THE UC/AIC QUARTERLY

THE NEWSLETTER OF THE UC AGRICULTURAL ISSUES CENTER
VOLUME 12. NO. 3. 1998

Director’s Message
by Daniel A. Sumner

Agriculture is used to variable production and market conditions. This reality has been particularly evident this year with El Nino, the Asian financial crisis, and variability in financial markets with its implications for the U.S. economy, as well as the related drop in many commodity prices.
These issues are each important and AIC has programs of work related to each. For example, at our Winegrape Outlook Workshop this summer one focus was on the importance of continuing income strength in the United States to create demand for the new winegrape production that will soon be forthcoming. The Asian financial crisis is of particular concern because such a high proportion of California farm exports goes to Asia. AIC has recently developed data to document more accurately the magnitude and distribution of these exports. This fall we will prepare an Issues Brief and other material presenting detailed analysis of just how economic troubles in Asia affect the California agricultural economy and its prospects.
Our forthcoming seminar on risk management will consider how growers and agricultural business may deal more effectively with variability in markets and other factors of uncertainty affecting agriculture. That seminar will deal not only with production, markets and financial risks, but also with labor, environmental, water, and farm and family business considerations. This December our annual Executive Seminar will focus on “Risks and Opportunities for California Agriculture” to emphasize that change may have both upside and downside aspects.
Not all variation means risk; risk relates to variability that is not fully anticipated. Further, the costs associated with variability depend on the degree to which one anticipates and plans ahead. Thus, a sound strategy for dealing with variability is to improve one’s information and knowledge. That is the role of AIC. Our goal is to help California agriculture take advantage of the upside and prepare for the downside. We think this is useful for agriculture and important for California as a whole.

Exotic Pest and Disease Policy Study: An Update

The AIC Exotic Pest and Disease Policy study is designed to strengthen the scientific basis for public policy decisions. We have the involvement of crucial UC faculty and staff assured, with active participation from government, industry and others.
Research will be centered around broad unifying principles and on case studies selected for their diversity of biological and social effects, control methods and policy issues. These multidisciplinary research teams include collaborators from academia, government and industry.
The case studies and team leaders are:

  • soilborne nematodes-Howard Ferris, UCDavis
  • Mediterranean fruit fly-Jim Carey, UCDavis, together with Jerry Siebert, UCBerkeley, and Joe Morse, UCRiverside
  • recent thrips and mites affecting avocados-Mark Hoddle, UCRiverside
  • ash white fly-Tim Paine, UCRiverside
  • red imported fire ant-John Klotz, UCRiverside
  • yellow star thistle-Joe DiTomaso, UCDavis
  • weed issues in general-Marcel Rejmanek, UCDavis
  • citrus canker-Ed Civerolo, USDA and UCDavis;
  • rice blast-Bob Webster, UCDavis
  • diseases affecting greenhouse and container grown plants-Jim MacDonald, UCDavis
  • foot and mouth disease-David Hird and Lovell Jarvis, UCDavis
  • bovine spongiform encephalopathy (BSE)-Alex Ardans, UCDavis
  • exotic Newcastle disease-Patricia Wakenell, UCDavis.

In addition, Deborah Golino, with Dan Sumner, will head a team looking at international trade rules.
Participanting economists include Jerry Siebert, David Zilberman and David Sunding from UCBerkeley; Lovell Jarvis, Karen Klonsky, Hyunok Lee, Jung-Sup Choi (a Fullbright scholar from Korea) from UCDavis; Keith Knapp from UCRiverside; and from AIC, Dan Sumner, Karen Jetter (a post doc for this project) and JooHo Song (an international policy fellow jointly with CDFA).
California Department of Food and Agriculture and the USDA Animal and Plant Health Inspection Service have committed resources to the project. In addition, CDFA, USDA and a number of private sector scientists and economists have volunteered to participate on the research teams and provide their expertise. Marcia Kreith, the project coordinator, is keeping the project on track and on schedule (530-752-8670; mtkreith@ucdavis.edu).

New Export Statistics Reported by AIC by Heather Benson, David Hart and Nick Kuminoff

The Agricultural Issues Center, in conjunction with the California Department of Food and Agriculture, recently reported new and more accurate export statistics for California agriculture during 1995-97. These statistics help fill a data void; previous efforts to quantify agricultural exports by state have had well known deficiencies. The Center-designed system synthesizes USDA data, California port data, Canadian import data and information from industry sources to provide the most accurate estimate of California agricultural exports available.
California agricultural exports were nearly $7 billion in 1997, a $500 million (8 percent) increase from 1995. Cotton and almonds top the list of commodity exports in all three years. Wine contributed $165 million to the export value growth, with an 80 percent increase over the three-year period. The ten highest value export products (cotton, almonds, wine, fresh grapes, oranges, cattle products, processed tomatoes, dairy products, raisins and walnuts) constitute more than half of the total agricultural export value.
The chart below shows 1997 exports by commodity group. East Asia and other Pacific Rim countries receive the bulk of California agricultural exports, with Japan and Canada the two largest destinations. Japan imported more than $1.3 billion of California agricultural products in 1997-a diverse list of cotton, fruits, nuts, vegetables and animal products. California agricultural exports to Canada, totaling nearly $1 billion, were almost exclusively fruits, nuts and vegetables. Asian countries comprise six of the top 10 export markets, with cotton, dairy products and table grapes the leading products shipped to those markets. European countries import processed horticultural products such as wine, nuts and dried fruits from California.
AIC also used export data to develop estimates of the farm value of exports, comparing exports to the value produced for each major commodity. For example, more than 80 percent of California cotton and more than half of California almonds are exported. For animal products such as dairy, beef, chicken, eggs and turkey, less than 10 percent of California production is exported. The export share for most fruits and vegetables falls between 15 and 35 percent.
A more detailed account of the results, their implications and their limitations will be the subject of an upcoming AIC Issues Brief, and will be posted on the AIC web page, http://aic.ucdavis.edu.

On The Web

The World Wide Web is now a main attraction of the information age. Without the Web, the newly opened cyberspace would be populated only by technology experts and researchers. AIC’s website, opened in 1996, is now a standard part of our public presence.
In order to find out more about the use of information sources on the Internet, AIC circulated a questionnaire earlier this year and received more than 250 completed responses from those on our address list. We thank those of you who supplied these data. They have been informative and useful.
We asked about computer technology, experience with computers and Internet applications, and about how and why the Web is used. The responses provide information on the adoption and diffusion of Internet applications, and will help AIC and others design improved Web sites of more use to patrons.
Survey respondents are well-educated leaders holding responsible positions in all sections of California agriculture. The majority of our respondents (43%) are between 46 and 55 years old, most (53%) attended graduate school, and most (54%) have executive responsibility in their organizations. Educational institutions are best represented (29%), followed by government agencies (19%). Farming enterprises, agribusiness and public affairs organizations are equally represented, each accounting for 16% of the total. Most respondents work in relatively large organizations.
A small set of questions probed the computer literacy of our respondents. This turned out not to be an issue as 96% of the respondents use computers regularly at work and a similarly large proportion has used computers for more than two years. Nearly all use their computers for writing (97%) and for sending email (93%). Spreadsheets and databanks are also widely adopted by these leaders in agriculture: 77% of our respondents employ spreadsheets and 69% use databanks.
AIC’s clientele is well wired; 71% are networked and almost all respondents (94%) can connect their PCs to the Internet, many (41%) by means of a fast (> 28.8 Kbs) modem. Only 4% have never used the Web at work and 71% have used the Web for more than one year. Popular uses of the Web are to retrieve reference material and research reports. Accessing newsgroups, information about commercial services, financial information, or finding addresses are infrequent uses.
The most frequently listed causes for frustration when visiting Web sites are having to wait for a slow page to view or download, followed by broken links, and not being able to find the information one is looking for. Other causes of frustration, such a losing one’s orientation on the Web or having difficulty navigating a site, are not as frequent.
Our respondents also assessed AIC’s own Web site, which many had visited for the first time only recently. Using the information obtained from this survey we are now in a much better position to accommodate the feedback we received and design a site that is more informative, quick to access and navigate, and pleasant to visit. The new AIC website at http://aic.ucdavis.edu will be up and running soon. Look there for a complete review of the responses to the AIC Web Survey.

Upcoming Events

Note the fliers for the Agricultural Risk Management Conference on October 21 and the Executive Seminar on Agricultural Issues on December 8 (both in Sacramento) which are enclosed with this AIC newsletter. For more information, phone 530-752-2320 or email agissues@ucdavis.edu.

Winegrape Outlook Workshop Wrap-up

AIC’s first Winegrape Outlook Workshop, held in Sacramento on July 24, drew over 160 growers, vintners, and associated industry personnel. All aspects of the industry were represented, from growers, wineries, concentrate buyers and nursery operators to financial institutions and grower organizations. John Kautz, the luncheon speaker, provided a personal historical perspective on changes in the industry. AIC Director Daniel Sumner moderated the workshop.
The main focus was on the economic outlook during 1998-2000 for the popular varietals: cabernet, merlot, zinfandel, chardonnay and sauvignon blanc. Speakers discussed recent trends and the near future for prices and acreage. Barry Bedwell, President, Allied Grape Growers, presented his recent analysis of statewide plantings and their implications for acreage and crush levels. Dale Heien, Professor of Agricultural and Resource Economics at University of California, Davis, gave price forecasts based on acreage estimates by Bedwell. Their results indicated that oversupply and hence the possibility of lower prices is more concentrated in the southern San Joaquin Valley and in varietals such as merlot and chardonnay. Vaughn Koligian, CEO of the Raisin Bargaining Association, concluded the morning session with an overview of the raisin industry.
The afternoon session featured George Schofield (George Schofield Company), Eric Sims (Motto, Kryla, & Fisher), Robert Smiley (Dean, Graduate School of Management at UCDavis), and Bill Turrentine (Turrentine Wine Brokerage). Their discussion centered on the demand for wine at the bulk and retail levels. The broad conclusion of this session was that the demand for wine remains both robust and highly correlated with the performance of the national economy.
One of the most impressive characteristics of the Workshop was the vigorous and thoughtful discussion in each session. Based on the success this year, AIC plans to make this outlook workshop an annual affair. Watch for our announcement for WOW II in coming issues.