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Good News!-Bad News!

It's about to get a lot tougher to farm in California.

Dec 12, 2019

It's always nice to see some good news when it comes to farming in California and the Central Valley.  According to the Fresno Bee, the recent signing of a proposed trade agreement between the U.S., Mexico and Canada will mean “significant long-term economic benefits” for farmers in Fresno County and the San Joaquin Valley."  This is one of the few things Democrats and Republicans in Washington D.C. can agree on as "both the White House and Democratic leaders said the new agreement is a significant improvement over NAFTA in how trade occurs between the three countries."

Vice President Mike Pence said he and the White House believe "USMCA will add 176,000 jobs in the U.S. And, “according to conservative estimates, American exports to Canada will increase by $19 billion, and exports to Mexico are going to increase by $14 billion.”  That's good news.

But,along with the good news there's also bad news.  The bad news is the Sustainable Groundwater Management Act (SGMA) which was discussed recently at the 38th annual Agribusiness Management Conference at Fresno State University.  In an article recently published in Ag Alert they cite Moderator Laura Ramos, manager with the California Water Institute at Fresno State who talked of the "likelihood that as much as a fifth of the 5-million acres of farmland in the Central San Joaquin Valley could be taken out of production because of SGMA constraints."  In case your math isn't too good, that's a million acres.  

So, while it's nice to see good news on the trade front, the obstacles put in front of farmers by the SGMA will make it difficult for farmers to produce the products to export.  Not many businesses get hit with a 20% penalty by the state to begin a new year.  

And, it's not just the water.  Remember, water is money.  Land without water doesn't have the value.  Banks are paying attention.  According to Ken Ramos, executive vice president with Central Valley Community Bank, "banks consider where a farming operation is located and its access to water.  Is there surface water as well as well water?  And what is the cost of water?  Those question affect land values and some banks, concerned about SGMA's impact on land values, are shying away from long-term loans."

The conclusion according to Gregory Kelly, former president and chief executive officer for the California Olive Ranch, "is that smaller operations will have "a hard time connecting the all the dots on soil analysis, leaf tissue analysis, water quality analysis."  So, the bigger operations will eat up smaller farmers who can't make it in the new world of SGMA.  

Farming is about to become a lot more regulated, a lot more bureaucratic, with a lot more paperwork.  It's about to get a lot tougher to farm in California.  

Panel discusses farm impact of state groundwater law

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