Urban Water InstituteAnnual Water Policy Conference

Ken Melban Director of Issues ManagementCalifornia Avocado Commission

Hilton Mission Bay ResortAugust 24, 2012

California Avocado Commission

Role• California Avocado Commission is a non-profit, public agency that provides marketing and promotional support for the industry's 5,000+ growers• The Commission also provides advocacy and support on issues involving labor, water, production, trade, pest protection, environmental stewardship, and food safety

Mission • To maximize grower returns by maintaining premium brand positioning for California Avocados and improving grower sustainability

Commission Structure• 29 member Board of Directors

­ 20 growers, 8 packers, 1 public member

• 13 member staff

• Headquarters located in Irvine, CA

• Includes a Southern California Agricultural Water Team to assist farmers in addressing issues impacting the cost, availability and regulation of agricultural water

History of Ag in Southern California

• Agriculture has been part of the southern California’s identity since the beginning

• Objective of Ag water sales - shed demand before urban rationing while generating additional revenue

• Ag imported water supply programs w/MWD since 1958

Southern California Ag Today

• Agriculture and related businesses contribute $40B to southern California economy

• San Diego, Riverside, & Ventura counties ranked among top 10 Ag counties in CA*

• Average value of farm products sold per acre in southern California exceeds almost all other regions nationwide

• Ag generates about 450K jobs

* Based on the market value of Ag products sold

Top Ag Commodities in Southern Cal.

Southern California avocados are a $373 million a year crop (2010)

0 100 200 300 400 500 600 700 800 900 1,000

Strawberries

Woody ornamentals

Lettuce

Milk

Avocados

Cattle

Lemons

Foliage plants

Bedding plants

Celery

Cut flowers

Broccoli

Million Dollars ($1,000,000)

Profile of California Avocado Industry

• Season: March – September

• Planted acres by variety: ­ 59,341 Hass-like ­ 1,835 Non-Hass

• Average grove size: 10-20 acres• A mature orchard of approximately 110 trees

per acre, can produce as much as 22,000 pounds per acre per year

• Modern orchard may have more than double the number of trees per acre, but absolute irrigation needs remain essentially the same, approximately four acre-feet per acre per year, regardless of tree planting density.

California Avocado Production Areas

• 95% of growers are located within 20 miles of the southern California coast and are responsible for more than 90% of all domestic avocado production

•Approximately 70% of California avocado production within the MWD service area

U.S. Market OverviewPer Capita Consumption

•In the U.S. fresh fruit market, domestic per capita consumption of avocados increased an average 10 percent annually from 1999-2009, the second-fastest growth rate after blueberries*

•Total consumption has also increased substantially. In 1980 total consumption was 479 million pounds. In 2009, that increased to 1.27 billion pounds.•As of 1980, total per capita consumption was 2.08 pounds. In 2009, that increased to 4.10 pounds per capita*

* USDA Economic Research Service

U.S. Market OverviewTotal Aggregate Supply

* 2011 Data not yet final

Volu

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Challenges/Opportunities• Water Pricing and Quality

• Food Safety • Labor Availability and Cost

• Industry Modernization – High density plantings– Managed tree height– Salt-tolerant varieties

• Environmental Benefits– Cap and Trade/Carbon Credits

Breakdown of Avocado Production Costs

• Affordable/Reliable/Quality Water is Critical to a Healthy Ag Economy

Comparison of Ag Water Rates

• Agriculture Is Faced With Crushing Rate Increases

- 222% in 20 years

Agency $/Acre-foot

MWD IAWP UNTREATED (2012) $537

MWD TIER 1 UNTREATED (2013) $593

Valley Center Ag Rate $1,170

Coachella Valley Water District $29

El Dorado Irrigation District $43

Imperial Irrigation District $20

Semitropic Water Storage District

$80

Case Study - Valley Center Water District

• Drop in overall water sales of 42%

• Ag water sales have dropped by 45%

• Productive avocado acreage dropped by 25 percent between 2005 - 2009

• 667 square acres of dead or dying avocado trees in abandoned groves were declared a fire hazard

• 21% drop in Ag water meters

• Layoffs for 12% of staff

Water Quality Challenges • Water Quality degradation of imported

supplies is damaging production• Sufficient SWP supplies are crucial to

meeting MWD blend target

Alternative Supply Cost Comparison

• Eyes wide open

Final Thoughts

• Great deal of interest in a Delta fix

• Number of issues to work through

• Final capacity could have significant cost and reliability impacts

• Delta Fix has great potential to address Ag’s long-term needs

• Ag affordability needs to be considered

Future of Ag• Ag Water Survey

Question:“Should regional water

agencies continue to allow farms and other agricultural producers to purchase surplus water at a lower rate, with the understanding that agricultural users participating in this program will be the first to reduce their water usage in shortage conditions?”

19% Oppose, Probably Oppose

Thank-you