Perspective Western US Agriculture

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Commentary on factors related to the Western US specialty crop market that represent indicators of an inflection point.

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Perspective Western US Agriculture

  1. 1. PERSPECTIVETimely insights from Entira professionals October 2012in the field. Shifting Landscape in the U.S. Western Agricultural Market By David Sypnieski, Entira Project Collaborator, Western U.S. Market Studies Feeling the Squeeze While water availability has always been a point of The one constant in life is change. In business, contention within the Western U.S., increasing significant changes that alter the way people think demand has historically been met through storage and act are called inflection points. Intel’s Co- and conveyance projects. The current Founder, Andy Grove, is famously quoted as saying, environmental, monetary and political environment “only the paranoid survive” when talking about has become prohibitive to continual large-scale inflection points. Organizations and people that, 1) projects and available supplies are rapidly appreciate this fact; and 2) are willing and capable approaching full appropriation. Advancements in of adjusting with change put themselves in irrigation management practices have contributed positions to maximize opportunities that inevitably to the sustained growth, but even so there is no arise out of significant changes. I believe the denying that the historical availability of water will “business environment” surrounding the Western never be the same. U.S. agricultural market, while always changing, has changed in a few critical areas that are requiring The western U.S. is recognized as having vast open stakeholders to change the way they think and lands. The reality is that only a small portion of act—an inflection point. these lands are considered to be prime agricultural land with soils and environments best suited for The Western U.S. specialty crop market has agricultural production. In California for example, experienced continual growth for many decades, which has approximately 100 million acres of land, from the early 1900s to now. This growth has 43 million acres are used for agriculture (16 million primarily been driven by expanding water supplies, acres are grazing land and 27 million acres are availability of prime agricultural land and relatively cropland). Of that, only about 9 million acres are consistent labor resources. Over more recent considered to be prime, irrigated cropland. Rapid decades, the increasing use of mechanization and and dramatic urban growth over the past couple of fossil- based energy sources, along with adoption of decades has resulted in a significant loss in available more sophisticated technology tools, have agricultural lands, especially prime agricultural land. contributed to sustaining the market’s growth. Between 1984 and 2008, 560,000 acres were lost Significant restraints on these driving market factors due to urbanization. Additional agricultural land are becoming measurable and affecting how the has been surrendered primarily due to the creation industry is going to be required to sustain its growth or expansion of wildlife refuges and withdrawals in the near term. For example, between 1949 and from water shortages. Irrigated farmland acreage 1989, agricultural productivity growth in California decreased approximately 200,000 acres statewide averaged 2.2% per year, while from 1990 to 2002 it due to these related issues. slowed to 1.2%. The pressure on the above factors has only increased and is contributing to a continued slowdown in growth. Learn more at www.entira.net
  2. 2. Regulatory and compliance issues have always been About Davidviewed as a burden to growth, especially inagriculture. Seemingly though, this burden has A California native, David Sypnieski brings morerecently been grown dramatically terms of than 15 years of experience in developing andredundancy and the number of originating sources. deploying strategic branding, marketing and salesApplication (chemical & nutrient), labor, emissions, initiatives. He is recognized as an innovator with afood safety, sustainability, environmental unique set of analytical skills earned by hands-onrequirements, compliance, documentation, experience in various technology and agriculturalcertification, and the like are at an all-time high. industries.The volume and complexity of regulations isrecognized as one of the greatest challenges to His experiences include the co-founding andCalifornia agriculture. Studies suggest that launching of two start-up technology companiesregulations cost California agricultural producers an along with establishing a metric based sustainabilityestimated $2.2 billion annually, which is about 6.5% program related to the commercial landscapeof the total market value. Fruit, nut and vegetable market. Specifically within the agricultural market,growers report that regulatory and compliance David has managed the re-launching of ancosts are steadily increasing and now account for agricultural focused advanced remote sensing andapproximately 11% of capital and operating costs. mapping technology, and more recently the restructuring of the product and market strategy forAdapt, Survive and Thrive an agri-business related software company.The Western U.S. agricultural market is unique in its David earned a degree in Public Relations and Issuediversity of cropping systems, markets and evolving Management from CSU Sacramento.business environment. Industry stakeholders(growers, processors, vendors, etc.) have proven tobe adaptable to this large, yet unique marketsegment. The pressures and constraints beingplaced upon core industry factors, that havesupported historical industry growth, are forcingindustry stakeholders to potentially act and thinkdifferently. Historical market assumptions andanalyses that traditionally produce aggregatedmarket and demographic data aren’t going tosupport insightful analysis to understand how aninflection point will affect strategic decisions goingforward. As history has repeatedly shown, there isa certain segment of any population that recognizesthat their perceptions are indicators of a newreality. Entira is working on several unique marketstudies to deliver insightful analysis and guidance toprogressive industry stakeholders. To learn moreabout how your organization can benefit fromEntira’s services, contact David Sypnieski atdsypnieski@entira.net or 916.599.9598 Learn more at www.entira.net

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