Sep 23, 2014
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California Water Prices Soar for Farmers as Drought Intensifies

July 26, 2014
California groundwater and corn silage
Prices range from $1,000 to $2,000 per acre-foot, with higher costs in the southern part of the state.  

The drought's water curtailments prompt districts representing growers to buy and sell for escalated prices from other parts of the state as thousands of acres go unplanted.

Farmers in California’s Central Valley, the world’s most productive agricultural region, are paying as much as 10 times more for water than they did before the state’s record drought cut supply.

Costs have soared to $1,100 per acre-foot from about $140 a year ago in the Fresno-based Westlands Water District, which represents 700 farms, said Gayle Holman, a spokeswoman. North of Sacramento, the Western Canal Water District is selling it for double the usual price: $500 per acre-foot, about 326,000 gallons (1.2 million liters).

"This year the demand was great, the competition was high," said Ted Trimble, general manager of Western Canal, which represents rice farmers. "You have huge demand in the southern end of the state."

The drought gripping the state that supplies half the fruits, vegetables and nuts consumed in the U.S. has led federal and state providers to curtail the water they distribute to California’s farmers. That’s prompted districts representing growers to buy and sell for escalated prices from other parts of the state as thousands of acres go unplanted.

The drought threatens to boost produce costs that are already elevated following a December frost, according to the U.S. Agriculture Department. The price of fresh fruit is forecast to rise as much as 6 percent this year, the department said last month. Dairy products, of which California is the biggest producer, may rise as much as 4 percent.

Almonds, Avocados

Agriculture consumes about 80 percent of all delivered water in the most-populous U.S. state. California’s 80,500 farms and ranches supply everything from milk, beef and flowers to some of the nation’s largest fruit and vegetable crops, including almonds, avocados and strawberries.

After three years of record-low rainfall, 82 percent of the state is experiencing extreme drought, according to the U.S. Drought Monitor, a federal website. Governor Jerry Brown in January declared a state of emergency and called for a voluntary 20 percent cut in water use.

Farmers and local water officials say the surge in water prices stems from the government decision to limit the water they provide. The U.S. Interior Department’s Bureau of Reclamation supplies water to a third of the irrigated farmland in California through a 500-mile network of canals and tunnels. In February, the agency made its initial allocations, and has since said it would reduce its California water distribution to between zero and 75 percent of contract supply this year.

Federal Water

The rising prices are "a function of supply and demand in a very dry year and the fact that there are a lot of competing uses for water in California," said Mat Maucieri, a spokesman for the Bureau of Reclamation.

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