August 2016

Focus on Agriculture

by DWC Team on August 15, 2016

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Many American farmers are currently enduring what is believed to be a continuation of a stressful economic environment. As in any industry, margins are critical, with multiple components contributing to profitability and current challenges – weather, foreign and domestic competition, stringent regulations and politics.

Farmers are currently producing bumper crops while there is already an oversupply, creating downward pressure on the price of many crops. This has resulted in substantial debt – the highest in more than 30 years. The cost of land remains firm in contrast to a 14-year low in profits. Agricultural credit conditions are therefore deteriorating as repayment rates fell for the 10th consecutive quarter. (Bloomberg News and the Wall Street Journal)

“The U.S. Department of Agriculture has projected that net U.S. farm income will fall this year to the lowest level in more than a decade… U.S. farmers have also been hit by the strength of the dollar, which has stymied demand to export their crops.” – Wall Street Journal, May 12, 2016

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Farmers are also bracing for the effects of a minimum wage increase in states that have or will implement the law, positioning them at a disadvantage compared to states and nations paying lower wages.

California farms are some of the world’s largest producers of fruit and vegetable crops, tree nuts, strawberries, flowers, beef and dairy. Compounding tense economic conditions, California is experiencing a record setting drought, resulting in soaring water prices. The drought is burdening agricultural production in many of the State’s over 80,500 farms. It is estimated that over 80 percent of California’s delivered water is used in agriculture.

In particular, avocado farmers have been battling high water prices for years, climbing to as high as $1,600 per acre-foot in San Diego County, which makes “…profits hard to come by for the water-thirsty crop” (San Diego Business Journal, March 21-27, 2016). Many farmers are now scaling back on avocado production, attempting to replace them with less water intense crops.

California has also seen a heightened supply of almonds with slowing global demand. This has created downward pressure on prices. “Exports play a key role for California almonds, with close to 70 percent of total U.S. almond supply serving international markets…The strong U.S. dollar is likely partly behind these reduced exports” (USDA Fruit and Tree Nuts Outlook, March 31, 2016).

With various agricultural sectors facing significant headwinds, their economic stability remains at risk.

Douglas Wilson Companies (DWC) understands the complexities of workout solutions for the agricultural industry. Our firm offers over 25 years experience tracking, developing and offering expert timely, strategic, industry-specific factors, such as:

  • industry market rates
  • laws and regulations
  • staffing, including H2A transportation and housing
  • operational procedures
  • lendor funding
  • land and equipment leases, ownership and value
  • insurance
  • budgeting and oversight accounting
  • pre- and post-harvest costs
  • sales, whether in-house or third-party
  • animal care, health and safety
  • animal or byproduct sales

DWC remains an industry leader, providing services managing troubled assets and operations for law firms, state and federal courts, institutions, trusts and partnerships.

DWC is here to support you when issues arise. Since 1989, the distinction and variety of services we’ve performed has been a clear reflection of the attention focused on the ever changing needs of our clients over time.

“Douglas Wilson Companies offers a robust  legacy of  timely navigating unique and complex agricultural  transactions. Spanning initial analysis to effectual resolution, our team administers an array of expertise throughout the entire process.”  – Douglas Wilson, Chairman and CEO

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For a complete project history list, please see our Project Archives. Please contact Nicholas Wilson for any inquiries.

 

August Events

by DWC Team on August 1, 2016

Bisnow  — August 18
Bisnow will be hosting a breakfast, ” San Diego Hospitality Development Takeoff: Exciting New Developments at the Seaport and Across Town” San Diego, CA

International Council of Shopping Centers (ICSC)  — August 30-September 1
Nicholas Wilson  and Michele Vives will be attending events surrounding the 2016 Western Conference & Deal Making ConferenceSan Diego, CA

Urban Land Institute (ULI) — September 13
ULI is hosting a breakfast, “When the Voters are the Decision-Makers: Land Use by Ballot” San Diego, CA

National Investment Center (NIC) — September 14-16
Douglas Wilson will be attending the  2016 Annual Fall Conference Washington, D.C.

Downtown San Diego Partnership (DSDP) — September 15
The DWC team will be savoring the Taste of DowntownSan Diego, CA