A daily compilation of significant news articles and comment
November 7, 2008
2. Supply –
2009 planning and planting risky business
Capital Press – 11/6/08
The report was compiled by Capital Press staff members Hank Shaw and Cecilia Parsons and freelance writers Wes Sander, Julia Hollister, Judy Bedell and Dan Weisman.
EDITOR'S NOTE: This is a look around the state of California to see how the various sectors of agriculture are planning to deal with an uncertain 2009, a year in which they will no doubt see higher fuel and feed costs and in many cases, lower allocations of water.
It's been raining in Northern California, but unless the recent rains continue this winter, drought could be a very real possibility in
Water isn't the only potential pitfall looming: Fuel, fertilizer and feed costs soared in 2008, and even the recent relief brought by lower prices has left many input costs at historic highs. Few producers expect them to fall far anytime soon.
Farmers and ranchers are responding with belt-tightening and a wary conservatism when making planting decisions or choices about whether to increase a herd or put in another acre of vines.
Dairy
Hay and grain prices are the unknown factor for
"It's more difficult in the north end of the (Central) Valley due to higher land prices," Souza said. Producers in the southern part of the valley might have an easier time, because there are still dairy sites that can be permitted.
Milk plant capacity also has producers thinking twice about adding more milk to the tank. Banks have typically found dairies to be good investments, but with lower milk prices and higher production costs, there could be a credit crunch, Souza said.
"With another dry year, feed prices may have the biggest impact of all," he said.
Hay prices have softened in recent weeks, but so have milk prices. The milk-feed ratio has stayed the same, but there has been no improvement in margins, he said.
Vegetables
"We are all doing the rain dance," said
Giannini, a third generation farmer in the
"When we don't get the rainfall, we have to pre-irrigate in order to plant. Then the electrical power costs increase and we have to factor that in," Giannini said.
Giannini has noticed a decrease in production of the traditional
"The folks from over in the
What might that crop be?
"We are seeing more processing tomatoes for one. And garlic, onions, peppers and tomatillos. I have seen the pumping levels drop tremendously over the past couple of years so we are looking for diversity and planning with less water in mind," Giannini said.
Orchards
Franz Niederholzer, a
"I can't remember a time when there was a potential of no water deliveries," he said. "Since we've never had that experience, I can't tell a grower what to expect."
Niederholzer says he advises local farmers to remove cover crops, which can make orchard maintenance easier but increase water usage. Peach and prune growers are investing in water-saving measures while trying not to cut water to their trees. Reducing water can affect a tree's health, which puts future harvests in peril.
Matt Little, a peach and prune grower, says he may invest in water-saving equipment if allocations are reduced significantly next year. Little says he has installed microjet sprinklers in some of his orchards with the help of a government funding program.
"Coming into this next year, if our water is cut back, it's going to definitely make us think about going to microjets or (something similar)," Little said. "It's expensive, but you've got to provide your trees with enough water."
For the most part, growers are relying on such measures to keep orchards healthy, hoping for better news in the coming months, Niederholzer said.
"I'm kind of in denial myself," he said. "You get to a point where there's not much else you can do. I hope we get a wet winter."
Ripon almond farmer Dave Phippen says he's planning on holding the line in 2009.
"We're not planting anything," Phippen said. "I think a lot of people who are sitting on older orchards are making decisions about pulling them out. If you don't need to do anything, it's a good time not to do anything."
Alfalfa
Alfalfa isn't a crop that growers can jump into or out of quickly, said Los Banos alfalfa grower Philip Bowles.
Even as one of the more extraordinary alfalfa growing years comes to a close, the crop isn't going to lure many neophytes to the table. Water, harvest and transportation costs can be deal-breakers for growers.
"It's like opening a restaurant and hoping customers will come in," Bowles said.
He doesn't see a giant increase in alfalfa acres for 2009, but, despite a recent think-tank report that hammered alfalfa for its water usage, Bowles has a hunch acreage will move up. Growers who are already in business - and have affordable water and a steady market - will remain, Bowles said. Those who had a hard time this year, even with record high prices, may not.
"If you're marginal, don't even think about it," he said.
The crop is key to the state's billion-dollar dairy industry. But with hay growers' biggest customers facing lower milk prices, there is a lot of market uncertainty, Bowles said. Prices for hay have also fallen $20-30 per ton in recent weeks as growers store higher-quality hay and sell off lower-quality hay.
To stay in the alfalfa hay business in
"There's sobriety back in the market, and it really depends on the profitability of dairies and the export market."
Winegrapes
The winegrape industry is in pretty good shape overall. Prices were good in 2008 and are expected to remain so in 2009, For the moment, the balance between supply and demand appears to be somewhere near even.
A serious drought could change things. Grape vines are generally resistant to drought, but there are limits.
"Water supply is always an issue and a good steward of the land always plans for these drought issues," said Andrew Avellar of Carneros Vineyard Management in
Avellar said he's also seen an increase in dry farming in
"This is not because of the lack of water but because this authentic style of farming will produce desirable fruit for high-priced wines. The first two years the deep-rooted vines are irrigated and once the vines are established we let them struggle and forage for their own water."
Stacie Jacob, executive director of the Paso Robles Wine Country Alliance, said wine grapes use very little water each year, but it's necessary to have water at critical points in the growing cycle is important to maintaining vine health.
"In times of low rainfall salts tend to build up so an average amount of rainfall is necessary," Jacob said. "Water is an area of concern for the Paso Robles region and in certain microclimates within our region it may be a limiting factor to overall growth."
Mark Chandler of the Lodi-Woodbridge Winegrape Commission said the industry as a whole is doing well. Demand for Pinot noir and Cabernet sauvignon is high and Merlot is recovering from the beating it took after a character in the 2004 hit movie "Sideways" disparaged the varietal.
Al Wagner, past president of the Napa County Farm Bureau and vineyard manager for Clos de Val, said the risk for them will be planting new acreage.
"If our vineyards don't have enough water we won't be able to plant," he said. "It takes water to establish young vines. In that sense another cold year could have impact into harvest."
Rice
Don Bransford, a rice grower near Colusa, says growers are planning for a normal year while hoping for better news in the next few months.
"It does make it difficult to plan, knowing you face potential cuts," he said. "It's a long time between now and spring. I believe growers are concerned, but they also know there's a long time to go."
The water shortage has caused the local district to restrict water pumping since the end of October, Bransford said. That means growers face restricted options in disposing of rice straw. With most field burning outlawed, the preferred alternative is flooding for decomposition, followed by disking.
Without water, the only option is to cut and bail the straw - which likely won't be used because of limited markets. Still, if November's rainy beginning persists, field flooding could return, Bransford said.
"If it continues to rain, at some point the district can begin to pump water again," he said.
Nicole Van Vleck, a managing partner of Montna Farms near
"Without rain this year we're going to have a terrible situation," she said. "Fortunately for us, we have not been affected by (the shortage) for fall decomposition. So far, we have not been affected as some other growers have, who have had their water cut back."
Cotton
"And I'm probably foolish for going with 600," he said. "There's no money in it."
Watte's father began growing cotton in
Higher value crops are pushing out cotton statewide. Rising fuel, fertilizer and water costs dictate better returns, but Watte said there are still reasons to plant cotton.
"I need another crop in the rotation and I don't want 100 percent dairy feed crops. I hope this will turn around again one day."
Watte isn't alone in his decision to plant less cotton next year. Bob Norris, president of the cotton cooperative Calcot, predicted cotton acreage in the
Cost of inputs is seen as a major reason why cotton is losing ground. According to the National Cotton Council, costs per acre in
Beef
Holly Foster, a fourth generation cattle rancher in Butte County said the last two years of hard culling has stretched ranchers so thin they can't tighten up another notch. What they do next depends on rainfall.
"That will be a big indicator for us, especially with the forage we lost to the fires last summer," Foster said.
"The cattlemen are having it rough because of the rangeland situation and they are affected by conditions in areas where they move their cows outside the county," said Bob Perkins, executive director of the Monterey County Farm Bureau.
Last spring ranchers did quite a bit of culling and declined to keep any replacement heifers. Foster said most of neighboring ranchers did the same.
"We cut deeper than normal and don't want to lose more," Foster said. Even if there is a good, wet winter, she said some ranchers may need to sell their heifers to pay bills. The tight spot that cow-calf operators find themselves is also reflected in the lower sales averages at some of the bull sales around the state.
"We're all in a pinch," Foster said.
Many ranchers have already been feeding hay for a month and have identified which cows they will sell if early rains don't bring some relief and green grass soon.
Possible drought conditions and water allocations are having some impact on growers in the Coachella and Imperial valleys, whose the growing year is just getting started. The desert region is the nation's chief winter vegetable producer.
"I cultivate 1,200 acres of alfalfa, but I might be leaning more towards converting some acreage to wheat, which needs less water," Osterkamp said.
Potential
Growers were nervous, Osterkamp said.
"I'm glad we're trying it now when not facing a major shortfall this year, so we can get problems worked out rather than a real problem situation," he said. "We're not being reduced by near as drastically as the other areas."
Growers in the
Coachella growers are still working through how much water will be available next year, with expectations that only 15 percent of water requests will be filled next year, according to Steve Pastor, Riverside County Farm Bureau executive director.#
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