News & Events - Archived News

The owner of John Wiedmann & Son recently left a third of his 1,200-ton pear crop near the Sacramento Delta town of Walnut Grove drop from the trees because there was simply no market for the fruit.

Tri Valley Growers, which filed for bankruptcy protection in July, accepted only a fraction of the pears it contracted to buy. To make matters worse, the financially troubled cooperative paid growers like Mayes about $150 a ton compared with $250 a ton a year ago.

Conditions are so bleak that a group of farmers calling themselves "The Coalition to Save the Family Farm" has organized a public gripe session at the San Joaquin County Fairgrounds in Stockton at 2 p.m. today to discuss how the state's agriculture industry has fallen on hard times and what can be done to revive it.

"Commodity prices have been dropping almost across the board," said John Baranek, who grows wine grapes 22 miles south of Sacramento and is one of the organizers of the rally. "I got tired of all my neighbors crying about problems in the coffee shop and not doing anything about it."

For Mayes, growing pears has been a perilous proposition. He figures it costs at least $180 a ton to produce the fruit. And that does not include the $700 per acre he had to pay this year to get rid of the pear blight organism in his 87-acre orchard. Despite profits from his 70 acres of wine grapes and 100 acres of sugar beets, Mayes is losing money for the third year in a row.

The future looks no better. This year there was a glut of wine grapes and next year there will be no market for 55,000 acres of sugar beets in the Sacramento area.

"Sugar beets are the only field crop we made any money on," said Mayes. "We had the highest production in the state -- 38 tons per acre at 15.2 percent sugar. But the two Imperial Holly mills in Woodland and Tracy are closing next year because of cheap imports from Brazil, Mexico and elsewhere."

Now Mayes is planting wheat "because it costs less to raise and you lose less money on it."

Mayes, Baranek and a few hundred other farmers plan to attend the Stockton meeting to focus public attention on their plight and potential relief measures.

California's economy may still be booming, but many growers and ranchers face looming losses.

Not only are they receiving less for what they grow, they are paying higher "input" costs for seeds and other supplies, fuel and working capital -- and facing higher labor and regulatory costs.

For the first time in more than a decade, farmers and their bankers are hinting that those farmers who are unable to repay or renegotiate their loans could lose their properties starting next year.

Prices for milk and a range of crops, including canning tomatoes and pears, are at or near their historic lows for a welter of reasons:

-- Farmer cooperatives including the California Rice Growers Association and Blue Anchor have perished. Many canneries have closed, and Tri Valley Growers faces the same fate if it does not find a buyer.

-- Foreign competition, aided by government subsidies and lax labor, environmental and other standards, is taking a terrible toll as exemplified by the imminent closure of two of California's four sugar beet processing plants. (According to recent figures, U.S. agriculture support payments total $29 billion but California farmers, primarily rice and cotton growers, received only about $900 million.)

-- Mergers among retailers have concentrated buying power and made it tougher for small farmers to negotiate reasonable prices for what they grow. In the past two years, the top four retailers, including Kroger, Albertsons and Safeway, have increased their market share to 43 percent from 25 percent.

The standard retail markup for produce is 200 to 300 percent, according to the Western Growers Association, but farmers get only a fraction of what consumers pay.

"Farmers are at the beginning of the food chain," explained California Farm Bureau spokesman Bob Krauter. "They're price takers, not price makers."

"Back in the 1980s, before we entered into this international market, we always had some bright spots in our commodities," said Baranek. "Diversity was always a defense, but now it doesn't make much difference."

Baranek isn't hurting too badly. He grows Cabernet Sauvignon, Chardonnay and other grapes on 640 acres under long-term contract to wineries such as Kendall-Jackson, E.&J. Gallo and Sebastiani. But due to a bountiful harvest boosted by thousands of acres of new vineyards coming into production, supply finally surpassed demand.

Baranek said he had "a reasonable year," selling grapes for an average of $585 a ton -- about $100 a ton less than a year ago.

However, growers who lacked contracts or failed to meet stringent quality specifications were not so fortunate.

The price of unsold wine grapes on the "spot market" this harvest season was $85 to $135 a ton compared with $500 to $600 in 1999. That is less than half the cost of production, according to Baranek.

Because prices were below harvesting costs, "a lot of acres of Syrah, Sangiovesi and other grapes in the Lodi area were just left on the vines," said Baranek.

The situation was even more grave for growers of other crops.

Tri Valley, the largest California co-op, representing about 500 growers, accepted only about 30 percent of the tomatoes it had contracts to buy, said California Farm Bureau President Bill Pauli. It also took only 70 percent of the pears it contracted to purchase and 80 percent of the peaches.

Other canners such as Del Monte, Ragu and Morning Star previously pulled out of the Sacramento Delta area. That has left local growers without a home for their crops because major canneries around Modesto get all the crop they need from nearby growers.

As a result, some commodity prices crashed. Tomatoes destined for ketchup and other processed products plummeted from $48 to $52 a ton at the beginning of the summer harvest to a money-losing $23 a ton at the end of the season. With no market for their crops, farmers reportedly plowed under close to 10, 000 acres of tomatoes.

Prices are also down on dairy products. Case Van Steyn, who operates the Van Steyn Dairy with his brother in Elk Grove (Sacramento County), said prices are at a 20-year low. "The average price is $10.50 per 100-weight (or 10.5 cents per pound). A year ago, it was closer to $15 or $16."

Van Steyn said about the only good news is that the prices of cotton seed, beet pulp and other crops he feeds his 700 Holsteins are depressed, too. But he knows that is no long-term solution. "Going out five years, the bad news is they will be out of business."

Van Steyn Dairy is discussing its debt payments, which are 10 to 15 percent higher this year, with its bank. "I'm holding my breath and hoping to break even," said Van Steyn. "The only saving grace is everyone else is in the same shape."

Banks could begin foreclosing on farms and ranches next year, especially if Tri Valley does not find a buyer, according to Paul Ubrun, vice president and loan administrator with Bank of Rio Vista.

"I believe the situation is worse than in the mid-1980s, the last time there were repossessions," he said. "Some (farmers) have good equity in real estate but others may not be so lucky."

"The problem is we're now in a global marketplace and food is being brought in below our cost of production."

California farmers have advantages including sunshine, soil and technical savvy. The state produces close to 350 crops, and many growers of specialty and organic crops, including herbs, gourmet lettuces, mushrooms and even bananas near San Luis Obispo, are doing well, according to Denny Lewis, executive director of the Sacramento County Farm Bureau.

In Latin America, field workers may cost $10 a day, according to grape grower Baranek. His cheapest laborers cost about $72 a day, including Social Security payments. On top of that are all sorts of other expenses, from portable toilets (one for every 20 field workers) to new California Air Quality Control Board levies on farm machinery to restrict emissions.

Five years ago, when the California economy was booming and agriculture was doing reasonably well, California Farm Bureau President Pauli said, "We were for fair and free trade and no government intervention."

But some family farmers are changing their tune. "Many have their backs against the wall and can't meet interest or principal payments or pay their Dec. 10 property tax bills," said Pauli. "If keeping your ranch and feeding your family means a government handout or bailout, some would say today they have no choice."

FARM PRICE SQUEEZE
   Farmers get only a fraction of the price consumers pay for produce.
   Price spread to farmers.
   Item                                   Price paid        Retail price       (Los Angeles)
   Carrots (1-pound bag)             $0.16               $0.49                 206%
   Potatoes (10-pound bag)          0.64                 1.91                 198
   Tomatoes (per pound)              0.57                 2.22                 289
   Iceberg lettuce (each)              0.43                 0.99                 130
   Source: Western Growers Association
   - week ending Nov. 17