The California Institute for the Study of Specialty Crops has published a new study which details the continuing explosion of regulatory costs on California agriculture and specifically citrus. Since a 2006 study by the Institute an additional $12.4 million in regulatory impacts have been shouldered by citrus producers throughout California.
“Even after giving credit for the reduction in workman’s comp expenses, growers have had a net increase of $46 per acre in the past two years,” notes CCM President Joel Nelsen. The vast majority of increases have occurred because of new mandates within education/training, capital investment imposed as result of environmental edicts, and regulations that have changed operational procedures according to the study.
Study authors Jay Noel, director of the Institute and agribusiness professor at Cal Poly San Luis Obispo; and Mechel Paggi, Fresno State University; were assisted by Fumiko Yamazaki, senior research economist at the Center for Agricultural business at Cal State University Fresno.
“What government giveth they taketh away, obviously,” notes Nelsen. “That’s $12 million plus, not counting the cost of living and farming increases that all of society is attempting to absorb.” The study speaks to eight regulatory compliance costs and incorporates them into farming costs. Another aspect of the study details the impact on a grower’s profit and loss statement. The study is available on the Citrus Mutual Web site at www.cacitrusmutual.com.
“Government agencies, operating independently, are adversely affecting the ability of the family farmer in our industry to produce a nutritious piece of California citrus,” Nelsen continues, “let alone stay in business. Our regulatory costs, according to the Institute have reached $400 per acre. With 270,000 acres now in production, state government sucks an estimated $108 million from our industry to feed the bureaucracy.”
Previous studies by the International Trade Commission clearly indicate that passing on these cost increases is almost impossible because of less expensive foreign products now available. “Two years ago our aggregate regulatory costs exceeded our competition in Texas by $85 million. I wonder what it is now,” Nelsen concludes.