I owe the IHB an apology, and accurate current milk pricing - IMPORTANT
- Thread starter no_vaseline_IHB
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Dairymen have the net of subsidies that catch up sooner or later (today they are behind because the USDA has bigger problems). Try farming fruit or nuts with no net and get back to me. The variance is much worse.
At one point in my life, I hated gambling. HATED IT. No longer. I guess I'm ready to move back to Fresno and and GAMBOL!
That's a loaded question, but in California, it depends on your water situation. I have pics and further comments on the subject of the current drought, but not today. I'm whipped.
You can only grow Avacados in Irvine, Fallbrook, parts of San Diego costal, Ventura, and a couple of spots in Arroyo Grande/Morro Bay (SLO County). They require a very specific climate to grow commercially, and have zero tolerance to frost.
A couple of years ago, you could plant almonds and pay for all of the development costs, the land, and the water in one single season of production. That has only happened a couple of times in a couple of crops in the last 60 years. I know a guy who dryland farmed a wheat crop last winter that got a double whammy of soaring commidity prices and an abnormally high rainfall (which really helps production) and did the same thing, but that was hardly industry wide.
Near as I can tell, everything sucks except cannery tomatos right now. You can't grow cotton, or silage corn, or alfalfa, or tree fruit, or grapes - water is too expensive and scarce, prices are too low.
Dunno. Nobody grows soybeans in California. Those guys in the Midwest all dryland farm for the most part – plant and let God irrigate it up. Harvest when he’s done.
Going forward with the subsurface drip, you have to cultivate something that is compatable with the drip tape and doesn't destroy it. Cotton grows well on 30" row centers. Tomatoes are farmed on 60" beds, so you can make it work. Corn makes too much post harvest debris. Alfalfa is grown flat so that won't work either.
Because they used to be profitable. Be careful – you’re fixing to fall into a trap. People talk about rice, alfalfa, and cotton as evil because they use a lot of water. It’s a little more complicated than that.
Rice requires a lot of water because you have to keep it flooded for 120 days or so. There is a ton of excess water north of the Delta that otherwise would run out through the Oakland bay. Also, the land they farm rice on is prone to flooding almost every other year, making it useless for anything other than……rice. If they stopped farming rice, we wouldn’t save a gallon.
Alfalfa is a low value crop and water intensive - because it contains a lot of water. Do you like milk at current prices? How about cheese and ice cream? Because without alfalfa there is no cattle feed. It may be inefficient, but it’s necessary if you want dairy products, and as inefficient as it is, it’s also the most efficient mechanism to feed dairy cows.
Cotton production has fallen off a cliff in California for the reasons we are discussing.
http://www.cottoninc.com/Water-Management/Cotton-Water-Requirements/
You still need cotton as a rotational crop for tomatoes as a management tool, primarily for nematodes (a microscopic organism that feeds on certain crops). There are around 2000 types of nematodes. Only 4 or 5 are bad for your particular crop. You can’t just single them out (the rest are beneficial), you either fumigate and kill all of them or you rotate crops and the bad ones die because they don’t have their preferred plant to lunch on. They have this problem with wine grapes from time to time and have to pull their entire rootstock and replant.
They do – see the cotton acreage graph.
The water problem in California is a matter of storage and logistics. There’s plenty of water North of the Delta. They used to pump the excess out of the delta for the California Water Project, but that has been greatly reduced because of the effects on the fish in the Delta. They used to pump so much out of the delta it would cause the river to run backwards and cause salt water intrusion out of the bay into the delta.
This is a bit of a chicken and egg argument. Nobody was growing out there until the government decided it needed the production and built the project – hence the subsidy, which was an interest free loan paid back over 50 years. The government induced the development, and has an obligation not to yank the carpet out from the growers now ‘somebody’ changed their mind.
That change is happening, but you must remember, you have to make a market for what you grow. To grow tomatoes you have to get a contract from a cannery else you won’t have anybody to deliver to. Growing commercial strawberries is a lot like avocados, you need to have a special climate and the right type of high drainage sandy soil (Irvine @ the El Toro Y FTW!).
A decade ago, my family’s operation was a rotation of cotton and alfalfa and silage corn. This year, it’s tomatoes and alfalfa and almonds. Next year it’s tomatoes and almonds – provided everything works out okay.
Also, you don’t just ‘switch’ crops without cost. To do 120 acres of tomatoes required a $125,000 irrigation system and $180,000 in additional working capital. That was about four years worth of free cash flow on an average 1800 acre California farm (assuming average year).
Fruits are horrible business. You have huge issues with accounts receivable realization. You grow a crop, then the real costs get you in labor to harvest and cold storage and transportation. Then, after it’s all sold, your end customer may decide there was something wrong with it and take a discount of 50-80% on what they agreed to pay, and there’s not a damn thing you can do about it because your product is long sold and gone. The fruit business right now is just horrible.
This is a subsidy problem. Everyone on the planet who grows gets subsidies. Seriously - everybody. If the US were to remove the subsidy, it would destroy the US domestic production because the US grower would be at a price disadvantage to the rest of the world – losing the domestic production does not help the US consumer. In short, free trade my ass. It’s a total joke.
Example – in the fall of 1992, the adjusted world price of cotton fell from $0.65 to $0.30 The US had a subsidy strike price around $0.90, and paid the grower the difference. It cost about $0.88 to grow it. Greece had a strike price of $4.50 – they slapped an import tariff of $4.20 on every pound imported, and transferred it back to the grower!
If you can buy it on the world market for thirty cents, it costs you eighty eight to produce it, and your Greek competitor set a floor for their domestic producers at $4.50 PLUS you can’t sell any cheaper, how you gonna compete with that? Do you want to pay $4.50 instead of $.90 like you did before? Earlier in this thread I take Mish to task for advocating against farm subsidies precisely because he misses the above point.
The rest of the world isn’t going to drop their subsidies, much to the chagrin of the African contingent, who believes that if the world would drop their subsidies the Africans would be able to compete on the worldwide market. The reality is if the world got rid of it’s subsidies the US grower would decimate everyone else because we are so much more efficient if you count $1 of inputs to = pounds output. Most of that is technology.
no_vaseline_IHB
New member
I didn't go shopping for milk this week, but I have a milk related update.
1. My dad was able to collect all but 4% of his aged alfalfa A/R. I was shocked - shocked -he got any of it, because.....
2. The pricing to the dairyman has improved slightly, but it's still below cost of production by about $10/cwt. Here's a graph of if anyone wants to see it. If prices need to double, herds need to be half. Maybe Awgee is right- food prices are fixing to skyrocket.
3. CWT = 112 pounds of milk.
That's it for this week. I've exceeded my self imposed post quota.
1. My dad was able to collect all but 4% of his aged alfalfa A/R. I was shocked - shocked -he got any of it, because.....
2. The pricing to the dairyman has improved slightly, but it's still below cost of production by about $10/cwt. Here's a graph of if anyone wants to see it. If prices need to double, herds need to be half. Maybe Awgee is right- food prices are fixing to skyrocket.
3. CWT = 112 pounds of milk.
That's it for this week. I've exceeded my self imposed post quota.
No_Such_Reality_IHB
New member
Wow, that's almost insane. Not the price drop this year. The volatility month after month, year after year.
no_vaseline_IHB
New member
No_Such_Reality said:
Dairymen have the net of subsidies that catch up sooner or later (today they are behind because the USDA has bigger problems). Try farming fruit or nuts with no net and get back to me. The variance is much worse.
At one point in my life, I hated gambling. HATED IT. No longer. I guess I'm ready to move back to Fresno and and GAMBOL!
usctrojanman29_IHB
New member
Patience is a virtue! Cold pudding FTW!!!green_cactus said:Girl In the OC said:
I sometimes break down and don't even wait for it to cool down ...
usctrojanman29_IHB
New member
Can you make some fresh pudding for me and bring it to the Dinner A'Mare event next week? Pretty please!!!Girl In the OC said:No... I've never watched Sex in the City... not the series or the movie!
Maybe they have a clip or something on youtube...
no_vaseline_IHB
New member
Prices of the loss leading fluid milk at Stater Bros have increased slightly.
3.79 for two gallons of nonfat.
3.89 for two gallons of lowfat.
4.11 for two gallons of 2%.
Feed prices have increased slightly but there is currently a drought on in California. Since all of California agriculture is beholden to surface water, growers are switching from alfalfa (currently low dollar and a high water user) to higher value crops. This is a very different kind of boom/bust cycle. The landscape will look very different in a couple of years, and the consumer is going to pay the price in the end with much higher prices.
I saw several fields that are laid fallow - something I've never seen this time of year ever.
I have to admit, I haven't spent a lot of time in the West Side of the San Joaquin Valley for the past decade - but to see a visual sign of our drought sidelining the most fertile, producive, and profitable farmland on the planet is kind of stunning.
3.79 for two gallons of nonfat.
3.89 for two gallons of lowfat.
4.11 for two gallons of 2%.
Feed prices have increased slightly but there is currently a drought on in California. Since all of California agriculture is beholden to surface water, growers are switching from alfalfa (currently low dollar and a high water user) to higher value crops. This is a very different kind of boom/bust cycle. The landscape will look very different in a couple of years, and the consumer is going to pay the price in the end with much higher prices.
I saw several fields that are laid fallow - something I've never seen this time of year ever.
I have to admit, I haven't spent a lot of time in the West Side of the San Joaquin Valley for the past decade - but to see a visual sign of our drought sidelining the most fertile, producive, and profitable farmland on the planet is kind of stunning.
IrvineRealtor_IHB
New member
Tuscan Whole Milk
Read the reviews...
"Edgar's" hat tip to Poe is outstanding.
103 of 105 people found the following review helpful:
Make this your only stock and store, July 8, 2008
By Edgar (Baltimore) - See all my reviews
Once upon a mid-day sunny, while I savored Nuts 'N Honey,
With my Tuscan Whole Milk, 1 gal, 128 fl. oz., I swore
As I went on with my lapping, suddenly there came a tapping,
As of some one gently rapping, rapping at the icebox door.
'Bad condensor, that,' I muttered, 'vibrating the icebox door -
Only this, and nothing more.'
Not to sound like a complainer, but, in an inept half-gainer,
I provoked my bowl to tip and spill its contents on the floor.
Stupefied, I came to muddle over that increasing puddle,
Burgeoning deluge of that which I at present do adore -
Snowy Tuscan wholesomeness exclusively produced offshore -
Purg'ed here for evermore.
And the pool so white and silky, filled me with a sense of milky
Ardor of the type fantastic of a loss not known before,
So that now, to still the throbbing of my heart, while gently sobbing,
I retreated, heading straightway for the tempting icebox door -
Heedless of that pitter-patter tapping at the icebox door -
I resolved to have some more.
Presently my soul grew stronger; hesitating then no longer,
'This,' said I, 'requires an extra dram of milk, my favorite pour.'
To the icebox I aspired, motivated to admire
How its avocado pigment complemented my decor.
Then I grasped its woodgrain handle - here I opened wide the door; -
Darkness there, and nothing more.
Deep into that darkness peering, long I stood there wondering, fearing,
Doubting, dreaming dreams of Tuscans I had known before
But the light inside was broken, and the darkness gave no token,
And the only words there spoken were my whispered words, 'No more!'
Coke and beer, some ketchup I set eyes on, and an apple core -
Merely this and nothing more.
Back toward the table turning, all my soul within me burning,
Soon again I heard a tapping somewhat louder than before.
'Surely,' said I, 'surely that is something at my window lattice;
Let me see then, what thereat is, and this mystery explore -
Let my heart be still a moment and this mystery explore; -
'Tis the wind and nothing more!'
From the window came a stirring, then, with an incessant purring,
Inside stepped a kitten; mannerlessly did she me ignore.
Not the least obeisance made she; not a minute stopped or stayed she;
But, with mien of lord or lady, withdrew to my dining floor -
Pounced upon the pool of Tuscan spreading o'er my dining floor -
Licked, and lapped, and supped some more.
Then this tiny cat beguiling my sad fancy into smiling,
By the grand enthusiasm of the countenance she wore,
Toward the mess she showed no pity, 'til I said, 'Well, hello, kitty!'
Sought she me with pretty eyes that seemed to open some rapport.
So I pleaded, 'Tell me, tell me what it is that you implore!'
Quoth the kitten, 'Get some more.'
Enjoy,
IR2
Read the reviews...
"Edgar's" hat tip to Poe is outstanding.
103 of 105 people found the following review helpful:
Make this your only stock and store, July 8, 2008
By Edgar (Baltimore) - See all my reviews
Once upon a mid-day sunny, while I savored Nuts 'N Honey,
With my Tuscan Whole Milk, 1 gal, 128 fl. oz., I swore
As I went on with my lapping, suddenly there came a tapping,
As of some one gently rapping, rapping at the icebox door.
'Bad condensor, that,' I muttered, 'vibrating the icebox door -
Only this, and nothing more.'
Not to sound like a complainer, but, in an inept half-gainer,
I provoked my bowl to tip and spill its contents on the floor.
Stupefied, I came to muddle over that increasing puddle,
Burgeoning deluge of that which I at present do adore -
Snowy Tuscan wholesomeness exclusively produced offshore -
Purg'ed here for evermore.
And the pool so white and silky, filled me with a sense of milky
Ardor of the type fantastic of a loss not known before,
So that now, to still the throbbing of my heart, while gently sobbing,
I retreated, heading straightway for the tempting icebox door -
Heedless of that pitter-patter tapping at the icebox door -
I resolved to have some more.
Presently my soul grew stronger; hesitating then no longer,
'This,' said I, 'requires an extra dram of milk, my favorite pour.'
To the icebox I aspired, motivated to admire
How its avocado pigment complemented my decor.
Then I grasped its woodgrain handle - here I opened wide the door; -
Darkness there, and nothing more.
Deep into that darkness peering, long I stood there wondering, fearing,
Doubting, dreaming dreams of Tuscans I had known before
But the light inside was broken, and the darkness gave no token,
And the only words there spoken were my whispered words, 'No more!'
Coke and beer, some ketchup I set eyes on, and an apple core -
Merely this and nothing more.
Back toward the table turning, all my soul within me burning,
Soon again I heard a tapping somewhat louder than before.
'Surely,' said I, 'surely that is something at my window lattice;
Let me see then, what thereat is, and this mystery explore -
Let my heart be still a moment and this mystery explore; -
'Tis the wind and nothing more!'
From the window came a stirring, then, with an incessant purring,
Inside stepped a kitten; mannerlessly did she me ignore.
Not the least obeisance made she; not a minute stopped or stayed she;
But, with mien of lord or lady, withdrew to my dining floor -
Pounced upon the pool of Tuscan spreading o'er my dining floor -
Licked, and lapped, and supped some more.
Then this tiny cat beguiling my sad fancy into smiling,
By the grand enthusiasm of the countenance she wore,
Toward the mess she showed no pity, 'til I said, 'Well, hello, kitty!'
Sought she me with pretty eyes that seemed to open some rapport.
So I pleaded, 'Tell me, tell me what it is that you implore!'
Quoth the kitten, 'Get some more.'
Enjoy,
IR2
no_vaseline_IHB
New member
http://www.latimes.com/news/nationworld/nation/la-na-miniature-cows24-2009may24,0,7037757.story
Farms downsize with miniature cows!
(embedded video no longer available)
Farms downsize with miniature cows!
(embedded video no longer available)
tmare_IHB
New member
It's funny how my eyes are peeled for milk stories in the news.
no_vaseline_IHB
New member
When the "behind the curve" LA times gets ahold of a story, you know it's bad.
http://www.latimes.com/business/la-fi-milk-crisis29-2009may29,0,6551352.story
I know one of the two dairymen they are refering too. I think they'd been in the business for something like 70 years. Apparently he couldn't stand to watch his business fail. And apparently Got Milk? doesn't know his ass from a hole in the ground.
I'm going home to look up some tomatos this weekend. Wish me luck.
http://www.latimes.com/business/la-fi-milk-crisis29-2009may29,0,6551352.story
I know one of the two dairymen they are refering too. I think they'd been in the business for something like 70 years. Apparently he couldn't stand to watch his business fail. And apparently Got Milk? doesn't know his ass from a hole in the ground.
I'm going home to look up some tomatos this weekend. Wish me luck.
usctrojanman29_IHB
New member
So currently, what are the most profitable crops (fruits/veggie) for farmers to grow right now? Are cattle farmers doing well?no_vaseline said:
Astute Observer_IHB
New member
unlike regular milk, organic dairies are luxury items, and certainly there will be some drop in demand during times like these.
no_vaseline_IHB
New member
usctrojanman29 said:
That's a loaded question, but in California, it depends on your water situation. I have pics and further comments on the subject of the current drought, but not today. I'm whipped.
usctrojanman29_IHB
New member
My money is on avocados.no_vaseline said:
no_vaseline_IHB
New member
usctrojanman29 said:
You can only grow Avacados in Irvine, Fallbrook, parts of San Diego costal, Ventura, and a couple of spots in Arroyo Grande/Morro Bay (SLO County). They require a very specific climate to grow commercially, and have zero tolerance to frost.
A couple of years ago, you could plant almonds and pay for all of the development costs, the land, and the water in one single season of production. That has only happened a couple of times in a couple of crops in the last 60 years. I know a guy who dryland farmed a wheat crop last winter that got a double whammy of soaring commidity prices and an abnormally high rainfall (which really helps production) and did the same thing, but that was hardly industry wide.
Near as I can tell, everything sucks except cannery tomatos right now. You can't grow cotton, or silage corn, or alfalfa, or tree fruit, or grapes - water is too expensive and scarce, prices are too low.
no_vaseline_IHB
New member
I shouldn't have written "can't" above. It's just super hard to make any money on conventional commodities that are high water usage and low priced. You must decide how much water is going to cost you per acre and figure how you can maximize your profitability per gallon of water. While this calculation has always been important, it's even more important now. Here's an example.
A grower I know in the Westlands Water District put in a well - maybe 400 feet deep. It has an electric motor on top of it that is equivalent to about 500 horsepower. This is a big well! He had planned to farm tomatoes on this property, but the well didn't get finished in time to plant them, so he switched to cotton. Problem - he didn't have enough water to do the whole field in cotton. What's a grower to do? Plant as much as you can irrigate.
These three photos are shot all at the same spot.
I would like to tell you this is a rare occurrence, but it's not. It's everywhere. Every grower has fallowed land due to lack of water. A lot of the land isn't "marginal producers", but top shelf stuff that there just isn't water for. The lack of surface water in California is not just affecting folks yards in LA (they got mandatory water rationing yesterday), it’s savaging an industry, and at some point, will have material effects on the prices you pay at the grocery store.
The drought has caused changes in cropping patterns, as many formerly mainstay crops (like cotton) are no longer being primarily grown, but have been turned into a rotational crop (like wheat). This year my family’s operation does not have a single cotton plant under tillage for the first time since we moved to California in the 1930’s.
Not all the changes brought on by the drought have been negative. A fairly new innovation is subsurface drip on crops that were formerly flood irrigated.
Note the black PVC drip lines exiting the end of the row. This is a cotton field that has been planted about 45 days ago. They used sprinklers to get it up from seed, then they take over with the drip line. The problem with using subsurface drip on a low value crop like cotton is the cost metrics don't work out. In this picture, the grower previously farmed cannery tomatoes for four or five years and is using cotton for a rotational crop. He'll switch back to tomatoes next year for three seasons before the drip line has "worn out".
Another benefit of the drip system is you have no excess runoff water (tail water, as it's commonly referred) like you do with flood irrigation. The runoff issues (like that mess at the Kesterson Reservoir in the 1970’s) and erosion issues are moot because there isn’t any..
On a personal note, I forgot what winter wheat smells like. I think it's the prettiest crop anyone grows. Trouble is, outside of last year, you can't make any money on it in CA, and since you have to irrigate it, you really can't make any money on it.
Anybody have any requests on stuff they want me to write about, or should I just continue to ramble on?
A grower I know in the Westlands Water District put in a well - maybe 400 feet deep. It has an electric motor on top of it that is equivalent to about 500 horsepower. This is a big well! He had planned to farm tomatoes on this property, but the well didn't get finished in time to plant them, so he switched to cotton. Problem - he didn't have enough water to do the whole field in cotton. What's a grower to do? Plant as much as you can irrigate.
These three photos are shot all at the same spot.
I would like to tell you this is a rare occurrence, but it's not. It's everywhere. Every grower has fallowed land due to lack of water. A lot of the land isn't "marginal producers", but top shelf stuff that there just isn't water for. The lack of surface water in California is not just affecting folks yards in LA (they got mandatory water rationing yesterday), it’s savaging an industry, and at some point, will have material effects on the prices you pay at the grocery store.
The drought has caused changes in cropping patterns, as many formerly mainstay crops (like cotton) are no longer being primarily grown, but have been turned into a rotational crop (like wheat). This year my family’s operation does not have a single cotton plant under tillage for the first time since we moved to California in the 1930’s.
Not all the changes brought on by the drought have been negative. A fairly new innovation is subsurface drip on crops that were formerly flood irrigated.
Note the black PVC drip lines exiting the end of the row. This is a cotton field that has been planted about 45 days ago. They used sprinklers to get it up from seed, then they take over with the drip line. The problem with using subsurface drip on a low value crop like cotton is the cost metrics don't work out. In this picture, the grower previously farmed cannery tomatoes for four or five years and is using cotton for a rotational crop. He'll switch back to tomatoes next year for three seasons before the drip line has "worn out".
Another benefit of the drip system is you have no excess runoff water (tail water, as it's commonly referred) like you do with flood irrigation. The runoff issues (like that mess at the Kesterson Reservoir in the 1970’s) and erosion issues are moot because there isn’t any..
On a personal note, I forgot what winter wheat smells like. I think it's the prettiest crop anyone grows. Trouble is, outside of last year, you can't make any money on it in CA, and since you have to irrigate it, you really can't make any money on it.
Anybody have any requests on stuff they want me to write about, or should I just continue to ramble on?
freedomCM_IHB
New member
ramble is good.
why do they rotate with cotton and not soybeans?
really, though, why should cotton (or other thirsty, low price crops) be grown in CA at all since water is at a premium? shouldn't the farmers have to take into account the price of their supply of water (which they get a huge federal subsidy on, or used to)? why not stick to high value crops like tomatoes, strawberries, fruits, etc?
why not let wetter parts of the world supply the cotton?
why do they rotate with cotton and not soybeans?
really, though, why should cotton (or other thirsty, low price crops) be grown in CA at all since water is at a premium? shouldn't the farmers have to take into account the price of their supply of water (which they get a huge federal subsidy on, or used to)? why not stick to high value crops like tomatoes, strawberries, fruits, etc?
why not let wetter parts of the world supply the cotton?
no_vaseline_IHB
New member
freedomCM said:
Dunno. Nobody grows soybeans in California. Those guys in the Midwest all dryland farm for the most part – plant and let God irrigate it up. Harvest when he’s done.
Going forward with the subsurface drip, you have to cultivate something that is compatable with the drip tape and doesn't destroy it. Cotton grows well on 30" row centers. Tomatoes are farmed on 60" beds, so you can make it work. Corn makes too much post harvest debris. Alfalfa is grown flat so that won't work either.
Because they used to be profitable. Be careful – you’re fixing to fall into a trap. People talk about rice, alfalfa, and cotton as evil because they use a lot of water. It’s a little more complicated than that.
Rice requires a lot of water because you have to keep it flooded for 120 days or so. There is a ton of excess water north of the Delta that otherwise would run out through the Oakland bay. Also, the land they farm rice on is prone to flooding almost every other year, making it useless for anything other than……rice. If they stopped farming rice, we wouldn’t save a gallon.
Alfalfa is a low value crop and water intensive - because it contains a lot of water. Do you like milk at current prices? How about cheese and ice cream? Because without alfalfa there is no cattle feed. It may be inefficient, but it’s necessary if you want dairy products, and as inefficient as it is, it’s also the most efficient mechanism to feed dairy cows.
Cotton production has fallen off a cliff in California for the reasons we are discussing.
http://www.cottoninc.com/Water-Management/Cotton-Water-Requirements/
You still need cotton as a rotational crop for tomatoes as a management tool, primarily for nematodes (a microscopic organism that feeds on certain crops). There are around 2000 types of nematodes. Only 4 or 5 are bad for your particular crop. You can’t just single them out (the rest are beneficial), you either fumigate and kill all of them or you rotate crops and the bad ones die because they don’t have their preferred plant to lunch on. They have this problem with wine grapes from time to time and have to pull their entire rootstock and replant.
They do – see the cotton acreage graph.
The water problem in California is a matter of storage and logistics. There’s plenty of water North of the Delta. They used to pump the excess out of the delta for the California Water Project, but that has been greatly reduced because of the effects on the fish in the Delta. They used to pump so much out of the delta it would cause the river to run backwards and cause salt water intrusion out of the bay into the delta.
This is a bit of a chicken and egg argument. Nobody was growing out there until the government decided it needed the production and built the project – hence the subsidy, which was an interest free loan paid back over 50 years. The government induced the development, and has an obligation not to yank the carpet out from the growers now ‘somebody’ changed their mind.
That change is happening, but you must remember, you have to make a market for what you grow. To grow tomatoes you have to get a contract from a cannery else you won’t have anybody to deliver to. Growing commercial strawberries is a lot like avocados, you need to have a special climate and the right type of high drainage sandy soil (Irvine @ the El Toro Y FTW!).
A decade ago, my family’s operation was a rotation of cotton and alfalfa and silage corn. This year, it’s tomatoes and alfalfa and almonds. Next year it’s tomatoes and almonds – provided everything works out okay.
Also, you don’t just ‘switch’ crops without cost. To do 120 acres of tomatoes required a $125,000 irrigation system and $180,000 in additional working capital. That was about four years worth of free cash flow on an average 1800 acre California farm (assuming average year).
Fruits are horrible business. You have huge issues with accounts receivable realization. You grow a crop, then the real costs get you in labor to harvest and cold storage and transportation. Then, after it’s all sold, your end customer may decide there was something wrong with it and take a discount of 50-80% on what they agreed to pay, and there’s not a damn thing you can do about it because your product is long sold and gone. The fruit business right now is just horrible.
This is a subsidy problem. Everyone on the planet who grows gets subsidies. Seriously - everybody. If the US were to remove the subsidy, it would destroy the US domestic production because the US grower would be at a price disadvantage to the rest of the world – losing the domestic production does not help the US consumer. In short, free trade my ass. It’s a total joke.
Example – in the fall of 1992, the adjusted world price of cotton fell from $0.65 to $0.30 The US had a subsidy strike price around $0.90, and paid the grower the difference. It cost about $0.88 to grow it. Greece had a strike price of $4.50 – they slapped an import tariff of $4.20 on every pound imported, and transferred it back to the grower!
If you can buy it on the world market for thirty cents, it costs you eighty eight to produce it, and your Greek competitor set a floor for their domestic producers at $4.50 PLUS you can’t sell any cheaper, how you gonna compete with that? Do you want to pay $4.50 instead of $.90 like you did before? Earlier in this thread I take Mish to task for advocating against farm subsidies precisely because he misses the above point.
The rest of the world isn’t going to drop their subsidies, much to the chagrin of the African contingent, who believes that if the world would drop their subsidies the Africans would be able to compete on the worldwide market. The reality is if the world got rid of it’s subsidies the US grower would decimate everyone else because we are so much more efficient if you count $1 of inputs to = pounds output. Most of that is technology.