Urban Water Institute Annual Water Policy Conference Ken Melban Director of Issues Management California Avocado Commission Hilton Mission Bay Resort August 24, 2012

California Avocado Commission Role California Avocado Commission is a non-profit, public agency that provides marketing and promotional support for the industry's 5,000+ growers The Commission also provides advocacy and support on issues involving labor, water, production, trade, pest protection, environmental stewardship, and food safety Mission To maximize grower returns by maintaining premium brand positioning for California Avocados and improving grower sustainability Role California Avocado Commission is a non-profit, public agency that provides marketing and promotional support for the industry's 5,000+ growers   The Commission also provides advocacy and support on issues involving labor, water, production, trade, pest protection, environmental stewardship, and food safety The California Avocado Commission's predecessor organization, the California Avocado Advisory Board, was organized in 1961 out of dissatisfaction by individual growers with the success of the state's largest agricultural cooperative, Calavo, Inc., (avocado’s equivalent of Sunkist) Mission To maximize grower returns by maintaining premium brand positioning for California Avocados and improving grower sustainability

Commission Structure 29 member Board of Directors 13 member staff 20 growers, 8 packers, 1 public member 13 member staff Headquarters located in Irvine, CA Includes a Southern California Agricultural Water Team to assist farmers in addressing issues impacting the cost, availability and regulation of agricultural water

History of Ag in Southern California Agriculture has been part of the southern California’s identity since the beginning Objective of Ag water sales - shed demand before urban rationing while generating additional revenue Ag imported water supply programs w/MWD since 1958 Avocados are part of a rich history in So. cal Ag has been part of the Southern California’s identity since the beginning It is how we presented ourselves to the rest of the country, to the rest of the world

Southern California Ag Today Agriculture and related businesses contribute $40B to southern California economy San Diego, Riverside, & Ventura counties ranked among top 10 Ag counties in CA* Average value of farm products sold per acre in southern California exceeds almost all other regions nationwide Ag generates about 450K jobs * Based on the market value of Ag products sold Ag and its related businesses contribute ≈ $17B to MWD’s service area economy San Diego, Riverside, & Ventura counties ranked among top 10 Ag counties in CA based on the market value of Ag products sold Average value of farm products sold per acre in So. Cal exceeds almost all other regions nationwide Ag generates about 290,000 jobs & contributes $9.5B to the income of individuals Economic benefits of Ag are widely distributed across geographic & socioeconomic lines

Top Ag Commodities in Southern Cal. Southern California avocados are a $373 million a year crop (2010)

Profile of California Avocado Industry Season: March – September Planted acres by variety: 59,341 Hass-like 1,835 Non-Hass Average grove size: 10-20 acres A mature orchard of approximately 110 trees per acre, can produce as much as 22,000 pounds per acre per year Modern orchard may have more than double the number of trees per acre, but absolute irrigation needs remain essentially the same, approximately four acre-feet per acre per year, regardless of tree planting density. Most avocados are grown on small family farms with an average size of around 10 acres. Unlike most other agricultural commodities in the nation" corporate operations supply only a small fraction of overall supply   Total industry acreage has been gradually expanding in recent years" and it is currently estimated that approximately 65,000 producing avocado acres Modern orchard plantings may have more than double the traditional number of trees per acre, although absolute irrigation needs remain essentially the same, approximately four acre-feet per acre per year, regardless of tree planting density.

California Avocado Production Areas 95% of growers are located within 20 miles of the southern California coast and are responsible for more than 90% of all domestic avocado production Approximately 70% of California avocado production within the MWD service area

U.S. Market Overview Per Capita Consumption In the U.S. fresh fruit market, domestic per capita consumption of avocados increased an average 10 percent annually from 1999-2009, the second-fastest growth rate after blueberries* Total consumption has also increased substantially. In 1980 total consumption was 479 million pounds. In 2009, that increased to 1.27 billion pounds. As of 1980, total per capita consumption was 2.08 pounds. In 2009, that increased to 4.10 pounds per capita* * USDA Economic Research Service

U.S. Market Overview Total Aggregate Supply Volume (Million Pounds) * 2011 Data not yet final

Challenges/Opportunities Water Pricing and Quality Food Safety Labor Availability and Cost Industry Modernization High density plantings Managed tree height Salt-tolerant varieties Environmental Benefits Cap and Trade/Carbon Credits

Breakdown of Avocado Production Costs Affordable/Reliable/Quality Water is Critical to a Healthy Ag Economy

Comparison of Ag Water Rates Agriculture Is Faced With Crushing Rate Increases 222% in 20 years Agency $/Acre-foot MWD IAWP UNTREATED (2012) $537 MWD TIER 1 UNTREATED (2013) $593 Valley Center Ag Rate $1,170 Coachella Valley Water District $29 El Dorado Irrigation District $43 Imperial Irrigation District $20 Semitropic Water Storage District $80

Case Study - Valley Center Water District Drop in overall water sales of 42% Ag water sales have dropped by 45% Productive avocado acreage dropped by 25 percent between 2005 - 2009 667 square acres of dead or dying avocado trees in abandoned groves were declared a fire hazard 21% drop in Ag water meters Layoffs for 12% of staff

Water Quality Challenges Water Quality degradation of imported supplies is damaging production Sufficient SWP supplies are crucial to meeting MWD blend target

Alternative Supply Cost Comparison Eyes wide open

Final Thoughts Great deal of interest in a Delta fix Number of issues to work through Final capacity could have significant cost and reliability impacts Delta Fix has great potential to address Ag’s long-term needs Ag affordability needs to be considered

Future of Ag Ag Water Survey Question: “Should regional water agencies continue to allow farms and other agricultural producers to purchase surplus water at a lower rate, with the understanding that agricultural users participating in this program will be the first to reduce their water usage in shortage conditions?” 19% Oppose, Probably Oppose

Thank-you