Agricultural Exports, Economic Prospects and Jobs West Hills Community College District Essential Elements Harris Ranch Inn and Conference Center November 6, 2014 Daniel A. Sumner University of California Agricultural Issues Center and Department of Agricultural and Resource Economics, UC Davis
One Economic Point and Three Examples Agriculture is important to economic vitality and jobs in California and especially here in the Valley and exports are vital to agriculture. Critics of agricultural exports (because agriculture uses water) miss the most important of common sense economic principles: Do what you are good at and let others do what they are good at! Consider three examples of what Valley agriculture is good at. 1. Supplying tree nuts to the world. 2. Providing high quality reasonably priced grapes that allow sales of wine that is competitive with any in the world 3. Producing milk and supplying processed dairy products to the United States and Asian markets All these have immensely positive impacts on employment and the economy of the Valley
California Tree Nut Production 2,000 1,500 1,000 500 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 California Production (1 million pounds) Almonds Pistachios Walnuts
$6,000 Value of California Tree Nut Crops $5,000 Farm Value ($1 million) $4,000 $3,000 $2,000 Almonds Pistachios $1,000 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Walnuts
Value of California Tree Nut Exports $500 $400 Value of Exports (in $million) $300 $200 Almonds Pistachios $100 $0-10 -10-10 Oct-10-11 -11-11 Oct-11-12 -12-12 Oct-12-13 -13-13 Oct-13-14 -14-14 Walnuts
Nut exports and Jobs Volume and value of nut shipments have both risen Export value in 2013 $4.2 B for almonds, $1.4 B for walnuts and $1.2 B for pistachios. (Partly 2012 crop) The 2014 numbers affected by crop sizes and higher prices. Total in the range of $7 billion. Expanded markets mean more jobs. Rule of thumb 15,000 jobs per $billion or more than 100,000 California jobs tied to nut exports.
Bearing Winegrape Acreage Districts 12, 13, and 14 410 400 Thousand Acres 390 380 2009 2010 2011 2012 2013 District 12, 13, and 14 Total Bearing Acreage Source: NASS. California Grape Acreage Report
Total Grapes Crushed and Weighted Average Grower Returns in S. San Joaquin Valley (Districts 12, 13 and 14) 4,000 450 Total Grapes Crushed, 1,000 Tons 3,500 3,000 2,500 2,000 1,500 1,000 500 400 350 300 250 200 150 100 50 Dollars per Ton - 2009 2010 2011 2012 2013 Total Grapes Crushed in Districts 12,13, and14 Weighted Average Grower Return -
Bulk Table Wine Imports, Exports and Unit Prices Over the Last Five Years Million Liters 400 350 300 250 200 150 100 50 0 2009 2010 2011 2012 2013 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 Dollars per Liter Bulk Table Wine Imports in Million Liters Imported Bulk Table Wine Prices Bulk Table Wine Exports in Million Liters Exported Bulk Table Wine Prices
35 Recent Monthly Bulk Wine Trade 30 25 Million Liters 20 15 10 5 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Monthly Imports in 2014 Mothly Exports in 2014 Monthly Imports 2013 Monthly Exports 2013
Milk Production by County, 2014 uary-june Rest of State 10% Madera 4% San Joaquin 6% Tulare 27% Fresno 7% Kern 10% Merced 15% Stanislaus 10% Kings 11%
California Milk Processors, by Product Type Butter, Nonfat Dry Milk (Human) Cottage Cheese, Condensed Evaporated, Whipping Cream, Whipped Cream, Eggnog, Sour Cream, Whey Protein Concentrate, Yogurt Cheese, Cream Cheese, Hispanic Cheese Frozen Products Fluid Milk, Buttermilk Mix
Dairy Export Value through California Ports Dollars (mil) 140 120 100 80 NFDM Cheese Whey 60 40 20 0 Oct Oct Oct Oct 2010 2011 2012 2013 2014
Dairy Export Value through California Ports Dollars (mil) 350 300 250 200 150 100 50 0 Oct Oct Oct Oct 2010 2011 2012 2013 2014
Economic Relationships for California Dairy, 2014 Employees Value of Output Employee Compensation Value Added Farm Production Processed Dairy Products Numbers of workers 30,000 17,000 Billions Of sales $10.0 $24.0 Billions of wages and benefits $0.7 $1.5 Millions of net returns to labor and capital $4.5 $2.2
Multiplier Relationships for California Dairy Farm Production Processed Dairy Products Multipliers per $ of sales and as ratio of direct and ripple effects Direct Value added/ Value of output Multiplier ratio Total value added/ direct value added 0.45 0.09 1.8 6.8 Direct Direct jobs/ $ million of output Multiplier ratio California workers/ Direct jobs 3.0 0.7 1.9 8.7
Economics and the Jobs Arithmetic 1. Demand for our agricultural output generate jobs on farms and in processing. These have ripples and multipliers throughout the economy. 2. An added billion dollars of milk exports generates 2.4 billion in processing sales. 3. The additional economic activity of this milk production and processing entails about 17,000 jobs in the California economy and most of those are in allied industries and communities. We do not gain by producing at high cost or shipping what we cannot produce efficiency, But, blocking trade or dampening competitiveness means lost economic dynamism and lost employment. The bottom line, international trade is vital for economic health and reflect the efficiency and productivity of agriculture.