity levels derived from the Colorado River. “We cannot maintain salinity issues over time if we're only relying on drip irrigation in date palms,” explained Montazar.
Flood irrigation pushes the salts below the root zone, when they would otherwise build up within the root zone preventing efficient water uptake. It also aids in refilling soil profiles quickly and more effectively since drip has a lower capacity of delivering sufficient water.
“Growers know what they need to water their crop within a broader parameter. But Ali has narrowed that window and helped us become more precise with our irrigation,” Keck said. “There's still room for improvement but we're spending less money, wasting less time and using less water now, and we're still getting the same positive results.”
Currently,Montazar is collaborating with the California Date Commission on developing guidelines for best irrigation management practices in the desert for date palms, which should be available by the end of 2023. These guidelines are based on a four-year data set from six monitoring stations and extensive soil and plant samples from commercial fields located in theCoachella Valley, Imperial Valley and near Yuma, Arizona. Additionally, Montazar is working to quantify how water conservation impacts growers economically.
“Growers from United Arab Emirates, Egypt, Tunisia and Mexico have already reached out asking for this information,” Montazar said, while reflecting on a presentation he made to a group of international date growers in Mexico late last year.
To read the paper on date palm irrigation, published in MDPI's Water journal, visit: https://www.mdpi.com/2073-4441/12/8/2253.
San Joaquin Valley farm and food project awarded $16 million in federal funds
Local food marketing, business and market support for small-scale farmers and food producers, new agricultural products and technology development are parts of a University of California Agriculture and Natural Resources project designed to boost jobs and farm resiliency in the San Joaquin Valley.
The Fresno-Merced Future of Food Innovation Coalition, or F3, received a $65.1 million grant from the U.S. Department of Commerce's $1 billion Build Back Better Regional Challenge. Of that award, about $16 million is designated for the Local Farm and Food Innovation initiative led by UCANR. With the addition of matching share of cost contributions, the total budget for UC ANR's project is over $20.5 million.
“As a key part of the broader F3 project, this Local Farm and Food Innovation initiative is going to be transformative,” said Glenda Humiston, University of California vice president for agriculture and natural resources. “By strengthening the parts of the food system to better support each other and drive innovation across the region, it's going to deliver many environmental and economic benefits to Californians.”
Gabriel Youtsey is chief innovation officer for The VINE, a UC ANR initiative that helps new technology make it to market and businesses get off the ground by connecting entrepreneurs with mentors and resources, and aligning university and startup technology development with industry needs.
“The Local Farm and Food Innovation initiative is a win for inclusive innovation in agriculture in the San Joaquin Valley and a critical part of the F3 project,” said Youtsey. “It provides a broad set of training and support resources and expertise to help farms, food producers and vendors of all sizes to grow their businesses profitably and sustainably, in alignment with the economic goals of the region.”
To ensure technology solutions address the needs of small-scale farmers, food business owners and local communities, they will be invited to participate in directing the innovation activities, Youtsey said.
“With our deep roots in the San Joaquin Valley, UC Cooperative Extension is uniquely positioned to draw expertise from other parts of UC and expand its efforts in helping farmers and food entrepreneurs realize enduring prosperity and community resilience,” Humiston said. “UC ANR experts are already helping immigrants and other underserved communities adapt to climate change, add flexibility to supply chains and grow grassroots innovations. We are excited the federal government is investing in making food systems more equitable and profitable, and the solutions more scalable.”
To assist small-scale farmers in complying with new regulations and production challenges, adapting to climate change and finding new markets for their produce, UC ANR is convening the Small Farms Technology and Innovation Alliance. They are collaborating with the Community Alliance with Family Farmers and other nonprofit organizations to provide translation services, training and marketing assistance to farmers and food producers.
Ruth Dahlquist-Willard, UC Cooperative Extension small farms advisor for Fresno and Tulare counties, and Houston Wilson, UC Organic Agriculture Institute director and UC Cooperative Extension tree crops entomology specialist based at UC Kearney Agricultural Research and Extension Center in Parlier, are leading outreach and engagement with small-scale and organic farmers.
“While we certainly need to create new tools to address the unique challenges of organic agriculture, it is critical that farmers and other end-users be involved from start to finish,” said Wilson. “The development of appropriate technology requires communication across a wide range of stakeholders.”
To make new technology more accessible for small farmers and food producers, UC ANR will create a new team to test and demonstrate technology that is developed as part of F3 and by startups around the world. To promote adoption, the team will create a tool lending library so farmers can borrow and try out equipment and get training to use it.
“This project will expand on current efforts to support small-scale farmers with access to equipment, new markets and technical support,” said Dahlquist-Willard. “Our team is committed to meaningful engagement of farmers and San Joaquin Valley communities in the development of new tools and resources for the benefit of the region.”
For local food entrepreneurs and vendors, UC ANR will launch the Cultiva La Salud Kitchen and Food Academy and the Saint Rest Food Entrepreneurship Program, which will provide a kitchen, equipment and training. These will create new jobs and, over time, provide a marketplace to sell those products. The Local Food Marketing Assistance Program will promote purchases of locally grown produce and food products.
The Fresno-Merced project was one of 21 projects funded of the 529 proposed for the Build Back Better Regional Challenge intended to uplift underserved communities.