by Victor Davis Hanson<\/p>\n
PJ Media<\/em><\/p>\n Boom or Bust?<\/strong><\/p>\n I have lived on the same farm for 59 years and seen at least three boom-and-bust farm cycles \u2014 one in the late 1960s, another in the early 1980s, and a third right now. I\u2019ve witnessed raisins, for example, at $1,420 a ton 35 years ago, then $410 a ton, then $700 a ton \u2014 and now almost $2,000. The old wisdom insisted that almond acreage could never exceed 200,000 acres without a crash, that prices would never go over $1 pound to the farmer, that production could not go much over 3,000 lbs. per acre.<\/p>\n Now? There are now 800,000 plus acres of California almonds, prices near $3 a pound, and new varieties are creeping up to 4,000 lbs. per acre. Some almond orchards remind me of alien organisms: lousy soil, undersized trees, tiny roots \u2014 and loaded with nuts to the point that props are needed to keep the trees from toppling over, as agronomy keeps these artificial creations going with daily IV fusions of water and nutrients. It is almost as if anything on the tree that is not a nut is genetically superfluous.<\/p>\n When I began farming full-time in the cresting boom of 1980, vineyard or orchard went for almost $10,000 an acre. I saw it crash three years later and prices dip as low as $3,000 an acre for what was then called \u201cThompson Worthless\u201d vineyards. By the 1990s, prices were back up to between $7,000 and $10,000 per acre \u2014 only to go back down too $5,000 by 2003. And now? Bare land can go for $15,000 an acre and up; a productive vineyard or nut orchard sells for $25,000 to $30,000. \u201cThey\u201d say $35,000 an acre is on the horizon.<\/p>\n I am getting old and remain a cynic (see\u00a0Fields Without Dreams<\/a>\u00a0[1]<\/sup><\/em>\u00a0and\u00a0Letters From an American Farmer<\/a>\u00a0[2]<\/sup><\/em>). All the same, I think eventually the latest boom will likewise bust. (Most of the \u201crich\u201d I know out here made their money by emulating J.Paul Getty\u2019s de facto rule of \u201cbuy low, sell high \u2014 everything can be sold or bought, all the time.\u201d<\/p>\n Most of my friends in these parts disagree about a looming bust. Things are \u201cdifferent\u201d now, they swear. Why? Human nature has been altered? The U.S. dollar has never been more stable? The debt is small? Governance is unusually competent? There will be plenty of water \u2014 new dams; the sneaky little smelt will get his comeuppance; salmon won\u2019t get their water from mountains to the sea?<\/p>\n Booming for 100 Years?<\/strong><\/p>\n But I digress, so let us count their reasons for optimism: 1) 400 million new empowered consumers in India and China enjoy a fig, some almonds, or a raisin or two as relish for their California rice, wheat, or beef, and will buy all they can of the state\u2019s staples and specialty crops from our Pacific ports. Now both countries possess both the tastes and the wherewithal to pay for our farm exports.<\/p>\n 2) America is no longer a nation of 250 million, but nearing 320 million souls. Seventy-million extra mouths translate into an entirely new consumer class the size of France right here in the U.S., prompting new domestic demand as never before.<\/p>\n 3) Land is finite, or rather, shrinking. Suburbanization, shortages of water, higher costs \u2014 all that and more mean that we are not going to see all that much further increases in production. New hybrids, better technique, drip irrigation, novel fertilizers, intensification of farmland, and more are reaching their theoretical limits. Existing land is more likely to be encroached upon than new acreage opened up for farming.<\/p>\n The optimists believe that at last the supply\/demand ratio has tipped their way. My late mother, dying from a brain tumor in the bust of the mid-1980s, was desperately trying to keep our money-losing farm. She used to plead with me: \u201cSome day, land will be precious. Please, please don\u2019t sell.\u201d Maybe she was right about \u201csome day,\u201d but much of her efforts went for naught, and the land was sold under duress in the bust, for about one-sixth of what that land is worth now. The owners of my siblings\u2019 land do not live nearby, but they are gracious people who magnanimously allow me to venture beyond my own 45-acre remnant and in the evenings walk the contours of the original farm of my ancestors. But now land is for money, money is for land \u2014 nothing more, nothing less.<\/p>\n 4) Another reason for the boomers\u2019 optimism: everything but land and food is bad and almost everywhere but the U.S. things are even worse off. There is no interest on passbook savings. Urban real estate\u00a0is dicey after 2008<\/a>\u00a0[3]<\/sup>. When \u2014 not if \u2014 the soaring stock market dives is the current betting. Land and the profits it provides are seen as good investments. The EU and its agricultural subsidies are in shambles. California\u2019s competitors \u2014 mostly Europe\u2019s Mediterranean agriculture \u2014 are bankrupt. India and China need food for their new yuppies. California agriculture is real: wonderful land, superb weather and climate, innovative farmers, and adequate water \u2014 for now.<\/p>\n 5) Most importantly, this boom is said to be profit-based. The others in the past were more inflation- and speculation-driven, as hedges for inflation or brief aberrant commodity price rises. This land rush is supposedly based on bottom-line arithmetic. If almond orchards are high at $25,000 an acre, so are almond profits: 3,700 pounds per acre at $3 dollars a pound leads to a theoretical (everything in farming is theoretical) gross of over $11,000 an acre, and perhaps $7,000-$8,000 an acre net profit \u2014 or a 30% percent return on the investment the first year. (One local just bragged to me he could pay off his land in four years.) In the old days, booming land prices were never justified by such highly spiked commodity prices. I think the fast talkers are drunk who say \u201cbuy now at $25,000 an acre before it goes to $40,000.\u201d But then I confess I thought they were inebriated two years ago when they were buying orchard at $12,000 an acre.<\/p>\n I want to be mistaken and believe the boom will only grow, but I have seen too many busts destroy too many lives of my friends and family. Still, whatever the truth, it is fascinating to watch, this mad scramble to make lots of money off the land \u2014 shysters, crooks, the audacious, the capable, the noble, the cynical, they are all out here involved in the way of the forty-niners. The old sandy hill with the half-dead vineyard down the road? No longer is it marginal land that is either poorly planted or sandy. So $6,000 an acre is poured into it \u2014 and, presto, out goes the pathetic vineyard and in comes hybrid almonds on computerized drip lines, overseen by corporate agribusiness experts. Who now cares about its sand, unleveled ground, and bad location? For investment purposes it is now \u201ca California almond orchard\u201d and that is all ye need to know.<\/p>\n The Homesteaders?<\/strong><\/p>\n And how about the old agrarian ideal? Is the new boom enriching hundreds of thousands of families at last with money to spruce up their old Victorian clapboard houses on 100 acre ancestral plots?<\/p>\n Nope. They are all dead, buried, forgotten. While the successful corporate families are trying to expand, bigger money is also coming from the outside of agriculture: 401K investment funds, pension portfolios, insurance profits, safe havens for imperiled euros, or smart investments for coastal professionals tired of rising taxes and zero interest. The result is that if in 1970 I knew every family in a two-mile radius, I don\u2019t know more than 10% of the landowners in my nearest vicinity now. Heck, I don\u2019t even know if there are any landowners, rather than shareholders of some investment portfolios.<\/p>\n Stranger still, the land looks better, not worse, at least in the daylight. A corporate-type lectured me not long ago for writing an essay on the \u201cTwo Californias\u201d: (if I could paraphrase him: \u201cYour problem is that you chose to spend the night on your land. That\u2019s dumb to hang out with copper-wire thieves, gang bangers, and the 18% unemployed. You\u2019re supposed to live in Fresno, visit your land in the daytime hours, and leave the problems after dark to your foreman and the insurance company.\u201d<\/p>\n Sort of like\u00a0Hippo Regius<\/a>\u00a0[4]<\/sup>\u00a0and\u00a0the Vandals<\/a>\u00a0[5]<\/sup>\u00a0circa A.D. 430?<\/p>\n Out with the Old, in with the New<\/strong><\/p>\n Central California is also a magnet for very rich Punjabis. Their three-story gated castles of 6,000 square feet are suddenly commonplace. For every copper-wire thief, there is an immigrant agribusiness man who smiles and says: \u201cNo problem. I just got more barbed wire, more video cameras, more lights\u201d \u2014 such an impressive confidence so characteristic of the immigrants who have always energized America.<\/p>\n The Sikh community arrives with capital, English, and education \u2014 and wishes to become even richer, better spoken, more highly educated, and more successful. In this nexus, land is not just a wise investment, but immediate proof of visible, tangible success, in the manner of the old idea of a landed aristocracy. A Punjabi acquaintance (I don\u2019t know him well) also sermonized to me: \u201cYou guys are played out. You don\u2019t have kids. If you do, they\u2019ve moved away. You\u2019re not up to it anymore.\u201d He\u2019s right: the old 19th century immigrant communities \u2014 Armenians, Japanese, Scandinavians, Portuguese \u2014 are dying off (if not completely assimilated) and the third generation mostly sold out and moved on, their plots recombined into\u00a0latifundia<\/em>. (At lectures I meet those in the audience who say, \u201cI grew up in Visalia. We had a place in Madera.\u201d End of story.) But as I replied to my Sikh interrogator: \u201cWhat makes your community exempt from the same forces that saw the Armenians, the Dutch, and the Swedes leave farming?\u201d Does anyone still believe in the old idea of\u00a0labor laboris gratia<\/em>?<\/p>\n The California Paradox<\/strong><\/p>\n No one is more upset than I about the direction of California \u2014 valued citizens exiting the state, high taxes, poor services, terrible public education, substandard infrastructure, contempt for the law, liberal sermonizing coupled with boutique apartheid, shameless ethnic identity politics, and public union bullying. But that said,\u00a0as I\u2019ve written<\/a>[6]<\/sup>, California is hard to destroy in a generation. For now, the governor is right that his higher taxes, his pie-in-sky high-speed rail, the solar and wind cons, the public employee fiefdoms \u2014 all that will continue for the present for three reasons.<\/p>\n Old-fashioned Energy<\/strong><\/p>\n One, there is a lot of oil and gas in the Monterey Shale formation. It is located right in the center of the state, ideal in terms of exploitation and transportation. Drilling off Big Sur would be one thing, drilling in the scorched, godforsaken West Side foothills, where nary a Bay Area professor or Santa Monica lawyer has ventured, is quite another. In Montecito or Lafayette, you can get fined for painting your house off-pink; out here you can move nine mobile homes behind it, dig some holes for outhouses, string Romex, create a low-rent compound \u2014 and the most regulated state in the nation becomes the most wild. At some point soon, fracking and horizontal drilling will start in earnest. The money will flow to ensure funding for one-third of the nation\u2019s welfare recipients, for the schools that rank 48th\u00a0and 49th\u00a0in the nation, for the unfunded $300 billion in pension liabilities, for ad hoc, stopgap tinkering on the murderous sections of the 99 and 101, and for the environmentalists to save the next bait fish in line.<\/p>\n