The Santa Barbara County Agricultural Commissioner recently released its 2021 Crop Report and reported a 5.1% increase in revenue from 2020. While this is good news for our local industry and community, it only paints part of the picture.
The most important thing to understand is that revenue does not equal profit.
The Crop Report reports gross values and does not represent net profit or loss experienced by individual growers or the industry as a whole. For example, what the crop report does not take into account is:
- The minimum wage increase that adds to labor costs
- Inflation and supply chain shortages that have greatly increased farm expenses
- Rising cost of health care and other insurances provided for employee health and safety
- Increase in theft, crime, and vandalism which adds to labor and farm costs
- Not all crops are created equally (e.g., strawberries had a great year, but avocados did not)
What farmers sell their produce for is subject to supply and demand. Farmers enter into contracts well before the crop is planted and sell it for a price based on projected demand.
For example, a farmer may enter into a contract for the following season to sell his or her strawberries for $1.88 per clamshell knowing it costs roughly $1.85 per clamshell to grow, harvest, and transport to a cooling facility. The Crop Report bases its numbers on the $1.88. However, for some farmers, the expenses could have surpassed the projected $1.85 costing them $1.87 or $1.89 per clamshell - numbers that are not reflected in the Crop Report.
It is also important to remember that whatever price your local grocery store is selling the strawberry clamshell for, it does not change the price of what a farmer receives. Whether you pay $2.99 or $3.50 or $4.99, the farmer still only receives $1.88 - a price set and agreed upon long before the product hits grocery store shelves.