The Economic Impact of Rising Input Prices on California Agriculture

The recent rises in production costs pose new challenges to farmers. However, price increases are not proportionate across input categories with the most dramatic increases in energy and energyintensive inputs such as fertilizer. Consequently, the relative impact of rising input costs on different subsectors of agriculture depends on the input-intensity of the production system. Operating costs were examined for five crops in California, prunes, winegrapes, processing tomatoes, alfalfa hay and dry beans over the period 2001 to 2008. For all commodities, the increase in operating costs was greater from 2007 to 2008 than the average annual increase from 2001 to 2007. The increase in costs was greatest for alfalfa and processing tomatoes with relatively high levels of fuel and fertilizer inputs, and lowest for wine grape production which is labor intensiv