In this episode, Edgar Terry, Terry Farms and CLU professor of economics, and I talk about farming economics, funding vs. growing cycles, and how markets and many other factors impact farming revenues.
Episode Overview
The Historical Context of Farming in Ventura
Ed outlines his family’s long history in agriculture, having farmed in Ventura County since 1894. Today, despite a gross revenue of approximately $2.1 billion generated by the agricultural sector in Ventura County, he indicates that this figure, when adjusted for inflation and operational costs, may not accurately reflect real profitability. The decline in the number of family farms continues, with the agricultural community facing increasing pressures from regulatory compliance and market dynamics.
Water as a Valuable Commodity
A pivotal discussion point in the episode is the value of water, which Ed argues should be treated as a commodity with intrinsic value. He emphasizes that water can not only sustain crops but may also be sold or traded. For example, he mentions potential compensation from municipalities for farmers choosing to conserve water instead of farming, positing that water scarcity requires innovative economic practices to maximize its utility.
Economic Realities of Farming
The episode delves into the economic complexities faced by farmers today. Ed provides insights into how rising costs impact profitability; for instance, the cost to plant strawberries has increased by 100% over the past six years, now reaching around $6,500 per acre before even considering other expenses. Meanwhile, the profit margins in agribusiness hover around 2% to 3%, highlighting the challenge of sustaining viable operations amid rising costs.
Shifting Crop Dynamics and Consumer Demand
Ed explores the growing consumer demand for avocados, noting a significant increase in per capita consumption from 2 pounds in 2000 to over 9 pounds currently in the United States, compared to 25 pounds in Mexico. This demand influences crop choices, impacting what farmers are willing to plant, and emphasizes the necessity for agricultural producers to have a background in economic forecasting.
Regulations and Industry Challenges
The complexity of compliance is a significant focus, with Ed noting that regulatory costs can exceed 13% of gross revenue in agriculture. Regulations intended for sustainable farming can lead to loss of cultivable land—up to 8% of viable agricultural land in Ventura County might be affected by new environmental mandates.
Future of Family Farms and Local Agriculture
Ed is concerned about the future of local agriculture, fearing the potential loss of family-run farms to larger corporate and private equity interests. This is a common theme, with less than 1% of the U.S. population now engaged in farming, placing pressure on these small businesses to adapt or perish.
Conclusion
The conversation provides critical insights into the rapidly changing agricultural landscape in Ventura County, illustrating how economic pressures, regulatory challenges, and shifting consumer demands are reshaping the future of farming. As Ed shares his knowledge, it becomes clear that understanding these dynamics is essential for anyone involved in or supporting the agricultural community.
