At its monthly meeting today, the California State Board of Food and Agriculture heard a cautiously optimistic appraisal of agriculture’s future through 2050 from economist Dr. Daniel Sumner, director of the Agricultural Issues Center at UC Davis. Dr. Sumner believes that net farm income will continue to grow, even though it may experience ups and downs, and that growth specifics will hinge on the management of five key cost factors:
Labor: Because of the relatively high cost of labor in California, there is a crucial need for innovation to offset that disadvantage. Fruit and vegetable commodities that remain highly labor intensive will face challenges, although guest workers and innovation may provide some relief. Commodities that can cost-effectively manage labor intensity will be more competitive.
Water: Drought, climate change and groundwater regulation are likely to mean a decrease in water available for irrigation. By 2050 effective regulations may minimize the loss of agricultural productivity and lead to a more economically sustainable water system with moderate investment in infrastructure to store and move water. Regulatory change must include innovative policy and rules to secure property rights, and markets to allow for water transfers and groundwater recharge.
Climate Change: The changing climate is likely to drive changes in crop production, especially shifting locations and planting crops or varieties better suited to new climate conditions. We may also expect shifts in locations of crops globally by 2050, so California farms may face new competition for some traditional crops and may switch to crops that had been grown previously in warmer areas. We can also expect different pest pressures. Nonetheless, no unmanageable changes seem to be likely by 2050, given the close attention of researchers and growers.
Regulations: California regulations raise costs of agricultural production in California relative to some competitors, especially competitors in the rest of the United States and in developing countries. California agriculture may mitigate some costs of regulations, in areas like technology or land prices that fall below where they would otherwise be to accommodate higher production costs.
Research and Development: Globally, farm productivity is increasingly reliant on private-sector R&D, but the role of public research and extension remains vital in many situations. California has a long history of having the world’s top public agricultural research enterprise, which has delivered tangible benefits to California producers and consumers. Given the challenges ahead, including challenges to adapt to climate change and regulations, renewed investment seems vital, but the prognosis is uncertain at best. This may mean that more of the R&D effort will shift to private funding and industries unwilling to support such effort will fall behind. The good news is that California is well suited to embrace food and farm trends and anticipate complex customer demands.
Dr. Sumner states that these five factors will affect all industries and regions to varying degrees and will drive the supply side of California agricultural adjustments between now and 2050, and he believes that overall demand for California Ag products will remain strong as long as income growth continues and consumers continue to make specific choices based on diet and on-farm practices.