1. Urban Water InstituteAnnual Water Policy ConferenceKen Melban Director of Issues ManagementCalifornia Avocado CommissionHilton Mission Bay ResortAugust 24, 2012

2. California Avocado Commission Role • California Avocado Commission is a non-profit, public agency that provides marketing and promotional support for the industry's 5,000+ growers • The Commission also provides advocacy and support on issues involving labor, water, production, trade, pest protection, environmental stewardship, and food safety Mission • To maximize grower returns by maintaining premium brand positioning for California Avocados and improving grower sustainability

3. Commission Structure • 29 member Board of Directors • 20 growers, 8 packers, 1 public member • 13 member staff • Headquarters located in Irvine, CA • Includes a Southern California Agricultural Water Team toassist farmers in addressing issues impacting the cost, availability and regulation of agricultural water

4. History of Ag in Southern California • Agriculture has been part of the southern California’s identity since the beginning • Objective of Ag water sales - shed demand before urban rationing while generating additional revenue • Ag imported water supply programs w/MWD since 1958

5. Southern California Ag Today • Agriculture and related businesses contribute $40B to southern California economy • San Diego, Riverside, & Ventura counties ranked among top 10 Ag counties in CA* • Average value of farm products sold per acre in southern California exceeds almost all other regions nationwide • Ag generates about 450K jobs • * Based on the market value of Ag products sold

6. Top Ag Commodities in Southern Cal. Southern California avocados are a $373 million a year crop (2010)

7. Profile of California Avocado Industry • Season: March – September • Planted acres by variety: • 59,341 Hass-like • 1,835 Non-Hass • Average grove size: 10-20 acres • A mature orchard of approximately 110 trees per acre, can produce as much as 22,000 pounds per acre per year • Modern orchard may have more than double the number of trees per acre, but absolute irrigation needs remain essentially the same, approximately four acre-feet per acre per year, regardless of tree planting density.

8. California Avocado Production Areas • 95% of growers are located within 20 miles of the southern California coast and are responsible for more than 90% of all domestic avocado production • Approximately 70% of California avocado production within the MWD service area

9. U.S. Market Overview Per Capita Consumption • In the U.S. fresh fruit market, domestic per capita consumption of avocados increased an average 10 percent annually from 1999-2009, the second-fastest growth rate after blueberries* • Total consumption has also increased substantially. In 1980 total consumption was 479 million pounds. In 2009, that increased to 1.27 billion pounds. • As of 1980, total per capita consumption was 2.08 pounds. In 2009, that increased to 4.10 pounds per capita* * USDA Economic Research Service

10. U.S. Market Overview Total Aggregate Supply Volume (Million Pounds) * 2011 Data not yet final

11. Challenges/Opportunities • Water Pricing and Quality • Food Safety • Labor Availability and Cost • Industry Modernization • High density plantings • Managed tree height • Salt-tolerant varieties • Environmental Benefits • Cap and Trade/Carbon Credits

12. Breakdown of Avocado Production Costs • Affordable/Reliable/Quality Water is Critical to a Healthy Ag Economy

13. Comparison of Ag Water Rates • Agriculture Is Faced With Crushing Rate Increases • 222% in 20 years

14. Case Study - Valley Center Water District • Drop in overall water sales of 42% • Ag water sales have dropped by 45% • Productive avocado acreage dropped by 25 percent between 2005 - 2009 • 667 square acres of dead or dying avocado trees in abandoned groves were declared a fire hazard • 21% drop in Ag water meters • Layoffs for 12% of staff

15. Water Quality Challenges • Water Quality degradation of imported supplies is damaging production • Sufficient SWP supplies are crucial to meeting MWD blend target

16. Alternative Supply Cost Comparison • Eyes wide open

17. Final Thoughts • Great deal of interest in a Delta fix • Number of issues to work through • Final capacity could have significant cost and reliability impacts • Delta Fix has great potential to address Ag’s long-term needs • Ag affordability needs to be considered

18. Future of Ag • Ag Water Survey Question: “Should regional water agencies continue to allow farms and other agricultural producers to purchase surplus water at a lower rate, with the understanding that agricultural users participating in this program will be the first to reduce their water usage in shortage conditions?” 19% Oppose, Probably Oppose

19. Thank-you