California farm revenues up, but so are expenses

California agriculture showed increased farm revenue in 2010 but also paid more in expenses, two government reports show.  Last year, California garnered a record $37.5 billion in receipts from its 81,700 farms and ranches, a nine percent increase over 2009 income levels, reports the National Agricultural Statistics Service and Economic Research Center (NASS).

 

Several staple items buoyed farm earnings for the Golden State including dairy products, whose producers increased their revenue 31 percent year-over-year to earn almost $6 billion in 2010, and pistachios, which increased their receipts an impressive 95 percent – from $570 million in 2009 to $1.16 billion in 2010.

 

In a first for the state, three nut crops topped $1 billion in revenue last year. Walnuts, pistachios and almonds all set production records in 2010. Almonds remained California’s top tree nut crop, earning an estimated $2.8 billion for producers last year. According to the report, 11 agricultural products topped the $1 billion earnings mark for the year (another first).

 

Farm expenditures also increased in 2010 (PDF) but not as much as earnings, a separate NASS report shows. Total farm production expenses for the year ran $30.3 billion, a 2.8 percent increase from 2009. Of important note is that the per capita expenditures of California farms in 2010 was a staggering $371,000 per operation, continuing a sharp upward trend.

 

A breakdown of expenditures in the NASS expense report shows that California growers allocated most of their money to farm labor, at an average of $99,000 per farm. The next highest expense for producers was farm services, a category denoting a wide range of activities such as transportation, marketing, machinery leasing and insurance costs. These costs amounted to just over $70,000 per farm. The average California farmer dished out over $54,000 worth of feed for livestock in 2010, making it the third highest expense.

 

Rising fuel, labor and regulation costs are to blame for tighter farm profit margins over the past six years, industry insiders say. The NASS data also dispels any confusion as to why animal agribusinesses, who spend as much as 60 percent of their budget on feed grains, continue to push for ethanol subsidy reforms to keep down corn prices.

 

The NASS statistics also show a rise in production expenses nationally that is consistent with California. U.S. farm expenses increased some $1.6 billion from 2009 to reach $289 billion for the year. Feed costs represented the largest expense item for American farmers in 2010, taking up an average of 15.7 percent of farmers’ budgets.