Monday, May 26, 2025
California
How Agriculture Makes California a Leader in the Global Economy
The state’s ascent to the world’s fourth-largest economy is powered in no small part by its $59 billion agriculture sector, which dominates national production and global exports of key commodities.
Last month Gov. Gavin Newsom announced that California had officially overtaken Japan to become the world’s fourth-largest economy. While the state is often celebrated for its tech industry and tourism, its agricultural sector remains a foundational force driving this global standing.
Home to over 400 commodities, California leads the nation in farm production, accounting for more than a third of U.S. vegetables and three-quarters of fruits and nuts — a critical engine not just for domestic consumption but also for international trade and the global food supply.
The state’s agricultural exports totaled $23.6 billion in 2022, led by almonds, dairy and dairy products, pistachios, wine and walnuts, according to the California Department of Food and Agriculture.
“California isn’t just keeping pace with the world — we’re setting the pace,” Newsom said in the news release. “Our economy is thriving because we invest in people, prioritize sustainability and believe in the power of innovation. And, while we celebrate this success, we recognize that our progress is threatened by the reckless tariff policies of the current federal administration. California’s economy powers the nation, and it must be protected.”
In 2024, California’s growth rate of 6% outpaced the top three economies: U.S. (5.3%), China (2.6%) and Germany (2.9%). The state’s economy grew strongly over the last four years with an average nominal gross domestic product growth of 7.5% from 2021 to 2024, Newsom said. Preliminary data indicates India is projected to surpass California by 2026.
Newsom said California is the leading agricultural producer in the U.S.
Top agricultural commodities
According to the California Department of Food and Agriculture, the following are the top 10 agricultural commodities in California for the 2023 crop year, based on cash receipts:
- Dairy products, milk — $8.13 billion.
- Grapes — $6.52 billion.
- Cattle and calves — $4.76 billion.
- Lettuce — $3.93 billion.
- Almonds — $3.88 billion.
- Pistachios — $2.98 billion.
- Strawberries — $2.97 billion.
- Tomatoes — $2.01 billion.
- Carrots — $1.67 billion.
- Broilers — $1.24 billion.
In total, California’s farms and ranches received $59.4 billion in cash receipts for their output in 2023, representing a 1.4% increase from the previous year, according to the state’s agriculture department.
Challenges in agriculture
As current trade disruptions impact the Golden State’s farmers and ranchers, the California State Board of Food and Agriculture held a meeting focused on agricultural trade, including updates from organizations, trading partners and policy experts with representatives from the almond, tomato and wine industries.
Ambassador Darci Vetter, head of global public policy for PepsiCo and former chief agricultural negotiator for the U.S. trade representative’s (USTR) office, said one issue that deserves attention by U.S. agriculture is the review of the U.S.-Mexico-Canada agreement, which has to be completed by Jan. 6, 2026.
“That may seem like a long time from now, but USTR has to issue its report of its priorities for that negotiation by Jan. 2, which means most of the strategy — the issues that need to be negotiated, lined up, brought forward to our partners, need to happen this fall,” Vetter said.
Vetter said USTR has stated that it will issue a Federal Register notice asking people for their priorities for the USMCA review.
“Please keep your eyes open for that,” Vetter said, “and I hope that all of U.S. agriculture will be very active.”
She said the existence of USMCA and the free flow of goods and services on a regional basis are important.
There are perennial problems, Vetter said, such as Canada dairy, Florida tomatoes, U.S potato access, but “What we forget to say is that Mexico and Canada are the two most important agricultural trading relationships we have in the world.
“And our model of agriculture in the U.S. doesn’t work without them, unless we think of ourselves as a region,” she added.
Ag trade impact
“Trade is critical for California agriculture,” Josh Eddy said in the State Board of Food and Agriculture meeting.
Eddy is the executive director of the board, an advisory body to the governor and secretary serving the interests of the state’s agricultural community. He also serves as the state director of international affairs for the California Department of Food and Agriculture and advises on federal policy issues.
“I think here in California … we’re committed to engaging with our international colleagues,” he said. “We’re committed to growing market opportunities — and really committed to growing the state’s agricultural bounty.”
Eddy noted that the state is the largest specialty crop producer and largest organic producer in the U.S.
“Trade matters here in California,” he said. “We have 62,500 farms, estimated by NASS (USDA National Agricultural Statistics Service), so the importance of what trade means for California agriculture and means for this state, [and what it] means for the farmers, the ranchers, the farmworkers and even our exporters and the ports, is critical.”
Looking at the U.S. overall, Eddy said California is responsible for 12.8% of the country’s agricultural exports, 12.8% of animal products, 62% of fruit, 100% of tree nuts, 56% of vegetables and 32% of nursery.
“This is U.S. agricultural exports — and this is California’s share of those commodities,” he said. “It means something on the international stage. Our products are known for their quality. They’re known for the high standards by which we grow them.”
Eddy emphasized that California agricultural exports provide a roughly $46.8 billion contribution to the U.S. economy.
“Further, every [$]1 billion of agricultural exports supports about 6,000 jobs, so California agriculture alone supports 141,000 jobs throughout the economy,” he said. “And that’s not just on farm. That’s the trucks. That’s the ports, that’s the marketing, that’s the irrigation, that’s the farm workers. That’s the diversity within our state.”
California ag: Vital yet vulnerable
Tom Gauthier, founder and CEO for AgTechLogic, a sustainable agricultural solution company, told The Packer that California stands as one of the most powerful agricultural economies in the world.
“At the heart of this dynamic system are California’s specialty crop growers — individuals and families who drive production, innovation and resilience in the face of mounting challenges,” he said.
These key on-the-ground challenges include, according to Gauthier:
- Climate adaptation — Growers acknowledge the visible impacts of climate change and are looking for tools that help them adapt quickly and minimize crop losses. They see value in technology that provides early insights and actionable data.
- Global trade uncertainty — Tariffs and shifting trade policies create instability, forcing growers to factor in rising costs. They’re actively seeking ways to maintain balance without placing the burden solely on consumers.
- Sustainability with ROI — Farmers are committed to sustainability, but their decisions are data-driven. They are not willing to adopt new practices unless the results show measurable cost reductions or yield improvements.
“In short, California’s agriculture is both vital and vulnerable. There’s a deep willingness among growers to embrace innovation — but only if it aligns with the practical, financial and environmental realities they face every day,” Gauthier said. “To ensure a resilient and thriving agricultural future, the path forward must be collaborative, data-backed and rooted in real-world conditions.”
Source: The Packer
