Regulatory Costs
Regulatory Compliance Costs
Monterey County Farm Bureau
commissioned an update of
2018 Compliance Costs Study by
Cal Poly San Luis Obispo
California’s regulatory environment in Agriculture is structured to protect the environment, food safety and worker health and safety. However, those protections come at a significant cost to agricultural businesses, and those costs continue to increase. The study, “A Decade of Change – Evolving Costs of Regulatory Compliance in the Produce Industry,” completed in 2018, showed that while production costs had increased by about 25% from 2006 to 2018, close to price inflation over the period, compliance, and associated, costs of regulation skyrocketed by almost 795%. Since 2018, additional agricultural regulation has been passed and/or fully phased in from initial stages. The Sustainable Groundwater Management Act, additional air quality and water quality regulations, as well as new overtime and minimum wage requirements pose additional costs to growers’ profitability.
Rising costs of regulatory compliance for lettuce growers indicate a 63.7% increase in the past seven years in a study commissioned by Monterey County Farm Bureau prepared by CalPoly San Luis Obispo professors Lynn Hamilton, Ph.D., and Michael McCullough, Ph.D.
This new study updated their regulatory costs study from 2017 with additional regulatory program requirements implemented in the intervening years.
Increased regulatory compliance requirements through 2024 bring lettuce grower total costs of regulation to $1,600 per acre, an increase of 63.7% from the 2017 study and a 1366% increase since 2006 (date of the original study).
This indicates that regulatory costs are now 12.6% of total production costs, while farmgate values for lettuce increased only 0.37% from 2017 to 2024.
Increased regulatory compliance mandates since 2017 come from the Sustainable Groundwater Management Act, Irrigated Lands Program, equipment emissions regulations, and minimum wage and workplace mandates.
Costs of regulatory compliance expenditures were studied for food safety practices and inspection audits, air quality, water quality, crop protection reporting, labor health and safety, and labor wages. Most significant cost increases were in labor health insurance requirements and water quality compliance, while food safety costs remained relatively steady.
While regulatory costs continue to dramatically increase, the farmgate value of crops has only marginally increased to cover the additional costs.
Download STUDY report here
According to a December 2025 report by the Public Policy Institute of California (PPIC), “In total, there are 420,434 … regulatory constraints in California, and the average business is subject to 3,737 constraints (averaged across industries…). This is the highest across states, and the median across states is 1,400.” Note that this report does not focus on the regulatory obligations placed just on the agricultural sector, but rather the broader business environment to understand the extent to which regulations aid or impede business in California. The PPIC report continues, “Regulations are hard to quantify, and this is even more challenging because different regulations can interact – for example, by contradicting each other or by creating layers of complexity that can increase the costs of compliance.”
