SOLANO COUNTY’S FOOD CHAINASSETS AND OPPORTUNITY IN FOODPRODUCTION AND PROCESSINGSolano EDCPrepared byCollaborative Economics AUGUST 2010 DRAFT
Solano EDC CONTENTSThe Mission of the Solano EDC is to attract, grow and retain business and industry EXECUTIVE SUMMARY...................................................................................................3in Solano County that enhance the economic vitality and quality of life in ourcommunities. We serve as the facilitator of countywide and regional discussions THE FOOD CHAIN AS A CLUSTER OF OPPORTUNITY.................................................6on how to improve the way we work together and take action on critical employer, FOOD CHAIN CLUSTER............................................................................................7transportation, and education issues. ECONOMIC IMPACT.................................................................................................9 ASSETS AND INNOVATION IN SOLANO COUNTY....................................................15 REGIONAL ASSETS..................................................................................................15 INNOVATION IS KEY TO THE SUCCESS OF THE REGION’S FOOD CHAIN..........18 OPPORTUNITIES FOR THE FUTURE............................................................................22 Appendix A...................................................................................................................24 Appendix B...................................................................................................................26 Endnotes.......................................................................................................................27Prepared byCOLLABORATIVEECONOMICSDoug HentonJohn MelvilleTracey GroseTiffany FurrellAmy KishimuraBridget GibbonsCollaborative Economics is a nationally-recognized consulting firm specializing in developingregional indexes, working with private and public sector leaders to develop innovative solutions topressing economic and community challenges, and advising civic entrepreneurs across the countryand globally.
EXECUTIVE SUMMARY The region benefits from many natural assets that support the production of high- value crops, and the region’s advantageous location between metro areas supports The Food Chain, with its diverse set of industries, plays an important the process and distribution of foods and beverages. role in the vitality of the Solano and Yolo County region. Activities • The region’s natural assets include prime agricultural land, stable water resources, and strong winds. associated with the Food Chain span agriculture support and production, The region also benefits from its convenient access to surrounding metropolitan areas major national highway systems. food processing, packaging and distribution as well as waste byproducts. • Increasing values of agricultural land discourages the expansion of lower valued crops in the region. Innovation is taking place in every segment as consumer demand The net loss of Agricultural Land has decreased 76 percent since the 2002 to 2004 period. changes and technological advance opens up new opportunities. Food • Two of Solano County’s top crops, almonds and walnuts, are currently experiencing rising demand Chain activities are highly concentrated in the region and represent 10 locally, nationally, and internationally. percent of total economic output. Statewide, these activities account for Innovation across the region’s Food Chain is improving process and resource only 6 percent of total output. This report highlights the strengths within efficiencies as well as food quality. the Food Chain and how innovation in each segment can support the • Organic farming in Solano and Yolo Counties represents 10 percent of total crop sales in the region, but creation of new markets for regional products and new job opportunities in California as a whole, organics account for only 6 percent. for its residents. • The influence of agriculture biotechnology is most prevalent in seed biotechnology research and production, and 7 of the 10 top seed producers in the world are located in the region. The University of California at Davis Seed Biotechnology Center also provides valuable research opportunities and The Food Chain in Solano and Yolo Counties is a dynamic system of multi-faceted graduates to fill new jobs in the field. components and interactive processes that are driving competition and boosting the • Farms and businesses in the region are adopting renewable energy systems including wind, solar, and region’s competitiveness in the global food market. Central to the region’s Food biomass. Chain vital cycle is the role of innovation. The segments of the Food Chain consist of 1) Agricultural Support Products and Services, 2) Agricultural and Livestock The region is fertile with opportunities for growth across the Food Chain Production, 3) Food Processing and Packaging, 4) Distribution of Food and • Farmer’s markets and other forms of Community Supported Agriculture (CSA) present an opportunity Beverages, and 5) New Markets for Waste Byproducts. for the counties to make the most of local agricultural production, specifically organic products. The growing demand for local and sustainable products aligns favorably with the resources in the region. The Food Chain contributes significantly to the economic vitality of the region in • The addition of livestock processing facilities and other intermediate processing facilities will help terms of economic output, employment, and business growth. maintain the diversity of activities in all segments of the Food Chain in the region. This will create new markets, jobs, and output value in the local Food Chain. • Generating $25 billion in 2009, Food Chain activities represent 10 percent of total regional output. Distribution accounted for nearly one third of Food Chain output and has tripled in value since 1990. • Growing global demand for high-value products such as almonds will create more consistency of demand as products are sent to multiple and diverse markets across the world. • Agricultural Support is larger in employment than any of the other segments in the region, and it is the only segment reporting growth in each of the past 3 years. Employment in this segment is primarily in Services and represents 27 percent of total Food Chain employment in the region. • There is a diverse range of occupations and earnings potential within the Food Chain. Between 2001 and 2008, Food Chain earnings increased by 12 percent, and the highest average annual earnings of $52,722 were reported in Processing. However, better connecting local education programs at the secondary and post-secondary level will be required in order to provide the necessary workforce for continued success of the region’s Food Chain. • The region’s Food Chain consists of a vibrant landscape of local, small businesses. Regional earningsEXECUTIVE SUMMARY EXECUTIVE SUMMARY of small businesses (with no employees) and small farm owners are exceeding the state average. Total annual farm proprietor income (income from sole proprietorships and partnerships, excluding the income received by corporate farms) increased 21 percent in the region between 1999 and 2008 but dropped 7 percent statewide. Nonemployers in agriculture earned roughly $3,000 more than nonemployers in California. 4 5
THE FOOD CHAIN AS A CLUSTER OF OPPORTUNITY FOOD CHAIN CLUSTER The Food Chain in Solano and Yolo Counties is a dynamic system of multi-faceted components and interactive processes that are driving competition and boosting the region’s competitiveness in the global food market. The Food Chain with its diverse set of Central to the region’s Food Chain vital cycle is the role of innovation. The Food Chain encompasses all activities from agricultural support and production to distribution. The segments of the Food Chain consist of industries plays an important role in the 1) Agricultural Support Products and Services, 2) Agricultural and Livestock Production, 3) Food Processing and Packaging, 4) Distribution of Food and Beverages, and 5) New Markets for Waste Byproducts. (This is broader vitality of the region made up of Solano and than the Advanced Food & Beverage Manufacturing Cluster presented in the Solano County Index in 2009 which focused on crop production, animal processing, and manufacturing.) Yolo Counties. Activities associated with The diagram below illustrates the dynamics of the Food Chain Vital Cycle. The five segments are linked the Food Chain span agriculture support and together by the varied processes (represented by the yellow arrows) that begin in the field and result in food products arriving in the hands of consumers. Central to this cycle is the element of innovation that infuses the production, food processing, packaging and cycle at each segment with new products, new processes, new materials, and increased efficiencies. Finally, the vital role of consumer demand cannot be overlooked in this system: innovation is both the product and the driver of consumer demand. Consumer demand is driven by the demands for quality, convenience, variety and distribution as well as waste byproducts. by the perception of reduced environmental impact. Innovation is taking place in every segment as FOOD CHAIN VITAL CYCLE consumer demand changes and technological advance opens up new opportunities. Food Grocery and related CONSUMER Agricultural implement manufacturing product wholesalers DEMAND Chain activities are highly concentrated in Food product machinery Beer, wine and manufacturing distilled alcoholic Irrigation systems the region and represent 10 percent of total beverage wholesalers Specialty food stores construction Pesticide and fertilizer Farm supplies economic output. Statewide, these activities DISTRIBUTION SUPPORT manufacturing Merchant wholesalers Technical consulting Veterinary services account for only 6 percent of total output. This report highlights the strengths within INNOVATION the Food Chain and how innovation in eachFOOD CHAIN AS A CLUSTER OF OPPORTUNITY FOOD CHAIN AS A CLUSTER OF OPPORTUNITY segment can support the creation of new PACKAGE/ PRODUCTION Crop farming PROCESSING Vegetable farming markets for regional products and new job Diary product manufacturing Animal farming Poultry and egg opportunities for its residents. Beverage manufacturing production Animal aquaculture Bakeries and tortilla manufacturing NEW Plastic bottle MARKETS manufacturing FOR WASTE Packaging materials BYPRODUCTS Construction materials Biomass/Energy 6 7
ECONOMIC IMPACT Technological advance taking place in each segment is driving the Food Chain Vital Cycle. Advances are boosting process and resource efficiencies, improving product quality and safety, and creating new products and markets. In Agricultural Support Products and Services, advances in biotechnology are improving efficiencies through the creation of pest and drought resistant seeds and seed coatings that allow for multiple Generating $25 billion in 2009, the Food Chain represents 10 percent of the total economic output of Solano plantings. Applied advances in sustainable farming practices are reducing fertilizer and pesticide use in and Yolo Counties. Exploring new opportunities and further developing industries unique to the region in all Agricultural and Livestock Production. New uses for waste byproducts are being leveraged, for example, by segments of the Food Chain will lead to continued economic growth and prosperity in this sector. Tracking harnessing nutrients from wastewater to produce fuel for production activities. Diagnostic testing and high- and small business growth, employment growth, and occupational mix help to tell the story about the region’s speed mechanization are both improving the quality and quantity of food products. In Distribution, electronic progress and where potential for growth exists. data interchange is vastly shortening the time lag between production and consumption thereby improving food quality. The economic activity related to the food chain generates a sizeable share of the region’s economy. Although dropping from its peak of 13.6 percent in 1996, the Food Chain accounted for 10 percent of the combined GDP of Solano and Yolo Counties in 2009. In comparison, California’s food chain industries represented less TECHNOLOGICAL INNOVATION DRIVING EACH SEGMENT than 6 percent of the state’s total GDP ($101.6 billion.) SUPPORT PERCENTAGE OF TOTAL ECONOMIC OUTPUT DISTRIBUTION Novel seed varieties Generated by the Food Chain Pest-resistant seed varieties Solano and Yolo Counties Coated seeds for regulating multiple planting Scan-based inventory systems 14% Recycling of agricultural waste Electronic data interchange (EDI) products for construction Management of point of sale data Monitoring technology for air and 12% Category management water quality 10% HAIN VITAL C O DC Y CL FO E 8% CONSUMER DEMAND 6% Quality Convenience 4% Variety Reduced 2% Solano & Yolo environmental PRODUCTION impact Diagnostic testing for detection California of plant/animal disease and feed 0% PACKAGE/PROCESSING 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1990 contaminants Diagnostic testing for the detection Precision irrigation of food contaminants GPS-directed micro-tractors with The GDP for Agriculture/Production segment is based on a more inclusive definition than the Food Chain Production segment. High-speed processing weed triggers and herbicide Data Source: Moody’s Economy.com mechanization MARKETS FOR WASTE Advances in organic production Analysis: Collaborative Economics Nitrogen-filled salad bags methods BYPRODUCTSFOOD CHAIN AS A CLUSTER OF OPPORTUNITY FOOD CHAIN AS A CLUSTER OF OPPORTUNITY Advanced membrane technology Biodegradable plastics/packaging Fiberous organic matter can be used for: • Packaging materials • Construction materials Anaerobic digesters generate electricity from biomass which can cut energy costs of operations or be sold back to the grid. 8 9
FOOD CHAIN EMPLOYMENT DISTRIBUTION Guittard Chocolates Solano & Yolo Counties - 2nd Quarter 2009 Generating $872 million in 2009, Distribution accounted for the largest portion of Food Chain output. Established in 1868, Guittard The region’s GDP in Distribution increased almost three times since 1990, faster than any other segment. Storage Chocolates is the oldest family- In 2009, Support generated $670 million in the region’s economic output, while Processing and >1% Services Water owned chocolate company Agriculture/Production accounted for $500 million and $426 million respectively. 27% 5% Specialty Materials in the United States. The 2% 2% company headquarters are Machinery located in Burlingame, and 1% Wholesale the processing plant is located ECONOMIC OUTPUT OF FOOD CHAIN 17% Crops Gross Domestic Product by Segment 21% in Fairfield. The majority of Solano and Yolo Counties inputs for the chocolate factory come from local sources. $30 Food Sugar, powdered milk and Agricultural/Production Beverage & Packaging 15% whey are all purchased from Billions of Dollars (inflation adjusted) Processing 2% $25 Support Livestock Bay Area suppliers. Similarly, Distribution 2% machinery used at the factory comes primarily from local $20 SUPPORT DISTRIBUTION PROCESSING AGRICULTURE makers. Guittard Chocolates Data Source: CA Employment Development Department, Labor Market Information Division (QCEW) Analysis: Collaborative Economics caters its production to the $15 growing needs of customers The segment of the Food Chain with the largest portion of jobs who are also local chocolate is Support (35%), followed by Production(23%), Processing producers. The market for their $10 (23%), and Distribution (19%). Each of the four segments chocolate exceeds their current consists of multiple subsegments. Within the Support segment, production capacity. In the $5 Service jobs dominate making up 27 percent of total Food future, the company plans to Chain employment. Production in Crops accounts for 21 relocate its headquarters from percent. Food in processing represents 15 percent. Wholesale Burlingame to Fairfield and to 0 in Distribution represents 17 percent of the regions total Food increase its workforce from the 13 employees currently with 1990 1991 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1992 Chain employment. the company to more than The GDP for Agriculture/Production segment is based on a more inclusive definition than the Food Chain Production segment. Data Source: Moody’s Economy.com 100. This expansion will help Analysis: Collaborative Economics FOOD CHAIN EMPLOYMENT TRENDS BY SEGMENT Guittard meet the growing local Solano & Yolo Counties 2nd Quarter 2009 demand for their products, as well as meet national growth in the demand for premium Employment is for the most part evenly distributed across the segments of the Food Chain and growing 6,000 Agriculture/Production Processing chocolate. fastest in agriculture support activities. Total Food Chain employment increased by 11 percent between Support 5,000 2001 and 2009, while Processing had the largest percentage increase (43%) during that period. At the Distribution same time, the two segments, Production and Distribution, declined in employment, by 10 percent andFOOD CHAIN AS A CLUSTER OF OPPORTUNITY FOOD CHAIN AS A CLUSTER OF OPPORTUNITY 4,000 2 percent respectively. In the second quarter of 2009, the subsegment Services, which is under Support, accounted for the largest percentage of employment in the Food Chain (27%). 3,000 2,000 1,000 0 2001 2005 2009 2001 2005 2009 2001 2005 2009 2001 2005 2009 Data Source: CA Employment Development Department, Labor Marketing Information Division (QCEW) Analysis: Collaborative Economics 10 11
EARNINGS GROWTH IN FOOD CHAIN EXAMPLES OF OCCUPATIONS IN SOLANO’S FOOD CHAIN Annual Average Earnings by Segment Food Chain earnings increased by Solano & Yolo Counties 2009 Annual Segment Occupation Title Education & Training 12 percent between 2001 and 2008; Median Wage $60,000 however, earnings growth varied by Farmworkers & Laborers, Crop, Nursery, & Greenhouse $19,010 Short-Term On-the-Job Training segment. Annual average earnings Annual Average Wage (inflation adjusted) $50,000 Shipping, Receiving, & Traffic Clerks $28,930 Short-Term On-the-Job Training growth was strongest in Support with Truck Drivers, Heavy & Tractor-Trailer $40,020 Moderate-Term On-the-Job Training wages rising 23 percent over the Distribution $40,000 Computer Operators $45,550 Moderate-Term On-the-Job Training period. Earnings grew 13 percent in Transportation, Storage, & Distribution Managers $92,630 Work Experience Production, 11 percent in Processing, and 7 percent in Distribution. $30,000 Bus & Truck Mechanics & Diesel Engine Specialists $53,000 Post-Secondary Vocational Education Computer Support Specialists $55,140 Associate Degree Processing In 2008, Processing reported the $20,000 Network Systems & Data Communications Analysts $65,010 Bachelors Degree Distribution highest average earnings at $52,722. Logisticians $74,620 Bachelors Degree Following closely, earnings in $10,000 Support Market Research Analysts $63,870 Masters Degree Distribution averaged $46,762, Support Production 0 Food Batchmakers $30,770 Short-Term On-the-Job Training and Production followed with average 2001 2002 2003 2004 2005 2006 2007 2008 earnings in 2008 of $39,189 and Food Cooking Machine Operators & Tenders $39,470 Short-Term On-the-Job Training $34,792, respectively. Data Source: CA Employment Development Department, Labor Market Information Division (QCEW) Analysis: Collaborative Economics Team Assemblers $23,940 Moderate-Term On-the-Job Training Processing Mixing & Blending Machine Setters, Operators, & Tenders $31,850 Moderate-Term On-the-Job Training A wide range of job opportunity exists in the Food Chain. Occupations associated with these areas of Bakers $27,460 Long-Term On-the-Job Training business activity represent an array of fields, levels of training, and earnings potential. In every segment Butchers & Meat Cutters $38,810 Long-Term On-the-Job Training training requirements vary from on-the-job training to graduate degrees. For example, in Distribution jobs Chefs & Head Cooks $37,910 Post-Secondary Vocational Education range from the machinists to logisticians. In addition, with all of the changes in agriculture technology there is a need for horticulturalists and chemical engineers. Chemical Technicians $45,250 Associate Degree Industrial Production Managers $97,890 Bachelors Degree Although Solano County offers a variety of training opportunities related to the Food Chain, there are Marketing Managers $96,710 Work Experience, Plus a Bachelors or Higher fewer than in the past. Solano County offers opportunities for residents of all ages to learn about farms Weighers, Measurers, Checkers, & Samplers, $22,160 Short-Term On-the-Job Training and agriculture. There are farm programs for schoolchildren as well as adult educational opportunities at Recordkeeping community colleges and the University of California at Davis. These include the following: Laborers & Freight, Stock, & Material Movers, Hand $24,500 Short-Term On-the-Job Training Industrial Truck & Tractor Operators $30,050 Short-Term On-the-Job Training • Schoolchildren have the opportunity to learn academic skills in a farm-based setting at Loma Vista Separating, Filtering, Machine Setters, Operators, & $46,250 Moderate-Term On-the-Job Training Production Farm. Since 1974, Loma Vista farm has taught children about plants and animals through hands-on Tenders activities in an outdoor classroom. Another program for schoolchildren is the Centers for Land Based Maintenance & Repair Workers, General $43,280 Long-Term On-the-Job Training Farming located on the Farm on Putah Creek. On 40 acres of land, the Farm on Putah Creek allows Industrial Machinery Mechanics $61,070 Long-Term On-the-Job Training visitors to participate in educational field trips and observe demonstration projects, and allows high school students to participate in the Student and Landowner Education and Watershed Stewardship First-Line Supervisors/Managers of Production & Operating $63,190 Work Experience Workers (SLEWS) program. Farm Equipment Mechanics $45,790 Post-Secondary Vocational Education • High school students attending Dixon High have the opportunity to develop agricultural interestsFOOD CHAIN AS A CLUSTER OF OPPORTUNITY FOOD CHAIN AS A CLUSTER OF OPPORTUNITY Sales Managers $65,670 Work Experience, Plus a Bachelors or Higher through coursework and participation in agriculture programs. Supervised Agriculture Experience General & Operations Managers $95,690 Work Experience, Plus a Bachelors or Higher Programs (SAEP) currently involves approximately 100 students in local agriculture projects ranging Packers & Packagers, Hand $19,210 Short-Term On-the-Job Training from assisting local farmers to internships at U.C. Davis. Students gain practical experience in a variety Inspectors, Testers, Sorters, Samplers, & Weighers $43,020 Moderate-Term On-the-Job Training of agricultural fields and some of these internships and partnerships lead to employment opportunities. Machinists $50,370 Long-Term On-the-Job Training Comprehensive courses in Agricultural Earth Science and Agricultural Biology spark interest in agricultural fields. These classes provide guest speakers from U.C. Davis and Chico State University First-Line Sup/Mgrs of Helpers, Laborers, & Material $46,470 Work Experience Movers, Hand and a Dixon High farm for enhanced agricultural education is planned for the future. Support Electrical & Electronics Repairers, Commercial & Industrial $74,160 Post-Secondary Vocational Education Equipment • Solano Community College provides agriculture classes through the Horticulture program, since the Veterinary Technologists & Technicians $31,250 Associate Degree school no longer offers Agricultural Business Classes. U.C. Davis offers many degrees and programs Mechanical Engineers $82,600 Bachelors Degree through the College of Agricultural and Environmental Sciences. Construction Managers $94,320 Bachelors Degree Purchasing Managers $100,930 Work Experience, Plus a Bachelors or Higher Operations Research Analysts $95,040 Masters Degree 12 13