Industry clusters

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Industry clusters

• Planning Issues in Ag
• Lecture 3

2
Industry clusters continued

• A cluster is a geographically proximate group of
  interconnected companies and associated
  institutions in a particular field, linked by
  commonalities and complementary programs.

3
Industry clusters continued

• Dependent on each other (add value from raw
  products and then send to other places to attract
  money to area)
• Attracts jobs/wealth and gives identity
• Production to Processing to distribution
• Business building with other businesses drives
  local economy
• Adds value to production
• Clusters will increase employment
• Clusters are geographically concentrated and
  connected

4
California Ag Summary

• San Joaquin Valley 8 counties (most productive
  ag in state and nation)
• Experiencing change in population (1970 growth
  accelerated)
• -diversity
• -impact on major industry( production and
  economic)
• Gross farm income in 2006 31.4 billion (1/2 of
  CA income)
• Farm income in US - of California in nation is
  13

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Since 1948 leading counties have changed

• Not LA anymore
• Fresno 4.8 billion
• Tulare 3.9 billion
• Kern 3.5 billion
• Merced 2.3 billion
• Stanislaus 2.1 billion
• San Joaquin 1.7 billion
• 6 counties in SJ are in top 10 only Kings and
  Madera are missing

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All private land in California

• 1/3 of state private land linked to Ag
• 27 million acres in Agriculture in 2000
• 1950 Ag land 37 million
• Amount of acres declined in Agwhy?
• Ag itself fewer farmers
• Consolidation farms have decreased, but size
  has increased

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Farmland Preservation will not stop growth nor
stop decline in land.

• What kinds of choices do we need to make?
• Which Ag land is more or less important?
• Which types of development should be encouraged?
• Questions debated throughout this course

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Agricultural Land

• 2/3 rangeland w/ pastures for cattle / other
  livestock
• 1/3 cropland (9 million acres) 20 in SJ Valley
• Different types of soil, water key to quality of
  land and
• Types of crops that are grown

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Specialty Crops Commercially Produced Only in
California (99 or more of total U.S.
production)

• Almonds
• Artichokes
• Clingstone Peaches
• Figs
• Ladino Clover seed
• Olives
• Persimmons
• Plums, Dried (Prunes)
• Raisins
• Sweet Rice
• Walnuts SourceCDFA Resource Directory 2002

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CA productivity

• Not all consumed in state or nation
• Most exported (2000) 6.6 billion Ag product
  exported
• CA export (1 exporter in nation)
• 6 significant Ag exporter in the world

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Exports
European Union Canada Japan China/Hong
Kong Mexico South Korea Taiwan India Australia Uni
ted Arab Emirates

• Almonds
• Wine
• Cotton
• Table grapes
• Walnuts
• Oranges

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CA 1 state in personal income

• 7 ½ of all jobs linked directly/indirectly to
  agriculture
• 6 ½ personal income (all income household)
• wages, profits, rent, interest
• Valley
• 30 jobs linked directly/indirectly to
  agriculture
• 20 personal income related to agriculture

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Jobs Linkeddirectlyindirectly

• Indirectly clusters of related industry
• Directly - Production of food fiber
• Creates/generates
• Economic activityemployment, income, sales,
  sales tax
• Agricultural ripple effect can be good (
  increased income for farmers, businesses etc)
• Or it can be bad (reduced income, employment,
  businesses go under)
• All are related to each other especially in the
  valley

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Employment Multipliers for the San Joaquin
Valley 1996

• Industry Employment multiplier
• Agriculture 1.50
• Mining/construction 1.99
• Food Processing 3.88
• Other manufacturers 2.44
• Transportation/public utilities 2.58
• Wholesale trade 1.77
• Retail trade 1.30
• Fire 2.03
• Services 1.58
• Government 1.37

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Share of total industry output
Focus on Ag Valley 13 CA 3 Exporting
(leaving region) Ag and food processing is the
highest
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Farm wage and salary employment growth in 1983
2000

• Importance 2000 1983
• Valley higher 17.5 20.
• Than CA 2.7 3.4
• 1 out of 5 jobs in CA is Agriculturally related
• Most people think that agriculture is considered
  open space instead of business.

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Where does the information come from?

• Every 5 years there is an ag census
• It measures of acres, change in of farms,
  decrease in amount of land, decrease in of
  farms, of family farms
• Currently finishing the 2007 Censusshould be
  available soon

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Structure of Ag is changing (3 points)

• Populationfewer people involved in production
  agriculture, more people involved in services
  that provide for agricultures needs
• Importance of Ag clustersrelated businesses
  depending on each others prosperity
• Changing structurallyless farms, larger
  farmsvertical integrationdirect marketing

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Factors in Agriculture Changing

• Technology - yields are higher, but not net
  yields ?
• Vertical integration
• Foreign competition
• Regulatory costs
• Consolidation may be the key, but family farms
  may suffer

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Cause and Effect

• In recession ( ¼ of farmers bankrupt)
• Purpose of public policy is to pressure Ag or an
  individual

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• NowConsider the effects of Planning on
  individual property rights
• Next lecture