2015 Drought Costs Ag Nearly Two Billion!

DROUGHT COSTS CALIFORNIA AGRICULTURE $1.84B AND 10,100 JOBS IN 2015

The drought is tightening its grip on California agriculture, squeezing about 30 percent more workers and cropland out of production than in 2014, according to the latest drought impact report by the UC Davis Center for Watershed Sciences.

In 2015, the drought costs to the state’s agricultural economy will reach about $1.84 billion and 10,100 seasonal jobs, the report estimated, with the Central Valley hardest hit.

The analysis also forecasts how the industry will fare if the drought persists through 2017.

‘NOT A FREE LUNCH’

Currently, the industry overall remains robust. The agricultural economy continues to grow in this fourth year of severe drought, thanks mostly to the state’s vast but declining reserves of groundwater, which will offset about 70 percent of the surface water shortage this year, the researchers said.

California is the world’s richest food-producing region. Continued strong global demand and prices for many of its fruits, nuts and vegetables has helped sustain the farm economy along with intrastate water transfers and shifts in growing locations.

“We’re getting by remarkably well this year — much better than many had predicted — but it’s not a free lunch,” said lead author Richard Howitt, a UC Davis professor emeritus of agricultural and resource economics.

The heavy reliance on groundwater comes at ever-increasing energy costs as farmers pump deeper and drill more wells. Some of the heavy pumping is in basins already in severe overdraft — where groundwater use greatly exceeds replenishment of aquifers — inviting further land subsidence, water quality problems and diminishing reserves needed for future droughts.

Further, several small rural communities continue to suffer from high unemployment and drying up of domestic wells because of the drought, particularly in the Tulare Basin.

“If a drought of this intensity persists beyond 2015, California’s agricultural production and employment will continue to erode,” said co-author Josue Medellin-Azuara, a water economist with the UC Davis Center for Watershed Sciences.

MAJOR CONCLUSIONS

The UC Davis team used computer models and the latest estimates of surface water availability from state and federal water projects and local water districts. They forecast several drought-related impacts in the state’s major agricultural regions for the current growing season, including:

  • The direct costs of drought to agriculture will be $1.84 billion for 2015. The total impact to all economic sectors is an estimated $2.74 billion, compared with $2.2 billion in 2014. The state’s farmers and ranchers currently receive more than $46 billion annually in gross revenues, a small fraction of California’s $1.9 trillion-a-year economy.
  • The loss of about 10,100 seasonal jobs directly related to farm production, compared with the researchers’ 2014 drought estimate of 7,500 jobs. When considering the spillover effects of the farm losses on all other economic sectors, the employment impact of the 2015 drought more than doubles to 21,000 lost jobs.
  • Surface water shortages will reach nearly 8.7 million acre-feet, which will be offset mostly by increased groundwater pumping of 6 million acre-feet.
  • Net water shortages of 2.7 million acre-feet will cause roughly 542,000 acres to be idled — 114,000 more acres than the researchers’ 2014 drought estimate. Most idled land is in the Tulare Basin.

The effects of continued drought through 2017 (assuming continued 2014 water supplies) will likely be 6 percent worse than in 2015, with the net water shortage increasing to 2.9 million acre-feet a year. Gradual decline in groundwater pumping capacity and water elevations will add to the incremental costs of a prolonged drought.

GROUNDWATER LAWS COULD HELP

The scientists noted that new state groundwater laws requiring local agencies to attain sustainable yields could eventually reverse the depletion of underground reserves.

“The transition will cause some increased fallowing of cropland or longer crop rotations but will help preserve California’s ability to support more profitable permanent and vegetable crops during drought,” said co-author Jay Lund, director of the UC Davis Center for Watershed Sciences.

The report was primarily funded by the California Department of Food and Agriculture.

Other authors on the report include Daniel Sumner, a UC Davis professor of agricultural and resource economics and director of the UC Agricultural Issues Center, and Duncan MacEwan of the ERA Economics consulting firm in Davis.

Op-ed: California Agriculture Is Worth the Water

California agriculture is worth the water

Op-ed co-authored by Secretary Ross and Daniel Sumner in the LA Times

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By Karen Ross and Daniel Sumner

Pundits here in drought-stricken California have become fond of proclaiming that farms consume 80% of the state’s water and generate only about 2% of its gross domestic product. “Why devote so much of our water to an industry that contributes so little fuel to our economic engine?” they ask.

Both of those figures are deceptive. It’s only possible to arrive at 80% by not accounting for the amount of water dedicated to environmental uses. (For example, the water in rivers that flows into the sea.) And the 2% figure grossly undersells the importance of food grown in California.

California’s economy is incredibly diverse, much like its topography, its climate and its population. That’s a significant benefit when you’re the eighth-largest economy in the world. And agriculture is a key part of that diversity.

Of course, many aggregate sectors constitute a larger share of our economy than agriculture. Finance, insurance and real estate tops the list at 21%. Professional services and government follow at 13% and 12%, respectively.

Beyond those sectors, we have a broad, flat grouping of several categories, each representing just a few percent of the state’s GDP. That’s a remarkably balanced profile that lends resilience and dynamism to our economy.

Let’s look more closely at that data, though. Is agriculture really just 2.1%? As is so often the case with statistics, what’s not in that number is more significant than what is.

Take the “utilities” category, for instance. It includes power generated for farms and for processing and marketing crops once they’re harvested. The “real estate” piece includes sales and leasing of agricultural acreage and processing facilities. “Non-durable goods manufacturing” includes food and beverage processing. “Wholesale trade” and “retail trade” does not just mean the shopping mall; it includes the supermarket, the food court and the regional produce hub.

Categories such as “transportation and warehousing” and “finance and insurance” are linked into every one of our 78,000 farms, each of which needs trucks, banks and insurance coverage to bring in the harvest.

“Accommodation and food services” not only runs on food but also is fond of promoting the fact that many of the most healthful and desirable foods and beverages grow on California farms and ranches. California, after all, helped start the farm-to-plate movement, and it’s not an exaggeration to say that agriculture is tied to the state’s identity from harvest (Cesar Chavez) to table (Alice Waters).

Granted, all economic sectors have ripple effects and multipliers. But unlike most other segments, California’s agricultural productivity and diversity are not readily duplicated elsewhere. Our soils and climate are what have made it possible for us to supply so much of our nation’s and the world’s food.

Food is central to California in more than just the nutritional sense. It contributes to nearly every aspect of our economy and our lives, an important point to keep in mind as we weigh what our water is worth during this drought, and the next one.

Karen Ross is California agriculture secretary. Daniel Sumner is a professor of agricultural and resource economics at UC Davis.

League of Women Voters to Host Ag Issues Seminars

The League of Women voters will host two seminars focusing on current issues in agriculture during the month of March.

The first seminar, “Agriculture’s Economic Health,” is scheduled to take place on Wednesday, March 5.

Panelists include Paul Betancourt, grower; Jerry Prieto, former Fresno County agricultural commissioner; Dr. Daniel Sumner, UC Davis agriculture economist; and Jeff Yasui, USDA Risk Management.

The second seminar, “From Animal Management to Food Safety,” will take place Wednesday, March 19.  Panelists include Bill Griffin, Fresno County Department of Agriculture; Charlene McLaughlin, a bovine veterinarian; Kiel Schmidt, organic farmer; and Paul Wenger, California Farm Bureau Federation president.

Each seminar will take place from 11:30 a.m. to 1 p.m. at the Community Media Access Collaborative (CMAC), 1555 Van Ness, Fresno.

The seminars are free and open to the public. Participants should bring lunch; a snack and beverage will be provided.  Relevant articles can be found at http://fresno.ca.lwvnet.org/.