By Faughn Commercial • Economy 0 Comments

FRESNO COUNTY ECON FORECAST: BRICK-AND-MORTAR TRANSITIONING, BUT HERE TO STAY

Fresno County businesses, farmers and retailers have weathered a tornado of unpredictable events in 2020. But in 2021, commercial and residential real estate are expected to thrive. Ethan Smith, a broker at Newmark Pearson Commercial in Fresno, specializes in industrial real estate. He says that Fresno’s commercial real estate market is growing. “Industrial has continued to be incredibly active since we sort of shifted gears due to the pandemic,” Smith said.  He said demand continues to outpace supply, but it can take a while for pricing to catch up to market changes.

Spring brought concern about the economy, but conditions are not looking nearly as poor as experts first thought. “As things have settled down, we haven’t seen the doom and gloom predictions that people have thought,” Smith said.  Industrial firms were deemed essential from the start, which might have helped, and will continue to help in 2021. “Small businesses locally tend to be pretty resilient; we actually still see demand because businesses are growing,” he said.

Some businesses need to lease more space. However, growth can be tough between businesses and banks. “Banks are being more judicious with their lending. However, we’re not seeing the same things during the financial crisis where liquidity just went away,” he said. Low interest rates means cash is cheap at the moment.

The housing market is also booming, and will continue to stay that way in the near future. But Smith and Danyelle Conner, real estate agent at London Properties in Fresno, said it’s because inventory is low. Thus, prices continue to climb. “The market right now continues to be pretty hot,” Conner said. Traditionally November slows down because people like to decorate their homes for the holidays, Conner says. “But as par for the course this year, nothing has been traditional with Covid, and we’re not really seeing a slowdown like we typically would expect right now,” Conner said. “Buyers are also willing to pay the prices sellers are asking, but I have had a few issues with appraisals lately,” Conner said. “Buyers are willing to pay it, but appraisers are not willing to give it the value.” This has potential to make buyers want to come down on the price if appraisers think it’s too high.

Office space has not died off as first predicted. Projects are still under construction because people want to work in a collaborative, in-person setting. Small and medium sized businesses rely on the office because of the lack of accommodation for sophisticated information systems available working from home. “The obituaries that were written about the offices were incredibly premature. And there’s no obituary,” Smith said.  Many office workers have been negatively affected by school closures, as was the agriculture industry, which delivers mass amounts of fruit, vegetables and milk to grade schools. Ryan Jacobsen, CEO of Fresno County Farm Bureau, says that Covid will continue to play a role in the 2021 agriculture forecast. “Overall, the commodities definitely are lower than what we’ve seen in the past decade, and a lot of that is attributed to the softer foreign markets for some of the products that are more heavily demanded worldwide,” Jacobsen said. This will play a role in foreign trade in the Covid era looking into 2021. “Central Valley agriculture is very dependent upon foreign trade, and so our hope is that the worldwide economy still demands California produce,” Jacobsen said.

Jacobsen hopes the United States-Mexico-Canada Agreement and U.S.-China Phase 1 trade deal will pay dividends in 2021. Aside from Covid-related differences, water runoff was below average year, so the agriculture industry hopes to have a better water year in 2021 because it means more crops in the ground. In 2021, retail giants like Amazon, Target, and Walmart could change the small business front. “The retail industry already was changing. The pandemic — people staying home — has only accelerated what was already happening,” Smith said. There is a shift as retailers occupy more warehouse space and use their own delivery infrastructure to accommodate consumers quicker, which could spur industrial construction. “The expectation on the customer’s end is not waiting five to seven days for delivery anymore,” Smith said.

The outlook for restaurants is certainly not bright, especially as Fresno County reenters the most restrictive purple tier on the state’s lockdown list. This week, Fresno Mayor-elect Jerry Dyer said on a panel discussion with California mayors that 30-40% of restaurants in Fresno will never open again, reported gvwire.com. Smith says we will continue to see the weeding out of businesses who can’t survive the temporary 30-40% decrease in sales until the economy levels out, which may occur in summer 2021. But online retailers born during the pandemic also see the value of operating a brick-and-mortar.  Nicole Zieba, Reedley city manager, and Alex Henderson, Kingsburg city manager, both remain optimistic about 2021. Reedley has a 90-day operating fund reserve for 2021. And both Kingsburg and Reedley cities show rapid commercial and residential development.  For instance, Reedley has been targeting advanced food manufacturing to reported success.

Then there is the incoming T-Mobile call center in Kingsburg, which Henderson says will bring 1,000 jobs to the city. The 100,000 square foot customer experience center is slated for early 2021, after being on hold for the past year.

https://thebusinessjournal.com/fresno-county-econ-forecast-brick-and-mortar-transitioning-but-here-to-stay/

By Faughn Food Processing • Renewable Energy 0 Comments

North American farmers profit as consumers pressure food business to go green

Beer made from rice grown with less water, rye planted in the off-season and the sale of carbon credits to tech firms are just a few of the changes North American farmers are making as the food industry strives to go green. The changes are enabling some farmers to earn extra money from industry giants like Cargill, Nutrien and Anheuser-Busch. Consumers are pressuring food producers to support farms that use less water and fertilizer, reduce greenhouse gas emissions and use more natural techniques to maintain soil quality.

Investments in sustainability remain a tiny part of overall spending by the agriculture sector, which enjoyed healthy profits in 2020. They may help to head off more costly regulations down the road now that Democratic climate advocate Joe Biden was elected U.S. president. Some companies, like farm retailer and fertilizer producer Nutrien , are also opening new revenue potential for farmers by monetizing the carbon their fields soak up. The companies say technology is improving measurement and tracking of carbon capture, although some environmental activists question the benefit of such programs and how sequestered greenhouse gas volumes can be verified.

Sustainable techniques farmers are adopting include refraining from tilling soil at times to preserve carbon. Some are adding an off-season cover crop of rye or grass to restore soil nutrients instead of applying heavy fertilizer loads over the winter that can contaminate local water supplies. A study conducted by agriculture technology company Indigo Ag estimated that if U.S. corn, soy and wheat farmers employed no-till and cover crops on 15% of fields, they would generate an additional $600 million by reducing costs, bolstering soil productivity or selling carbon credits.

Indigo has a partnership with brewer Anheuser-Busch Inbev NV, which plans to buy 2.6 million bushels of rice this year grown with less water and nitrogen fertilizer than conventional rice. Anheuser-Busch said that is up from 2.2 million bushels last year and accounts for 10% of its U.S. rice supplies.

Bill Jones, the brewer’s manager of raw materials, said farmers voluntarily growing rice with a lower environmental impact along the sensitive Mississippi River would be less disruptive to supplies than having local authorities require such practices by legislating changes to water and nitrogen use. “We look at supply chain security. I see this gaining traction,” he said, noting that Minnesota and other U.S. states and conservation districts worried about polluting the Mississippi are already introducing limits on how much manure farmers can spread on fields. Arkansas farmer Carson Stewart used the program for the first time this year, earmarking his entire 340-acre rice crop to Anheuser-Busch. Depending on milling quality, his rice may earn up to $1.50 a bushel more than conventional rice, a premium of about 27%, he said.

https://www.reuters.com/article/usa-agriculture-climatechange/focus-north-american-farmers-profit-as-consumers-pressure-food-business-to-go-green-idUSL2N2GK17L

By Faughn Food Processing • Renewable Energy 0 Comments

Worms help power Valley winery’s wastewater system

Worms are helping a Valley winery on its path to becoming more green. Olympic-sized swimming pools at O’Neill Winery are actually beds filled with worms helping the company become greener. “Our technology at BioFiltro, what it is is the star of the show is the worm. Ultimately, the worms are known as an ecosystem or environmental engineers,” said Mai Ann Healy, BioFiltro spokesperson.

BioFiltro, an international company, was able to go through Fresno State’s Valley Ventures program that focuses on water, engineering and technology businesses. The worms are known for converting waste or organic matter. Water is spread across the worm beds and goes through levels of wood chips, river rocks, drainage cells and exit pipes. “So within four hours, our worms are getting fed, getting full and also producing more microbes and bacteria that’s furthering helping us reduce and convert waste into beneficial byproducts,” Healy said. The technology allows the company to take about 80 million gallons of processed water and clean it.

O’Neill Winery is the seventh-largest winery in California. They produce wines and spirits sold around the United States. “So what we are trying to do is provide a sustainable process so that we can have a facility that is environmentally stewards, that is reducing our carbon footprint, reducing/minimizing our waste,” said Phil Castro, senior director of winery operations. O’Neill said they’ve taken steps to be more green with solar energy and the BioFilitro system. They’re able to save water and use that for crop irrigation and reduce the amount of water they use. “So we can ensure for generations to come that there’s water available to continue the great process of agriculture,” Castro said. A sustainable process and technology thriving here in the Valley.

By Faughn Distribution 0 Comments

Amazon plans distribution hub at former Bakersfield Kmart

The former Kmart on Wilson Road is slated to become an Amazon distribution hub and the e-commerce giant’s second warehouse development in Kern County. City records show a 123,000-square-foot warehouse proposed at the site would receive and sort six truckloads of consumer goods per day. Products would then be loaded onto 20 delivery vans and shipped out in staggered departure times to avoid causing congestion.

Amazon has been identified as the operator, according to a representative of one of the small businesses ordered by the property’s owner to vacate the site to make room for the new project. An Amazon spokeswoman would not confirm or deny the project. She said by email the company is “constantly exploring new locations and weighing a variety of factors when deciding where to develop sites to best serve customers.”

The property’s owner did not return calls requesting comment Monday. Neither did the project’s applicant at Irvine real estate developer Greenlaw Partners. The city’s Board of Zoning Adjustment in September approved a conditional-use permit to convert the existing, 50-year-old building into a distribution warehouse. Nowhere in materials filed with the city is Amazon mentioned, and a city official said the operator’s name had not been disclosed.

Amazon was similarly stealthy when it was in early stages of developing the much larger “fulfillment center” the Seattle-based company recently opened just north of Meadows Field Airport. In that case, county officials considering the project were unaware the nation’s most valuable retailer was behind it. A majority of the property’s 128,150-square-foot footprint along Wilson Road will remain in place, according to paperwork filed with the city. But it says the shopping center’s eastern portion will be bulldozed to accommodate driving access and parking. The demolition is expected to take out several small businesses operating on the property, including the Golden Ox Diner and a small store owned by the father of Miguel Munoz, who said he was told by the landlord that Amazon had purchased the entire property.

County records give no indication Amazon has bought the center. They show the former Kmart, which closed in early 2017, was purchased in May 2018 by investor Balbir Singh. He sold it in March 2019 to Big J Investment LLC, which is at least partly owned by Singh. County property records show that eight months later Big J sold or transferred the property to itself or a company of the same name. Munoz said his father’s lease doesn’t expire until April but that they have been told to vacate by January. He said the final deadline to move out has changed a few times. A representative of the city of Bakersfield said its Planning Division has not received a project timetable from the property owner or the applicant, Greenlaw.

The warehouse can only improve what has become a blighted property, said Bakersfield real estate professional Frank St. Clair, whose company owns a 257-unit apartment building directly north of the empty Kmart space. “We’re happy to see it go,” he said, adding that transients hanging out at the shopping center sometimes jump a fence onto his company’s property. Singh originally planned to develop an independent supermarket on the site of the former Kmart and the Big Lots next door. His business partners said there was also going to be a banquet hall, a gym and a Dairy Queen at the shopping center. Those plans appear to have been changed.

https://www.bakersfield.com/news/amazon-plans-distribution-hub-at-former-bakersfield-kmart/article_cec64cea-43e4-11eb-8c30-6b0be55c7af1.html?utm_source=bakersfield.com&utm_campaign=%2Fnewsletters%2Fbreaking%3Ffast-method&utm_medium=email&utm_content=headline

By Faughn Food Processing 0 Comments

CROP REPORTS REVEAL NEW, OLD TRENDS IN VALLEY AGRICULTURE

Delays involving coronavirus pushed the publishing of Central Valley crop reports back this year. While farm receipts from 2018 to 2019 show an almost unchanging total, beneath the surface, shifts in dominant crops have begun to occur as growers face labor shortages and higher water demand. Cumulatively, ag commissioners across Fresno, Tulare, Kings and Madera counties report gross values in 2019 equaling $19.41 billion, down from $19.45 billion in 2018.

Almonds have been the top crop for several years in Fresno County, but in other counties, they are still coming into their own. In Tulare County, almonds ranked No. 6, up from No. 8 the year before. The nut grossed $426 million in 2019, up from $311 million. Acreage also increased, up 11,000 acres from 2018 to 78,300 acres. Growers have been fearing a price drop as acreage continues to grow, said Roland Fumasi, North American Regional Head for RaboResearch Food & Agribusiness in a previous interview. Supply continues to grow, setting shipment records. Another record year is predicted for the crop, with estimates ranging at 3 billion pounds being produced. Lower prices means some California crops can better compete abroad against other producers, but the United States produces 80% of almonds worldwide. Lower prices don’t give California growers an edge like they should. However, lower prices means more people can afford the nut. Because of lower pricing and strong demand, shipments have been robust, Fumasi said.

Almonds averaged $4,942 a ton across the four counties, according to the crop reports in 2019. Prices in 2018 averaged $4,664 a ton. Decreases in wine acreage lead a retreat in grapes across the Central Valley. In Fresno County, raisin and table grape acreage had slight increases. Grapes used to consistently hold the top spot over the years, competing with citrus. Of late, vineyards have bequeathed that title to less labor-intensive crops such as almonds. Table grapes have seen a rise over the past few years, according to Ian LeMay, president of the California Fresh Fruit Association. There has been a shift in varieties for sweeter grapes, he said.

The industry still relies on human hands and labor represents the biggest issue, followed by water. Bunches of grapes are still picked by hand, then sent down the rows in wheelbarrows where they’re packed. Even in the off-season, vines need to be thinned and prepped. Forty percent of table grapes go overseas and foreign markets view California grapes as “premium,” said LeMay. So while labor demands have put pressure on getting higher prices, that view of quality coming from the Central Valley hasn’t affected the fruit’s ability to compete internationally “yet,” said LeMay.

Grapes grossed $2.07 billion, down from $2.27 billion in 2018. Acreage increased in Tulare County to 53,680 acres from 51,950 acres in 2018. Acreage decreased in Fresno County to 164,549 acres from 168,038 in 2018. Over the last few years, citrus has struggled, said Casey Creamer, president of California Citrus Mutual. Larger volume crops coupled with trade disputes have caused problems all around for citrus growers. “When one is out of whack, it creates a real problem in the industry,” said Creamer. Exports represent 30% of the market for citrus. Oranges, both navel and Valencia, grossed $1.17 billion, up from $762 million, according to crop reports. Creamer says 2020 has cause for growers to be more optimistic about citrus.

The loss of restaurant purchasing has put lemons at a loss, but domestic demand for citrus, especially in the face of a pandemic, has raised pricing for oranges and mandarins. The upcoming winter crop for navels looks like the fruit will have good size and quality, Creamer said. It is a little too early to tell how foreign markets will be for the upcoming crop, but he anticipates domestic demand to continue to be strong.

A phase-one agreement in trade deals between the U.S. and China in February dropped tariffs on citrus to 35% from 75%. The fact that the development occurred a month before the pandemic stymied any potential boon growers could have experienced from the negotiation. Growers may see a benefit for this season’s harvest, however. Some other notable development occurred in fruits and veggies. Melons did well in 2019 in Fresno County, growing to $194 million from $156 million in 2018. Lettuce leaf more than tripled to $97 million from $31 million. Recorded price per unit in the crop reports almost tripled to $1,350 a ton from $500. Garlic and onions had a tough year with late spring rains, according to Bob Ehn, CEO of the Garlic and Onion Research Advisory Board.

A fungus called garlic rust was prevalent, causing growers to spray three to five times that season. Hail also damaged a lot of fresh market onions. Onions halved to $178 million from $369 million. Garlic dropped to $365 million from $434 million.

2018 was a banner year, however, setting high marks for the crops. 2020 is looking to do the same, said Ehn. The advisory board is looking to stretch its influence into Kern and Madera counties. Critical water issues in west Fresno County could pose a threat into the future, Ehn said. In the past 10 years, that region of Fresno County grows 95% of garlic for the country.

https://thebusinessjournal.com/crop-reports-reveal-new-old-trends-in-valley-agriculture/

By Faughn Energy • Hi-Tech 0 Comments

Large energy storage project would create new reservoir above Isabella Lake

A $3 billion pumped-water energy storage project has been proposed along Isabella Lake that would help even out power delivery from California solar and wind farms at a volume and longevity dwarfing the large battery installations envisioned for eastern Kern. The Federal Energy Regulatory Commission is reviewing a Walnut engineering company’s plan to create a new reservoir above the lake then use pumps and underground pipes to turn it into a rechargeable dam and hydroelectric generator putting out a whopping 2,000 megawatts of power for up to 12 hours at a time.

Optimistically, the project could open within six years but remains in such an early stage that its environmental impacts haven’t been studied and its eventual owners or operators haven’t been identified, said the head of the company behind the proposal, Power Tech Engineers Inc., whose principals have experience with similar projects elsewhere. President Victor Rojas suggested the installation might serve best as a government asset even as it would serve electric utilities and their customers.

He said the U.S. Department of Energy has expressed interest in covering up to 70 percent of the project’s cost. The agency did not respond to an email Monday afternoon requesting confirmation of an offer of financial backing. Also, a FERC official reviewing Power Tech’s proposal could not be reached for comment. Pumped-storage hydroelectric, as such projects are known, is among many forms of energy storage under consideration as California looks to provide clean, renewably sourced power even when solar and wind installations aren’t generating electricity.

Gravity-powered projects like Power Tech’s proposal offer benefits and drawbacks different from the kind of batteries proposed to be sited alongside massive solar arrays planned for eastern Kern. Pumped-water storage offers huge scale and lifetime of maybe 100 years but it cannot instantaneously produce power and it disrupts large areas of habitat. Batteries immediately deliver when called on but have a relatively short life — generally less than two decades — and can’t provide electricity for more than a few hours at utility scale. For size comparison, 8minute Solar Energy’s 400-megawatt, more than $1 billion Eland photovoltaic array proposed in eastern Kern would come with 1,200 megawatt-hours of energy storage — just 5 percent the capacity of Power Tech’s pumped-water project.

Kern River Master Dana Munn, who oversees water storage and flow at Isabella Lake, expressed concern Power Tech’s project would interfere with the flow of water from the lake down the river. “A power plant will go on and it’ll essentially cause a fluctuation in the river,” he said. Rojas disputed that interpretation, saying the project would use a “closed-loop” design that shouldn’t affect the lake or the river much once it is equipped with between 30,000 and 40,000 acre-feet of water.

Membrane would be installed beneath the water’s downward flow to reduce water loss to percolation, he said, and there would be a covering above, possibly including solar panels, to limit evaporation. Rojas said three alternative sites are under consideration for siting the upper reservoir. If the “small lake” that would be created is deemed to have too great an impact on animals and plants there now, he said, “we’ll look somewhere else.” But his hope is that the benefit becomes clear. “Without projects like this the renewable energy solution won’t be possible,” he said. “We have to have a way to store the energy when the sun is not shining (and) the wind is not blowing.” He added that informational workshops for the public will be scheduled later allowing people to learn more about the project. He said Power Tech’s engineers, formerly with the Los Angeles Department of Water and power, have designed pumped-water energy projects in Castaic and elsewhere.

Rosemead-based utility Southern California Edison and the nonprofit California Independent System Operator, which operates the state’s power grid, said separately they were not familiar with Power Tech’s proposal but that they support a diverse mix of energy-storage projects. Pacific Gas and Electric Co. declined to comment on the project.

https://www.bakersfield.com/news/large-energy-storage-project-would-create-new-reservoir-above-isabella-lake/article_a79ff7ee-4955-11eb-a6d5-5b06b053bb14.html

By Faughn Food Processing 0 Comments

Blue Diamond reports $1.59 billion in revenue. Almond milk from Turlock is a hit

Blue Diamond Growers had $1.59 billion in revenue in its latest annual report, boosted in part by the new almond milk operation in Turlock. The Sacramento-based cooperative saw a 1.5% increase in the fiscal year ending Aug. 28 over the previous year. It was announced during a Nov. 23-24 online event that replaced the usual luncheon at Modesto Center Plaza.

Blue Diamond employs about 1,800 people at plants in Sacramento, Salida and Turlock, up about 100 from a year ago. It is the biggest player in a California almond industry that accounts for about 80 percent of the global supply. This was the 110th annual meeting for the company, launched in Sacramento in 1910. Plants followed in Salida in 1968 and Turlock in 2013. The Washington Road plant in June added Almond Breeze milk to its slicing, dicing, blanching and almond flour production. Before that, the Sacramento plant made all of this dairy substitute.

The Salida plant long did just basic processing of bulk almonds bound for food makers around the world and the Turlock and Sacramento plants. Last year, the Sisk Road site added dry-roasting and flour production. This past spring, it expanded warehouse space for incoming nuts by 20 percent.

https://www.modbee.com/news/business/agriculture/article247517695.html#:~:text=Blue%20Diamond%20Growers%20had%20%241.59%20billion%20in%20revenue,year%20ending%20Aug.%2028%20over%20the%20previous%20year.

By Faughn Economy • Food Processing 0 Comments

Top World Region – San Joaquin Valley Agriculture

Fresno County is home to over 1.4 million acres of productive pasture and farmland. It remained the top ag county in the state and nation. Ag commissioner Melissa Cregan delivered the crop report to county supervisors. Cregan told the board, “The 2019 gross production value for agriculture in Fresno County was $7.718 billion.”

That figure was down 2% from a year ago but the battle to be the number-one ag producer was extremely tight among valley counties. Fresno County topped the list at $7.71 billion. Kern County was right behind at $7.62 billion, while Tulare County was at $7.50 billion.

Fresno County Farm Bureau CEO Ryan Jacobsen explained, “In a year like this year, you really appreciate that the value that every single farmer contributes really makes that difference.” The pandemic decreased demand for some crops during the spring. In April, we watched some lettuce get disced back into the ground because orders for restaurants and schools were canceled due to a sudden drop in demand in the foodservice industry. Cregan said, “Fresno County’s agricultural strength is based on the diversity of the crops we produce.”

Over 300 crops were grown in Fresno County. Seventy-eight of them topped $1 million in annual ag production. Jacobsen said, “The shining star once again was almonds, saw a dramatic increase there. A lot of that was acreage based.” Almonds were worth over $1.5 billion in 2019.

The number-two crop, grapes, dipped under the billion-dollar mark though. Jacobsen said, “Table grapes, wine grapes as well as raisins. It’s been tough for the local grape industry.” Pistachios, poultry and milk rounded out the county’s top five crops. Cregan thanked local growers and ranchers for their resiliency during a tough year. She said, “All the glory goes to the farmers because they’re the ones producing these crops and placed us where we are.” International trade was down. Ag officials believe continued challenges posed by the pandemic may lead to lower production numbers next year.

https://c751d5.a2cdn1.secureserver.net/wp-content/uploads/2020/12/Kern-EDC_Ag-Flyer_2020.pdf