A TALE OF TWO CITIES Specialty Crop Agriculture 2040 By Walt Duflock, Senior Vice President, Innovation
For decades, California has been the center of specialty crop agriculture for the U.S. and much of the world, growing fruits, nuts and vegetables for Californians, Americans and international consumers. The Mediterranean climate was perfectly suited to many specialty crops, and the microclimates within the state allowed growers to choose growing slots that fit an increasingly common 12-month production calendar, allowing retailers to show consumers that they could get the same produce items every week of the year (whether or not they knew it was grown in different locations). Consumers, retailers and producers got used to the week-to-week availability, and growers increasingly built operations for scale. Many got vertically integrated and handled growing operations, processing facilities and supply chain logistics. As specialty crops got recognized as being a great source of healthy food, many went through surges in popularity—including strawberries, avocados and almonds—and California growers continued to support the new demand. New restaurant chains created growth in the food service category, and some growers chose to focus on that and other market opportunities. Then, as the 1990s and 2000s came into frame, things got more challenging. The never-ending set of cost challenges California growers faced led to many growers choosing to relocate acreage outside of California, often to neighboring states like Arizona and increasingly to international locations like Mexico and Peru. California retained a first-mover advantage in a lot of key crops and built systems for scale, including logistics and processing facilities. But many crops that have a significant percentage of their costs tied up with labor relocated and never came back. In addition, regulatory cost increases from $109/acre/year to $1,600/acre/ year over 18 years forced many smaller farmers to exit the business. On top of that, challenges created by the passage of the Sustainable Groundwater Management Act (SGMA) are forcing growers to reconsider permanent crops like almond trees and wine grapes in light of a possible fallow allocation by an SGMA quasi- government agency. Rotational crops like processing tomatoes are often becoming a better fit than permanent crops when increased risk of a fallow allocation, which forces you to stop farming some acreage, is taken into account. If you analyze the U.S. Department of Agriculture (USDA) Census data from 1997 to 2022 and then perform some straight-line estimates through 2052, you can see the damage that has already been caused and the damage that is likely to be caused in the next 25
years. The short version—California is projected to lose 32 percent of acreage and 52 percent of growers from 1997 to 2052. This is where the “Tale of Two Cities” becomes apparent. Will California be able to make enough changes to retain irrigated acreage well above the forecast and keep all the benefits that go with the acreage (ag jobs, agtech jobs, new high-skilled jobs to sell and support the new agtech that keeps the acreage local)? Or will California move too slowly or not at all and turn the forecast projections into a baseline scenario that ends up looking optimistic? From my perspective, that answer hinges largely on one variable—how much automation can be developed at scale to improve the economics to help keep the acreage in California? Labor has been an ongoing problem in terms of both cost and availability for California (and increasingly for other growing regions in the U.S.). Availability was addressed in part by the H-2A program, which created an access path for international farmworkers to come into California on temporary or seasonal work visas. This added costs because those workers were paid an AEWR (adverse effect wage rate—designed to give the advantage to domestic farmworkers, who could work for less than AEWR) and growers had transportation, food and lodging costs to manage for all H-2A workers. Current costs in California are estimated at $30 to $32/ hour for H-2A workers, and H-2A usage in California has tripled in six years, represents 10 percent of the farm workforce and is forecast to continue rising because there is an increasingly small pool of domestic farmworkers applying for these jobs. The 2024 "Western Growers is working with our partners at Reservoir Farms and John Deere to help harvest and other automation startups reduce their time and capital needed to get through R&D to first commercial product,
and that does make it easier—but not easy."
16 Western Grower & Shipper | www.wga.com October – December 2026
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