(gentle music) - So in all the analysis that you guys have done, have you taken a look at the way this winter in particular happened in California and how that affects different, whether it's policy, markets, whatever, have you done any deep dive analysis kind of stuff on that?

- Yeah, we have.

We've actually done a lot of analysis.

We wrote a research report on it, and there there's a lot to talk about it to say, I feel bad for the average consumer and the average citizen of California because the data that you get in the press is so factually incorrect.

Unless you do a deep dive like we do, you don't know what's correct.

So there's data out there.

when we were in the drought last year, call it the 20 through 22 drought, in particular from 21 to 22, there are some news organizations that came out and said worst drought in 1,200 years.

It wasn't even the worst drought in 50 years.

And there's comparable rainfall amounts going back five years and 10 years.

And then when this magnitude of rain came, it was "We've never seen rainfall like this," or "Here's a byproduct of global warming" or what have you.

But the data is out there if you take a look at it.

And the media and the leadership of the state talk about conservation as though conservation is the path to us reaching a level of sustainability.

So we put out this message on, I think it was on LinkedIn or we sent out a tweet where if you look at the water used in a year by all of California taking showers, and as you made the assumption, no one takes a shower for a year.

So 40 million people, no shower for the year, that would conserve about 250 billion gallons of water.

If you look at this past January and the amount of water that flowed out the delta into the ocean, 2 trillion gallons of water.

So you have eight times the amount of water flowing into the ocean, eight times the amount that you could actually conserve by not taking showers.

The whole directive from our state and the leaders of "You need to conserve," it doesn't move the needle at all, it has to be in storage.

Here's another example is that when the past rain season, let's say it goes from October through May or what have you.

So the amount of rain that came down was about 250 million acre feet.

And an average year is about 200 million acre feet.

Our reservoirs in the state of California can hold about 37 million acre feet.

At the time that the rain started falling, the reservoirs were at 17 million acre feet.

So the reservoirs are full now.

So that means of the 250 million of acre feet that came down, we captured 20 million.

So we captured 8% of the most recent storm.

Just a staggering fact.

And the balance of that water just has run out.

Most of it has just run out to the ocean.

- The Central Valley in particular is the last bastion of red California, so to speak, on any kind of scale.

And when you get in some of these political discussions in places like Sacramento, you find it out real quick.

Because the attitude is, "Well, you guys aren't voting for us anyway.

Why are we concerned?"

- At some point, you have to fight back, right?

And I think we're at the point now where-- - Oh we're past it, we're past that point.

- Well enough's enough, right?

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(gentle music) - I was pretty excited to see your 100-Mile Circle analysis, and I was wondering if you could explain it to me a little bit more and maybe tell me a little bit more about what else you do.

- Yeah, we're not in the business of writing research and the 100-Mile Circle has taken on a life of its own.

So my team and I, we advise family-owned farms that we've been doing it for about 20 years and we advise them on strategic alternatives, raising capital, selling, acquiring.

And as part of due diligence, when the other professionals came in, whether it's a law firm or a consulting firm or an accounting firm, the amount of education that we would have to provide to these "Professionals" was shocking to us because they were citing data that was just factually correct about the Central Valley, and there wasn't a single voice out there representing the Central Valley.

So we had the idea of let's just analyze this region.

And we have an office in Fresno and the majority of our meetings were in this general vicinity.

So we said, "Okay, if we had a compass, centered it on Fresno, and went Bakersfield to the South, Salinas to the west, and Modesto to the north, what does that look like from an ag production standpoint?"

And we had a general idea as to what it would look like, but the data blew us away.

And the stats in our report, and a lot of times we give this report to entities that are doing due diligence because it's all cited, is that that is the most prolific growing region in the world, has more type one soil than anywhere in the world.

It produces 14 times the peaches than the peach state of Georgia.

And you know this fact, but 10 times the oranges that people eat than Florida.

Florida's primarily for juicing.

75% of the almonds, all the raisins, you go down the list, there's 250 different commodities, 20% of all organic produce comes from this region.

So we put this report out there really to provide a unified voice to this region that didn't have one.

And since then, it's gotten a lot of publicity where even people that make their living in the ag industry had no idea the magnitude about how prolific it is.

And even on a per acre basis, it's the most profitable growing region in North America, even more than Napa and Sonoma Valley.

- So you're working with family-owned farms.

What is your long-term goal?

- [Bill] Well I've been doing the same thing for 30 years now, and that is advising family-owned farms.

And most of the farmers we meet have a question about what they want to do with their land.

And sometimes there's not a second generation or a third generation that wants to take it over.

And the question they have is what do I do with this asset?

And there's a lot of alternatives out there.

It's not just selling to a pension fund.

There's a lot of things you could do.

So we help them think about the alternatives.

We walk them through the pros and cons of the different alternatives and we do this analysis for them.

And then ultimately, we get hired to advise on it.

If you look at some of the largest ag transactions in North America, we've advised on most of them over the past 10 years.

And a lot of times it's a family business that we meet and then two, three, four years later, after our first meeting and after our analysis, they come back and say "We're ready to do something."

Because the family now has reached the point where mom and dad are gonna retire, the kids don't wanna step into the business and we help them execute that transaction.

Eric, so as a family-owned farm, what are you doing to compete against some of the larger players out there, Not just this year, but for the next decade?

- Well I think we look at the next several years unfolding, I think you're gonna see further and further consolidation regardless of what crop you grow or anything else.

And so my take on it is that if we're gonna be economically viable because we can't take advantage of some of the economies of scale that some of these other producers can, then we have to figure out a way to see if there's a niche that we can fill in the market and figure out if we can make that work and if there's enough profit in that to keep us going versus getting gobbled up by the big machine that seems to grab folks like us.

- [Bill] So when you compete, is it at the variety level where you're producing your own fruit or genetics?

- No, it's actually my take on it is that one of the advantages that particularly a generational-owned family farm has is their story.

So it's taking a piece of our story and some really high quality fruit that we grow that's on trees that are over 110 years old, and just taking that and making it available to consumers who might not have access to that.

If you kinda look at what happens in, I'll use the citrus industry because I'm familiar with it, I think the average time for a piece of fruit to come off of a tree and wind up in a grocery store is something like 16 days.

Two weeks, 16 days, something like that.

And what we're doing is getting it off the tree and in somebody's house and 48 hours or less.

And it's really flipping the dynamics of the market on its head because when you kind of look, as a California grower, generally speaking, this is a big generality, but most of the profitability from what we do comes from exports.

And so when you kind of look at that situation and you say, "Well, we're sending the highest quality on a boat across the ocean, and then the American consumer isn't getting that level of quality, but we grow it, how can we provide that to them in a way that's different and tells a piece of our story as well?"

Because I think that's what people, we were talking about this earlier, I think that's what people are after is wanting to understand how all of this works.

And in a lot of ways, agriculture struggles with being transparent about a lot of things.

And so that's kind of the way I see the future unfolding for a lot of folks like us.

- [Bill] So is it primarily a direct to consumer model, you have your own website and you pack and ship from a distribution facility?

- Yep, and it's very small.

And we're just trying to figure out, you know, I've looked at a lot of data at what's working, what's not.

And we've only done it one season so far, and we did okay.

And we'll see what that looks like.

It's interesting, a friend of mine in the industry, when I first started talking about doing this, his mind immediately went towards, "Well, we could expand it, we can make it bigger, and we can buy a facility" and all of that.

And I said, "No, that's what got us here in the first place."

I said, "I want to be a 40 acre grower."

And if I can sell 40 acres like this, that's what I want.

That's who I want to be.

(gentle music) So in all the analysis that you guys have done, have you taken a look at the way this winter in particular happened in California, and how that affects different, whether it's policy, markets, whatever, have you done any deep dive analysis kind of stuff on that?

- Yeah, we have.

We've actually done a lot of analysis.

We wrote a research report on it.

So as people talk about, we're making moves with conservation and more storage, there's not enough to take advantage of these spurts of rain.

And we've also looked on a historical basis too, and the data is online, it's from the government, it's NOAA, National Oceanic and Atmospheric Administration.

You could look at it.

They've been keeping data since 1895.

And the data is clear that the rainfall in California is almost very predictable.

On average it's 22 inches a year.

And we have periods where we get more and periods where we get less.

And in general, if you look at it over a 10 year period, you can make a prediction that there'll be a couple years of drought and a couple years of excess rain.

So the most recent storm we had where they're saying it was record, it was the fifth most rain we received in the past 40 years.

So it is comparable to other storms that we've had.

So simple math, we can assume that we'll get a storm like that about once every eight years.

The problem is there's not enough storage capacity.

So that's our analysis, and I have a lot more to say about it, but what's your perspective on this?

Why do you think that so much water goes out to the ocean, much more than is needed for environmental purposes?

What do you think the long term objective is of the people that are making those decisions?

- You know, when I look at it, and it's just my opinion, and you kind of look at Occam's razor and say what is it, I think it's financial.

I think there's a financial interest in a very small amount of hands that benefits from water scarcity.

Because if water is abundant and we come at managing water from a standpoint of abundance because there's more of it, it becomes cheap or cheaper.

And so that's really, kind of when I take the 30,000 foot view of all of it and look at it, I can't see another reason why.

Because if you look at the environmental side of things, they have a pretty dismal track record of achieving their stated goals, outside of their stated goal of eliminating agriculture or a significant portion of agriculture in the Central Valley.

Outside of that, wouldn't say that they've even come close to achieving their stated goals.

And the answer is always, "Well, we just don't have enough water.

So we need more."

And without something that's results-driven, it's the only thing that I can figure.

- [Bill] So those benefiting economically, is it the state or are there other-- - I think there's a number of players depending on their situation, whether it's government entities or private entities or however it works, because I just have a real hard time believing that this path that we've been on for the last 40 years with respect to water, that there just hasn't ever been accountability on that side of things.

And I understand that accountability is not a word usually associated with government during these times, but why would we continue to do exactly the same thing and expect a different result if there's not something underpinning all of it, that there has to be a gain for someone somewhere, someone, because at this point, nobody's gaining.

The environment's not gaining, farms and ranches aren't gaining.

And so there's gotta be some objective truth in there about why this continues to go on.

- [Bill] Yeah, and I think the path forward really is the narrative has to change, and who's creating the narrative, how the narrative is being delivered, and being able to access the consumer with facts about what goes on in the 100-Mile Circle and ag in general.

But do you agree with that?

- I think I do, I think that is the crux of the problem, I think in a practical sense, not sure how we get there.

Because from what I've seen in all of the dealings that I've had, it's such a high mountain to climb that I'm not sure how you get there.

I mean, we've tried all kinds of different paths and it doesn't seem to make a dent because every time you pick up the LA Times, which has a way broader distribution than what anybody in agriculture can have, you see these narratives out there like farmers are wasting water, we're growing food in a desert, we're exporting California's water out.

We're not seen as people growing food.

And that's been going on for so long that I'm not sure.

I was real hopeful during Covid.

I really was.

I thought, ah, here we are.

We've gotten to a point now where the consumer's paying attention because there was a lot going on with food during that time.

And then the minute that all of that's over, everybody's onto the next thing, right?

So how to make that stick I think is really the problem.

You definitely identified where we can make a difference.

I'm just not sure how we do that.

And that comes from someone who's been fighting in that battle for quite a while, it's tough.

- [Bill] I personally think we need to change the narrative.

And I think we need to go about it as a collective in the 100-Mile Circle and as a group of farmers and deliver facts and provide people the source data for the facts.

So here's a hypothetical.

You're an investor.

So here's a magical tree.

This magical tree, every acre removes 2.6 tons of CO2 per acre per year.

The holes of this magical tree produces a nut, can be used for feeding cattle as opposed to using alfalfa, which has a very poor carbon footprint, you can use these holes.

And this nut that it produces has the perfect combination of fat and protein, it's the almond tree, right?

So what do people hear?

What people hear is that it takes a gallon to produce an almond.

But if you look at what's going on in this country as far as type two diabetes and obesity, it's the perfect food.

And The Economist put out a study, and this is fascinating.

They looked at 57,000 different foods.

They looked at fruits, nuts, vegetables, animal protein, 57,000, and they ranked them by which had the best carbon footprint and the worst carbon footprint.

And they looked at calories, nutrition, protein, and weight.

And the almond ranked first at the very top in all the categories that they rank.

This is online.

So the general consumer doesn't know that, right?

So if you put stuff out there and say, okay, and then from a water consumption standpoint as well, people say it takes a gallon.

But if you look at what's important to the consumer as far as calories, fat, and protein, just looking at protein as an example, lentils, 17 gallons of water to produce one gram of protein.

Tofu, eight gallons of water to produce one gram of protein.

Almonds, four gallons.

So the narrative that's been out there has been controlled by entities that have a bias, right?

- Of course.

- [Bill] And I think if the consumer was to hear these facts, it would change their perspective.

It's not gonna happen overnight.

But whoever put the Got Milk ad campaign together years ago, we should probably go hire them.

And I'm not here to advocate just for almonds, but it's just an example of if you use data and you put the narrative out there, you're not gonna convince all the people.

But we're backed up with data.

And I don't view this as a state of California issue either.

This is a national issue, and our food supply is governed and overseen by Homeland Security.

And their regulation and what it states is that Homeland Security is overseeing our food supply, and this is their words, because if there's an interruption or degradation, it would be catastrophic to the US.

So what we're seeing really is a degradation that's being driven by policies in California.

So it doesn't just impact the 100-Mile Circle or growers within the region or the state of California.

This is now a national issue.

So when I talk about, you know, we need to take the fight to them and get the story out there, it's not just California, it's nationally.

And I hope some at the federal level steps in and starts taking a look at this.

- I agree, I agree with that 100% because I've seen it in real time.

I don't anymore, but I used to belong to a farmer group that has farmers from all over the country in it, and I would talk to these guys a couple times a week.

And without fail, all of these guys, they would listen to me talk about what we're going through here.

And their jaws are just wide open and they're like, "Oh God, how do you do that?

We're not doing that here."

And I said, "It's coming.

Get ready for it and get your house in order because it's coming your way."

So I think yeah, a lot of it does emanate from California and move out into the rest of the country.

(gentle music) It is fascinating how much they don't, I say they, you know, there's a group of people out there for whatever reason, they don't want that narrative to change, period.

- Yeah.

It is so surprising if you think about what's being produced here in the Central Valley of California, and it's not as though it's something that's bad for you, unhealthy, or if they're successful in their mission, it's gonna have an impact on water or carbon emissions.

Because what you're really doing is you're moving carbon emissions to another point in the world.

So that doesn't really change anything.

And relatively speaking, if you look at the water usage for ag relative to the amount of water that comes down in California, it's not gonna have an impact.

It's not gonna move the needle.

When you're talking about 200 million acre feet coming down and we're capturing, depending on the year, four to 10% of it.

So if ag completely is out of the picture, it doesn't really change the impact of it.

- When you get in some of these political discussions in places like Sacramento, you find it out real quick.

Because the attitude is, "Well, you guys aren't voting for us anyway.

Why are we concerned?"

- It's not gonna be an easy battle, but it's a battle worth fighting.

- [Announcer] Production funding for American Grown: My job Depends on Ag" provided by James G. Parker Insurance Associates, insuring and protecting agribusiness for over 40 years.

By Gar Bennett, the Central Valley's growing experts.

More yield, less water, proven results.

We help growers feed the world.

By Brandt Professional Agriculture, proudly discovering, manufacturing, and supplying the ag input that support the heroes who work hard to feed a hungry world every day.

By Unwired Broadband, today's internet for rural central California, keeping valley agriculture connected since 2003.

By Hodges Inc Battery Storage Systems.

Would you rather invest in PG&E's infrastructure or your own?

By Harrison Co, providing family farms with the insights they need to make the best possible strategic, M&A, and financial decisions.

By Sierra Valley Almonds, dedicated to sustainable agriculture and water efficiency for a brighter farming future.

By Cal-Pacific Supply, providing agriculture the field supplies needed to keep field operations on track.

And by Valley Air Conditioning and Repair, family-owned for over 50 years, dedicated to supporting agriculture and the families that grow food for a nation.

(upbeat music)