Every business person in California is painfully aware of the cost of doing business in such a highly regulated state, and the appearance that some state agencies have a strong bias against agriculture just adds to the pain. This last year, the state made things even worse when they added a slew of costly new rules. It’s even more fuel to the fire, and takes yet another bite out of whatever profit is left for the industry. To figure out just how much our growers will be affected, the Citrus Research Board (CRB) funded a study by a leading expert in Ag financial issues.
The study was conducted bv Bruce Babcock, who is a professor at the School of Public Policy at the University of California Riverside. The study focuses only on the new costs the industry is set to face over the next few years as new labor, food safety, and environmental regulations are phased in.
CRB President Gary Schulz said that Babcock has presented a well-researched economic report that shows how new regulations will increasingly impact California’s citrus industry. According to his figures, California citrus growers will pay an average of $701 per acre per year, or $203 million annually statewide. The total cost of these new regulations is a whopping 6 percent of total gross revenues of citrus growers. What it comes down to is, these growers will pay a new tax of 6 percent of their income.
These cost increases will be borne by California citrus but not by growers in other regions. This means the playing field is no longer level – that growers in Peru, Brazil, Argentina, and other parts of the world have a clear advantage over California growers. Just to break even and stay in business, California growers will have to charge more for their products – even with the shipping costs of the foreign-grown fruit factored in. We all know that when the price of citrus at the store gets too high, many consumers will blame the grower and buy the cheaper, foreign grown fruit.
This could destroy our citrus industry. The head of California Citrus Mutual, Joel Nelson, said it best: “This UCR report paints a clear path for policy makers if their goal is to drive the citrus industry out of California.”
Between this and the water regulations that are coming, It’s no wonder California growers feel embattled on all sides.
I’m Len Wilcox and that’s the Western View from AgNet West and Citrus Industry Magazine. Visit us on the web at www.citrusindustry.net.