Soaring gas prices affecting California agricultural co-ops

Gas prices continue to climb and are affecting local co-ops, including one that packages and markets beans out of California.

As of Wednesday, the average price of regular gas throughout California jumped 4 cents from Tuesday to $5.33, and that's $1.76 more than the national average, according to AAA.

"If fuel prices stay the way they are when they start harvesting, it obviously just cuts into their margin, as well, and it becomes harder to be a farmer," Kellen Kubo, Rhodes-Stockton Bean Co-op general manager, said. "I think, ultimately, they get hit pretty hard as a farmer in California and higher fuel prices just make it even more challenging."

The Rhodes-Stockton Bean Co-op, which operates out of Tracy in San Joaquin County and Meridian in Sutter County, gives local growers a place to bring their beans and they then process and market their beans. It's a niche business in California agriculture, according to Kubo, compared to produce, strawberries, tomatoes, or almonds, serving small and big growers and working with smaller operating margins.

"We're basically there for the growers," Kubo said. "We're owned by the growers. We have members. We're controlled by the people who use our facilities. We don't have private investors or anything like that. So, we literally are there to serve all our members."

Kubo says the increase in gas prices increases their cost, not just for the warehouse but also for the farmers, with beans being trucked to the plant.

"We also bring beans in and repackage for our customers and so with inbound freight, you have a big increase in fuel prices over the past week, especially here in California," Kubo said. "So with beans, you work off of lower margins than you do with, let's say, a strawberry. We're not working off a percentage. We're working off of smaller operating margins. And it really just increases our cost, not only for the warehouse, but even for farmers."

The co-op brings beans in from other states like Idaho and North Dakota, causing them to rely on high-priced freight.

"I think everyone wishes that fuel prices would go down as time goes on," Kubo said. "But obviously things happen on the world scale, and it just affects everything else. And that's just part of the way the world is right now."

The commute to work is also more expensive for their employees who work in Tracy from Oakdale, Stockton, Patterson, and Modesto. There are employees who work at their Meridian plant who live in Yuba City and Sacramento.

Kubo's commute from Fresno to Tracy is four hours round-trip without traffic.