No one ever said citrus farming was easy, and in California, it will be increasingly difficult.
A recent report issued by Bruce Babcock, a professor at the School of Public Policy at the University of California, Riverside, quantifies the impact of regulations on production costs and competitiveness of the California citrus industry.
According to the report, California was the least business friendly state ranking 50 out of 50 for small farmers and small business due to high taxes on gasoline and income, and higher costs for electricity and labor, the latter seeing significant increases in the state minimum wage and the elimination of overtime exemptions. Funded by the Visalia-based Citrus Research Board, the study focuses on costs the industry is set to face over the next few years as new labor, food safety, and environmental regulations are phased in.
The total future increase is expected to be $701/acre or $203 million statewide. This represents about 6% of the total value of citrus produced in California. The biggest piece of that increase will come in labor costs. New labor requirements will increase costs by $112 million or $357/acre once minimum wage increases to $15 per hour in 2023.
“Because growing citrus is more labor-intensive than some other tree crops, future labor cost increases will likely lead to some substitution away from citrus towards other crops,” wrote Babcock, a Fellow of the Agricultural and Applied Economics Association.