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New Look in California Farming : Prospects Better in Some Sectors Than in Others

May 25, 1986|BRUCE KEPPEL | Times Staff Writer

Tulare's annual farm equipment show drew 750 exhibitors this year,a decline from 770 last year and the record of 1,024 in 1982.

"It seems obvious that the Tulare farm show is a reflection of the farm economy," show manager Gary D. Patton said.

But California's agriculture is not uniformly distressed. Citrus and other fresh-fruit crops have rebounded.

On the other hand, cattlemen have watched low beef prices slip even further as the government implements a new program to slash surplus milk by paying dairymen to slaughter their herds, thus feeding a glut of red meat.

The state grows about 250 different crops, some of which, like lettuce, are harvested 12 months a year. At final reckoning, last year's farm production is expected to total 52.8 million tons, a 3% increase over 1984, but gross farm receipts are expected to rise less than 1% from last year's $14.2 billion, according to the state Department of Food and Agriculture.

The department forecasts "a slight improvement" for 1986, thanks to lower financing and fuel costs and a softening dollar, which are expected to enhance exports. Weak commodity prices and lower price supports for cotton, wheat, rice and corn will depress earnings, however.

What follows is the outlook for the state's top 10 agricultural sectors, ranked in terms of estimated 1985 gross cash receipts:

Dairy

When the federal government first gave the nation's dairy farmers a one-time chance to sell their herds for slaughter this year and go out of the milk business for at least five years, few in California--the No. 2 dairy state--were expected to take the government up on its offer. The thinking was that because the state's dairy operators claim to be the nation's most cost-efficient producers, they would have less incentive than high-cost producers to want to destroy their herds. It was assumed that the price set for their animals would be too high for the U.S. Department of Agriculture.

Yet, when the USDA opened bids and announced results March 28, California led the list with contracts that will eliminate about 11% of the state's milk production in exchange for payments of more than $277 million to participating dairymen--one of whom will receive more than $8 million for going out of the dairy business for five years.

In contrast, the nation's leading dairy state, Wisconsin, finished third with buyout benefits of nearly $126 million and a 3.3% reduction in milk production. Second was Minnesota, which will reduce production about 9% and receive $145 million.

USDA officials speculated that farmers in the older dairy states of the Midwest may have been less burdened by debt than their counterparts in California's relatively young dairy industry.

That may be a factor, but the industry's strong participation in the herd-reduction plan also reflects a dependence on federal farm subsidies that is uncharacteristic of most of California agriculture. The scores of specialty produce and fruit and nut crops that are the state's agricultural hallmark are grown and marketed without subsidies.

In contrast, only about half of the state's milk production goes into the profitable fluid market; the rest is sold to the government at prices that have effectively removed any desire that the industry might have had to market such dairy products as powdered milk and cheese.

One result of this incentive to sell to the government is that California--the nation's largest market--imports about 75% of the cheese consumed in the state.

This situation should begin to change this year, however, with the opening of the world's largest cheese facility, Golden California Cheese Co., in Corona.

The plant will enable California producers to take advantage of their higher productivity and lower transportation costs to compete with Oregon and Wisconsin for the California market, which they previously surrendered by default.

If all goes well, dairymen will have a new market to replace the government, whose subsidies are scheduled to diminish over the next five years.

Nursery Products

Continuing enthusiasm for landscaping and gardening, plus an increase in new housing starts, help make this a bright spot in the state's agricultural picture. Sales in 1985 were off only slightly from 1984's record pace, and the outlook remains promising for 1986.

California leads the nation in production of high-value landscaping plants, which include trees, shrubs, vines, bulbs, turf and Christmas trees (but not plants, which are classified as flowers and foliage).

The state's industry, which is centered in the Southland, accounts for 27.6% of the nation's total production, a 2.6% increase in market share. Nursery production has grown steadily in the 1980s to more than $700 million last year from $499 million in 1981.

It could be one of the sectors to overtake cotton on the roster of California's top 10 agricultural sectors.

Livestock

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