AGRICULTURE: Revenue rose in 2008,
amid higher costs for water, fuel ~
But water, fuel costs leave profitability in question
NORTH COUNTY TIMES - Chris Bagley | August 6, 2009

San Diego County's farms brought in $1.55 billion last year, a 1 percent gain from 2007 that nevertheless may have been undercut by rising water costs and a historic spike in fuel costs, the county government reported Thursday.

The Department of Agriculture, Weights and Measures attributed the gain to increased acreage and to higher prices for a handful of farm products. The report showed small increases in revenue across most of the agricultural sector, from livestock to nursery plants and flowers, to vegetables, fruit and nuts.

County Agricultural Commissioner Robert Atkins said the results were somewhat surprising in view of the multiyear drought that has pitted agricultural producers against wildlife. A 2007 court ruling involving the Endangered Species Act and a dwindling fish species in the Sacramento-San Joaquin delta has led to cutbacks in water deliveries to Southern California.

Nurseries appear to be coping by shifting their mix of flower and plant varieties, Atkins said.

"They're selecting for more water-thrifty varieties, and that plays into what people are doing at their houses," Atkins said.

About 10,600 people worked last year in San Diego County's agricultural sector, including the ranching, forestry, fishing and crops industries, according to state payroll data, which don't include cash-only laborers.

The sector accounts for just 1 percent of local jobs and just 0.6 percent of local payroll, but its contribution to the local economy is arguably much greater because agricultural products bring in significant revenue from outside the county.

Flowers and shrubs for use in landscaping and indoor decorations make up about 66 percent of local farm revenue, according to the department's report. They tend to yield more revenue per acre than field crops that are harvested in bulk. San Diego County farms and nurseries took in $4,963 per acre last year, more than in any other county in the nation, according to Atkins's department.

"You've got the expense of water, labor and land," Atkins said. "If you're not growing a high-dollar return, you're not going to farm any more."

Michael Anthony Mellano, who oversees growing at Mellano & Co. in Oceanside, said the nursery industry's profits have become squeezed between penny-pinching customers and the rising cost of water. Growing conditions were reasonably good last year, Mellano said, but some growers were forced to choose between higher water rates and 30 percent cuts in water deliveries.

"The price of water is getting to be extremely high," Mellano said.

Higher wholesale prices may have benefited producers of avocados and eggs, whose production has fallen amid uncertainty about the effects of government policies and water cutbacks.

The average wholesale price for avocados jumped to $1.21 a pound last year from 95 cents in 2007. Avocado revenue rose by 14 percent, to $145 million, even as growers "stumped" tens of thousands of trees.

Stumping, in which growers cut off branches and cover the stubs with a white compound to reduce transpiration, began after the Witch Creek, Guejito and Rice Canyon fires in October 2007 and continued last year as growers assessed the cuts in water deliveries.

Egg ranchers took in $70.8 million last year, up 26 percent from 2007, as the average wholesale price rose to $1 a dozen from 88 cents, according to the department's report. Several egg ranchers in North County's backcountry said they hesitated to build new hen houses while awaiting clarification of a pending state law on the amount of space allotted to each chicken.

August Fluegge, who has more than 150,000 laying hens in Valley Center, said he believes higher egg prices are merely following the rising cost of chicken feed. Egg ranchers' profit is little changed, Fluegge said.