San Diego’s losing avocado market grip

May 19, 2016. I North County, CA. USA. | Avocados on sale from a venders off HWY-76 in San Diegos North County. |Photos by Jamie Scott Lytle. Copyright.

The Gist:

Salty water turns avocado leaves brown, curbs root growth and can even stop trees from producing fruit at all. In the past three years, the amount of salt in the water used by most avocado growers in San Diego County has gone up by 20 percent, according to one expert.

Like any plants, avocados need water to thrive. But lately, water has been causing a lot of headaches for San Diego’s avocado farmers.

Water rates have soared over the past several years. And as San Diego water officials have scrambled to assemble a drought-proof water supply, they’ve begun to rely more on water from the Colorado River. That water, it turns out, is quite salty. Avocado trees are particularly sensitive to salt.

Salty water – even water that has been treated and is fit to drink – turns avocado leaves brown, curbs root growth and can even stop trees from producing fruit at all.

It’s started to take a toll: For decades, San Diego and its 18,000 acres of avocado trees has been the top avocado-producing county in the United States. Ventura County is now on the verge of overtaking San Diego, in part because water there is cheaper and not as salty.

“The thing I find that is quite interesting is that district water that passes state standards for human consumption is water that is not worth a damn for a grower,” said Charley Wolk, a longtime avocado grower in Fallbrook.

In the past three years, the amount of salt in the water used by most avocado growers in the county has gone up by 20 percent, said David Crowley, a soil scientist at University of California, Riverside. Even with good quality water, he said that growers may be applying 30 pounds of salt per tree, and much more if the water is salty.

Salt is a longstanding worry for farmers across the world. Typically, they hope for steady rains to carry away excess salt from irrigation or at least push it beneath the roots so the salts don’t harm their plants.

Of course, California is in a drought, so that needed rain hasn’t materialized.

“A lot of our trees are damaged and we just haven’t had the rains to wash the salts out of the soil,” said Jerome Stehly, a veteran grower in Valley Center.

Most of San Diego’s avocado orchards are in North County, around Fallbrook and Valley Center.

There, most water comes straight from the Robert A. Skinner Filtration Plant in Riverside County, which is operated by the Metropolitan Water District of Southern California.

Metropolitan tries to create avocado-friendly water at Skinner by blending the Colorado River water with less salty water from Northern California. But, because of the drought, the Northern California water hasn’t been making its way to Skinner, which means San Diego farmers last year got water that was almost entirely from the Colorado.

Avocado growers believe they are seeing the effects.

“The consensus of those who have been around the industry for a while is that the crop we’re harvesting now is that the fruit size is smaller,” Wolk told me earlier this month. “In my opinion, here we are in the first week in May and the fruit is not growing anymore, it’s not getting any bigger.”

To get rid of the salt, farmers could apply extra water to the trees, hoping to push away the salt build-up. But the high cost of water in San Diego means that’s not much of an option for many.

This is perhaps the top complaint by San Diego farmers. Other California farmers have much cheaper water. Farmers in other parts of California have relied on groundwater, which costs only what it takes to drill a well and then pump water from it; or they can buy subsidized water from the Central Valley Project, the federal government’s canal and reservoir system.

Neither is an option for most farmers in San Diego: Groundwater is scarce here, and the Central Valley Project ends around Bakersfield.

The price of water puts San Diego farmers at a disadvantage, at least when they are growing crops, like avocados, that are grown elsewhere.

In 2011, the University of California Agricultural Issues Center studied what it would take to plant a new 20-acre avocado grove in several counties. In San Diego, water costs were about four times higher than the cost of water in Ventura County, the second-largest avocado producing county.

To break even, a new avocado farmer in San Diego would need to bring in about $1.44 per pound. In Ventura, a farmer would be able to break even at just 88 cents per pound. Right now, non-organic avocados are selling for up to $1.36 a pound in mid-May. That price is up from earlier in the year, when Mexico flooded the market with avocados.

So, if salt is affecting crop yield, that could be a real problem, because farmers’ costs aren’t going down.

Jessica Hunter, a farm manager at Del Ray Avocado in Fallbrook, said growers could have substantially lower production because of salt issues.

“We’re starting to get where you significantly reduced your production because the nutrients aren’t going up the tree,” she said.

Some farmers are considering buying machines called sulfur burners just to re-treat water – not for salt but for alkalinity, another problem that can reduce yield. The machines would add yet another expense.

Then there’s the fact that San Diego’s avocado farms tend to be in some of the most fire-prone parts of the county. In San Diego, growers have taken out or lost in fires about 8,000 or 9,000 acres of avocado trees in the past decade. (The 2007 fires damaged about 1,722 acres, according to one estimate.)

In 1980, San Diego harvested from 24,820 acres of avocados and produced half the state’s avocados. Now, according to the latest estimates from the California Avocado Commission, San Diego has just 16,870 acres of producing avocado trees. Ventura County has 16,732 acres and is likely to produce about as many avocados as San Diego this year, according to the commission.

Photo by Jamie Scott Lytle

Photo by Jamie Scott Lytle
Avocados groves line a hill in North County.

Water officials in San Diego have speculated about the possibility of a “death spiral” for agriculture in North County. As farms go out of business, water districts sell less water. That makes water prices even higher because water districts still have to pay to operate plants, pumps, reservoirs and pipelines – so they charge more for each unit of water. When water prices go up again, fewer farmers can stay in business, so they shut down, which then drives prices up again. And so on.

“It’s a matter of mathematics,” Stehly said. “Prices are going to just keep going up and people are just going to keep going out of business.”

He and most other growers believe it’s possible to make it as an avocado grower. But farmers are going to need to invest in different trees – ones that are more tolerant of drought and salt but also have higher yields. But Stehly, who is an active member of the California Avocado Commission, is also beginning to think about what can replace avocados in some parts of San Diego.

“We’re always looking for the next great crop that can take what we call cruddy water,” he said.

This summer, Metropolitan says it will be able to take some water from the State Water Project – a system of canals, pipelines and reservoirs that carries Northern California water to Southern California – and blend it with Colorado River water, so the water should not be as salty.

“That’s really our main lever, so until the State Water Project supplies consistently stay favorable, it will be challenging,” said Brent Yamasaki, Metropolitan’s manager of operations and planning.

The San Diego County Water Authority recently added one lever: its desalination plant in Carlsbad. The water from that plant has been so stripped of salt, it could be mixed with Colorado water to provide better water to farmers. So far, though, not every farmer in the county has access to that blended water, because of the way the pipelines are connected.

Escondido’s City Council will decide later this month if the city should spend $29 million on a water recycling project to provide low-salt water to its farmers, particularly avocado growers.

Farmers are lobbying Metropolitan to lower its prices, but officials there say there’s little chance prices will come down. Metropolitan is offering incentives for avocado farmers to use technology to reduce their water use, which will reduce their expenses.

About 8 percent of the County Water Authority’s water is sold at a discount to farmers, though it remains expensive. But that lower prices comes with an attached string: When there are water cutbacks, farmers who get the discount are the first to get cut.

Enrico Ferro, an avocado grower in Valley Center, replanted some of his groves in 2013. When mandatory cutbacks hit farmers last year, the amount they needed to cut was based on their water use in 2013. His water use that year was low, because he had so many young trees that didn’t use much water. Now, the trees are grown and use more water. He was being asked to use less water even though he had more need for it.

“What I realized from that is that the smart farmers wait until they are told they have to cut back water and then remove sections of their grove,” he said.

Luckily, Ferro got a one-time reprieve from the Valley Center Municipal Water District, which allowed him to use more water than his original allotment.

“If my appeal hadn’t gone through,” he said. “I would have lost this property.”

People are still entering the industry, though they are not always optimistic about its future.

John Haskett, a businessman, bought an avocado orchard in Bonsall years ago. He’s worried about salt, about water prices, about avocados from Mexico and about the looming $15 minimum wage that will drive up his labor costs.

“We could be witnessing the end of California agriculture in our lifetime,” he said, looking out over his 106 acres, which can hold 10,000 avocado trees. “It could just be one large subdivision.”

As he rode his four-wheeler across the farm, he stopped suddenly and got off to pick up an avocado that was in the middle of the dirt road. Avocados that fall to the ground can’t go to market, but this one seemed fine. He cut into it with a pocketknife, and offered me a slice. It was a perfect green, and it was delicious.

Clarification: This post has been updated to make clearer that while only some North County farmers have access to water that’s a blend of desalinated water and Colorado River water, desalinated water is available outside of North County.


The Tax Loophole That Gave Rise to San Diego’s Avocado Boom

The Gist

While the county’s first avocado orchards were planted around 1915, the industry exploded six decades later thanks to congressional bumbling and some sharp-eyed tax planning.

May 19, 2016. I North County, CA. USA. | Avocados on sale from a venders off HWY-76 in San Diegos North County. |Photos by Jamie Scott Lytle. Copyright.

May 19, 2016. I North County, CA. USA. | Avocados on sale from a venders off HWY-76 in San Diegos North County. |Photos by Jamie Scott Lytle. Copyright.

San Diego has long been California’s No. 1 avocado producer, so it might be easy to forget that avocados aren’t native to California.

Indeed, while the county’s first avocado orchards were planted around 1915, the industry exploded six decades later thanks to congressional bumbling and some sharp-eyed tax planning.

The roots of the boom may be traced to the late-1960s and early-1970s, when Congress tried to clean up the nation’s tax code, which then allowed scores of America’s wealthiest families to avoid paying any income taxes at all. As part its tax reform effort, Congress closed a loophole that allowed people to avoid taxes by investing in citrus and almonds orchards.

Congress had long given farmers special tax rules, which were meant to accommodate the unique ebbs and flows faced by agricultural operations. High-income people discovered they could use those same rules to reduce their tax burden by investing in farming operations. Of course, there are other trees, and suddenly non-farmers discovered the avocado – doctors, attorneys and airline pilots. They could defer paying some taxes by investing in farming operations. Some of the investment could be counted as a “loss” and when they did eventually pay taxes, it was often at a lower rate.

For six years, from 1970 until 1976, when the loophole was closed on avocados, Californians planted about 10,518 acres of avocados because of the tax benefits of doing so, according to a 1998 research paper.

In 1970, there were about 18,000 acres of avocados in California. By 1980, that number snowballed to 50,000 acres, half of them in San Diego.

Ron Packard, then a Republican congressman from San Diego, lamented the “gentleman farmers” who were “farming primarily for tax incentives rather than for farming.”

“As a result, it has completely thrown the marketplace out of kilter in terms of production,” he said during a congressional hearing in the mid-1980s.

And while avocados are now the hallmark of California cuisine, at the time a third of Americans had never heard of them. Growers banded together to try and create a market for the newly abundant crop, and hired actress Angie Dickinson to appear in sensuous ads.

Today, avocados are a $154 million industry in San Diego, but it’s become harder to make money on avocados, because the industry is shrinking: That’s down from $170 million a decade ago.

Water rates have soared over the past several years in San Diego County, and the region has also begun to rely more on water from the Colorado River, which is high in salt that can turn avocado leaves brown and generally curb trees’ growth.

The amount of farmed land in the county is projected to shrink by half in the next several decades. Wine grapes and nuts might be options for farmers who are giving up on the avocado but want to keep farming. There are 6,000 farmers in the county, but most farms are small, about nine acres or less.

Thousands of acres of avocados were planted for reasons besides tax incentives, of course, before, after and during the 1970s. Avocados fetched a good price compared to other crops. Avocado trees also begin producing fruit three years after they are planted, meaning a new farmer can start seeing revenue quickly compared with other tree crops.

“If it didn’t take seven years for macadamias to come into commercial production, all of those hills covered with avocados might have been covered with macadamia nuts,” said Charley Wolk, a longtime avocado grower in Fallbrook and former chairman of the California Avocado Commission.

Written by Ry Rivard

Ry Rivard is a reporter for Voice of San Diego. He writes about water and land use. You can reach him at or 619.550.5665.


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