California: To Grow On? : An uncertain future beneath the surface of America’s finest farmlands

Of all the myths about California agriculture, one of the most enduring has been that the state’s agribusiness industry was so rich and diverse that it could survive any economic crisis.

There was all that land, a stable climate, rich soil and plenty of water. To the farmer, California was Eden, Paradise and Utopia in one.

Back in the 1860s, the wheat fields in the San Joaquin Valley were so vast that a crew might work all day just to plow to the end of one field. When the export wheat market collapsed in 1894, so did the California wheat industry.

But California farming adjusted. As the prophets knew it would, California developed the richest, most diverse and most sophisticated agricultural system in the world. California farmers set out not only to feed their own state, but the entire nation and the farthest reaches of the globe.

California was different from Iowa, everyone said. It was not routinely visited with the weather disasters that could make or break a whole year’s crop and investment. The big corporate farms had the capital to survive depressions. The diversity itself insulated California agribusiness. Maybe one or two crops--or even half a dozen--might fail in one year. But California had 250 crops and the world’s most efficient farmers. It could survive anything.

That myth may not now endure. The mid-1980s have demonstrated that California agriculture may be exceptional, but it is not immune from the depression that has wracked the nation’s heartland.

California agriculture is, in fact, undergoing wrenching economic change from which it surely will recover, but the endless landscape of row crops and orchards is likely to be altered for years to come.

California has not had the tragic headline stories of sheriff’s auctions of farms in the same families for generations; of depressed farmers, unable to make their interest payments, committing suicide. But some experts believe segments of California agriculture face problems just as bad as those in Iowa or Wisconsin--perhaps worse in some areas.

Consider one statistic: California cotton exports totaled $897 million in 1982, but plunged to $625 million in 1984, to an estimated $500 million last year and may fall as low as $350 million this year.

Just a decade ago, China was one of the world’s biggest cotton importers. Today it has become an exporter. The Soviet Union and Pakistan have also increased cotton production and Japan is cutting back on its imports.

Of every three acres planted in California, one goes to the export market and is subject to all sorts of pressures beyond control of the farmer and, often, of the U.S. government. Those markets have look to be in decline: California exports soared from $2 billion in 1978 to $4.2 billion in 1981, then fell to $2.8 billion in 1984, to about $2.7 billion last year and an expected $2.6 billion in 1986.

Some think things will improve now. Interest rates have come down. The value of the dollar has dropped so that American exports are more attractive. Fuel is cheaper. Chronic California overproduction may fall to more realistic levels.

Take almonds, for instance. After several disastrous years, California almond sales boomed in 1985 and should do well in 1986, too. Almond growers have faced stiff competition from a variety of sources, including hazelnuts from Turkey. They got $1.54 a pound in 1979, but only 82 cents in 1984. But then the Turkish hazelnut crop failed and California almonds suddenly were in big demand.

Good news? Not entirely. Much of the California crop had already been bought on speculation by West Germans. The speculators, not the farmers, reaped the profits. At least the surplus was reduced. Heavy rains this winter have caused some damage to this year’s crop so, if nothing else, farmers do not face the prospect of oversupply. That scenario is a sketchy one on which to build much optimism.

In fact, the optimistic view is limited to selected speciality crops and is by no means a consensus.

One corporate farm official, Tristan E.G. Krogius, president of Tenneco West in Bakersfield, said speciality crops are likely to survive the short-term vagaries of world markets. But commodities like cotton, wheat and rice face long-term, increased competition from Third World countries. More than 2.5 million acres have been planted to cotton, wheat and rice in California. Many such fields will remain fallow this year and the long-range outlook for these commodities is no better than uncertain.

“Any country looking to improve its economy looks first to farming,” said Krogius. As they do, traditional California markets disappear.

In the simple old days of farming, a hail storm or a drought or an early freeze destroyed a crop. There was one single obvious source to blame, most likely traceable to the whims of nature. That is not so today, particularly in California.

State Assemblyman Jim Costa (D-Fresno) points to the lack of coordination of U.S. farm policy with foreign policy over the years. Back in the 1950s and 1960s, advances in agricultural production were pioneered in American universities--often public land-grant schools and most notably the University of California.

While one arm of the federal government encouraged American farmers to use these tools to grow more crops on more land, another arm exported the same tools to undeveloped countries to help them become self-supporting. Many of those countries now are competing with California farmers for the same markets, and often winning.

As in the Midwest, many California farmers sought to cash in on the land rush of the 1970s, adding to their farms but also adding to their debt. Now, overproduction, depressed prices and shrinking markets make it impossible for them to make payments. They cannot sell their land because there are few buyers. There are forecasts that as many as one-fourth of California’s farms may be foreclosed during the next few years, face some sort of bankruptcy proceeding or undergo a drastic paring of operations.

The cost of irrigation water is too high for some farmers under current conditions. Some are considering possible water sales to urban areas--a concept no one would dare utter just a few years ago. Many areas of the San Joaquin Valley face serious pollution problems from irrigation runoff. The common question is, who pays to clean it up? The most common answer is, the farmer. The farmer asks, how?

Corporate farms are suffering, too. While their resources might see them through a number of seasons, boards of directors look at quarterly profit-and-loss statements. They owe no loyalty to the romantic American notion of the family farm and are not interested in maintaining a resource that drags down the balance sheets. Some of the big corporations have sold. Others want to, but can’t find buyers. Banks, already holding more than $17 billion in farm debt (an increase of 36% during 1980-84), are reluctant to lend more.

California agriculture always has been so productive and efficient--so adept at shifting strategies--that optimists see the industry surviving without major dislocation. Others are not so sure. Last fall, Assemblyman Costa was relatively optimistic, but he is less so today: “It will take a while to wash out.”

Dan Whitehurst, president of the Fresno Economic Development Corp., is among those who cannot forecast the health of California farming in five or 10 years. But he believes the situation is worse than many are willing to acknowledge. “I wouldn’t be surprised to see a lot of people moving out of farming,” he said.

While many farmers and communities will be hurt, the California farm depression of the mid-1980s is not likely to be a catastrophe for the state’s total economy. Some farm leaders cling to the nostalgic belief of agriculture as California’s No. 1 industry. But California got $28 billion worth of defense contracts in 1984, twice the total receipts of all farming. Three California-based oil firms each had greater gross income than did California agriculture.

If there is any consensus about the future of California farming, it is this: Those with the most manageable debt and the most efficient operations will survive, perhaps by shifting to new products as the market shifts, possibly with the penetration of more foreign markets. The result will be a leaner, better-managed, more highly competitive industry. These are the sort of comments heard these days about the oil industry.

“It’s kind of a Darwinian world we live in,” one farm expert said.

It may be, however, that it is not just the fittest who survive in a puzzling new complex world of shifting markets and economic conditions, but also the lucky.