1. Industry clusters Planning Issues in Ag Lecture 3

2. Industry clusters continued… A cluster is a geographically proximate group of interconnected companies and associated institutions in a particular field, linked by commonalities and complementary programs.

3. Dependent on each other (add value from raw products and then send to other places to attract money to area) Dependent on each other (add value from raw products and then send to other places to attract money to area) Attracts jobs/wealth and gives identity Attracts jobs/wealth and gives identity Production to Processing to distribution Production to Processing to distribution Business building with other businesses drives local economy Business building with other businesses drives local economy Adds value to production Adds value to production Clusters will increase employment Clusters will increase employment Clusters are geographically concentrated and connected Clusters are geographically concentrated and connected Industry clusters continued…

4. California Ag Summary San Joaquin Valley – 8 counties (most productive ag in state and nation) San Joaquin Valley – 8 counties (most productive ag in state and nation) Experiencing change in population (1970 growth accelerated) Experiencing change in population (1970 growth accelerated) -diverse cultural and ethnic populations increasing -diverse cultural and ethnic populations increasing -impact on major industry( production and economic) -impact on major industry( production and economic) Gross farm income in 2000 – $27-30 billion (what did we say this was today?) Gross farm income in 2000 – $27-30 billion (what did we say this was today?) California represented 13% of US Gross Farm Income California represented 13% of US Gross Farm Income

5. Since 1948 leading counties have changed (2002 Census) Not LA anymore Not LA anymore Fresno2.7 billion Fresno2.7 billion Tulare2.3 billion Tulare2.3 billion Kern2.0 billion Kern2.0 billion 6 counties in SJ are in top 10 (> $1 billion income) Kings and Madera are missing 6 counties in SJ are in top 10 (> $1 billion income) Kings and Madera are missing Can you find the latest data on Ag Values from the CDFA or Farm Bureau Websites? Can you find the latest data on Ag Values from the CDFA or Farm Bureau Websites?

6. All private land in California 1/3 of state private land linked to Ag 27 million acres in Agriculture in 2000 27 million acres in Agriculture in 2000 1950 Ag land … 37 million 1950 Ag land … 37 million Amount of acres declined in Ag…why? Ag itself fewer farmers Ag itself fewer farmers Consolidation – farms have decreased, but size has increased Consolidation – farms have decreased, but size has increased

7. Farmland Trust will not stop growth nor stop decline in land. What kinds of choices do we need to make? What kinds of choices do we need to make? Which Ag land is more or less important? Which Ag land is more or less important? Which types of development should be encouraged? Which types of development should be encouraged? Questions debated throughout this course… Questions debated throughout this course…

8. Agricultural Land 2/3 rangeland w/ pastures for cattle / other livestock 2/3 rangeland w/ pastures for cattle / other livestock 1/3 cropland (9 million acres) 20% in SJ Valley 1/3 cropland (9 million acres) 20% in SJ Valley Different types of soil, water key to quality of land and… Different types of soil, water key to quality of land and… Types of crops that are grown Types of crops that are grown

10. Specialty Crops Commercially Produced Only in California (99% or more of total U.S. production)* Almonds Almonds Artichokes Artichokes Clingstone Peaches Clingstone Peaches Dates Dates Figs Figs Kiwifruit Kiwifruit Nectarines Nectarines Olives Olives Persimmons Persimmons Pistachios Pistachios Plums, Dried (Prunes) Plums, Dried (Prunes) Raisins Raisins Walnuts * Source:CDFA Resource Directory 2002 Walnuts * Source:CDFA Resource Directory 2002

11. CA productivity Not all consumed in state or nation Most exported (2000) $6.6 billion Ag product exported. What is this figure today? Most exported (2000) $6.6 billion Ag product exported. What is this figure today? CA export (#1 exporter in nation) CA export (#1 exporter in nation) #6 significant Ag exporter in the world. Where do we rank today? #6 significant Ag exporter in the world. Where do we rank today? Has our import/export balance changed in Ca? Has our import/export balance changed in Ca?

12. Crops in order of most exported (2003) Almonds (70% exported) Almonds (70% exported) Cotton (So valley) Cotton (So valley) Wine Wine Table grapes Table grapes Oranges Oranges Milk/cream Milk/cream 2 countries import almonds #1 Canada #2 Japan

13. CA #1 state in personal income 7 ½% of all jobs linked directly/indirectly to agriculture 7 ½% of all jobs linked directly/indirectly to agriculture 6 ½ % personal income (all income household) 6 ½ % personal income (all income household) wages, profits, rent, interest Valley: 30% jobs linked directly/indirectly to agriculture 30% jobs linked directly/indirectly to agriculture 20% personal income related to agriculture 20% personal income related to agriculture

14. Jobs Linked… directly:indirectly Indirectly – clusters of related industry Indirectly – clusters of related industry Directly - Production of food & fiber Directly - Production of food & fiber Creates/generates $$$ Creates/generates $$$ Economic activity…employment, income, sales, sales tax Economic activity…employment, income, sales, sales tax Agricultural ripple effect can be good ( increased income for farmers, businesses etc) Agricultural ripple effect can be good ( increased income for farmers, businesses etc) Or it can be bad (reduced income, employment, businesses go under) Or it can be bad (reduced income, employment, businesses go under) All are related to each other especially in the valley All are related to each other especially in the valley

15. Employment Multipliers for the San Joaquin Valley: 1996 IndustryEmployment multiplier Agriculture1.50 Agriculture1.50 Mining/construction1.99 Mining/construction1.99 Food Processing3.88 Food Processing3.88 Other manufacturers2.44 Other manufacturers2.44 Transportation/public utilities2.58 Transportation/public utilities2.58 Wholesale trade1.77 Wholesale trade1.77 Retail trade1.30 Retail trade1.30 Fire2.03 Fire2.03 Services1.58 Services1.58 Government1.37 Government1.37

16. Share of total of all industry output… Focus on Ag Valley 13% CA3% Focus on Exports (leaving region) Ag and food processing is the highest

17. Farm wage and salary employment growth in 1983 – 2000 Importance20001983 Valley higher17.5%20.% Valley higher17.5%20.% Than CA2.7%3.4% Than CA2.7%3.4% 1 out of 5 jobs in CA is Agriculturally related 1 out of 5 jobs in CA is Agriculturally related Most people think that agriculture is considered open space instead of business. Most people think that agriculture is considered open space instead of business.

18. Where does the information come from? Every 5 years there is an ag census: Every 5 years there is an ag census: It measures: # of acres, change in # of farms, decrease in amount of land, decrease in # of farms, # of family farms It measures: # of acres, change in # of farms, decrease in amount of land, decrease in # of farms, # of family farms

19. Structure of Ag is changing (3 points) Population…fewer people involved in production agriculture, more people involved in services that provide for agriculture’s needs Population…fewer people involved in production agriculture, more people involved in services that provide for agriculture’s needs Importance of Ag clusters…related businesses depending on each others’ prosperity Importance of Ag clusters…related businesses depending on each others’ prosperity Changing structurally…less farms, larger farms…vertical integration…direct marketing Changing structurally…less farms, larger farms…vertical integration…direct marketing

20. Factors in Agriculture Changing Technology - yields are higher, but not net yields ? Technology - yields are higher, but not net yields ? Vertical integration Vertical integration Foreign competition Foreign competition Regulatory costs Regulatory costs Consolidation may be the key, but family farms may suffer Consolidation may be the key, but family farms may suffer

21. Cause and Effect… In recession ( ¼ of farmers bankrupt) In recession ( ¼ of farmers bankrupt) Purpose of public policy is to pressure Ag or an individual Purpose of public policy is to pressure Ag or an individual

22. Now…Consider the effects of Planning on individual property rights… Now…Consider the effects of Planning on individual property rights… Next lecture… Next lecture…