CALIFORNIA IS LOSING FAMILY FARMS
FARMING FAMILY MOVES TO TEXAS TO PRESERVE THEIR LEGACY
Today, December 26, Lincoln Forry, a California walnut farmer will transplant his family’s century-old farming legacy to a new state. Despite a healthy 650-acre walnut orchard, loyal employees and top-of-the-line equipment, this farming operation can no longer thrive in California.
It’s a bittersweet reality. On one hand, three generations of the Forry family are walking away from a long history of farming in the Golden State to migrate to a more business-friendly state. On the other hand, there is a bright future in store for them.
The process took about four years to transition from initial thoughts about the future of farming in California to the actual sale of the ranch which occurred about three months ago. The family stayed until December to manage the walnut harvest — both at the field level and operate the huller/dryer.
The Forry family’s story is an example of how California’s regulatory environment is suffocating family-owned and operated farms. Lincoln says farms with less than several thousand acres are particularly vulnerable because they are too small to hire office staff to manage compliance requirements, but big enough fall into regulatory thresholds.
Given this reality, Lincoln felt it was more important to farm where a future is plausible for his children and grandchildren.
Four years ago, Lincoln and his wife, Jennifer, went on road trip to Texas to look at purchasing a pecan orchard in consideration of expanding the business.
They liked what they saw, and more importantly liked what they heard from other farmers in the state.
Lincoln and Jennifer were in disbelief as they learned about the business environment for ag business — it seemed to be based the concept of mutual trust to farm responsibly as opposed to multi-layered regulatory oversight.
Excited by the prospect, they came back to California and shared the news with Lincoln’s mom. Lincoln’s mom and dad farmed and operated the huller/dryer for 50 years, and his mom continues as an active participant in the business.
After the initial visit, the family researched the differences between the two states. Their findings: California appeared to be completely opposite from Texas in terms of being able to pursue a farming lifestyle.
Then they visited again, this time with his mom and their four children to see where they might live in Texas.
The actual decision-making process was not easy. They had to justify leaving behind a ranch that has been silent partner to their family over five generations. Leaving means letting go of sentimental ties to their family home.
Lincoln’s great-grandfather settled on the ranch in 1903. The ranch in Colusa has provided an ideal place to raise a family.
Lincoln had to decide personally as well as collectively with his family.
He thought about he felt about a future life in California. With a sentiment that the state has little regard for the farming community it cast a shadow on his future outlook.
He remembered thinking a few years ago, “I’m too young to not want to get up and go to work in the morning.”
Then as a family they talked it over. They listed the pros and cons: to stay or not stay in California.
“We all agreed, that we need to go,” Lincoln said. “I didn’t feel that there wouldn’t be any (future) here for my kids. So, I got them a new piece of dirt.”
Wanting the dirt to be viable, he sold the family’s California ranch and bought a cattle ranch in Paris, Texas.
Texas offers an opportunity to move to a state where ag business is embraced instead of scrutinized. Lincoln feels strongly that making this move provides a more sustainable future for the family business to grow for another century.
California-based operations must adhere to the strictest standards in the country.
Regulations have a long history in the state with traditional brick and mortar businesses — manufacturing, processing, etc. A significant number of regulations were established in the 1960s and 1970s, many of which were triggered by the Clean Air Act.
Regulations applied to traditional businesses; but, agriculture was a different type of business, so most rules exempted ag businesses.
Ag has been and continues to be a difficult segment to regulate for several reasons.
With a diversity of operations means there is a lack of uniformity among operations which can range from a dairy farm, 100-acre pistachio farm or 200-acre strawberry farm. Seasonality is another area that hinders process. For example, a busy three-month period for an almond harvest turns into no activity following the harvest during the rest of the year.
To make matters worse, there are very few common elements that individual crops share and California is home to hundreds of crops.
Equipment is highly specialized for the type of crop it’s used for. Secondly, seasonal equipment varies in age — from a 60-year-old tractor to a nearly brand-new shaker.
Despite the logistical challenges, the last two decades have served as a “catch-up” through a series of changes to legislative and regulatory requirements that apply to farming operations.
The evolution in regulations occurred in the early 2000s, around the time Lincoln transitioned to the helm of the family ranch.
Traditional exemptions for ag faded when multiple pieces of legislation targeted agriculture operations — in a series of bills called the SB 700 series.
These laws cast a wide net to bring all ag operations under scrutiny and move the rulemaking process into high-gear so that not only was compliance now mandated, but operations had to keep pace with industries that had been regulated for decades.
One regulatory example is open burning (also called ag burning) is a rule that seeks to control particulate matter. The rule went into effect in 2010 by requiring a registration and permitting process for an ag operation to burn on designated burn days which generally are just a handful a year.
Overall, the changes have been significant.
“We’ve gone too far too fast and it feels like we are outrun. It’s a big snowball, that is now an avalanche,” Lincoln said.
Air regulations set the stage for a tenuous operating environment, but it was labor law that determined the Forry’s farming future.
On January 1, 2016, California’s minimum wage increased from $9 to $10. On January 1, 2018, the minimum wage will increase from $10 to $10.50 and set in motion annually increases from $10.50 to $15 per hour. There is a one year delay in implementation for employers with less than 25 employees.
Lincoln explained he would have no problem paying his employees more money and would be glad to do it. There are two problems with the minimum wage equation: it increases business expenses for all California-based businesses, and it decreases how much money the farm is paid for the crop.
If Lincoln stayed in California, his payroll expenses (not including payroll tax or workers’ compensation) would increase by $400,000 in 2018. This increase is based on the 10 year-round employees. When the harvest season arrived, that would increase to 25 employees.
Increasing the minimum wage also means higher costs for all goods and services, including the businesses where Lincoln would buy parts, fertilizer, packaging, or pay for transportation. The higher wage is added to the cost of the item or service, and passed along to the customer.
“Just go look at everything you buy. Look around your house and everything is going to go up,” Lincoln said.
The impact doesn’t stop there: the walnut processor where Lincoln’s walnuts are processed will also have higher costs. Now, Lincoln’s price per pound drops.
“Where do I get that money? It comes out of my pocket — meaning my savings and this isn’t a one time cost. Those that buy my walnuts will pay a half cent a pound less to account for the wage increases. Now, I am getting a half cent or penny less a pound,” Lincoln said.
In farming, producers don’t have the power to set the price for their product based on the law of supply and demand.
There is another change that is affecting ag. California passed a law in 2017 that removes overtime provisions for ag field operations. The new law will be phased-in, starting January 1, 2019.
Lincoln calculated the health of the family business just by adding the labor costs. Based on the minimum wage increase and removal of ag overtime provisions, the business would be upside down in five years.
Despite the grim reality, Lincoln struggled with how to break the news to his employees.
Nearly half of the 10 employees have worked with the Forry family before Lincoln took the helm.
The employees are like family. They were at his wedding, saw his children come home from the hospital and attended his father’s funeral.
“I’ve never had to look a guy in the eye before and tell him he is laid off,” Lincoln said. “Now, I am essentially having to turn a blind eye, and walk away.”
He said he had to put his family first, but it was still a grueling experience.
Installing a new huller/dryer was a necessity to keep the business afloat and was completed before the family contemplated moving out of state.
Lincoln explained that new huller/dryer was necessary to accommodate local walnut farmers who brought their crop to the Forry facility.
“Customer’s crops were getting bigger and out-growing our small facility. We either had to let go of customers or go big,” Lincoln said.
Forry’s huller/dryer handles more than 3 million pounds of walnuts.
A walnut huller/dryer serves as a second step in the post-harvest handling of walnuts. First, walnuts are harvested in orchards. Immediately after harvesting, the raw nuts are transported to a huller/dryer or in the Forry’s case, they operate their own to process their crop, as well as, for others.
During the next step, the hulling process removes the outer layer, also called the husk, from the walnut. Walnuts are then dried before being transported to a processor. At the processor, the crop is sized, graded, and packaged of both in-shell and shelled walnuts for shipment to third parties for sale.
Retiring the 50 year old huller/dryer to a brand new huller/dryer provided more capacity, improved technology and greater efficiency.
LOSS FOR CALIFORNIA
The state of California may not notice the Forry family leaving. By the time it becomes noteworthy, the pendulum will have swung too far.
One walnut grower’s plight is really one that belongs to all Californians.
There are so many positives that come from a single 700-acre farm: jobs, food, open land, preserving a way of life, economy, environment.
“There are hundreds of people who contribute to produce a bag bag of walnuts,” said Lincoln. “It’s not just me and 10 guys.”
“It is spent here. It’s 114 years of spending money here in the community.”
How do you replace five generations of caretakers?
“You have to take care of dirt and ground in turn it takes care of you,” Lincoln said. “It’s a give and take.”
Texas will inherit an incredible family legacy.