The Great California Land Rush
Boom or Bust?
I have lived on the same farm for 59 years and seen at least three boom-and-bust farm cycles -- one in the late 1960s, another in the early 1980s, and a third right now. I’ve witnessed raisins, for example, at $1,420 a ton 35 years ago, then $410 a ton, then $700 a ton -- and now almost $2,000. The old wisdom insisted that almond acreage could never exceed 200,000 acres without a crash, that prices would never go over $1 pound to the farmer, that production could not go much over 3,000 lbs. per acre.
Now? There are now 800,000 plus acres of California almonds, prices near $3 a pound, and new varieties are creeping up to 4,000 lbs. per acre. Some almond orchards remind me of alien organisms: lousy soil, undersized trees, tiny roots -- and loaded with nuts to the point that props are needed to keep the trees from toppling over, as agronomy keeps these artificial creations going with daily IV fusions of water and nutrients. It is almost as if anything on the tree that is not a nut is genetically superfluous.
When I began farming full-time in the cresting boom of 1980, vineyard or orchard went for almost $10,000 an acre. I saw it crash three years later and prices dip as low as $3,000 an acre for what was then called “Thompson Worthless” vineyards. By the 1990s, prices were back up to between $7,000 and $10,000 per acre -- only to go back down too $5,000 by 2003. And now? Bare land can go for $15,000 an acre and up; a productive vineyard or nut orchard sells for $25,000 to $30,000. “They” say $35,000 an acre is on the horizon.
I am getting old and remain a cynic (see Fields Without Dreams and Letters From an American Farmer). All the same, I think eventually the latest boom will likewise bust. (Most of the “rich” I know out here made their money by emulating J.Paul Getty’s de facto rule of “buy low, sell high -- everything can be sold or bought, all the time.”
Most of my friends in these parts disagree about a looming bust. Things are “different” now, they swear. Why? Human nature has been altered? The U.S. dollar has never been more stable? The debt is small? Governance is unusually competent? There will be plenty of water -- new dams; the sneaky little smelt will get his comeuppance; salmon won’t get their water from mountains to the sea?
Booming for 100 Years?
But I digress, so let us count their reasons for optimism: 1) 400 million new empowered consumers in India and China enjoy a fig, some almonds, or a raisin or two as relish for their California rice, wheat, or beef, and will buy all they can of the state’s staples and specialty crops from our Pacific ports. Now both countries possess both the tastes and the wherewithal to pay for our farm exports.
2) America is no longer a nation of 250 million, but nearing 320 million souls. Seventy-million extra mouths translate into an entirely new consumer class the size of France right here in the U.S., prompting new domestic demand as never before.
3) Land is finite, or rather, shrinking. Suburbanization, shortages of water, higher costs -- all that and more mean that we are not going to see all that much further increases in production. New hybrids, better technique, drip irrigation, novel fertilizers, intensification of farmland, and more are reaching their theoretical limits. Existing land is more likely to be encroached upon than new acreage opened up for farming.
Article printed from Works and Days: https://pjmedia.com/victordavishanson
URL to article: https://pjmedia.com/victordavishanson/the-great-california-land-rush