Senate Standing Committee on Agriculture

The Senate Committee on Agriculture will come to order. Good afternoon, everyone. The Senate continues to welcome the public and has provided access to both in person and teleconference participation for public comment. For individuals wishing to provide public comment via the teleconference service, the participant toll free number is 1-877-226-8216 and the access code is 5700096. We also have representatives who are participating remotely. For today's hearing, we will be hearing all of the panelists on the agenda prior to taking any public comment.

Once we have heard all of the panelists, we will have a public comment period for those who wish to comment on the topics on today's agenda. Today's hearing is titled 'Navigating Threats to California Agriculture.' Climate change is the greatest threat facing mankind. By 2050, we're expecting the global population to top 9 billion people with a need to increase food production by 60 percent. And according to the United Nations, every minute we lose about 23 hectares of arable land worldwide to drought and decertification.

During my time in the State Senate, I have grown significantly concerned with what I believe to be an additional threat to our food security. And that is a threat that agricultural land acquisitions pose. Last year alone, just in the Central Valley, one brokerage firm that specializes in Ag land sales oversaw transactions covering 6,024 acres in specialty crops, over 8,479 acres in dairy sales, and over 17,329 acres in open land development properties.

And they expect a lot more transactions this year, and many of those transactions being 1031 exchanges according to their press release. At the same time, we have witnessed some of this land being purchased by anonymous companies, others being purchased by public pensions backed from other nations. Even more concerning, I've had tough conversations with many farmers across the Senate district that I represent that they're just living in fear of having to go bankrupt or being forced into selling because they feel being pushed out by outside interest.

And while we have well intentioned laws and policies that are being used to threaten their livelihoods--because that's what it is--farming really is about family. It's about hard work. It's about giving back to community and providing food to millions around the world, and to those struggling farmers, it has never been about profits. It has always been about family and giving back. So there's a lot at stake here, and it's not just about growing the food we need to survive.

This productive land is being considered for various reasons like mineral rights, water rights that can put big interest in control of our very basic needs. And a lot of the data that is driving these investments is at the hands of a few. So over the last two years, I have made every effort to address this issue and shed light on it.

I have sponsored two pieces of legislation, and I have also worked with other colleagues, like State Senator Dave Cortese, who helped me draft two letters just last year expressing our concerns to the US Department of Justice, asking them to investigate possible abuses. But here we are today.

And while at times it has felt easier to just give up, it is good people like those you'll be hearing from today on this panel that will be speaking that continue to motivate me and help me bring transparency into what is happening. This doesn't mean that all investors are bad actors, but there is no reason to hide your true identity and or the money behind it in the Cayman Islands.

This is a state and nation that believes that this land is a land of opportunity and prosperity. There shouldn't be need to hide your identity. And we have to ask ourselves what happens when the state doesn't know who is buying our Ag land or for what purpose? What happens when urban sprawl takes over prime Ag land and California can no longer be the breadbasket to the world?

And what happens if a hostile actor purchases the land and we don't know what they want to use that land for? So today, it is my hope that those that are watching get some insight into one of the greatest threats facing agriculture in our nation and that we work collaboratively on every level to ensure that California continues to be Ag strong while protecting one of the state's most critical resource.

And so at this moment, I really want to just open it up to members of the committee if they want to provide any comments for the opening statement. Senator Dodd?

Yes. Thank you very much, Chair Hurtado. I want to thank you and your staff for holding this hearing and having me join. The protection of California's agricultural nature is a critical issue in every corner of our state. Our farms feed the nation and play important role in the development of our clean energy, carbon sequestration, and economic development. I'm proud to represent a district rich with agriculture. Many are familiar with the world famous wine growing regions I represent in Napa and Sonoma counties.

But I also represent Solano County, which is a major Ag region producing great wine along with livestock and crops. In fact, agricultural land makes up 62 percent of Solano, and the county ranks among the top five counties in California for production of sheep and lamb, grain, corn, hay, and safflower. Ag production and related business generate almost 1.3 billion each year, creating thousands of jobs around the county. Safe to say, Solano County contributes greatly to California's reputation of being America's breadbasket.

So people in my district have been understandably alarmed by a company operating in the shadows buying large tracts of Solano County Ag land for the past several years. Now recent reports indicate their intent to push development of large swaths of agriculturally zoned land into some new city. We need to build more housing, certainly, but we need to do it in a thoughtful way with public input and guided with thoughtful general plans, and we cannot let sprawl threaten the ability to produce feed--food--excuse me.

Phones at my office have been ringing off the hook, to say the least, with last week's story in the New York Times, and I share many of their questions and their concerns. In Napa County, we fought sprawl by enacting a revolutionary agricultural preserve 55 years ago. The bottom line is, as a state, we must protect and preserve Ag lands in open space, and partnerships across all levels of government with farmers is critical.

I really appreciate the opportunity, Chair Hurtado, to be here with you today and appreciate the opportunity to speak.

Thank you. We also have Senator Marie Alvarado-Gil.

Thank you, Chair Hurtado, and I'll welcome our guests today. I just wanted to say that agriculture in California is a significant industry. I represent Senate District 4, which is 13 counties in California in the eastern Sierras in Central Valley. California has a diverse range of agricultural products, including fruits, vegetables, nuts, dairy products, and wine. And the state is known for its vast farmlands, favorable climate, and advanced farming practices. We stand at the forefront of technology, farming, and agriculture. We're the leading agricultural state in the U.S. producing a significant portion of the country's fruits, vegetables, and nuts.

We are also major exporter of agricultural products worldwide. Our agricultural industry contributes billions of dollars to the economy and provides numerous jobs for farmers, farm workers, producers, and other industries. Our favorable climate allows for year-round cultivation of various crops, including in California's Central Valley with its fertile soil and abundant water resources is particularly important for agriculture.

The region is known as the breadbasket of the world but it's up to us to keep it that way. However, agriculture in California does face various challenges and we're going to be talking about today. Water scarcity is a significant concern with droughts impacting water availability for irrigation. Our land, this can lead to water shortages and reduced crop yields. Pests and diseases also pose threats to crops, leading to reduced productivity and the need for pest management. Wildfire is another challenge for agriculture in California.

Wildfire can destroy crops, farmlands, infrastructure, and leading to significant losses to farmers. Climate change is exasperating these challenges by altering temperature and rainfall patterns, affecting crop growth and water availability. These are some of the concerns that we talk about frequently here in California. What we don't talk about as often as the important topic that we're going to talk about today is control and regulation and oversight of our own California lands here. So I applaud our Chair for bringing forward today's topic.

Thank you for putting a highlight on the risks that we face as a state in order to have our Ag land for today and for our families and future for tomorrow.

Senator Padilla.

Thank you, Madam Chair. Just briefly, I would thank you as well for the opportunity to have the informational hearing and bring this conversation, which is more than timely, this opportunity to have this dialogue. I would echo and associate myself with the comments of both my colleagues. I have limited time. In the interest of time, Madam Chair, I'm happy to go to our panelists. I'm looking forward to hearing from them.

Okay. Well, thank you so much to our speakers here today. I know that you come from different parts of the state, and so I thank you for your time, the travel, and we're all looking forward to hearing your expertise in the matter. So we'll begin with our first speaker, and I apologize in advance if I mispronounce your name. For those that are on the panel, we will begin with Nate Halverson. So please begin when you are ready.

I'd like to thank the members for having me and the staffers for putting it together, and Senate Chairwoman Melissa Hurtado for organizing a screening of the film 'The Grab' that we made for lawmakers in June. I am Nate Halverson. I'm a reporter and producer at the Center for Investigative Reporting. It's a nonprofit newsroom that goes back to the 70s. We put out a weekly radio program on NPR called 'Reveal.'

And along with Director Gabriella Cowperthwaite, who did 'Blackfish' and then has done a series of Hollywood scripted movies, we made a film called 'The Grab' that looks at the growing importance on a national and international level of food and water issues and how it is beginning to drive geopolitical conflict around the world. We covered topics here in the United States as well as in Africa, Europe, even some issues underlying the Ukraine-Russian War.

And some of the stories that I've broke on this topic in the last decade or so is, I was asked by PBS NewsHour to look into Shuanghui, China's largest meat company, buying Smithfield Foods, which is effectively one in four American pigs. And I worked with Senator Stabenow and others and went to China and met with the folks running Shuanghui, and I was able to basically definitively show that the Chinese government was behind the deal. They helped finance the deal.

They gave a loan, effectively, of about 5 billion dollars overnight because it fits into their five-year plan, their national strategy of purchasing food and water assets around the world as that government becomes increasingly concerned about its ability to feed its population and the ability of other countries to feed their populations.

I did a story here in California about eight years ago when I came across a USGS scientist, Michelle Sneed, who had discovered that California was sinking at record rates not seen since the aqueducts were put in. I did that national story. We broke that news. I think it got a lot of coverage.

And then I did a story about--I wanted to know--I went and met with some folks in the U.S. Intelligence Community to understand what other countries beyond China were increasingly concerned about food and water issues. Saudi Arabia was one of the countries that came up, and I broke a story about eight years ago showing that China's--or excuse me--Saudi Arabia's--if I seem nervous, it's because I'm usually with a notepad on the other side.

I'm reporting on these, not actually speaking in them, about Saudi Arabia's largest dairy company buying about 15 square miles in Arizona. That story, of course, has been covered widely now nationally and internationally for the last eight years.

A couple of weeks ago, I did an addendum to that story that showed that the Arizona State Retirement System had actually invested 175,000,000 dollars into an investment company that bought land right near the Saudi farm and was leasing it to an Emirati company connected to the Emirati Royal Family and shipping that hay overseas.

So, despite all of the political critique from Arizona politicians regarding the Saudi farm, their own pension funds for state workers is actually invested in a similar scheme that's sending their water, their limited water overseas. So 'The Grab,' the film, and my reporting kind of focus on really on three topics. Water and food is of growing importance. In 2012, the U.S. Intelligence Community put together a National Intelligence Estimate, which is the U.S. government's highest form of intelligence product, and they did it specifically on water.

And it was led by a former CIA officer, also a major general in the Air Force, a man named Richard Engel. And his quote when he rolled this out was: 'We know that freshwater supplies won't keep up with demand if we maintain business as usual.' And what he was stressing was that under the current system of farming and water use, it was on a devastating course, even absent climate change. And of course, climate change is exacerbating these conditions.

But even absent climate change, the current course of food and water issues was going to lead to a breakdown in social cohesion among many U.S. allies, and we would even see regional issues, particularly in the western United States. I got my hands on a Nestle cable when the--classified cable--when the State Department went to Nestle headquarters in 2009, Nestle basically said, forget about the great financial crisis.

The world's running out of enough water to feed folks, and this is what we need to focus our time on, and this is the world's largest food company. Now, the second piece of those three items is that other countries are moving swiftly to address their needs. I mentioned the Kingdom of Saudi Arabia. These are edicts that came down from King Abdullah, now deceased, who began putting these measures in place to subsidize his companies going overseas and buying up food and water assets. I mentioned China.

It has now become part of their five-year plans. And now I think for the last three five-year plans, it is a top line national security issue. President Xi Jinping lived through the Great Famine. He remembers a time of deep deprivation and what it looks like when there's not enough food. And it extends to countries like Korea, the Emirates, and other wealthy nations all beginning to strategically push their companies to invest in food and water assets around the world.

So, as people here know probably better than me, the U.S. food and water systems are still largely governed by laws created to manage regional, state, and national demand. But the reality now is, of course, there's international subsidies from foreign governments that are coming in to acquire these assets. And as Major General Richard Engel said while discussing this, 'the U.S. is effectively subsidizing water for China and other countries.'

So I think that brings us to lawmakers and how these issues might be addressed and the new challenges that have emerged in the 21st Century. And I'll just share two bits of reporting that I've come across in some cables, some classified cables coming out of Sanaa, Yemen, in the lead up to the civil war there.

You had the Head of the Water Ministry telling then Ambassador Seche that mismanagement of water by the government and a lack of law and regulation had resulted in a breakdown of social cohesion, so you began to see water riots around the country. You began to see conflicts, villages versus villages, over water issues. And in the end, the Houthi from the north, whose water had been drained by large agricultural commercial interests, ended up coming down and sacking Sanaa.

Of course, there are many complicated, underlying factors in these issues. And sort of the antithesis of a lack of regulation would be the Chinese government in the run up to the 1959 Great Famine where the government put in place certain policies that experts that have covered this basically said broke down the agricultural system in China, resulting in 37 million people starving to death. So the stakes are quite high in doing nothing or doing the wrong thing.

I look forward to any questions I might be able to answer. Thank you.

Thank you so much. And up next, we'll be hearing from Congressman John Garamendi, who represents California's 8th District. Thank you.

Thank you, Senator. Thank you so very much for holding the hearing and for the members here. Heavy duty. Very, very important subject, as you just heard. As a proud Californian, rancher, my family's been in the business since 1863. Safeguarding our state's agricultural heritage and ensuring that our rural communities remain vibrant is of utmost importance. My wife Patty and I were Peace Corps volunteers in Ethiopia in the 60s when we learned the sad fact that the land could not produce enough and famine was routine.

As a State Senator in the late 1970s, we watched with dismay the rapid conversion of prime agricultural land to urban development. So I authored laws requiring the state and local jurisdictions to identify the best agricultural land and direct development away from it. Our farmers continue to face a myriad of threats, from climate change to labor shortages to rising cost, and now the new threat that you just heard about: foreign investors or others acquiring the land, forcing the farmers to sell.

I want to give you one example of the threats facing our rural communities, farm families, and indeed, the ability to produce food. Landowners around Travis Air Force Base in my congressional district, many of them multigenerational family farmers and ranchers, are facing their harrowing choice of sell or risk getting sued by wealthy out of town speculators who want the land.

Since 2018, Flannery & Associates used the Delaware LLC to conceal the source of over 800 million dollars that was used to purchase 400 parcels and 55,000 acres of agricultural land in unincorporated Solano County. Flannery & Associates has now surrounded three sides, 75 percent of Travis Air Force Base in Fairfield. That is the busiest transit base in the United States. More personnel and material fly in and out of that base every day than any other place. And at this moment, C-5As and C-17s are loading munitions headed for Ukraine.

It is a strategically important gateway to the Pacific. Just last week, August 22nd, Flannery & Associates finally revealed, after five years, their plan to use an initiative to override local zoning that protects Travis Air Force Base and the farmers in order to build a megacity east of Fairfield. With the announcement, we learned that the 800 million came from a bunch of Silicon Valley billionaires.

Flannery & Associates is using secrecy, bullying, and mobster tactics to force generational farm families to sell. They have forced farmers off the land, hiring big city lawyers to file federal lawsuits claiming restraint of trade against seven farm families who refuse to sell their land and their heritage. One family, not able to pay the legal cost of defending themselves, has sold out. That lawsuit is a heavy handed, despicable, intimidation tactic, and those Silicon Valley big wig billionaires should be shamed, and they should be held to account, and their names are known.

Now, if these investors plan to convince Solano County and the residents and their elected representatives, none of whom have had a conversation with Flannery & Associates that building a new city on productive agricultural land is a wise scheme, they're off to a terrible start at earning the community's trust.

Now, keeping agricultural land adjoining military installation, other critical assets in California and across the country, keeping it in agricultural production is the best possible use to prevent encroachment and to protect those bases. Travis Air Force Base cannot operate surrounded by skyscrapers, wind turbines, tract homes, or other kinds of development right up to the fence line; no military base can. That's just one reason why the State of California, its counties and cities, must ensure responsible, compatible agricultural use around critical, economic, and national security assets.

One way to do this is through conservation easements, ensuring that the agricultural landowners are compensated for the value of their open space that the value of their open space provides to others, including the U.S. Military. In 1999, Patty and I donated to the California Rangeland Trust a permanent conservation easement on our ranch in Calaveras County. I hope agricultural landowners across the state will take a hard look at placing easements on their property.

Now the U.S. Department of defense has long understood the value of conserving open space buffering military installations. On the House Armed Services Committee, I have worked to increase funding for the Department of Defense Readiness Environmental Protection Integration Program. 40 million dollars is available this year to purchase easements from willing landowners. 173,000,000 has already been spent in California to conserve land adjacent to military bases at Beale Air Force Base just to the north of there, which I represented until January of this year.

Local landowners have received eleven and a half million to place conservation easements on 7,650 acres adjoining the base, thereby protecting the base as well as agricultural production. This year, Mike Thompson and I are working with Democrats and Republican Members of Congress to ensure that the Department of Defense and other federal agencies can do a better job reviewing real estate transactions to prevent encroachment or espionage by foreign adversaries at sensitive military and national security installations.

To accomplish this, we introduced, along with Congressman Mike Gallagher, Chairman of the House Select Committee on Chinese Communist Party, the Protect America Farmland and National Security Sites from Foreign Adversaries Act. I've included a section in the House version of the National Defense and Authorization Act to require the Department of Defense to develop processes to address any type of land sale or use that might encroach. We continue to work actively on all of these.

Now, I call upon the State of California, you and this committee and others, to direct additional state funding and tax incentive to encourage more agricultural landowners to permanently conserve their property as open space. This will help keep agricultural land in production while preserving the rural Ag economy upon which they depend. Permanently conserving private land will also help meet President Biden's America the Beautiful. His national conservation goal to protect and conserve at least 30 percent of the lands and waters in the United States by 2030.

Governor Newsom has a similar conservation goal for the state. For those agricultural landowners willing to donate a conservation easement, federal law allows them to deduct the fair market value. A similar deduction is available at the state level and I would encourage the State Legislature and Governor to rationalize both the state and the federal tax credit so that they could be more attractive and work in unison.

That would provide certain landowners in their tax and estate planning in high value agricultural land to realize the tax benefits commensurate with the value of their Eastman donation. Senator, thank you. Thank you for holding the hearing. Thank you for the attention to this matter.

There are many other issues that are associated with this, and I'm sure you'll get into them and look forward to working with you on protecting California's agricultural heritage.

Thank you, Congressman. Up next we'll hear from Jamie Fanous from the Community Alliance with Family Farmers.

Good afternoon. It's hard to follow a Congress Member, but I will do my best. Good afternoon, Chairman. Members. Yeah, my name is Jamie Fanous. I'm the policy Director at the Community Alliance with Family Farmers or CAFF. CAFF currently represents over 8,000 small and mid-scale family farmers in California and has worked for over 45 years to preserve family-scale agriculture and promote environmental sustainability. In California, 80 percent of farms operate on less than 180 acres.

Nearly 75 percent of farmers operate on less than 100,000 dollars in annual gross sales. And we are losing at least four small-scale farms a day. The challenges facing small farmers are overwhelming and make the simple act of growing food to feed local communities a nearly impossible task.

The realities of the climate crisis, existing supply chains, and the greater economic disproportion affect the farmers that use this as an opportunity to make a living producing food, which includes the one in five California farmers who identify as Black, Indigenous, and people of color or BIPOC.

Today, as we experience one climate catastrophe after the next with the only existing program that has supported these farmers with emergency relief being CDFA's California Underserved and Small Producer Program, or CUSP, providing relief through COVID, drought, and soon to be floods. Today, as we talk about food security, this is embedded in land security. Land access or security not only means the ground we stand on, but also access to water, capital, and infrastructure and housing.

Today, at least 50 percent of California's cropland is owned by 5 percent of the total landowners, meaning 5 percent of all landowners own over half of California's cropland. Meanwhile, 85 percent of the smallest properties account for only 25 percent of the cropland. And finally, almost 40 percent of farmland is rented or leased by non-farmers. We've learned at CAFF through survey statistics and farmer engagement that not only is the primary barrier for small family farmers access to land, but most historically underserved farmers, primarily small-scale farmers, lease their land.

Farmers who lease their land, unfortunately, are unable to invest in that land that they manage and are regularly at risk of being kicked out. Unless you've gained access to land from a family or have several million dollars available, access to secure land is 100 percent impossible. The only entities that have the ability to purchase the land in California are large corporations, hedge funds, investment firms, and as we've seen, tech billionaires, none of whom are local farmers.

Here are a few examples of how this crisis is playing out. In the Cuyama Valley in East Santa Barbara County as we speak, two global companies, Grimmway, which is owned by a hedge fund, and Bolthouse, have both decided to sue every single water rights holder in the valley. This comes as water resources become more constrained as a result of decades of over-pumping and climate change.

These companies are suing hundreds of community members, farmers who produce our food, and the local school district that educate and feed our community's children, all of whom are at risk of losing their water rights or going completely bankrupt in the process.

The second example, as the congressman has pointed out, is of course, the Flannery Group, which, as we know, are named Michael Moritz, Reid Hoffman, Marc Andreessen, and Chris Dixon, four prominent Silicon Valley investors who, up until last week, have been a complete mystery and have a reputation of tearing up communities apart, pitting family members against each other, and employing vicious land grab tactics that have left out a fog of fear and distrust in the entirety of Solano County's agricultural community, taking thousands of viable agricultural land, food producing land out of production, and gutting a significant component of the Solano County economy, which is agriculture.

And now many of the Solano agriculture community has 510,000,000 dollar lawsuit on their hands, which the Flannery Group has accused them of collusion. The third piece that I'll point out is the impact of warehouse developments that have had a valuable impact on the valuable prime land and agricultural land in California. Not more than ten years ago, San Bernardino and Riverside counties were filled with citrus, orchard, and small farms.

Today, the Inland Empire has seen a rapid surge of warehouse development, impacting food security, air quality, housing, and community health. Many of the stories have surfaced about landowners or farmers being harassed by developers to sell their land and other landowners receiving offers so high they cannot refuse, which results in farmers who lease land being kicked off. Warehouse development has single-handedly destroyed this farming community overnight. The playbook for all of these entities is the same.

If you refuse and they do not get what they want, they will likely sue these small farming communities out of existence. It is a chilling reality, but we are seeing it play out in many instances in California. We need immediate and serious laws and regulations to stop these land grabs from continuing if we have any hope of taking back control for our communities.

When it comes to the protection of land, we need to think about the farmers who have never had access to land and the farmers who are at risk of losing their land. While bodies like the California Land Equity Task Force at the Strategic Growth Council is a great first step forward, laws must be written and passed today to slow down this type of land grab and resource grab, meaning water.

Thank you so much for holding this time to speak about this really important issue.

Thank you, Jamie. And up next we have Christopher Cabaldon, former mayor of West Sacramento, past member of the Delta Protection Commission and Central Valley Regional Water Quality Control Board. Thank you for being here.

Thank you so much, Madam Chair. And I just want to pick up where both Jamie and Congressman Garamendi have taken us, into, but to see how this works on the ground because you might be thinking, 'well, we have CEQA, we have LAFCO, we have Williamson, we have a lot of policies.' So how could something like this happen? And what is the state of the state policy toolbox to prevent that and to intervene? So let me pull up.

Let's get into some of what Congressman Garamendi showed on the ground by going into the Flannery area in particular. This is the biggest view. You can see some of the cities that are around it, but it borders the Bay Area and the Delta, and their land is involved in both these. Zooming in a bit, you can see the bulk of the Flannery holdings. Let me just note, you need to pretty much stop by the Solano County Assessor Office every single day to get the updated map.

So I can already tell you almost as much of this that's purple is more purple now since this map was produced, which was only a couple of weeks ago. So the pace has not been slowing down. So on the right in this map is the Delta. On the left is Fairfield. Just to the north is Vacaville. And as Congressman Garamendi said, Travis Air Force Base is in the upper left. And these acquisitions have been proceeding for the last five years.

Now they are in Solano County. This is a map produced by UC Davis a few years back cataloging Solano County's land. And you can see here an area that is in a light yellow and even UC Davis at the time identified as developable. I want to emphasize it's geologically developable. This is not a policy proposal from UC Davis, but they highlighted that this was an area of the county that is consumed not by prime soil farmlands, but by active agriculture.

And the county has taken a series of steps to try to protect it for those purposes ever since. This is what it looks like. If you can see, this is in Birds Landing. This is a typical use of land in much of the Flannery holdings. It is not a wasteland, as some folks have claimed to say, but it is an active farming and people-centered community who are making a living.

They're not making millions, but they are surviving and contributing to the food economy in the region and to the Lid League and everything else. Solano county is one of the counties of California like Napa. Senator Dodd mentioned that long ago the voters there adopted an aggressive, orderly growth policy that said all urban development should happen in cities. Essentially that's the textbook definition of what urban means: should happen in cities and there shall be no urban development that is occurring in the county.

The county's also adopted a Travis just this year, a Travis Overlay on its zoning code. It has a Resource Conservation District Overlay in much of this area as well. So the county has taken aggressive action to try to prevent exactly this sort of urbanization from occurring within this agricultural zone because this is a central part of the regional economy and because other towns and communities in the developed delta depend on agriculture in a variety of ways.

Also note, just very quickly, this is a map of wind power in the state of all of Northern California. This area is the biggest, most opportune wind zone in the entire northern part of the state. And I can't even zoom in that close because it's so purple on the wind map. But this is another major resources in the area and it's why you will see in virtually from every vista of every piece of property or every ranch or farm in the region, you will see wind turbines behind it.

So, again, this is the Flannery property. Now, here's the Williamson Act holdings in the area, the dark ring being prime farmland and the brown being principally the rangelands. And this is an overlay of the purple Flannery map on top of that. You can see it's almost entirely Williamson Act holdings that have been acquired. The Williamson Act hasn't really functioned in this case to in any way deter these acquisitions from happening.

In some sense, it's almost been a flag like buy here because the Williamson Act is preventing and has kept prices low for potential buyers to swoop in. So the Williamson Act has not really been effective in preventing or diminishing the pace of acquisitions in this area. This is a map from LAFCO of the spheres of influence in Solano County.

And now I'll add the Flannery map in, and you can see that many of the Flannery holdings, particularly on Travis Air Force Base, but also at the Delta, are within the spheres of influence of the existing cities. Under California LAFCO Law, you're not allowed to create a new city on somebody else's sphere of influence, and certainly not around Travis Air Force Base. But this is one of the key issues, controls, that's supposed to be in place.

Now, here's a map of the Delta, probably the state's most important both water engineering facility, but also habitat, water supply, and the many Delta communities, including Congressman Garamendi's own, that depend on that. Zooming in here, you can see Flannery has acquired a large proportion of the overall Delta Zone.

And then coming in more closely, you can see the Delta Primary Zone, which is the most sensitive, at risk area of the Delta where the holdings exist in the Delta Secondary Zone, which are those areas that are if they were to fall, the Delta Primary Zone is next. So there is a state plan and state zoning rules. I've served on the Delta Commission for 20 years that prevents urbanization inside the Primary Zone, but not in the Secondary Zone and not immediately adjacent to it.

And you can see it's kind of an artifact of history that Rio Vista, which now is completely surrounded by Flannery holdings, is not in the legal Delta. But that's not a hydrological or an ecological designation, it's just an accident of history. Alright, next, let's turn to the water issues that have been mentioned. This is the State Water Project. Here is the North Bay Aqueduct.

It's a small part of the State Water Project, but it's really important if you're in Solano County or Napa County because that's where a large proportion of the water supply comes for drinking water and other municipal uses. This is the North Bay Aqueduct.

It is connected to the Delta, which is then connected to the Sacramento River, which is then connected to Shasta Dam by virtue of this little sluice--if you're not from this part of the state, this little canal, basically, but natural canal, sort of, that connects the major waterways to the smaller ones. And the pumping station, the intake for the North Bay Aqueduct, the main drinking water supply for Napa and Solano counties leads right to that sluice.

Now, you can see here that same sluice; it's right in the middle. There's a big body of water and then a sluice running off to the left of it. And you can see that Flannery has acquired the entire south bank of that sluice as well as land surrounding. This is a very important piece of the water infrastructure. Obviously, this is essential for both counties and agriculture and for Travis, which relies on a Travis supply station as well.

So this is an absolutely critical piece of that infrastructure that Flannery has also acquired. Next and maybe last in the detail piece, just to note that here is an example of a project that is also in the vicinity that's designed not just for the local region, but the entire health of the flood protection system for all of Northern California, which the Yolo Causeway is a major portion of.

And this property, the Little Egbert Tract, is right next to the town of Rio Vista and it's being converted essentially into tidal action land in order to promote flood protection in the local area, but also to make sure that the bypass system for all of the state functions properly. So it's an absolutely critical state prior to.

We just recently, in the port of West Sacramento, deeded over Prospect Island across the water for the same purpose, to widen the amount of tidal action that occurs in this area to protect water and agriculture and flood protection for the entire region. And as you can see from the map, Flannery's acquired all the land right up to it, including most of the reclamation district that is one half of the votes on the Little Egbert project, JPA.

So what we're seeing here is a pretty substantial effect, sweeping effect across a lot of resources in this area. The question then comes are the state's tools, are they up to this task? And I want to note a couple of things. First is that agriculture, as you know better than anyone, that it depends on critical mass in a region. So it isn't just about a piece of property changing hands.

It's also that without enough folks doing rangeland farming in the region, the processing facilities that are nearby, which there's now only one, and all of the rest of the agricultural economy that supports all of the farmers becomes unavailable to the single farmer if other properties convert. So you imagine yourself as the last holdout. Well, you can't be the last holdout because the rest of the system doesn't exist for you. Most ranchers don't make a profit already. This is true statewide.

It's true in this zone as well. They want to stay in ranching and they want to stay in their family. But they struggle because when a single, non-agricultural based owner establishes a monopoly in the entire agricultural infrastructure of the region, it becomes very difficult for any single farmer to continue or to get feed. To have land for foraging. These are farmers who, in many cases, lease land from one another for foraging in particular. Now they can't. Flannery has canceled many of these.

And the challenge with the Williamson Act and other easement based approaches is that the Williamson Act, you pay a penalty if you terminate your contract tract immediately. Then you just simply pay a penalty of 15% of the current market value of the land. But if the buyer is already prepared to pay two 3510 times market value, then clearly that 15% penalty is of no consequence. It's not performing any incentive away from taking that land out of agriculture. So even though the zone is entirely saturated in Williamson Act coverage, it's simply not effective in that way. Then we have LAFCO and the voters cannot create a new city by ballot initiative. I think this was an error in a couple of the media reports. That's just not allowed in California.

Of these foraging leases. We've already covered water rights and the important and sensitive issues that are there. The last piece of this that I would mention is on the land use pieces themselves because I mentioned the Williamson Act.

LAFCO, which is a state agency and therefore not subject to county initiatives, is the only entity that can forward that ultimately to a later vote. But it cannot be done by initiative. And they have to consider other policies. And this is one area where there is a local tool and a state tool. They have to consider sustainable Communities plans adopted under SB 375. They have to consider federal and state transportation plans.

They don't yet have to consider the 30 x 30 strategy that the state has adopted. I served on the statewide advisory committee for that and one of the recommendations is that Lafcos do consider 30 by 30 implications of actions like this boundary changes, annexations and incorporations. They do consider rena the regional housing needs allocation, but they typically don't examine water implications outside of their zone.

And as we've already covered in this presentation, there are a lot of water implications for Napa, for Yolo, for the rest of the state as well. So this is one of the key backstops is LAFCO. But remember, LAFCO is five people. It's not at a complete governmental process, it's not elected, it performs an essential function. But you may want to look at the role that LAFCO's play and how other parts of the democratic process can engage in that as well.

Then there's Sequa, which as you know, in many cases is overpowered for many housing projects. In this case, it's probably completely underpowered. There's no lead agency that's capable of examining all of these issues. When you're talking about a conversion of this scale, it's designed for what about those five acres over there? What about that empty lot over there? It isn't designed for what about half your county? What if we just converted that overnight?

And so one of the challenges that's going to be presented going forward is how can seek would be effective given the sheer scale and complexity that it was never really designed to handle unless it was a project being advanced by the government. The other key factor to remember is that many of the services and policies that are at play in this community, in this area, they are based on local special districts that are assessment based.

And this is a key point because many of the voters who will be voting in the local reclamation district or the Montezuva Fire Protection District or anything else, they're gone already. They've been either evicted from they no longer have the land they've sold, so they're not there to participate in that discussion. But even if they are, they can be easily outvoted because almost all of these special districts are. Your votes are based on how much assessed valuation of property you own.

And so you imagine yourself then if you're a farmer in this area, a rancher in this area now, and you may be completely surrounded by incompatible uses that will make it impossible for you to survive. The infrastructure that you depend on to farm the additional land, the processing, everything else may disappear. Your lease for your sheep to go a little bit farther off your property has been terminated. You can no longer do that.

And now you're getting bills because the Montezuma Fire Protection District is now controlled by another entity. And they've decided that they want to build urban fire stations everywhere. And your assessments are going to go up as a result. So your taxes could be increased by dramatic amounts for projects that have nothing to do with serving you, but are in the interest of this larger conglomerate area of property acquisition that has occurred. And that's for flood protection for a variety of others as well.

So you put yourself in the shoes of farmers in this area, as Jamie has said, and it's almost impossible for them to survive in this space. So where we're left then is the challenge being that even if the project is rejected locally, it doesn't go through Lafgo. It's dropped. You can't reset the clock. You cannot turn it back and say, okay, no harm, no foul.

Let's just return to the way this community was two years ago, because the owners will be gone, the family farmers will have left, the supportive infrastructure will have been eliminated as well, the investments in the infrastructure. And so over and over and over again what you find yourself in a situation where it may not be reversible. So the question, I think, for you and for the state is how to upgrade the toolbox at the state level. So we're not at this situation at local communities.

Too many of the laws that we have are not they're not designed for this scale. They cannot handle a billion dollars of private investment all at once. And they sort of assume that they would. So there will be 50 state agencies reviewing this project and 20 local ones as well. But they're seeing it after the fact and after the farmers have left.

And so the changes that are going to be necessary to the Williamson Act, to LAFCO laws, to all these other provisions of law, are going to be essential in order to assure that local communities and agriculture have at least a fighting chance as projects like this come forward. Thank you very much, madam Chair.

Thank you so much. And up next, we have Madonna Lang from Watson Realty via Zoom. Welcome, Madonna.

Thank you so much. I'm so sorry I can't be there in person, but I greatly appreciate this opportunity. Good afternoon, Madam Chair and Members of the committee. At the outset, I would like to thank the committee for inviting me to serve as a panelist for today's important conversation on California's agricultural industry. My name is Madonna Lang. I'm a realtor for Watson Realty in Bakersfield, California. I'm a fifth generation farmer, second generation realtor, and have over nine years experience in selling agland in California.

In my experience, I have found that not all land is created equal. Therefore, protecting the state's most fertile land is of critical importance. During my time today, I will discuss several issues I've identified through my work as a realtor and farmer that have significant implications on California's agricultural industry. First, the issue I'd like to briefly discuss today is water. My dad is my professional mentor. Throughout his career as a realtor and landowner, he has completed over 800 Escrow transactions.

When I asked him what I needed to know about selling agricultural land, he said one word: water. I can't express this enough that the single most important qualifier for good agland is water. High quality and quantity food comes from fertile soil and available water. In California, we have the climate to grow over 400 different commodities. Due to the Sustainable Groundwater Management Act, or Sigma, a large portion of very fertile land is going to go fallow. Agricultural land prices impacted adversely by Sigma have dropped 75%.

In my experience, agricultural land sales have become much more complicated as a result of Sigma because there exists a lot of confusion when buying property. Increasingly, buyers are concerned that their water allocations will diminish the closer they get to 2040. This market uncertainty has complicated the agricultural real estate market in California and forced many small farmers out of business. Unfortunately, as a result of this market uncertainty, foreign countries can seize this opportunity to purchase quality agricultural farmland from small farmers.

I'd like to give you an example. My family owns 80 acres in the Semitropic Water District. Semitropic is made up of 224,000 acres. 130,000 acres is currently irrigated. 43,000 acres only 43,000 acres. By 2040, we'll have approximately three acre feet per acre of water. Three acre feet per acre of water is what is needed to grow most crops. 83,000 acres will have six inches to one acre foot per acre water allotment.

If you want to farm, then you will need to know how much water allotment you will need to grow your crops, and you will need to start buying land to equal that water allocation. Currently, our 80 acres has three acre feet per acre water allotment. By 2040, we will have six inches of water allocation. Therefore, we will need to purchase and own six acres for every acre we plan to farm.

The second issue I'd like to speak about today is data collection and real estate transaction process. As most of you know, finding a landowner can be very difficult and a very arduous task. I personally have searched for agricultural property owners and found it to be very difficult to identify the actual property owner. In one case, three people in our team, plus our client, searched for three weeks to locate at the owner of a parcel in Bakersfield, California.

Eventually, it turned out that the owner lived in Santa Barbara, but coincidentally had his office across the parking lot from our office building. At a recent Senate agricultural hearing about legislation that would prevent foreign governments from purchasing agricultural land in California, I mentioned that agricultural real estate transaction data could not accurately be collected in a timely manner.

In the scenario I just described, it took three Members of our team, plus our client, three weeks to accurately identify the owner of a parcel my client sought to purchase. California's real estate transaction data collection system needs to change. There needs to be a verified physical address, email, phone number, and foreign status information for corporations, LLCs and individuals owning land in California. Currently, under the California law, sellers have to declare if they possess non foreign status. However, this requirement also needs to apply to the buyer as well.

This requirement would assist in accurate real time data collection for landowners as described. The data that is required is vague, and until you change that, it will continue to be difficult to track. I'd like to give you an example of a transaction in a real estate ag deal. If a buyer wants to purchase land, I need to know where they want to buy, if they're paying cash or financing, and what they want to grow.

I need to know if they want grazing land for cattle, an existing orchard, developing orchard, land for row crops, or development. Their answers will tell me how many sources of water they need. If it's being financed, they will need two sources of water. A seasoned buyer will know what district they want to buy in. Some water districts are in better condition to provide water than others. I will check the MLS and commercial sites for available land.

Often, land isn't for sale if it has good water available. If that's the case, I start looking up parcels and landowners so that I can see if they'd be interested in selling. It would be great if the data was reliable and could provide me with a name, address and phone number. This was the situation when the landowner's office was across the parking lot. Once a parcel is located, an offer is made. The sale is contingent on investigations, finance, disclosures, acceptance and appraisal.

Investigations include phase one soils, leaf samples, water samples, well tests, septic tests, building inspections, et cetera. Normally, there's a 45 day free look period so that there is time to reach out to the water district and hear back on all the investigative work. Finance and appraisals escrow for land deals can take anywhere from 90 days to six months. During that time, title is run on the property, finance is established, and the disclosures and documents are signed by both buyers and sellers.

If a problem is discovered, then that has to be negotiated. I have had buyers added and subtracted right up to the close of escrow. It's rare, but it does occur. One of our partners, first American Title, who has helped us with a lot of our transactions, I reached out to them to verify that buyers aren't required to declare foreign status. They confirm that in situations where foreign companies are selling or taking out a loan, they have to verify the correct person is signing.

However, non foreign status disclosures are not completed by the seller. Presently, a large portion of data that is collected is provided on volunteer basis and allows for virtual addresses to be submitted instead of actual addresses. Providing an email is optional, and a phone number isn't even required. Data is only as good as the information provided. I would like to thank you all for this opportunity to participate today, and I look forward to any questions that you may have. Thank you.

Thank you so much. And up next, we have Melissa Cregan, the AG Commissioner for Fresno County.

Good afternoon, Chairwoman Hurtado. Thank you, Members of the committee, for having me here to speak today. Again. My name is Melissa Cregan. I'm the Agricultural Commissioner and Sealer of Weights and measures in Fresno County and I also represent the California Agricultural Commissioner and Sealers Association as the Vice President of Agriculture.

Casa represents all of California's 58 counties. Agricultural Commissioners are responsible for promoting and protecting the state's food supply, agricultural trade, the environment, public health and safety, consumer confidence, and a fair marketplace in California. When I wrote these comments, we had a slightly different direction for this hearing. But I promise you, at the end, I'm going to tie this in.

So I'm going to go ahead and talk about pest prevention in the state of California and California's, farmers and ranchers and farm workers grow over 400 different specialty crops and produce over 50% of the nation's produce. When we discuss threats to California agriculture, as an agricultural commissioner, my first thought is the need to protect agriculture from invasive species and plant diseases.

California's Agricultural Commissioners are part of a network of federal, state and local agencies that focus on protecting U. S. And California agriculture through pest prevention programs. Simply put, people move pests through the movement of infested items. This can include commercial agricultural shipments, but also items in passenger luggage, parcels containing homegrown fruits and vegetables, nursery stock shipments, and the movement of equipment and other outdoor items that can harbor pests in their egg masses.

California has many entry pathways, including six international ports of entry along the border with Mexico, twelve seaports, 27 commercial airports, nine of which are international 16 Border Protection statements, stations, along the Oregon, Nevada and Arizona border, and 165 parcel distribution centers. Those are FedEx ups on track and the US. Postal Service. That number continues to grow, maybe not daily, but probably monthly.

At the federal level, the Agricultural Quarantine and Inspection Program operated by the US Department of Agriculture's, Animal Plant Health and Inspection Service and the US Department's Homeland Security, Customs and Border Protection, works to intercept plant and animal threats associated with the entry of imported goods and international passengers at the nation's 328 land, air and seaports of entry. Their current staffing is approximately 2700 agricultural specialists and 165 canine teams nationwide. At the state level, pest exclusion is the first line of defense.

The California Department of Food and Agriculture operates 16 Border Protection Statement stations where vehicles entering California are inspected and to ensure that they are pest free and meet all regulatory requirements. CDFA reports that in most years, more than 20 million private vehicles and 7 million commercial vehicles cross into California, resulting in 82,000 rejections. Some shipments that are difficult to inspect, such as beehives and nursery stock, are flagged for additional inspection by County Agricultural Commissioner staff at destination.

The state's High risk pest exclusion program focuses on pathways that have shown to be of the highest risk for introductions of pests into California. These pathways include parcel, air and nursery stock shipments. In fiscal year 2021, county Agricultural Commissioner staff made over 25,000 premise visits, inspecting 378,000 shipments, resulting in the issuance of 6000 notice of rejections and the interception of 1841. Pests detrimental to Agriculture in addition to the high Risk pest exclusion program, California operates 14 canine teams focused solely on parcel facilities.

These teams are funded through funds from the Federal Farm Bill. From July 1, 2021 to June 30, 2022, California dog teams alerted on 47,500 parcels containing agricultural products. Those are parcels that are moving into California. They intercepted 966 significant pests detrimental to agriculture. That's in addition to the 1841 that were found through the High Risk Pest Exclusion Program. 562 of these pests were intercepted in unmarked packages, which is 58%, demonstrating that unmarked parcels present a high risk pathway for significant agricultural pests to enter California.

Detector canines not only are able to effectively locate unmarked parcels, but also increase the efficiency of the identification and inspection of marked parcels, allowing inspection staff to identify and inspect more parcels that then would be possible without the assistance of these canines. Inevitably, we are not able to intercept every pest entering California. Pest detection is the second line of defense to actively search for pests that were able to evade our pest exclusion efforts.

Early detection of pests before they become established is crucial to the success of eradicating the pest. Each year, CDFA and CAC staff deploy over 235,000 detection traps throughout the state of California targeting exotic fruit flies, Japanese beetle, which has infested most states east of the Mississippi River, spongy moth, which infests states in the northwestern united States, Asian citrus psyllid, which is the vector of Huanglongbing that has decimated the citrus industry in Florida. And the glassing sharpshooter, which is the vector of Pierce's disease in grapevines.

Both the Asian citrus psyllid and the glassing sharpshooter are established in parts of California and current efforts in these programs are to limit the spread of the vector and disease until research can find ways for our farmers to combat these diseases. Our last line of defense is pest eradication.

Since January of this year, CDFA has set up delimitation trapping or eradication projects in response to two Japanese beetle detections, two spongy moth detections and 32 separate exotic fruit fly detections including Guava Oriental, Queensland Peach and Tau fruit flies. The Tau fruit fly infestation is the first detection of this pest in the Western Hemisphere. Each pest infestation can cost over $1 million to eradicate. This does not include losses to the agricultural industry for the costs of complying with quarantine requirements.

Each pest infestation has the potential to disrupt trade and shipments of agricultural commodities to other states and counties and countries. Sorry. While pest detections in our most populous areas of the state occur every year, this year is different in that five separate detections have occurred in the San Joaquin Valley counties of Fresno, Kern and Merced. In a typical year, there are zero or maybe one exotic fruit fly detection in the San Joaquin Valley.

The threat to California agriculture from exotic pests and diseases will only continue to grow as we see increases in California's population and continued globalization. The last time a comprehensive review of California's pest prevention system was conducted was 1997 as a result of SB 2062 authored by Don Rogers. Recommendations from that study included an additional $14 million for high risk pest exclusion activities.

As a result of this recommendation, Food Nag Code Section 22 82.5 was enacted, requiring an appropriation of 5.5 million to be utilized solely for high risk pest exclusion activities. The intention at the time was to increase that amount to 14 million in the following year, since the 5.5 million was only meant to Fund the program for the partial year.

Unfortunately, that never happened and despite the statute, currently funding from this program has only been $3.1 million statewide, compared to the 14 million in 1990 $7 that was recommended to Fund that program. This funding was cut in fiscal year 1213 with obviously all of the budget cuts that a lot of agencies had to undergo. However, it never reestablished. In an effort to plan for the future, CASA and CDFA have partnered with UC and CSU researchers to conduct a new comprehensive review of California's pest prevention system.

That report is due to be finalized in early 2024 and we look forward to having updated information on the needs of the pest prevention program to protect California agriculture. And now I'll tie in how we've seen the idea and the concept of pest prevention and pest control in General come into play with land use in Fresno County.

We have a lot of areas that have been purchased by investors for lots of reasons that have been talked about today, and they don't come in and purchase that land and take out the crop and return it to native vegetation. They just simply abandon the crop and it continues to be out there growing in certain states, harboring pests, and those pests then move on to adjacent properties and cause significant damage.

We have one area on the west side of Fresno County that is 7000 acres, that was purchased by a Canadian pension Fund that has been abandoned and it's causing millions of dollars in damage to the neighbors and the neighboring farm owners come to me, the AG Commissioner, and they say, Melissa, there's these abatement laws on the books, right, the AG Commissioner, you can go and abate these pest problems. And that is true, there are abatement laws on the books, but they don't work.

The abatement process first requires me to determine who the property owner is. And as we've discussed today, that can obviously be difficult to do. And so maybe after five or so years of researching who owns the property, sending letters through our county councils, we might get some cooperation from the property owner. But if we don't, the process requires that the county Board of supervisors authorizes the AG Commissioner to go out and procure a contract and have whatever that pest is that need to be abated removed.

And in this case, we would need to remove 7000 acres. That's probably in the range of $20 to $25 million for that project. And that's more than double my Department budget. So obviously I can't fit that in my budget. And so I'd have to go to the Board of Supervisors and ask them to Fund that. And that's one project.

I have lots of situations, maybe not on that scale, but lots of situations where we have pests from abandoned properties that are now causing issues for our family, farmers that are still trying to farm the land. And so when you start stacking all of these things that we've talked about today, at some point they do just finally say, you know what, we're going to sell.

And we're seeing a lot of that, especially on the west side of Fresno County where water is scarce and they don't really see other opportunities and their kids aren't looking to farm anymore. They don't see it as a viable career. So I would like to thank the committee for the invitation to be here today to speak and I'd be happy to answer any questions.

We have one more speaker. And that is Michael Delbar, CEO of California Range Land Trust. Thank you for being here and please begin.

Thank you Madam Chair. As you stated, I'm Michael Delbar, the CEO of the California Range Land Trust and my comments are going to take a little bit of a different angle as well but definitely pertinent to the conversation. So 25 years ago, the establishment of the California Range Land Trust was a visionary step taken by the California Cattlemen's Association to ensure the preservation of our state's rich ranching heritage.

Back then, we witnessed a mass exodus of ranchers to other states driven away by rising land costs, burdensome taxes and the looming threat of unchecked development. Ranchers were also facing huge financial challenges with these state tax burdens to family Members wanting their share of the ranch value but not their share of the work. The Rangeland Trust was formed to be a service to California's ranching families offering a tool through conservation easements that can help save that family ranch. Flash forward to today.

The Rangeland Trust has worked with 87 ranching families in the state to conserve over 378,000 acres of private working rangelands from Siskiyou County to San Diego County, Pacific Ocean to the Nevada border with another 102 ranching families in our queue trying to conserve more than 225,000 additional acres with us. And I'm proud that our very first easement, which the Congressman did not mention, was his family's ranch. So thank you for getting us a good kickstart.

So as successful as we have been with this tool to help protect California's working lands, the threats to the ranching and farming industry that they saw 25 years ago have not disappeared and have continued to lurk right around the corner. For private landowners, the addition of more regulations and threats has made it even harder to be a rancher and farmer in California. They operate on very thin margins. The old adage how to end up with a million dollars in ranching start with 3 million.

So why do ranchers sell? What can we do to help them stay on the land? The issues that force these landowners to look at getting out of this business squeeze profit margins. The ever rising costs of equipment, seed, feed and other inputs are eroding profit margins for ranchers and farmers. They face the paradox of paying retail prices to produce products sold at wholesale rates, making it increasingly challenging to sustain their operations.

Land Purchases as Investments as we've talked about today, outsiders to the industry, including wealthy individuals and corporations, are increasingly purchasing agricultural lands as investments. This surge in demand is driving up land prices, rendering it unaffordable for average ranchers and farmers to acquire land for production purposes. Labor costs and regulations. Stringent labor regulations and escalating labor costs are adding to the burden faced by ranchers and farmers, making it harder for them to maintain their operations efficiently.

CARB Requirements and Equipment Costs ranchers are grappling with the financial strain of conforming to CARB requirements, often necessitating substantial investments in equipment upgrades. Many are being forced to divert revenue towards meeting these regulations, leaving their profit margins even thinner and thinner. Fuel Costs escalating fuel Prices with diesel surpassing $5 a gallon and driving up transportation operational expenses. These elevated costs hinder essential activities such as livestock transportation and field work.

Lack of Processing Facilities the scarcity of processing facilities and the high costs associated with processing are posing significant obstacles to ranchers. Two way, long range hauling of animals and products become unviable due to these challenges. Drought and Water Restrictions severe drought conditions and water restrictions have led to reduced land production and forced ranchers to sell cattle due to inadequate pastures. This not only diminishes food production locally, but also impacts our state, nation and global food supply.

It is imperative that we not only develop new water supplies, but protect our existing ones as well. Generational Transition and Land Transfer an additional challenge lies in the fact that California has five times more farmers and ranchers aged 65 and over than those under 35. The transfer of land from one generation to the next is a major concern, impacting the industry's future and negative public perception. Ranchers and farmers often find themselves portrayed unfavorably by the media and frankly, by some sectors of government.

This portrayal does not reflect the vital role they play in feeding our communities and sustaining our economy. It also unfairly drives public opinion, which has a negative impact on farmers and ranchers. So all that's like a death from a thousand cuts. Yet with these challenges come potential solutions. And if we as a state are willing to rally behind the industry, some of these solutions include conservation Easements conservation easements present a potential solution by reducing land costs through the elimination of development value.

This approach could facilitate younger producers ability to acquire and continue agricultural operations. While the state has provided funding for the acquisition of agricultural conservation easements, the funds amount to only eleven cents per capita. For reference, Delaware spends $6 per capita. In order to permanently protect the working lands that the 102 ranching families that are looking to the Rangeland Trust to protect, we would need $250,000,000. The longer they have to wait, the greater the chance and circumstances will change and we will lose those opportunities.

We were actually approached by Travis Air Force Base using the Repie monies that the Congressman mentioned to help protect through conservation events, the land around the base. When we said, we're absolutely interested in what can we do, how can we make this work? They said, oh, well, never mind, there's not enough land left. That was a big blow for us because we were really excited. About having the opportunity to put easements on those lands and keep them in production.

Williamson Act I'm going to take a little bit of a different spin here. The Williamson Act is recognized as the best conservation program in terms of value. Reinstating County's inventions could bolster its effectiveness and get more lands enrolled in the program. It may not help in this particular case, but it is a huge benefit to those farmers and ranchers and keeping them in business. It's another tool that they need, and it's very effective.

Direct to consumer Sales over the past 15 years, direct to consumer sales have tripled. However, a serious lack of infrastructure hinders the industry's ability to fully capitalize on this avenue by addressing the infrastructure issues and other regulations, it presents a tremendous opportunity for producers to capitalize on their sales and also to consumers and to go directly to the source to get their food.

And while this is not a state issue, but a federal one, eliminating capital gains while it's a federal issue, eliminating capital gains gain taxes on the sale of conservation easements could serve as an incentive to encourage more landowners to participate in conservation efforts. California produces over 400 commodities, some of which are only commercially produced here in the state. Agriculture contributes over $132,000,000,000 per year to the state's economy. Our AG industry is vital for food security, economic prosperity, and environmental quality.

Yet agriculture much too often gets blamed, regulated, and driven out. We all felt the impact of the lack of abundant and affordable food supplies when, during COVID we stared at empty shelves in the grocery store. California stands as a national leader in agriculture, yet our farmers and ranchers face mounting obstacles that jeopardize their ability to continue feeding our state and nation. The additional regulations and challenges they encounter daily only make their plight more difficult.

As the number of farmers and ranchers decreases, the specter of food insecurity looms larger over our state, nation, and world. Thank you, Madam Chair and Senators, for your leadership and thank you for the opportunity to share these thoughts with you today.

I want to thank each and every one of you for participating in today's committee hearing. Obviously, we had a lot of speakers here today, but I think very important information each and every one of you provided just really good insight into the landscape of all the different threats and challenges that really come with agriculture and the land.

At this moment, I want to provide an opportunity to committee Members and see if they have any questions or comments for our panelists and Senator Cortese.

Thank you, Senator Hurtado and first of all, thank you for convening the hearing. Well, it's much needed, I think, ever since I attended the documentary that you set up the screening for here in Sacramento and heard what Mr. Halverson had to say.

I haven't been able to help but notice the number of transactions that are going on that, frankly, I probably would have just overlooked as routine transactions at some level, because big transactions at some level have always been part of the state. It's a big state. We deal in large acreage, maybe not so much as Montana or Wyoming, but certainly in our own right. These things can slip right under your noes in terms of what's really going on.

And I think the tradition in this state has been that Californians are transacting real estate with one another, not with foreign governments and folks from my neck of the woods in Silicon Valley who are billionaires who absolutely aren't going to be deterred by pretty paltry Williamson Act penalties. Those penalties weren't set up to stop billionaires. Those penalties were the act was there for small farmers and ranchers or medium sized ranchers and farmers to stay in business.

Back in the day, of course, pre Prop 13, people were being driven right out of business by alternating reassessments and property tax increases that were, I know, killed agriculture in my region, which was once called the Valley of Hearts Delight. That said, I appreciate being called on first, and I apologize. I have to step out. I'll be back. But I had to step out for a few minutes to greet some high school students that are here visiting the Capitols.

But I really want to hear beyond what our great Congressman John Garame is doing, and thank you for such a profoundly thoughtful presentation and corresponding documents. But with the tools that we do have and certainly the Government Reorganization Act, I have a familial connection to that in the state. It's called Cortese knox and Cortese Knox Herzberg. But back when that work was done, it was a little bit of a different culture, I think.

Here in Sacramento, where people were here for years, committee staff were in place for years, and people really were in a mode to be able to spend four years or five years completely rewriting or significantly augmenting the rules around land use transactions like they did back then. We have been in more of a triage environment, in my opinion, legislatively.

And part of that had to do with term limits coming into play here and shortening tenures in the Legislature and so forth, who would be here for four years just a few years ago or eight years to work on such a big endeavor. But I think we're back in a place now where we can and frankly, need to take a look at deeper dives into our own statutes, our own code sections, and do so in a hurry where we can.

But also, I believe the expertise is here in the Capitol to do this kind of work, despite the fact that we probably haven't done it for 30 years. So if you go back to the whole LAFCO. Side of things here, it strikes me that I'd like to hear from you on the panel, but it strikes me that there's opportunity there.

There's nothing stopping the Legislature from coming in and putting some new guardrails in in terms of what can and can't be done in terms of these mega transactions. I think that was part of the point when you refer to it as a tool. But it's not such a good tool if we just keep what's been in place for 20 or 30 years when these kind of transactions really weren't a problem or weren't going on.

And I don't know how much work has been done or where you would refer us to augment our own legislative research on where to go besides our own Ledge Council, besides good committee staff and government and finance here and AG Committee and so forth.

It seems to me that we would have to bring another layer to this type of hearing now and continue to dive into specifics, real written language, real legal language on how to come in and, if nothing else, put a moratorium on these kinds of transactions, all of which I think we're capable of doing under our own constitution here. Any comments on that?

I'll take a swing at it. The testimony that's been provided here has legislative gems in each of the testimonies that have been given. And I would suggest that the Committee Committee Staff draw out of the testimony written, in most cases, or at least transcribed now, little or big issues. Senator, Chairperson Herato, you have a piece of legislation in that basically deals with foreign ownership of land. Before you get to that, we have to know that somebody is actually buying land.

And the testimony here indicated the need for information. So perhaps you start with a process of reporting of agricultural land transactions. You'll have to define agricultural land. You've heard different kinds rangeland, prime agricultural land and so forth. Soil conditions, which 1978, we define that and actually the maps in California now display that. So you start with information and then you can build upon it additional prohibitions such as the Senators legislation and also protections, which was the assessments.

The essence of my testimony is that there are certain key assets that you want to protect. And then I want to add one more thing. And this was the testimony about the family farmers. There's actually money at the federal level in the Department of Agriculture to finance, provide financing for startup family farmers. And that could be, and it seems to me should be coordinated with the efforts of the State of California to make that money attractive and perhaps even with agricultural commissioners.

Not that you need more work to do, but for the State Department of Agriculture to coordinate and enhance the ability of startup farmers, which we heard earlier today, to access that money.

Thank you, Senator. I guess what I would add, and I did serve on the Hertzberg Commission that lead to that work and worked here. Well, not I was going to say in the building, but in the Capitol when your father was here as well. And this hasn't been an issue because so many of these urbanization changes have occurred through a messy but orderly process through the LAFCO laws around annexation one step at a time.

Or there might be an unincorporated community that has been growing under the aegis of the county that now wants to incorporate the case that we're seeing here, the Flannery case in particular. But it's not unique in the country. For sure is a proposal for incorporation of an urbanization of an area, a completely blank slate from the perspective of the organizers. All the communities and farming that's happening underneath.

It not present, which is impossible under the current LAFCO law unless you happen to control five or six or seven special districts and you have the resources to change the entire zoning map through a ballot initiative, that sort of thing. And so that, I think, is where if you were to think about an area to spend some real thought trying to fix the Cortese Knox Hertzberg law is that one what occurs in that situation where out of nowhere you have a proposal to accomplish this.

The second piece, which I'm still thinking through myself, which is, but then what do you do that would give you the tools to be able to say no to the project? But we still have this issue that we talked about earlier with all the acquisitions that occur on the prospect of the project happening. If the project doesn't happen, you end up with the pest issues that have been described in all the other ones that I described as well. And we don't have that mechanism.

You rarely see that on annexations. It's a couple more acres being put into a community. It's not the end of the world if either way how it goes. But in this particular case, the current law allows for the complete erasure of the status quo prior to the very first public hearing or vote. And that's the challenge within the Cortesian Oxford that's got to be solved.

Thank you. And Senator, if I can just through the chair. Going back to the AG easement issue, I wish Senator Laird was here because my understanding is as Resources Secretary he was instrumental in standing up the California program which is bigger than it was on day one. But it still really would need to be augmented to take on what I see going on in my own county.

With urbanization of South County, 12,000 acres that we're trying to preserve that is more of a local land grab day in, day out. Apple Computer would have been down there years ago had they been able to pull it off politically. But when you start dealing with this kind of acreage I know we haven't built the bucket of money up in terms of AG easements.

And kudos to those of you who have out of the kindness of your heart or as benefactors said, hey, I'm turning over an easement. I don't need a lot of money back or anything like that. But a lot of these farmers, the same folks who are selling out, they're selling out under pressure because generationally and I know I'm a third generation farmer from California myself, I stuck it out for the first 20 years of my life.

But the obvious problem is you get to a generation where nobody's interested in farming anymore. The older generation needs to figure out a way out, and then somebody comes along with the grab and says, we're your best friend, all of a sudden we've got the money. We're going to do what you're seeing with Flannery. And to compete with that, we have found on a smaller scale, at least in our own county, if you have AG easement money available, folks will take that.

Farmers are not trying to go down the path of either urbanization or mega deals. They would love to keep their fee title to their property, be able to keep that as part of the family legacy, and then maybe bring a new immigrant family in or a retired CPA or somebody to come in and farm over the top of that property under the easement.

So it's a terrific program we have, but maybe this will be the impetus for this problem that we have, this grab problem that we have maybe would finally be the impetus to really put a huge commitment of state dollars into the AG easement program. So, again, those are more comments. I don't suspect there's too much argument about that here, but I'm glad to get that on the record. Thank you, Senator.

If I may, I just want to put it out there that there are plenty of people that want to farm, but they don't have a million dollars to go buy land. There are actually lots of young folks that just don't have the ability to suddenly be gifted million.

I've been I actually want to just point out that I've been extremely impressed with senators and Congress and the Feds, frankly, for doing incredible work in terms of actually creating space for beginning and underserved farmers to access land through that land, capital and markets program. $300 million went to programs and hopefully farmers to purchase land. It's possible actually, if the federal government can do it, we certainly can in this state.

And then the other point I wanted to bring up know, of course, as these farm Bill conversations are happening, there's so many amazing marker bills that are coming out.

And the one that I've noticed most recently is Senator Corey Bookers, which is the Farmland for Farmers Act, which really starts to address some of these issues that we've been talking about of let's actually keep farmland in the farming communities and let's start slowing down that transition that we're all seeing from farmers to investment companies and so on. So just highlighting, just throwing kudos where they deserve to be. Thank you. Any additional questions or comments, go ahead.

Hi, I also want to thank you all for your time here. I'll be very quick. I want to focus on foreign land ownership because this has been a Bill that's come before us here and we've wrestled with it now for years here at the Legislature. Now, some of the benefits or some of the concerns I would say loss of control over valuable resources, potential exploitation of our land and resources and then also the impact on local farmers and communities and we certainly talked about that today.

However, some of the proponents would also note that the foreign investment in agriculture also has a benefit such as increased capital, technology transfer and access to international markets. How do we balance the benefits and the risks in a state that's so prolific around being the first and everything? So how do we balance that mindset and that culture to ensure that we are being smart stewards of our agland?

Your argument about technology and transfer I would challenge the rest of the world to be as creative and as advanced in technology as California. The European Union has many things going for them, particularly on the issues of pesticides, herbicides and the like. However, in America and particularly in California, you have to be creative, you have to use the most modern technology. And we are blessed in California with a thing called the land grants.

Universities, the University of California specifically and now also the state university system that is the best in the world on all research and the application of that research to advance efficiency and effectiveness in farming. I'm going to go back you can't solve a problem if you don't know what the problem is, where it is and how it's happening.

So I would start with, and probably this would be the least objectionable, that is information simply requiring that any defined agricultural land that's sold that information be made publicly available as to who is the buyer. And remember, LLCs are specifically designed to hide the real money. So you got to deal with that and this specifically on your Bill, Madam Chair. Secondly, once you have the information it is then easier to make a political argument to address that in how you may want to do it.

You may want to do it with conservation easements and I highly recommend that you may want to do it, as was said about the mechanisms of government strengthening them in one way or another so that they can act. And you may want to also put some money up front and that deals not just with the Eastmans but also with young farmers coming in.

I've been around a long time and I've watched a beautiful thing happen in California and that is the transition in my community, Walnut Grove, mostly Italian farmers or European farmers, Filipinos, Asians came in to work the farms. Pretty soon they became the tenants or the managers, then the tenants and then the owners. Now that's happening with the Hispanic community. How do you allow that and encourage that to happen? And there have been these suggestions that you've heard here today, and you might couple state programs.

It may be money to come on top of the federal programs, as was discussed, but it might be also information and access. And here's where the state and the federal or the land grant, University of California can help. And that is to that organization can provide specific information to assist a new farmer in very, very valuable information. And, for example, market data. What's the market data? I grow hay. I'm having a hell of a time finding out what the market is today.

But I need to know because I want to sell. I don't want to sit there and ride all winter. All winter. So anyway, there's a series of things you can do to assist a startup farmer, and I would really urge your attention to that. You said 7000 acres abandoned. And the threat that that poses to the other, that's where your information comes in. If that information was available earlier, maybe something could have been done, working with the investor to say, just don't abandon this.

Let's bring into this a series of small farmers. I'll let it go at that.

Thank you. Thank you so much. Okay. I will not ask too many questions. I think my question really deals with obviously, getting the information is important. LLCs can have the ability to hide who's actually behind them. And I know that a couple of years ago at the federal level, the Corporate Transparency Act was passed so kind of in an effort to try to make sure that there's transparency behind some of these companies.

And I know that they're beginning to roll out the rules and the regulations and trying to implement it. I guess my question is, how can we improve or how can we work together to speed up that process here in California?

And my second question really deals with and I guess this is more for Nate, because I know you briefly mentioned or touched on it on the public pension piece, but what are some of the trends that you're seeing in terms of how money is being used by foreign countries to invest in the US?

Yeah. So the Canadian pension Fund was mentioned. One of the gentlemen that was interviewed in our film is a Wall Street investor, and he helped build up with the Canadian pension Fund a very large and sizable piece of land holdings across the US. That were then later transferred to the Gates Family Trust, which has recently been reported that Bill and Melinda Gates Family Trust was the largest farmland holder in the United States. And that sort of began with Canadian pension Fund money.

So you're really seeing it's a complex evolution. But what's clear is that increasingly large amounts of money from people driven by profits that are viewing land, agricultural land, as a prime way to generate safe profits, hedged profits. And then you also have the trend of foreign governments that are increasingly worried about their ability to feed their own populations and want to be able to control their food supplies vertically, meaning owning the land.

And you have these two things happening in parallel and obviously feeding off of each other. So it's a fairly complex system. There is currently a federal registry that foreign investors into farmland have to register with. So by federal law, you do through I forget what it stands for, but the acronym is a Fida AF I DA. If you are a foreigner and you buy farmland in the US. You are required. When I looked into this several years back, the compliance wasn't that high.

The penalties are actually quite high for not complying, but it didn't look like compliance was really all that well enforced. So that's one place that in theory, when this land around Travis was being purchased, before the New York Times published the owners, I went to that database and they weren't registered. So they were either not foreign owned or they weren't in compliance, which would have been a very significant penalty.

So there are just a way of saying there are some laws in place to begin to track it, not on the state level, but on the federal level. It's a trend that appears to be increasing. When I look at the prospectuses of these large investment companies, they say it is the increasing global population, the increasing wealth of the world that are eating higher up on the food chain, less grains, more meat driven diets which just require more water to grow more know.

It's why China is the largest importer of grains from the United States. It's a very healthy market. It's very healthy for farmers to have that market. But it also creates certain complexities as that increases. I don't know if I really answered your question, but there was a bunch of information in there thank you.

Where I think you can start here, and that is real estate transactions of the agricultural land that you care about. You want to define that a state registry and a requirement that before a deed can be entered into a county, that information must be made available. If it is a defined agricultural land and it may be range land, it may be other kinds of production land that then provides you the database. And the federal database is woefully inadequate because it is not used.

The percentage is probably no more than 20% of the transactions are actually registered. But the state could set up a registry and you have a mechanism to do it, and that is the recording of a deed which is fundamental to land transactions. And then from there, you can then build the political understanding and support based upon foreign ownership or certain kinds of transactions that might implicate national security. The national security issue is not just a military base.

It may very well be a transformer at Vacaville, drive down Interstate 80, look to the northeast, you approach Vacaville, and you go, oh, my God. If that's not enough, you may want to go over the pass, the Pacheco pass, and look at the transformers as you get towards I Five. So there are national security issues far beyond the military base, and you want to be very aware of those. Those happen to be absolutely critical to the state of California.

I would like to add something if I could.

Thank you. Yes. Go ahead, Madonna.

In commenting about being able to know who these buyers and sellers are and being able to have accurate data. I think that something needs to happen as far as the laws regarding data collection at the time an escrow closes, because that's really the only time you're going to have every single party available and they can all get together and have that information.

And that information can be put into a database because without having any kind of rules and regulations regarding that, you really aren't going to know who the owners or signers are on the buying side. So it's just critical that there are some regulations that change as far as collecting that information. The other thing I wanted to comment on real quick is we have a young gentleman who works for us, and he would love to be able to get into farming.

And so we found a parcel of land for him, and he went through the USDA, he went through Farm Credit West for being able to find a loan in order to be able to purchase that land. And in the end, it just didn't work out because in order for any kind of financing to happen at this point, you have to have two sources of water that are currently available. And while he was in a great water district, he had great water accessibility through the canal.

He did not have a well, and so he could not purchase the land. And I would just like to provide that as an example of what young farmers are facing in trying to get into farming industry. Thank you.

Thank you, Madonna. Well, I once again want to thank each and every one of you. I know that I want to go to the telephone conference line to see if there's any individuals waiting to provide public comment. We're going to go into public comment now. So if there are any individuals here, we'll begin actually here in the room. If there's anyone that wants to provide public comment, we'll go ahead and provide 1 minute.

I want to make sure that we keep it short and be mindful of our panelists and making sure that they make it home on time.

Good afternoon, Madam Chair and Members. Karen Lange. I'm the registered lobbyist for the Solano County Board of Supervisors. So we're very intrigued by the hearing this afternoon. It's been going on for quite a while that obviously they've articulated it. The points that the county administrator's office sent to me have all been covered by your wonderful panel. I just wanted to know they were trying to get to Flannery for a few years. They saw the pattern. The maps were developed a while ago. They were very alarmed.

And I know that it's focused on forming today, but the Air Force base is absolutely incompatible with wind energy installations going in there. So even if they give up the dream of building housing there, the Air Force base is an incredibly important economic driver in the county. And it's also, of course, helping Ukraine right now. And it's just any threat to that.

We would urge the Legislature to provide more tools here or locally to make sure that these things are tracked and that we are protecting national defense interests inside of our counties. And, of course, the agricultural losses that were described and the lack of a solution going forward for being able to bring farming back once it's gone, it's gone. Those are things that they would are grateful you're considering today. Your panel was perfect. They don't even need a lobbyist today.

But I just appreciate the hearing, and thank you for raising all the points today.

Thank you. Up next. Good afternoon, Madam Chair. Thank you so much for your attention to this issue today. And thank you so much to all the panelists who were able to join us. We heard a lot about different threats to agriculture, and I think having resources to manage all of these are critical. But I would like to mention another looming threat that Mr. Delbar noted. California's rapidly growing regulatory obligations. This is death by a thousand cuts for a lot of our agricultural communities.

Californians and farmers and ranchers aren't strangers to adaptation. So there's pride to be earned in being resilient in the face of challenges. But with every policy shift comes a new regulation, and the cost to the farm grows. You need to look at waterboard fees and utility rates as a good example of some of those increasing costs over time. Water quality fees alone have grazed 150% in the last ten years, and then there's an eight and a half percent increase that's being contemplated.

So even if you could overcome the land ownership challenges that dominate a lot of the conversation today, there's real questions about whether or not you could even afford that land to farm. And as you hear frequently in your committee and in your district, these costs put pressure on the hardest family farms in California. So we hope that you consider these impacts in your last few weeks of session. Thank you.

Thank you. Can you state your name and organization? I'm Taylor Ocean. I represent a whole variety of agricultural associations and commodity groups. Great, thank you. Any other individuals? Okay.

Good afternoon, Chair. My name is Peter Ransel from the California Farm Bureau. I wanted to thank you for holding this hearing this afternoon. It's important to our Members in Solano County and throughout the state. They feel a lot of pressure constantly on their agriculture operations and their ability to farm. And when there's questions about who the groups are that are purchasing AG lands and there's uncertainty about who those actors are, it certainly raises the alarm bells for them.

Farmers appreciate a rural way of life, and there's a lot of consternation currently that this is an opportunity and an attempt of wealthy people in a place that don't like to build housing to just simply move that housing to rural communities. And that's obviously got our membership quite concerned. So we appreciate you bringing attention to the issue this afternoon. Thank you.

Okay, if there are no other individuals here to provide comment, we'll move to the telephone public comment line, and that number, once again, is 1877-226-8216. And moderator, can you please let us know how many individuals are in the queue?

Yes. Thank you. For public comment, you may press one, then zero. And Madam Chair, we have one in queue. Okay, thank you. Can you please and we will go to line ten.

Hello, this is Ama Hernandez. I am the mayor of the city of Fujian City, which is right next to Travis Air Force Base. I want to first congratulate everyone for this discussion. It has been not only informative for everyone who is learning about the land use and everything that's going on locally, but I think for Members of the public who are tuning in and seeing the work taking place, I just wanted to say thank you for the work.

Travis Air Force Base locally is imperative to our community as the largest single employer in our location. So I just wanted to say thank you for all the work that's taking place as well.

Thank you, Madam Chair, we have no further public comment in queue.

Thank you, moderator. Well, having heard all public testimony and from our panelists here today, I want to say that the information was just extremely valuable. Thank you so much for coming, for attending, for providing input, ensuring California's agricultural community remains vital, and that we protect the land that we have is really important to myself, to the committee, and of course, to everyone that is here in this room and beyond.

I am hopeful that the information gained this afternoon will be beneficial in finding lasting solution to this pressing issue. And as the chair of the Senate AG Committee, my staff and I will continue to monitor threats to California agriculture. And we'll do everything within our purview to combat them as they arise. I. Want to thank my colleagues, committee staff and for everyone else who contributed to today's hearing. I know that it went a little bit long, so I appreciate your patience.

And I also want to thank all the individuals who called in to participate and provide public testimony. With that, this concludes our agenda. So the Committee on Agriculture is now adjourned. Thank you.