Stanislaus County: Challenges for Farmers

Through conversations with local experts and farmers in Phase Two of the project, we have identified some of the most significant challenges to agriculture in Stanislaus County.  The four challenges cited most often were:

The Challenges:

Global Agricultural Trade

As major food manufacturers expanded dramatically after World War II, the contours of a global food system began to emerge. Then, in the 1980s, a wave of mergers consolidated a tremendous amount of power in the food processing sector. (W.D. Heffernan, Consolidation in the Food and Agricultural System. Report prepared for the National Farmers Union, 1999.) These large, multinational food and agriculture corporations have increasingly become the locus of control that organizes and coordinates the production, processing, and distribution of food worldwide. The sheer size and power of these food companies is particularly significant when compared to the large number of relatively small farms. Such large processors and retailers purchase enormous quantities of standardized, uniform products and have a significant amount of power in determining how and where agricultural production takes place. (P. Hart. “Marketing Agricultural Produce” in The Geography of Agriculture in Developed Market Economies. New York: John Wiley and Sons, 1992. 162-206.)

Though the American agricultural sector is highly productive and efficient, the US is not, compared to other countries, a low-cost producer. According to Jan Ennenga, formerly of the Stanislaus County Farm Bureau, some foreign products can be grown, canned, and transported here more cheaply than American farmers can simply grow them. Ed Perry of Stanislaus County Cooperative Extension reports that Stanislaus County farmers face major competition in almonds from Chile and Spain and in walnuts from France. Though the prices of these commodities are about the same, the costs of production in the US—including energy for irrigation, fuel, petroleum-based sprays, and labor—have increased. Because many US-grown products are more expensive, food retailers and manufacturers are making more and more purchases from less-expensive producers elsewhere. As a result, Ed anticipates that even more agricultural industries will leave the Central Valley and move south to Mexico, Central America, or South America.

As an example of such overseas competition in the agricultural sector, Ed points to Australia. From the 1940s to 1960s, Stanislaus County cultivated a significant amount (about 3,000 acres) of boysenberries. Then, in the 1980s, Australian growers entered the boysenberry market too. Buoyed by government subsidies, Australian farmers could grow and ship boysenberries to California and still undercut the local, California-grown price. Production dropped off dramatically in Stanislaus County and now only about three boysenberry growers remain. Now this trend is unfolding in the wine industry. Australian winemakers have improved the quality of their product and lowered their production costs by using mechanical pruning technology not employed here in California. Once again, Australian growers are presenting a serious challenge to an agricultural industry in California.

In their experience, Karen and Bill Cox of Just Tomatoes in Westley western Stanislaus County have also found that international markets are exerting a larger and larger influence on American farmers. They say that apricot growers in California, for example, can’t compete with the price of apricots from Turkey. The imports are on sale at the market for less than what growers in the US are paid for the unprocessed fruit, even though the imports are often of lower quality. Karen also points out that consumers have no information about how such imports were produced.

For American farmers, the globalization of the food system and the growing distance between food production and consumption means that a much smaller number of farmers will interact with relatively few food processors in a highly-integrated system. Steven Blank, author of The End of Agriculture in the American Portfolio (1998), argues that because farming has offered such low returns on investment over the past few decades (1.5%), the trend toward concentration in the agricultural sector is likely to continue. Farmers are squeezed between the increasing costs of production in the US and stagnant or declining prices on the global market. In an attempt to remain profitable, farmers choose between price strategies (integrating production and processing to add value to their products) and cost strategies (reducing the unit cost of production by farming on a larger scale).

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Urbanization

The rural atmosphere and relatively low cost of living in the Central Valley is attracting more and more newcomers. According to Ed Perry of Stanislaus County Cooperative Extension, development pressure took off in the 1980’s and has since continued at all margins of the county. Between 1996 and 1998, over 2,000 acres of farmland were converted to development in the county.

Prime farmland north of Modesto that once grew peaches, almonds, and grapes has now been converted to housing developments. Small towns located along a major interstate in western Stanislaus County are growing rapidly too. New residents often purchase homes in these towns, but then commute up to three hours each way to jobs in the Bay Area. In Newman—a small town whose population has doubled in the past seven years—a new 100-unit housing development sits nearly vacant during the day because most residents commute hours away to work.

The influx of new residents has had an impact on the cost of living in these small communities. Jim Jasper of Stewart & Jasper Orchards in Newman remembers the area 20 years ago as primarily an agricultural community. New homes sold for around $50,000 and the cost of living was quite affordable. Today, as the population grows, the cost of living in Newman increases too. In fact, the median home price jumped from $140,000 to $180,000 in only one year. Most long-time county residents can’t afford to purchase homes at this price; most farmworkers can’t even afford to live in town at all. As Jim says, American growers have a hard time competing in the global agricultural market because they face higher labor costs than growers in other countries. Now, to make it worse, even what they do pay workers isn’t enough to match the increasing cost of living in these small, farming towns.

Unfortunately, many newcomers to the Central Valley aren’t accustomed to living in an agricultural area. They often don’t like the dust, the noise, or sharing the road with slow-moving farm vehicles. Jim has even had complaints about the bees that they depend on to pollinate their orchards. Stanislaus County has a Right-to-Farm ordinance, but new residents still often complain to growers or local officials, especially about farms located close to urban or suburban areas.

Though all growers face the increasing pressure on farmland in the Central Valley, they have different opinions about how to best respond. Some are reluctant, for example, to enroll any of their acreage in the Williamson Act. This state program preserves agricultural land and open space in California through land-use agreements between local governments and landowners. When landowners agree to preserve their private land, their property tax assessments are substantially reduced. Despite this benefit, such land-use restrictions do limit farmers’ flexibility to respond to economic pressures. If it is difficult to keep a farm business going, a developer’s offer might look like an attractive retirement fund. In Ed Perry’s experience, developers have offered farmers up to $100,000 per acre. In the presence of declining agricultural markets and such high offers, it will be increasingly difficult to maintain the rich agricultural lands of the Central Valley.

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Labor

Labor is a significant issue for the many of the farmers we met in Stanislaus County. The difficulties of recruiting and training workers and the increasing cost of labor present significant challenges to these farm businesses. Their experience in Stanislaus County is not unique. Farmers across the state have the same concerns.

Dr. Philip Martin, professor of Agricultural Economics at the University of California, Davis, has identified three fundamental issues in the agricultural labor market: recruitment, remuneration, and retention. We’ll discuss each issue in general terms and then look specifically at how it has emerged in Stanislaus County.

Recruitment is a significant labor issue, particularly since farmers and workers often speak different languages. Farmers often face significant communication barriers that make finding workers, clarifying expectations, and managing tasks very difficult. This is a common situation since about 95% of all seasonal farmworkers in California are not originally from the US. Most hail from Mexico.

Due in part to these communication difficulties, most farm businesses now recruit entire crews, not individuals, for agricultural jobs. Due to language barriers between farmers and employees, these labor intermediaries or farm labor contractors often handle this recruiting process. In addition, these firms absorb all the risk associated with immigration and employment violations. Labor intermediaries currently provide over half the labor employed in agriculture.

Remuneration, which includes employee wages, rewards, and motivation, is a major expense for farms. The total cost of employing one worker is about 35% greater than the employee’s actual wage due to the cost of workers compensation and insurance. Workers compensation alone can amount to 15 to 20% of the total wage costs. If a farmworker’s wage is $7 per hour, for example, then total cost to the farmer for their employment amounts to about $9.45 per hour.

At Riverdance Farm in Livingston, Cynthia Lashbrook and Bill Thompson recently found out that they will pay 40% more for workers’ compensation coverage this year. Overall, for every $100 they earn on orchard crops, $26 will be diverted to paying for workers’ compensation insurance for their two employees.

Retention. Most farmers do not or do not know how to identify their best workers and keep them coming back. This is particularly important in California since the prevalence of labor-intensive crops has led to increasing seasonal employment. In California, for example, there are twice as many farmworkers employed in September than there are in February. At the extreme, the most seasonal, labor-intensive crop in the state is raisin grapes. For only six weeks each year, over 50,000 people are employed in the Fresno area to harvest raisin grapes alone.

Mary and Terry Cake of A Country Garden in Hughson have found that farmwork is very seasonal in their area. Employee retention is low and most workers do not return from year to year. They too struggle with how to offer year-round employment and find a consistent, long-term group of workers for their farm. Their experience seems consistent with trends in the area, where some farms are moving away from crops—including peaches—that require a significant amount of labor.

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Environmental Compliance

[forthcoming]

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