California's Organic Agriculture

by Laura Tourte and Karen Klonsky, Department of Agricultural and Resource Economics

The size and growth of organic farming has stimulated considerable discussion and speculation. Farmers, agribusinesses, policy-makers, public interest groups, educators, researchers, and investors all need reliable information on organic agriculture to make informed decisions about business strategies, teaching and research agendas, and institutional policies. Statistical analyses of organic farming contribute crucial information for these decisions.

This article contains information from the Agricultural Issues Center (AIC) Issues Brief Number 6, May 1998 (also available on the web at http://aic.ucdavis.edu) on organic agriculture in California. The brief draws on a larger report entitled Statistical Review of California's Organic Agriculture 1992-1995, prepared in collaboration with the California Department of Food and Agriculture (CDFA) Organic Program.

The report is based on information reported to CDFA as required by the California Organic Foods Act (COFA) of 1990. Industry trends, including patterns of entry and exit from the CDFA Organic Program, are also discussed in the Statistical Review of California's Organic Agriculture 1992-1995 report, as are some potential impacts of proposed federal regulations for organic agriculture. Highlights of the study include:

The number of registered organic farms increased from 1,157 to 1,372, for a total gain of 19 percent.

Registered organic crop production acreage increased from 42,302 to 45,070, reflecting a more modest gain of 7 percent. These figures exclude land that was double or multiple cropped, fallow land, land utilized for livestock production, (such as range and pasture), and land utilized for farm buildings, houses and roads.

Table 1. Registered Organic Agriculture As Reported to CDFA, 1992-95

Value of production for registered growers went up from $75.4 million in the first year to $95.1 million in the third year, posting an overall gain of 26 percent.

In contrast to these increases, during the same three years, the number of registered growers who were also certified declined 2 percent, from 527 to 517. However, certified acreage increased 7 percent, from 34,679 to 37,110, and certified gross sales increased 30 percent, from $65.9 million to $85.6 million. Some concentration in the certified sector was evident, as fewer growers farmed more acres. Although certified organic farms represented less than half of all registered organic farms, they accounted for more than 80 percent of the registered acreage and about 90 percent of the value of production.

Organic Commodities

Every major farm commodity group is represented in the data - more than 70 individual commodities in each year. However, the relative importance of commodity groups to total sales value within the organic industry differs from the state's agriculture as a whole. Most notably, vegetable crops are much more important to organic sector sales than to total agricultural sales in the state (57 percent vs. 23 percent in 1994-95). At the other extreme, field crops, livestock, poultry and related products generated only 4 percent of organic sales, but more than 40 percent of total farm value.

Looking only at crop production (excluding livestock, poultry, and related products) in 1994-95, 1,363 registered organic farms in the state reported almost $95 million in sales from almost 45,000 acres. This accounted for less than 1 percent of the total value of crop production in the state. However, organic production generally has exceeded the state's rate of yearly increase in total agricultural value.

Vegetable crops and fruit and nut crops are the commodity groups of most consequence for organic agriculture in California. These industries have the largest number of farms, the largest acreage, and by far the largest gross revenues. During the three-year period, they generated 95 percent of the total value of organic production from approximately 80 percent of the state's registered acreage.

Vegetable crops were the single most valuable organic commodity group, accounting for at least half of the state's gross sales from approximately one-third of the registered acreage each year. During 1992-95, vegetable crops posted only a 4 percent increase in the number of producing acres, but a 46 percent increase in total sales - suggesting a shift in products grown, considerable gains in production or marketing efficiency, and/or increased consumer demand. In comparison, fruit and nut crops received about one-third of the state's total organic acreage. During 1992-95, fruit and nut crops recorded a 7 percent increase in acreage, but an 8 percent decline in overall value of production.

Field crops, though of considerably less value to California's organic industry than vegetables or fruit and nut crops, nonetheless recorded a 28 percent increase in sales during 1992-95.

Vegetable crops predominated in the Central Coast/Bay Area, the San Joaquin Valley and the South Coast regions. Fruit and nut crops were particularly important in the San Joaquin Valley and North Coast regions, and field crops in the Sacramento Valley.

Geographical Distribution of Acres

During 1992-95, the San Joaquin Valley accounted for the largest number of registered organic acres, with about one-third of the state total. The Sacramento Valley was second, with approximately one-fourth of the total acreage, followed by the Central Coast/Bay Area region, with roughly one-sixth of the total.

During the three year period:

The San Joaquin Valley recorded a 12 percent decline in revenue from the first to the third year of registration, dropping to $23.6 million in 1994-95, with a 3 percent decline in acreage, but roughly the same number of growers.

The Central Coast/Bay Area region showed more than 69 percent growth in revenue, moving from $17.8 million to $30 million. At the same time, total acreage increased 11 percent, with grower numbers increasing by 5 percent.

In the Sacramento Valley, the value of production increased by 28 percent, climbing from $6.8 million to $8.7 million, while acreage declined by 4 percent. The total number of growers stayed essentially the same.

In the South Coast, the number of growers and total acreage grew by 43 percent and 42 percent, with a corresponding 29 percent increase in total revenue. Sales were $13.8 million in 1994-95.

During the three years of analysis, all regions except the San Joaquin Valley demonstrated considerable growth in gross revenues. Nevertheless, that region, with the second highest total revenue in 1994-95 and the largest organic acreage, clearly remained a major contributor to the state's total organic sales and to overall organic agriculture.

Farm Sizes And Sales

During the three years of analysis, average acres per registered organic farm decreased by 10 percent, while sales per acre went up 18 percent - resulting in an average increase of sales per farm of 6 percent.

The Central Coast/Bay Area and San Joaquin Valley were the two regions that captured the highest revenues in all three years. Combined they accounted for more than half of the state's total sales value.

In 1994-95, average sales per farm were $220,800 for the San Joaquin Valley and $148,365 in the Central Coast/Bay Area.

In all three years, more than half of the value of registered organic production was claimed by 2 percent of growers who grossed more than $500,000 each. At the other end of the spectrum, growers grossing $10,000 or less comprised two-thirds of all growers and only 5 percent of sales. The top revenue-generators were all certified, while those with the lowest sales frequently were not. This indicates that certification may be an important marketing tool for full time growers with large sales volumes and little direct contact with customers, and less important for part-time growers or those selling their product through direct marketing channels. It also may indicate that certification procedures and fees are a barrier for growers with low farm sales.

Although registered organic agriculture accounted for less than 1 percent of the total value of crop production in the state in all three years, production generally has exceeded the state's rate of yearly increase in total agricultural value. The expanding market for California's organic production suggests considerable gains in production and marketing efficiency, enhanced consumer demand, or both.

The registration data for the first three years of the organic program in California reveal considerable growth in terms of number of farms, acreage, and farmgate sales. Farmer exit and entry patterns indicate substantial turnover in the organic sector, although it continues to grow. (In fact, CDFA estimates the current (1998) number of growers and handlers at 2,300, impressively higher than the 1994-95 number of 1,561.)

Implementation of the federal law, which will require certification of commodities marketed as organic, will undoubtedly serve as another catalyst for change. The evolution of the organic sector has broad implications for such nationwide issues as food safety, viability of rural communities, resource conservation, and environmental quality.

To order the Statistical Review of California's Organic Agriculture 1992-95 for $18, contact the Agricultural Issues Center, University of California, One Shields Ave., Davis, CA 95616; (530) 752-2320; fax (530) 752-5451.

For additional information about the study, contact Laura Tourte, Department of Agricultural and Resource Economics, (530) 752-9376, or e-mail her at ljtourte@ucdavis.edu.