What is up with California?
I am putting together a rough study of the farm land in US compared with the productivity of said farmland. I’d like to have at least 20 of the states complete before I finish my writings that will give me a good sample set. But, one thing I can say right now is all states, with one exception, are losing productivity in our farm land. How so?
I took all produce sold by farmers and divided that by the acres declared to be farm land that year by the Dept of Ag in corresponding years going back to 1974. I then deflated that price by the inflation for each period with respect to 1974 (in other words, making 1974 my base year). In all states and in all periods (so far) the productivity is trending downwards. I’ll talk about what this stat means in my next addition.
But, the exception is California and I was a little shocked to see the initial data. Granted, it only went up 15% since 1974, but the amazing thing is all of that is reflected in the latest three time periods. 1987-1992 saw a 4.5% increase and 1992-1997 saw a 20.1% increase. The next period is the most current data period, the 1997 – 2002 period and it saw a 2.6% increase.
Here is where things start looking interesting: I looked at the raw data and it seems the number of acres is decreases each period by around 4.5% with one exception. The 1992-1997 period is decreasing also, but only by .6% (that is 6/10ths of one percent) decrease in total farm land. Tricksy, very tricksy!
Now, the actual productivity, not accounting for efficiency, oscillates between -10% and 10%; except the 1992-1997 period. Which saw an inflation adjusted 27% increase in productivity.
Ok, so something happened in 1992 -1997 and probably more likely in the 1992-1987 period. But, it is important to know what California’s cash crop is: wine. That’s right, the ol’ vino. 90% of all wine made in this country comes from California and 63% of all wine trickled down our throats can be traced back to California. This amounts to a 45.4B dollar economic impact.
In 1990 a piece of legislation came down the pike which said that all wine made in the US needs to list its appellation. For example, if the wine comes from Napa Valley, it needs to say that. There are lots of wineries out there and they can be anywhere. This gave the non-wine buff an easy to go by tool in which to buy what they perceive as high quality wine.
Wine appellation rents. How so very intriguing, no?
Ok, so lets take a look at the wine industry to the best of my ability. Between 2002 and 1974 the physical amount of wine production has gone up 85%. If my theory is right, for that period of 1997 and 2002, I should see more land going towards vineyards and in fact this is exactly what happened, a 7.5% increase in fact. But, this is not good enough because this is actually only 75K of acres and we still need to account for 1M other acres. I think what happened is the USDA changed their methodology in 1997 and they provide both sets of data for that year. If you compare the old 1997 data to the 1992 year you will get a loss of 4.5% also, so it appears everything is normal here.
So, what I need to drive this theory of Wine Appelation Rents home, I need to find total sales of wine in each going back to 1974. I can find wine drank, wine produced, wine exported… in gallons which tells me we are a boozing country for sure, but it tells me nothing about how much people are spending. This much I can say right now, between 1992 and 1997 5B more wine was sold, which is around a 50% increase. However, this is ALL wine not just Californian. True, 60 some odd percent is from CA but, this is science people and we need to be thorough, so I am not prepared to make any declarations yet.
If I make any headway in this problem, I’ll keep you updated.
I took all produce sold by farmers and divided that by the acres declared to be farm land that year by the Dept of Ag in corresponding years going back to 1974. I then deflated that price by the inflation for each period with respect to 1974 (in other words, making 1974 my base year). In all states and in all periods (so far) the productivity is trending downwards. I’ll talk about what this stat means in my next addition.
But, the exception is California and I was a little shocked to see the initial data. Granted, it only went up 15% since 1974, but the amazing thing is all of that is reflected in the latest three time periods. 1987-1992 saw a 4.5% increase and 1992-1997 saw a 20.1% increase. The next period is the most current data period, the 1997 – 2002 period and it saw a 2.6% increase.
Here is where things start looking interesting: I looked at the raw data and it seems the number of acres is decreases each period by around 4.5% with one exception. The 1992-1997 period is decreasing also, but only by .6% (that is 6/10ths of one percent) decrease in total farm land. Tricksy, very tricksy!
Now, the actual productivity, not accounting for efficiency, oscillates between -10% and 10%; except the 1992-1997 period. Which saw an inflation adjusted 27% increase in productivity.
Ok, so something happened in 1992 -1997 and probably more likely in the 1992-1987 period. But, it is important to know what California’s cash crop is: wine. That’s right, the ol’ vino. 90% of all wine made in this country comes from California and 63% of all wine trickled down our throats can be traced back to California. This amounts to a 45.4B dollar economic impact.
In 1990 a piece of legislation came down the pike which said that all wine made in the US needs to list its appellation. For example, if the wine comes from Napa Valley, it needs to say that. There are lots of wineries out there and they can be anywhere. This gave the non-wine buff an easy to go by tool in which to buy what they perceive as high quality wine.
Wine appellation rents. How so very intriguing, no?
Ok, so lets take a look at the wine industry to the best of my ability. Between 2002 and 1974 the physical amount of wine production has gone up 85%. If my theory is right, for that period of 1997 and 2002, I should see more land going towards vineyards and in fact this is exactly what happened, a 7.5% increase in fact. But, this is not good enough because this is actually only 75K of acres and we still need to account for 1M other acres. I think what happened is the USDA changed their methodology in 1997 and they provide both sets of data for that year. If you compare the old 1997 data to the 1992 year you will get a loss of 4.5% also, so it appears everything is normal here.
So, what I need to drive this theory of Wine Appelation Rents home, I need to find total sales of wine in each going back to 1974. I can find wine drank, wine produced, wine exported… in gallons which tells me we are a boozing country for sure, but it tells me nothing about how much people are spending. This much I can say right now, between 1992 and 1997 5B more wine was sold, which is around a 50% increase. However, this is ALL wine not just Californian. True, 60 some odd percent is from CA but, this is science people and we need to be thorough, so I am not prepared to make any declarations yet.
If I make any headway in this problem, I’ll keep you updated.
-eire1130 7:45 AM
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