May 25, 2022Effects of drought, inflation top Farm Bureau testimony
Not enough water. Too much money in circulation. Sky-high prices for just about everything – except the price paid to the farmers for their crops.
All of these and more have created an existential crisis in California farm country, according to California Farm Bureau Administrator Jim Houston.
Houston was part of a panel testifying before the Assembly Select Committee on Food Systems on May 18 at the capital in Sacramento. The committee chairman is Assemblyman Marc Levine, D-Greenbrae.
Houston spoke of a Farm Bureau board meeting the day before his testimony, noting that about half of the directors – all of whom are farmers – were in Washington, D.C., at the time.
“They are facing the ruin of their farms – the end of hundreds of years of family farming,” Houston testified. “They are worried about their communities and their employees, because they’re our neighbors. They’re our family. They’re our friends.” Along with everyone else, they’re all facing significantly higher food prices, he added.
Top of mind for Houston was the ongoing drought and its ripple effects on California’s farm economy and, ultimately, the nation’s food supply.
“We have not had any serious water investments in this state for over 30 years, despite funds to make it happen and voter willingness,” he said. “We can’t even repair the infrastructure we have.”
One state senator – Melissa Hurtado, D-Sanger – has sponsored legislation, Senate Bill 559, that seeks funding for repairs to the Friant-Kern Canal and other water infrastructure.
“She still can’t get the desired funds, which is a mere 1% of the discretionary surplus that the state has available to it,” Houston said. “But it was not in the May (budget) Revise. Keep in mind that farmers and communities still pay full freight for their water, whether they get it or not.”
This comes on top of soaring prices for fertilizer ingredients such as ammonia and potash, sulfur for fungicide, diesel fuel and labor, Houston noted.
“To make it all worse, markets are evaporating as the global supply chains become increasingly unavailable,” Houston said.
Almonds set to be harvested later this year will join the 100 million pounds of nuts still awaiting shipment to their buyers, he said. Processing tomatoes – used in soup, salsa, ketchup and tomato paste, among other products – face the opposite problem.
“They are hoping that they can get enough fruit off the vine to fill store shelves come June and July,” Houston said.
“We are 99% of the world’s almond supply,” Houston said. “We are 90% of the United States supply of processing tomatoes, and 60% of the world’s supply. This is a global problem.”
Houston noted that global leaders such as David Malpass of the World Bank have been urging countries around the world to make efforts to boost energy and fertilizer supplies and help farmers boost plantings and yields.
“It will not surprise you to hear that we are not seeing that from either the legislature in California or the administration,” Houston said. “Instead, California’s government is debating the choice whether to use our billions to get farmers and ranchers to grow less by buying up their land and water and paying them to grow less food, or using those billions to buoy the farm economy and support our communities and the millions of people who rely on it.”
Water isn’t the only thing drying up because of the drought, he emphasized. Work is disappearing, too.
“Just last week, 1,500 people were laid off in rice country due to no plantings and no millings,” Houston said. “With no food comes no processing, no value-added (products), no trucks, no ships, no retail sales, and nothing available for food banks. You can give the food banks all the money in the world to buy food, but there needs to be food available to be bought.”
While the past several years have been tough, “this past one was absolutely the worst,” Houston testified. “Inflation is just the last and most predictable result of the policy choices that have put us in the place that we are today.”
While supply-chain issues have been blamed for driving inflation, they’re only a small part of the problem, according to an American Farm Bureau Federation Market Intel report by AFBF Chief Economist Roger Cryan.
“Quite simply, too much money was created by the Federal Reserve Bank (often called “the Fed”), mostly in 2020, and it is turning, inevitably, into inflation,” Cryan wrote. “Thankfully, the Fed has begun taking steps to address this. The market may once again be reassured that it will be controlled, but it will likely take a few years to approach their long-term target of 2% per year.”
Disruptions in the food and fuel markets have exacerbated inflation in recent months, Cryan wrote.
“However, the much larger reasons for current overall inflation, and those that will persist in the coming years, are the unprecedented actions of the Fed since March 2020 and the resulting growth in the money supply, something to which very few people were really paying attention last October,” he added. (The full report can be read at www.fb.org/market-intel/inflation-and-money.)
While dealing with the money supply is up to the federal government, Houston said, there are plenty of options on Sacramento’s table.
“Imagine if we enabled our local communities to invest in water storage, we supported groundwater recharge, we repaired our canals and gave real relief to farmers and ranchers instead of dribbling it out through (nongovernmental) intermediaries.
“We can choose to make relief available to farmers directly and easily,” Houston said. “We can choose to provide a tax credit that will help employers afford overtime and get employees more money. We can choose to support more dams, storage, conveyance, on-farm ponds, water recycling, groundwater recharge and shoring up our water-right system instead of eroding it.”
Supporting farm communities, Houston said, means listening to the people who live and work there.
“We have been here for a hundred years and hope to be here for a hundred more,” Houston said, “but we have to work together, learn from the past, and have the courage to make hard choices now for a better future.”
– Kevin Hecteman, California Farm Bureau Federation