Industry clustersIndustry clusters

Planning Issues in Ag Planning Issues in Ag

Lecture 3Lecture 3

Industry clusters continued…Industry clusters continued…

A cluster is a geographically A cluster is a geographically proximate group of proximate group of interconnected companies and interconnected companies and associated institutions in a associated institutions in a particular field, linked by particular field, linked by commonalities and commonalities and complementary programs.complementary programs.

Dependent on each other (add value from Dependent on each other (add value from raw products and then send to other raw products and then send to other places to attract money to area)places to attract money to area)

Attracts jobs/wealth and gives identityAttracts jobs/wealth and gives identity Production to Processing to distributionProduction to Processing to distribution Business building with other businesses Business building with other businesses

drives local economydrives local economy Adds value to productionAdds value to production Clusters will increase employmentClusters will increase employment Clusters are geographically concentrated Clusters are geographically concentrated

and connectedand connected

Industry clusters continued…Industry clusters continued…

California Ag SummaryCalifornia Ag Summary

San Joaquin Valley – 8 counties (most productive ag San Joaquin Valley – 8 counties (most productive ag in state and nation)in state and nation)

Experiencing change in population (1970 growth Experiencing change in population (1970 growth accelerated)accelerated)

-diverse cultural and ethnic populations increasing-diverse cultural and ethnic populations increasing

-impact on major industry( production and -impact on major industry( production and economic)economic)

Gross farm income in 2000 – $27-30 billion (what Gross farm income in 2000 – $27-30 billion (what did we say this was today?)did we say this was today?)

California represented 13% of US Gross Farm California represented 13% of US Gross Farm IncomeIncome

Since 1948 leading counties Since 1948 leading counties have changed have changed (2002 Census)(2002 Census)

Not LA anymoreNot LA anymore

FresnoFresno 2.7 billion2.7 billion TulareTulare 2.3 billion 2.3 billion KernKern 2.0 billion2.0 billion 6 counties in SJ are in top 10 (> $1 billion 6 counties in SJ are in top 10 (> $1 billion

income) Kings and Madera are missingincome) Kings and Madera are missing Can you find the latest data on Ag Values Can you find the latest data on Ag Values

from the CDFA or Farm Bureau Websites?from the CDFA or Farm Bureau Websites?

All private land in CaliforniaAll private land in California

1/3 of state private land linked to Ag1/3 of state private land linked to Ag 27 million acres in Agriculture in 200027 million acres in Agriculture in 2000 1950 Ag land … 37 million1950 Ag land … 37 million

Amount of acres declined in Ag…why? Amount of acres declined in Ag…why? Ag itself fewer farmersAg itself fewer farmers Consolidation – farms have decreased, Consolidation – farms have decreased,

but size has increasedbut size has increased

Farmland Trust will not stop growth Farmland Trust will not stop growth nor stop decline in land.nor stop decline in land.

What kinds of choices do we need to make?What kinds of choices do we need to make?

Which Ag land is more or less important?Which Ag land is more or less important?

Which types of development should be Which types of development should be encouraged?encouraged?

Questions debated throughout this course…Questions debated throughout this course…

Agricultural LandAgricultural Land 2/3 rangeland w/ pastures for 2/3 rangeland w/ pastures for

cattle / other livestockcattle / other livestock

1/3 cropland (9 million acres) 20% in 1/3 cropland (9 million acres) 20% in SJ ValleySJ Valley

Different types of soil, water key to Different types of soil, water key to quality of land and…quality of land and… Types of crops that are grownTypes of crops that are grown

Specialty Crops Commercially Specialty Crops Commercially Produced Only in CaliforniaProduced Only in California (99% or more of total U.S. production)*(99% or more of total U.S. production)*

AlmondsAlmonds ArtichokesArtichokes Clingstone PeachesClingstone Peaches DatesDates FigsFigs KiwifruitKiwifruit NectarinesNectarines OlivesOlives PersimmonsPersimmons PistachiosPistachios Plums, Dried (Prunes)Plums, Dried (Prunes) RaisinsRaisins Walnuts Walnuts

* Source:CDFA Resource Directory 2002 * Source:CDFA Resource Directory 2002

CA productivityCA productivityNot all consumed in state or nationNot all consumed in state or nation

Most exported (2000) $6.6 billion Ag Most exported (2000) $6.6 billion Ag product exported. What is this figure today?product exported. What is this figure today?

CA export (#1 exporter in nation) CA export (#1 exporter in nation)

#6 significant Ag exporter in the world. #6 significant Ag exporter in the world. Where do we rank today?Where do we rank today?

Has our import/export balance changed in Has our import/export balance changed in Ca?Ca?

Crops in order of most exported Crops in order of most exported (2003)(2003)

Almonds (70% exported)Almonds (70% exported) Cotton (So valley)Cotton (So valley) WineWine Table grapesTable grapes OrangesOranges Milk/creamMilk/cream

2 countries import almonds2 countries import almonds

#1 Canada#1 Canada

#2 Japan#2 Japan

CA #1 state in personal CA #1 state in personal incomeincome

7 ½% of all jobs linked directly/indirectly to 7 ½% of all jobs linked directly/indirectly to agricultureagriculture

6 ½ % personal income (all income 6 ½ % personal income (all income household)household)

wages, profits, rent, interestwages, profits, rent, interest

Valley:Valley: 30% jobs linked directly/indirectly to 30% jobs linked directly/indirectly to

agricultureagriculture 20% personal income related to agriculture20% personal income related to agriculture

Jobs Linked…Jobs Linked…directly:indirectlydirectly:indirectly

Indirectly – clusters of related industryIndirectly – clusters of related industry Directly - Production of food & fiber Directly - Production of food & fiber

Creates/generates $$$Creates/generates $$$ Economic activity…employment, income, sales, Economic activity…employment, income, sales,

sales taxsales tax Agricultural ripple effect can be good Agricultural ripple effect can be good

( increased income for farmers, businesses etc)( increased income for farmers, businesses etc) Or it can be bad (reduced income, employment, Or it can be bad (reduced income, employment,

businesses go under)businesses go under) All are related to each other especially in the All are related to each other especially in the

valleyvalley

Employment Multipliers for the Employment Multipliers for the San Joaquin Valley: 1996San Joaquin Valley: 1996

IndustryIndustry Employment Employment multipliermultiplier

AgricultureAgriculture 1.501.50 Mining/constructionMining/construction 1.991.99 Food ProcessingFood Processing 3.883.88 Other manufacturersOther manufacturers 2.442.44 Transportation/public utilitiesTransportation/public utilities 2.582.58 Wholesale tradeWholesale trade 1.771.77 Retail tradeRetail trade 1.301.30 FireFire 2.032.03 ServicesServices 1.581.58 GovernmentGovernment 1.371.37

Share of total of all Share of total of all industry output…industry output…

Focus on AgFocus on Ag

Valley 13%Valley 13%CACA 3%3%

Focus on Exports (leaving region) Focus on Exports (leaving region)

Ag and food processing is the Ag and food processing is the highesthighest

Farm wage and salary Farm wage and salary employment growth in 1983 – employment growth in 1983 –

20002000

ImportanceImportance 20002000 19831983 Valley higherValley higher 17.5%17.5% 20.%20.% Than CAThan CA 2.7%2.7% 3.4%3.4%

1 out of 5 jobs in CA is Agriculturally related1 out of 5 jobs in CA is Agriculturally related Most people think that agriculture is Most people think that agriculture is

considered open space instead of business.considered open space instead of business.

Where does the information come Where does the information come from? from?

Every 5 years there is an ag census:Every 5 years there is an ag census:

It measures: # of acres, change in # It measures: # of acres, change in # of farms, decrease in amount of land, of farms, decrease in amount of land, decrease in # of farms, # of family decrease in # of farms, # of family farmsfarms

Structure of Ag is changing Structure of Ag is changing (3 points)(3 points)

Population…fewer people involved in Population…fewer people involved in production agriculture, more people involved in production agriculture, more people involved in services that provide for agriculture’s needsservices that provide for agriculture’s needs

Importance of Ag clusters…related businesses Importance of Ag clusters…related businesses depending on each others’ prosperitydepending on each others’ prosperity

Changing structurally…less farms, larger Changing structurally…less farms, larger farms…vertical integration…direct marketingfarms…vertical integration…direct marketing

Factors in Agriculture Factors in Agriculture ChangingChanging

Technology - yields are higher, but Technology - yields are higher, but not net yields ?not net yields ?

Vertical integrationVertical integration Foreign competitionForeign competition Regulatory costsRegulatory costs Consolidation may be the key, but Consolidation may be the key, but

family farms may sufferfamily farms may suffer

Cause and Effect…Cause and Effect…

In recession ( ¼ of farmers bankrupt)In recession ( ¼ of farmers bankrupt)

Purpose of public policy is to Purpose of public policy is to pressure Ag or an individualpressure Ag or an individual

Now…Consider the effects of Now…Consider the effects of Planning on individual property Planning on individual property rights…rights…

Next lecture…Next lecture…