by AL Olmstead · 2017 · Cited by 15 — Foundation membership includes agricultural economists (faculty and Cooperative Extension specialists) at the Department of Agricultural and Resource Economics,

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THE AUTHORS Alan L. Olmstead is professor emeritus in the Department of Economics at University of California, Davis. Paul W. Rhode is professor and chair in the Department of Economics at University of Michigan. Contact: Alan Olmstead, GIANNINI FOUNDATION The Giannini Foundation of Agricultural Economics was founded in 1930 from a grant made by the Bancitaly Corporation to the University of California in tribute to its organizer and past president, Amadeo Peter Giannini of San Francisco. The broad mission of the foundation is to promote and support research and outreach activities in agricultural economics and rural development relevant to California. In line with those goals, the foundation encourages research in various areas of interest to agricultural and resource economists and supports dissemination of research ˜ndings to other researchers and to the public. Foundation membership includes agricultural economists (faculty and Cooperative Extension specialists) at the Department of Agricultural and Resource Economics, Davis, and at the Department of Agricultural and Resource Economics, Berkeley. Associate members include forestry economists in the College of Natural Resources, Berkeley, and economists in the Department of Environmental Sciences at Riverside. This and other Giannini Foundation publications are available in PDF format online at Julie McNamara Managing Editor and Communications Director Giannini Foundation of Agricultural Economics Contact: ©2017 by the Regents of the University of California Division of Natural Resources All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the written permission of the publisher and the authors. To simplify information, trade names of products have been used. No endorsement of named or illustrated products is intended, nor is criticism implied of similar products that are not mentioned or illustrated.

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A History of California Agriculture Alan L. Olmstead and Paul W. Rhode In recent years, California has accounted for over one-tenth of the value of the U.S. agricultural output. Perhaps more impressive than the value of farm output is the great diversity of crops, the capital intensity, the high yields, and the special nature of the state™s agricultural institutions. California’s agri – culture evolved differently from what was found in the home states and countries of the immigrants who settled and farmed its soils. These differences were not just an outcome of the state™s distinct geoclimatic features; they were molded by the farmers, laborers, researchers, railroad barons, and policy – makers who interacted to create one of the most productive and dynamic agricultural-industrial complexes in the world. Two contrasting legends dominate the telling of California™s agricultural history. The ˜rst extols California farmers as progressive, highly educated, early adopters of modern tech – nologies, and unusually well organized to use irrigation to make a fidesertfl bloom. Through cooperation, they prospered as their high-quality products captured markets around the globe. This farmers-do-no-wrong legend is the mainstay of the state™s powerful marketing cooperatives, government agencies, and agricultural research establishment, and largely ignores agricultural workers. The second and darker legend sees the California agricultural system as founded by land- grabbers whose descendants continue to exploit migrant workers and abuse the Golden State™s natural environment. Even in its mildest form, this view faults California farmers for becoming full-˚edged capitalists rather than opting for a more environmentally and labor-friendly system of family farms as in the Midwest. The contest between these compet- ing interpretations of California™s farm system has raged for the past one-and-a-half centuries, with each side seldom even talking to the other. Neither legend has engaged in a system – atic and objective analysis of the available data nor offered the comparative perspective needed to assess why California agriculture developed as it did. This chapter analyzes major developments in California™s agri -cultural history to provide a better understanding of how and why the state™s current agricultural structure and institutions emerged. We focus on major structural transformations: the rise and fall of the extensive grain-growing economy of the nineteenth century; the shift to intensive orchard, vine, and row crops; and the emergence of modern livestock operations. Intertwined with our discussion of sectional shifts will be an analysis of some of the special institutional and structural fea -tures of California™s agricultural development, including farm power and mechanization, irrigation, and the labor market. In these areas, California™s farmers responded aggressively to their particular economic and environmental constraints to create unique institutional settings. The results have been remarkable, albeit with signi˜cant environmental problems and continuing labor unrest. 1

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The Grain Empire Bonanza Farms Early settlers found an ideal environment for raising wheat: great expanses of fertile soil and ˚at terrain combined with rainy winters and hot, dry summers. By the mid-1850s, the state™s wheat output exceeded local consumption, and Cali – fornia™s grain operations began to evolve quite differently from the family farms of the American North. The image is vast tracts of grain grown on huge bonanza ranches in a coun – tryside virtually uninhabited except at harvest and plowing times. California grain farms were very large for the day and used labor-saving and scale-intensive technologies, pioneering the adoption of labor-saving gang plows, large headers, and combines. Californians vigorously pursued the development of technologies and production practices suited to early Cali – fornia™s economic and environmental conditions. This search for large-scale, labor-saving technologies culminated in the perfection of the world™s ˜rst commercially successful com – bined grain harvesters by the Holt Manufacturing Company and other local manufacturers in the early 1880s. Combines became common in the California grain ˜elds by 1890 (Olm – stead and Rhode, 1988), when California was the second largest wheat-producing state, following only Minnesota. Some bonanza farms planted thousands of acres and were far larger than Midwestern operations. They would establish many precedents. Most of the wheat and barley was shipped to European markets, setting a pattern of integration into world markets that has characterized California agriculture to the present. Their size, the extent of mechanization, and a reliance on hired labor would also become hallmarks of the state™s farm sector. Biological Innovation and Failure In addition, California grain-farmers developed novel bio – logical systems, growing different varieties of wheat and employing fundamentally different cultural techniques than their eastern brethren. When eastern farmers migrated to California, they had to relearn how to grow wheat. In the eastern United States, grain growers planted either winter- habit varieties in the fall to allow the seedlings to emerge before winter, or spring-habit varieties in the spring shortly before the last freeze. The difference was that winter-habit wheat required prolonged exposure to cold temperatures and an accompanying period of dormancy (vernalization) to shift into its reproductive stage. Spring-habit wheat, by contrast, grew continuously without a period of vernalization, but generally could not survive extreme cold. With the mild winters of California, farmers learned it was advantageous to sow spring-habit wheat in the fall. California™s wheat experience exempli˜es the importance of biological innovation. After learning to cultivate Sonora and Club wheats in the 1850s, 1860s, and 1870s, California grain growers focused most of their innovative efforts on mechanization, and purportedly did little to improve cultural practices, introduce new varieties, or even maintain the qual – ity of their seed stock. According to contemporary accounts, decades of monocrop grain farming, involving little use of crop rotation, fallowing, fertilizer, or deep plowing, mined the soil of nutrients and promoted the growth of weeds. By the 1890s, there were frequent complaints that what had been prime wheat land would no longer yield paying crops. In addition to declining yields, the grain™s quality suffered, becoming starchy and less glutinous, and thus fetched a lower price. Contrary to ˜rst impressions, these unsustainable fisoil miningfl practices may well have been fieconomically rationalfl for individual farmers, given California™s high interest rates in the mid-nineteenth century. The result of declining yields and quality was that, in many areas, wheat ceased to be a pro˜table crop and was virtually abandoned (Rhode, 1995, pp. 773Œ800; Olmstead and Rhode, 2008, pp. 223Œ61). 2

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Intensi˜cation and Diversi˜cation Indicators of Change Between 1890 and 1914, the California farm economy shifted from large-scale ranching and grain-growing operations to smaller-scale, intensive fruit cultivation. By 1910, the value of intensive crops equaled that of extensive crops, as California emerged as one of the world™s principal producers of grapes, citrus, and various deciduous fruits. Tied to this dramatic transformation was the growth of allied industries, includ – ing canning, packing, food machinery, and transportation services. Table 1 provides key statistics on the transformation of California agriculture between 1859 and 2007. Almost every aspect of the state™s development after 1880 re˚ected the ongoing process of intensi˜cation and diversi˜cation. Between 1859 and 1929, the number of farms increased Table 1. California™s Agricultural Development about 700 percent. The average size of farms fell from roughly 475 acres in 1869 to about 220 acres in 1929, and improved land per farm dropped from 260 acres to about 84 acres over the same period. These changes ushered in vastly different production arrangements driven by the differing require – ments of extensive grain operations compared with intensive fruit farms. Movements in cropland harvested per worker also point to increased intensi˜cation after the turn of the century. The statewide land-to-labor ratio fell from about 43 acres harvested per worker in 1899 to 20 acres per worker in 1929. The spread of irrigation broadly paralleled the inten – si˜cation movement. Between 1869 and 1889, the share of California farmland receiving water through arti˜cial means increased from less than one percent to ˜ve percent. Growth was relatively slow in the 1890s, but expansion resumed over the 1900s and 1910s. By 1929, irrigated land accounted for nearly 16 percent of the farmland. No. of Farms Land in Farms Improved Land Cropland Harvested No. of Farms Irrigated Irrigated Land Ag. Labor Force (1,000(1,000) ——–(1,000 Acres)——– (1,000) (1,000)Acres) 1859 19 8,730 ——–53 1869 24 11,427 6,218 —-60-100 69 1879 36 16,594 10,669 3,321 –300-350 109 1889 53 21,427 12,223 5,289 14 1,004 145 1899 73 28,829 11,959 6,434 26 1,446 151 1909 88 27,931 11,390 4,924 39 2,664 212 1919 118 29,366 11,878 5,761 67 4,219 261 1929 136 30,443 11,465 6,549 86 4,747 332 1939 133 30,524 –6,534 84 5,070 278 1949 137 36,613 –7,957 91 6,599 304 1959 99 36,888 –8,022 74 7,396 284 1969 78 35,328 –7,649 51 7,240 240 1978 73 32,727 –8,804 56 8,505 311 1987 83 30,598 –7,676 59 7,596 416 1997 74 27,699 –8,543 56 8,713 260 2007 81 25,364 7,633 52 8,016 NA Sources: Alan L. Olmstead and Paul W. Rhode, fiThe Evolution of California Agriculture, 1850-2000,fl 2003.,_Chapter_2_US_State_Level / 3

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18781889189919091919192919391949195919871997196919782007Figure 1. Distribution of California Cropland Harvested, 1879Œ2007 10,000 Wheat Barley 9,000 Corn Vegetables for Sale Hay Cotton 8,000 00)(1,0 7,000 sted 6,000arve5,000 4,000 nd H3,000 oplar Cr 2,000Acres fo1,000 0 Data on the value and composition of crop output place California™s agricultural transformation into sharper relief. Between 1859 and 1929, the real value of the state™s crop output increased over 25 times. Growth was especially rapid during the grain boom of the 1860s and 1870s, associated primarily with the expansion of the state™s agricultural land base. But improved acreage in the state peaked in 1889, and cropland harvested peaked in 1899. Subsequent growth in crop production was mainly due to increasing output per acre and was closely tied to a dramatic shift in the state™s crop mix. After falling in the 1860s and 1870s, the share of intensive crops in the value of total output climbed from less than four percent in 1879 to over 20 percent in 1889. By 1909, the intensive share reached nearly one-half, and by 1929, it was almost four-˜fths of the total. In terms of the crops producedŠthe scale of operations, the quantity and seasonality of the labor demanded, and the types of equipment neededŠCalifornia agriculture was a very different place than it had been 50 years earlier. Figure 1, which shows how cropland harvested was distrib -uted across selected major crops over the 1879Œ1997 period, displays the transformation in further detail. In 1879, wheat and barley occupied over 75 percent of the state™s cropland whereas the combined total for the intensive crops (fruit, nuts, vegetables, and cotton) was around ˜ve percent. By 1929, Rice Fruit and Nuts Other the picture had changed dramatically. Wheat and barley then accounted for about 26 percent of the cropland harvested and the intensive crop share stood around 35 percent. In absolute terms, the acreage in the intensive crops expanded more than ten times over this half-century while that for wheat and barley fell by more than one-third. Explaining the Transition Many of the commonly accepted explanations for the causes and timing of California™s structural transformationŠsuch as the advent of the transcontinental railroad, the spread of irrigation, and the slump in world grain pricesŠfail under close inspection. The transcontinental railroad was completed in 1869, and one of the ˜rst effects was an increase in the importation of fruits from the East. At that time, California was not yet self-suf˜cient in fruit production. Monopoly railroad pricing limited exports from California, and shippers of canned and dried fruits found ocean transport preferable. In the 1880s, the Santa Fe Railroad connected to California, creating more competition. In addition, during roughly the ˜rst 15 years of railroad availability, the rudimentary South – ern Paci˜c service was not well suited to handling perishable commodities. Key changes occurred in the mid-1880s, when the Southern Paci˜c began express shipments of entire trains carrying fruit in ventilated cars, and refrigerator cars were 4

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Germany; and ˜gs (eventually together with the wasps that facilitated pollination) from Greece and Turkey. Plant breeders also got in on the act. The legendary Luther Burbank, who settled in California in 1875, developed hundreds of new varieties of plums and other fruits over his long career (Tufts, 1946; Hodgson, 1993). In part, the growth of horticultural knowledge occurred through the informal fifolk processfl but, over time, the process of research and diffusion became increasingly formalized and institutionalized. Agricultural fairs served to demonstrate new practices and plants. As an example, a series of major citrus expositions, held annually in Riverside from the late 1870s, helped popularize the new Bahia orange variety. An emerg – ing group of specialty farm journals, such as the Southern California Horticulturist, California Citrograph , and California Fruit Grower, supplemented the stalwart Paci˜c Rural Press to spread information about fruit growing (Teague, 1944; and Cleland and Hardy, 1929). The California State Board of Horticulture, formed in 1881, provided an active forum for discussion of production and marketing practices, especially through its annual convention of fruit growers. The Agricultural College of the University of California, under the leadership of Eugene Hilgard and Edward Wick – son, intensi˜ed its research efforts on horticultural and viti – cultural problems after the mid-1880s. By the early 1900s, the USDA, the state agricultural research system, and local cooperatives formed an effective working arrangement to acquire and spread knowledge about fruit quality and the effects of packing, shipping, and marketing on spoilage and fruit appearance. These efforts led to the development of pre-cooling and other improved handling techniques, contributing to the emergence of California™s reputation for offering high-quality horticultural products. This learning process eventually propelled California™s horticultural sector to a position of global leadership. More generally, the example of the state™s horticultural industry highlights the important, if relatively neglected, contribution of biological learning to American agricultural development before the 1930s (Olm – stead and Rhode, 2008). The application of science, strict quality control in the ˜elds and packing houses (often via policies supported by coop- eratives), and a rapid and quality-conscious transportation system to bring fruits to the market, all supported by a commercial ˜nancial network, was the landmark creation of California™s agribusiness community. This integrated system became known as the fiCalifornia Model,fl and was the envy of fruit producers around the world. It allowed California producers to capture the high-price end of markets across Europe. A second major transformation took place before 1930, with the increased cultivation of row crops including sugar beets, vegetables and, most notably, cotton (see Figure 1). These changes represented an intensi˜cation of farming, requiring signi˜cant capital investments and signi˜cant increases in labor. The rise of row crops often led to a vast increase in productivity on what had been marginal or under-utilized lands. The advent of cotton, which by 1950 had become the state™s most valuable crop, offers another important case study in the continuing evolution of California agriculture. As with the shift to fruit crops, the shift to cotton was also associated with signi˜cant scienti˜c and institutional innovations. 6

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3,500 3,000 0 0 Acreage Harvested Bales Produced Yield California™s White Gold The Introduction of Cotton adoption of high-quality seeds, and a relative freedom from Acreage Harvested and Production (1,000’s) 1,750 1,500 Yields in Pounds Per Acre Harvested 2,500 2,000 1,500 1,000 500 1,250 1,000 750 500 250 From Spanish times, visionaries attempted to introduce cotton into California on a commercial basis. A variety of factorsŠ including the high cost of labor, the distance from markets and gins, and inadequate knowledge about appropriate varieties, soils, etc.Šdoomed these early efforts. The real breakthrough came during World War I when high prices coupled with government research and promotional campaigns encour -aged farmers in the Imperial, Coachella, and San Joaquin Valleys to adopt the crop. Figure 2 illustrates acres harvested, bales produced, and yields per acre from 1910 to 2017. The tremendous absolute increase in California™s cotton acreage from the 1920s to 1980 contrasts with the absolute decline nationally. California™s acreage in cotton ranked 14th out of 15 cotton-producing states in 1919; by 1959 it ranked only behind Texas. Several factors distinguished California™s cotton industry from other regions. First, cotton yields were typically more than double the national average. High yields resulted from the favorable climate, rich soils, controlled application of irriga – tion water, use of the best agricultural practices and fertilizer, Figure 2. California Cotton, 1910Œ2017 4,000 pests. Second, the scale and structure of cotton farms was remarkably different in California. From the mid-1920s through the 1950s, the acreage of a California cotton farm was about ˜ve times that of farms in the Deep South.1 As an example of the structural differences between California and other important cotton states, in 1939 farms producing 50 or fewer bales grew about 17 percent of the output in Cali – fornia, but in other leading cotton states, farms in this class produced at least 80 percent of all cotton output. Thus, it is not surprising that California™s gross income per cotton farm was almost nine times the national average (Musoke and Olmstead, 1982). Mechanization Other distinctive features of California cotton farms were their more intensive use of power and their earlier mechanization of pre-harvest activities. In 1929, a California farm was almost 1 Some of these San Joaquin Valley farms would grow into immense holdings. The J.B. Boswell company is purportedly the world™s largest private farm and cotton farm, credited with owning over 135 million acres. Arax and Wartzman, 2005. 2,000 1910 1930 1950 1970 1990 2010 7

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20 times more likely to have a tractor than a Mississippi farm (U.S. Bureau of the Census, U.S. Census of Agriculture: 1959, General Report: Statistics by Subjects, Vol. II). The Paci˜c Rural Press in 1927 offered a description of the highly mechanized state of many California cotton farms: fimen farm in sections. By the most ef˜cient use of tractor power and tools, one out˜t with a two-man daylight shift plants 100 acres per day, six rows at a time, and cultivates 70 acres, four rows at a time (April 2, 1927).fl The more rapid adoption of tractors created a setting favorable to further modernization. When picking machines became available, farmers already possessed the mechanical skills and aptitudes needed for machine-based production. The larger size of cotton operations in California and the more intensive use of tractors re˚ected a fundamentally different form of labor organization than existed in the South. By the 1940s, on the eve of cotton harvesting mechanization, most cotton in California was picked on a piece-rate basis by sea – sonal laborers under a contract system (California Committee to –, March 15, 1951; Fisher, 1953). Although conditions varied, a key ingredient was that a labor contractor recruited and supervised the workers, and dealt directly with the farmer, who might have had little or no personal contact with his laborers. This type of arrangement implied different class and social relationships from those that prevailed in much of the South. The California farm worker was more akin to an agricultural proletarian than to a peasant. The proverbial paternalism of southern planters toward their tenants had few parallels in California. Tenants remained on their allotted plots year-round, while many California farmworkers followed the harvest cycle, migrating from crop to crop. As with many crops, California cotton growers also led the way in harvest mechanization. Many of the factors discussed aboveŠincluding pre-harvest mechanization (and familiarity with machines), relatively high wages, large-scale operations, high yields, a ˚at landscape, and a relative absence of rain during the harvest seasonŠall aided in the adoption of the mechanical harvester. Spindle picking machines ˜rst appeared on a commercial basis following World War II. In 1951, over 50 percent of the California crop was mechanically harvested compared to about 10 percent for the rest of the nation. And roughly one-half of the country™s machines were in California (Musoke and Olmstead, 1982). One-Variety Community California was also home to the largest one-variety cotton community. In the ˜rst decades of the twentieth century, USDA cotton specialists became increasingly alarmed by the declining quality of American cotton due to the effects of the boll weevil, which prompted farmers to switch to earlier- maturing but lower-quality cottons. In addition, smaller pro – duction units in the South, seed mixing at gins, and market failures in cotton grading and marketing, contributed to the quality problem. After about a decade of one-variety experi – ences in the Southwest, the California legislature declared eight San Joaquin Valley counties and Riverside County as a one-variety community. The 1925 legislation stipulated that only Acala cotton, bred by an association research facility, could be planted, harvested, or ginned in an area of more than four million acres. In the early years, the California one-variety system probably had the desired effects of increasing quality and prices of the state™s cotton. However, John Constantine, Julian Alston, and Vernon Smith demonstrated that by the late 1970s, this system was becoming increasingly inef˜cient, costing the state™s cotton farmers about $180 million a year. In the rest of the nation, one-variety communities had faded away in the 1950s, but in California the system lingered on far too long (Constantine, Alston, and Smith, 1994; Olmstead and Rhode, 2008, ch. 6).2 As Figure 2 makes clear, after reaching a peak circa 1980, California™s cotton acreage and production declined rapidly. Yields continued their upward march, and over the 2007Œ 2011 period were still nearly double the national average. The dramatic fall in cotton™s importance once again re˚ects the dynamism of California agriculture as growers responded to changing environmental conditions and opportunities. Rising water cost and growing pest problems made cotton produc – tion less lucrative, while especially in Fresno county farmers converted considerable acreage to more lucrative crops such as almonds, grapes, and tomatoes. Another change not evident in Figure 2 is that since the 1980s, there has been a marked increase in the importance of high quality, extra-long staple, Pima cotton, which was planted on about one-half of the state™s cotton acreage (Geisseler and Horwath). 2 For more traditional accounts see Turner, 1981; Weber, 1994; and Briggs and Cauthen, 1983. 8

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318501860187018801890190019101920193019591969194019501978200719971987Livestock Production Ranching Similar forcesŠearly adoption of large-scale operations and advanced technologiesŠcharacterized California™s livestock economy. The broad trends in livestock production in Cali – fornia since 1850 are re˚ected in Figure 3, which graphs the number of head on various types of livestock as aggregated into a measure of animal units fed. 3 California emerged from the Mexican period primarily as a cattle producer. A series of droughts and ˚oods in the 1860s devastated many herds, and in the 1870s, sheep-raising had largely replaced cattle- ranching (U.S. Bureau of the Census, Census of Agriculture 1959, General Report, Vol. II.). Many of the livestock ranches of the nineteenth century, including Miller-Lux, Tejon, Kern County Land Company, Flint-Bixby, Irvine, Stearns, and Hearst, operated on extremely large scales. For example, Henry Miller and Charles Lux amassed more than 1.25 million acres of land, often with valuable water rights (Igler, 2001). With the intensi˜cation This measure combines livestock into dairy-cow-equivalents using the following weights: dairy cows=1; non-dairy cows=0.73; sheep=0.15; goats=0.15; hogs=0.18; horses and mules=0.88; chickens=0.0043. Figure 3. Livestock Inventories, 1850Œ2007 6,000 Chickens Sheep5,000 Other Cattle 4,000 3,000 2,000 1,000 0 Number of Animal Units(Milk Cow Equivalents, 1,000’s) of crop production in California, aggregate livestock activities tended to grow slowly. Although the smaller, family-sized fruit farms began to replace the large bonanza grain farms and livestock ranches, figeneralfl farms, modeled on Midwestern prototypes, remained rare. This is re˚ected in the relatively small role of swine production in Figure 3. Largely as a result, over the twentieth century, livestock production has been relatively less important in California than in the rest of the country. The market value of livestock and livestock products sales as a share of the sales of crops, livestock, and livestock products has generally exceeded one-half nationally but usu – ally hovered around a third in California. Dairy Herds Dairy and poultry operations represent exceptions to the general pattern of slow growth of livestock farming in the ˜rst decades of the twentieth century. These activities steadily expanded, primarily to serve the state™s rapidly growing urban markets. In 1993, California replaced Wisconsin as the nation™s number one milk producer (USDA, Agricultural Statistics, 1995). Between 1900 and 1960, the number of milk cows grew at a rate of 1.5 percent per annum and the Hogs Horses and Mules Milk Cows 9

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