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California Farms Going Thirsty as Drought Burns $5 Billion Hole

January 29, 2014

Jan. 29 (Bloomberg) -- Near the confluence of the Merced and San Joaquin rivers, the heart of the California farm belt, Bob Kelley watches the driest year ever erode water supplies and prospects for the dairy business his family began in 1910.

The amount of water available for the 2,800 acres of corn and alfalfa Kelley grows to feed more than 6,500 cows may drop as much as two thirds, so fewer crops will be planted and some animals will be sold to avoid the expense of buying grain, he said by telephone from Newman, about 83 miles southeast of San Francisco.

"It would impact us for not just 2014, but all of 2015," said Kelley, 60, who runs a local water district that will cut output by at least half. "I’m anticipating a very difficult time, and I’m probably the best off of anybody I know."

The drought in California, the top U.S. agricultural producer at $44.7 billion, is depriving the state of water needed to produce everything from milk, beef and wine to some of the nation’s largest fruit and vegetable crops, including avocados, strawberries and almonds. Lost revenue in 2014 from farming and related businesses such as trucking and processing could reach $5 billion, according to estimates by the 300-member California Farm Water Coalition, an industry group.

The state was the driest ever in 2013, a third straight year of little moisture. California Governor Jerry Brown declared a drought emergency on Jan. 17 as arid conditions he called "unprecedented" continued well into the annual rainy season that runs from October through March. Reservoirs on Jan. 27 were at 61 percent of average, while the mountain snow-pack as of Dec. 30 that supplies most of the state’s water was at 20 percent of normal for that time of year, data show.

Dry Spell
Average rainfall in California was 7 inches last year, the lowest on record going back to 1895, said Michael Anderson, the state climatologist with the Department of Water Resources in Sacramento. Dry weather and drought will persist through 2014, predicted Drew Lerner, the president of World Weather Inc. in Overland Park, Kansas.

Fresno, the biggest city in the fertile San Joaquin Valley, got a record-low 3.01 inches last year, compared with an annual average of 11.5 inches, according to data from Accuweather Inc. in State College, Pennsylvania. Salinas, a city known as "the Salad Bowl of the World" for its production of lettuce, broccoli, mushrooms and strawberries, recorded 3.27 inches, compared with 15.46 inches normally. Los Angeles got less than 4 inches, compared with 15 normally.

Unplanted Crops
Farmers in the state probably will leave as much as 500,000 acres unplanted, or about 12 percent of last year’s principal crops, because they won’t have enough water to produce a harvest, which will mean fewer choices and higher prices for consumers, said Mike Wade, executive director of the California Farm Water Coalition, a Sacramento-based group of farmers, water district managers and farm-related businesses.

"Any job that’s associated with agriculture is hurting," Wade said. While some farmers were able to conserve water in years past, they won’t get "any preferential treatment" over uses by municipalities, he said.

Extreme weather around the world is wreaking havoc with farmers and threatening global food production. Dry weather in China turned the world’s second-biggest corn grower into a net importer of the grain in 2010, and ranchers in Texas have yet to recover from a record dry spell three years ago. One in eight people in the world go hungry, some of which can be blamed on drought, according to the United Nations.

U.S. retail prices for beef, bacon, lettuce and broccoli posted double-digit gains last year, and tomatoes are the most- expensive since May 2011, even as overall food inflation advanced just 1.4 percent, government data show.

Bigger Impact
California gets most of its rain in December, January and February, when crops are dormant or yet to be planted. A prolonged drought may change the way water is used.

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