California Drought Drying Up the Local Agriculture Business

It’s official: California drought, which began in 2011, has entered a fourth consecutive year of severe drought. Almost 80 percent of California is now in the state of “extreme or exceptional” drought. Low snowpack in the mountains and record high triple-digit temperature heat waves surrounding the state even in the midst of autumn are telling us that coming months will do little to improve the dehydrated state. In drought-stricken California, people engaging in businesses anywhere from breweries to golf are struggling hard to prevent their companies from shutting down by fighting water-shortage. Among all industries however, farming is the probably the most negatively impacted in California—the nation’s biggest agricultural state by value.

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Shocking image of cumulative water storage changes in California captured by NASA satellite over the last 12 years.

http://mashable.com/2014/10/03/nasa-satellites-california-drought/

The fact that farmers need water to grow their products is pretty intuitive. However, the state has faced a net water shortage of 1.6 million acre-feet this year, resulting in $810 million loss in crop revenue and $203 million worth of damage in dairy and livestock products. California drought is causing the agricultural business to shrink. The dwindling farming business is negatively affecting the California economy in many ways. The severe and historic drought in California is expected to have a huge financial and economic influence in California’s agricultural sector—and lead to thousands of jobs being cut. To make matters worse, it will also likely to have negative impacts on nation’s food prices and foreign exports.

According to data released by Beacon Economics, exports of California fruits and tree nuts dropped by 8 percent compared to last year and vegetables by 7.8 percent this August. In terms of rice crop, almost 25% of California’s $5 billion will be lost this year due to drought. It is said that 2,500 rice farmers planted just 420,000 acres of high-quality rice used in sushi this year—a significantly lower number than usual. California’s Sacramento Valley produces most of the sushi rice and exports a huge amount of rice countries outside U.S., especially in Asia. According to U.S. Drought Monitor, 58% of California, including all of Central Valley, where a lot of agriculture happens, is currently going through “exceptional drought”, the most severe level of drought. In other words, sushi lovers will either see a spike in the price of sushi or a shorter roll.

Among the biggest losses in California agriculture are almonds, hay, corn and oranges. The state’s dairy farmers are struggling too because there is not even water to grow hay to feed their cows.

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Empty docks as a result of severe drought

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So what are some specific repercussions of California drought? What will happen if the problem does not get resolved?

  1. Overall Economic Loss

The number one result of California’s severe drought is of course the loss of money. From a report from experts at the University of California, Davis commissioned by Department of Food and Agriculture, California is estimated to lose about $2.2 billion this year, and is expected to cut 3.8%, about 17,100 of the state’s agricultural related jobs, most of them consisting of seasonal and part-time work in the Central and San Joaquin Valleys. It is also according to the report that dairy and livestock farmers will be losing about $203 million while pumping cost for more groundwater will cost about $500 million.

 

  1. Less Employment

Since there is less arable land for farmers to harvest their crops, there is less demand for workers as well. Job cuts are not only limited to farmlands but are also happening in other industries that are closely related to farming. For example, some companies that make farm equipment have begun laying off their workers and downsizing their business since there is now less need for farming equipment in California. Although this is only happening locally as of now, it will soon be a national if drought problem persists. For instance, those who are engaged in agricultural goods export business all around the world will soon be put into predicament as well due to shortage of food.

The job cuts are causing a ripple effect on the local economy. If the problem continues, it will soon cause a ripple effect on national and worldwide economy as well.

 

  1. Less Export

California is responsible for providing food nationally and internationally. It is known that the state grows about 80% of world’s almonds. The almond trade has become so profitable that Californians began planting almond trees in deserts thanks to the well-equipped irrigation system. Now that farmers in California are strictly restricted from freely watering their plants, many lands that grow almonds are being left fallow this year. This is not only limited to almonds; we are seeing this in other food products as well such as rice and oranges. Although this is not yet a significant problem as of now since California has enough amount of products that are stored, it could soon possibly cause a global crisis if the problem were to persist.

 

  1. Higher Food Price

This is quite intuitive. Less food production due to drought means there will be less supply chain. Now that there is less food available in the market but equal amount of people competing for that reduced amount, the price of food must go up. This will be especially crippling to poor people who are trying hard to make their ends meet. This will also make people turn to relatively cheaper food, most likely the imported goods from other countries. This will stagnate the local food market and ultimately lead to less active economy and possibly inflation as well due to less consumer confidence.

 

  1. Groundwater Demand

The average demand for groundwater in California is usually around 40 percent a year, but now it has reached 60 percent. The amount of money put into pumping groundwater costs millions of dollars. To make things worse, pumping groundwater not only depletes the stored water but also makes dangerous conditions for the ground such as huge sinkholes because groundwater is layered in clay and sandstone. If this happens to be the case, the state would have to spend extra money on fixing the land.

Using up groundwater due to drought may solve the problem that is imminent. This is why we are not seeing a huge change in our food prices just yet. However, using up groundwater is not the best idea if we look at this situation in a long term—there is only a limited amount of resource and it will be depleted soon enough if drought continues to happen in the future. The result of depleted groundwater will be devastating, leading to much less harvest and worsened land situation.

 

As of now, there is nothing we can really do to solve this problem. The dilemma to this drought problem is that the short term solutions that have been implemented to resolve the problem may resolve the current economic problem but it cannot solve the drought problem which can occur over and over again. All we can do as of now is to use less water. We have been too greedy, and surprisingly our greed has come back to haunt us.

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