California farm economy surprisingly resilient
An estimated 800,000-plus acres will sit idle this year
Gross farm revenue, employment actually increased slightly last
Food prices remain steady despite crop declines
By Dale Kasler and Phillip Reese
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The land is bare, except for a few weeds, and the ground is
cracked. For the second year in a row, Dan Errotabere is
fallowing one third of his ranch: 1,700 acres of California
farmland that might have grown tomatoes, garlic, onions and
“I can’t do this every year,” Errotabere said, inspecting an
idle field on his family’s Fresno County farm. “I’ve got to
grow. I’ve got to farm.”
This is the state of California agriculture in the fourth year
of record-setting drought. With deliveries of surface water
through state and federal pipelines slashed by 70 percent
overall, the state’s 77,000 growers are struggling to produce
the diverse agricultural bounty that makes California the
nation’s leading farm state. At least 800,000 acres likely will
sit idle this year, or nearly 9 percent of the statewide total,
according to the California Farm Water Coalition. The coalition
says about 690,000 acres were taken out of production last year
due to drought, although other estimates have been lower.
Even as many farmers cut back their planting, California’s farm
economy overall has been surprisingly resilient. Farm employment
increased by more than 1 percent last year. Gross farm revenue
from crop production actually increased by two-tenths of 1
percent last year, to $33.09 billion, according to the U.S.
Department of Agriculture. The revenue figures don’t take into
account animal agriculture, such as beef and dairy production.
The statistics don’t mean farmers and their employees are having
an easy time of it. Rather, the data show how farmers are coping
with the shortages of water. Forced to make choices, they’re
diverting more of their dwindling water supplies to keep
high-value crops going. Almond prices, for example, have been
sky high, and farmers such as Errotabere have idled other crops
to preserve their almond orchards and reap the financial
rewards. As for jobs, many of the crops that have held up the
best also happen to be the most labor intensive, such as
strawberries, which has helped pump up employment.
“The agricultural economy is, in a general sense, not that bad
if you have a product to sell,” said Dave Kranz, spokesman for
the California Farm Bureau Federation. “If you don’t, you’re not
going to be able to take advantage of that.”
Without question the drought is reining in a sector of the
economy that’s been a juggernaut. Between 2003 and 2013, annual
agricultural output adjusted for inflation grew by 24 percent,
to $46.4 billion. The full impact of the unplanted acreage won’t
be known for months, but it’s obvious that many farmers are
Some 27,000 acres of California grapevines have been ripped up
in the past year, and another 20,000 acres of orange and lemon
trees are expected to get bulldozed this year. Sacramento
Valley’s rice crop likely will shrivel by at least 25 percent,
and growers fear they’re losing access to critical export
markets because they can’t meet obligations to customers.
While crop revenue grew last year, the profitability of farming
was depressed. Farmers in much of the state had to pay
considerably more for their water, said farm economist Vernon
Crowder, a senior vice president at Rabobank.
“Sometimes aggregate numbers lose sight of the very real
challenges that farmers are experiencing on a local level, the
incredible difficulties some of them are experiencing in getting
water,” said Mark Jansen, chief executive of Blue Diamond
Growers, the giant almond cooperative based in Sacramento.
Almond production is expected to decline slightly this year as
water problems interfere with yields.
So far the drought hasn’t had huge impacts on consumers.
California’s celebrated wine grapes will be relatively
plentiful. Overall food prices haven’t risen much. Much of the
drop in production has occurred with crops, such as rice, where
California contributes a relatively small share of the world’s
supply and doesn’t have much impact on price. The crops in which
California dominates world production – almonds, strawberries,
many vegetables – have seen only limited declines in output.
“Consumers mostly won’t notice at all,” UC Davis farm economist
Daniel Sumner said. “Your California rolls might be a nickel
more expensive because the price of rice became more expensive.”
No apologies for water use Changing consumer tastes have spurred
a revolution in California agriculture that began well before
the drought. In the past decade, farmers have nearly doubled the
number of acres devoted to almonds and pistachios in order to
meet growing global demand, taking out hundreds of thousands of
acres of cotton and other lower-value commodities. With last
year’s almond crop estimated at nearly $6.5 billion, almonds
have overtaken wine grapes as the second-largest California farm
commodity, trailing only the dairy industry.
“I grow what people want,” said Errotabere, whose operation
includes 900 acres of almonds and 100 acres of pistachios.
No one’s rushing to thank him. Environmentalists and others have
been pummeling farmers for taking 80 percent of the water used
by people in California. (Farmers say they account for just 40
percent of the state’s supply when river water left to the
environment is taken into account). Critics have been
particularly scornful of almond growers south of the Delta for
planting comparatively thirsty permanent trees in a region where
water rights are weak and the supply has been unreliable for
The farmers’ response: They are reacting to booming worldwide
demand for almonds and using good economic sense by putting the
water on a high-value crop. Farmers are continuing to plant new
“I don’t apologize for using water,” said Errotabere, whose
family has been farming in the San Joaquin Valley since the
1920s. “We need it to grow crops. I’m a pretty good steward.”
Errotabere, 59, farms in one of the most drought-stricken
regions of the state. Much of his farm sits in the giant
Westlands Water District, which normally buys its water from the
federal government’s vast statewide plumbing network, the
Central Valley Project. Not so this year: Westlands is getting
no water whatsoever from the project, for the second year in a
That doesn’t mean farms in the region have gone completely dry.
Westlands growers expect to pump 650,000 acre-feet of
groundwater this year, said the district’s general manager Tom
Birmingham. An acre-foot is 326,000 gallons.
The pumping leaves no one particularly happy. Westlands still
expects half its fields to lay fallow, and growers are wary
about wells going dry.
“Groundwater is a finite supply,” Errotabere said, standing
alongside a well irrigating a tomato patch. “We’re already
taking out too much.” The Legislature enacted the state’s first
groundwater regulations last year, although local agencies have
another five to seven years to develop plans for implementation.
A Westlands board member, Errotabere, like many farmers in the
parched San Joaquin Valley, criticized government policies that
he said has resulted in too much river water being diverted for
fish in recent years. To him, the situation raises troubling
questions about farming’s future in California.
“Ultimately, the question is, does California want agriculture?”
Errotabere said. “We’re farming in an urban state (where) the
connection to agriculture over the years has drifted apart.
We’re not understood.”
Even with higher prices for almonds, Errotabere said the drought
has taken a toll. He used to pay $150 an acre-foot for water
delivered by the Central Valley Project. Now he spends about
$200 to pump water from underground, and hundreds more for
whatever supplies can be scrounged on the open market.
Every acre that’s quiet, he said, represents 30 hours of lost
labor, at about $12 an hour. With 1,700 acres out of production,
that’s about $600,000 in lost wages.
“We’re not a big faceless company here,” he said. “This is
Broader fallout from idled fields The drought’s impact goes
beyond the farm fields. Holt of California, a farm-equipment
dealer with offices from Redding to Los Banos, reported a 30
percent drop in sales of its largest machines – the tractors and
combines that sell for anywhere from $200,000 to $500,000
“Farmers are being very careful with their capital,” said Kent
Monroe, president of Holt. “I would say that’s all
drought-related, with the farmers not willing to take the risk
on a capital outlay.”
Standing last week in a field that normally would be under
several inches of Sacramento River water but this year has been
left idle, Colusa County rice grower Donald Bransford gestured
toward a series of businesses that depend on farmers to raise
“That seed plant employs people,” Bransford said. “That’s a
storage facility; it employs people. There are some rice mills
Even commodities that had withstood the effect of drought in
prior years are a source of anxiety. Last year, the tomato
industry in California delivered a record crop, 14 million tons
worth, as farmers responded to record prices offered by
manufacturers of pasta sauce and other products. So far this
year, prices haven’t been set and it’s unclear how big the crop
“Most growers are struggling with the water issues,” said
Winters farmer Bruce Rominger, chairman of the California Tomato
Growers Association. “A lot of those people are out in the
market, trying to buy water.”
California’s giant dairy industry, the state’s largest farm
commodity, is losing its price cushion. Producers enjoyed a 24
percent jump in revenue last year, to around $9.4 billion,
thanks to increased milk prices, according to a study produced
by UC Davis for the industry-supported California Milk Advisory
Board. The high prices helped dairy farmers cope with the
drought, which drove up the cost of feed.
The situation is different this year. Annie AcMoody, director of
economic analysis at Western United Dairymen, said farmers are
getting squeezed because feed prices are still high but milk
prices have plunged by one-third. Now in retrenchment mode,
California dairy farmers have scaled back production 3 percent
compared with last year, AcMoody said.
Rice growers along the Sacramento River, whose historic water
rights are strong compared with other regions of California, are
using that positioning to create their own financial buffer.
They’ve lost 25 percent of their federal water this year – a
heavy hit, but far better than the zero water deliveries for
landholders with lesser rights. Many growers have agreed to sell
a portion of their remaining water, mainly to farmers in
Westlands and other districts south of the Delta, for $665 an
Selling the water is probably a bit more lucrative than actually
planting rice at today’s crop prices, said Bransford, who is
president of the Glenn-Colusa Irrigation District.
But it also means fallowing more fields, which puts more stress
on the valley’s rice industry. Production fell 25 percent last
year and probably will decline further in 2015.
One casualty is the export business, which normally consumes
about 55 percent of the valley’s rice crop. The diminished
output is hurting sales; so is the strength of the U.S. dollar,
which makes California’s rice comparatively more expensive.
Valley farmers are starting to lose business in Turkey, Jordan
and certain other markets they spent years cultivating, said
Kirk Messick of Farmers’ Rice Cooperative, a Sacramento
marketing firm owned by farmers.
Getting those customers back won’t happen overnight.
“When you lose a market, you just don’t lose it for a year,”
said Tim Johnson, chief executive of the California Rice
Commission. “It takes a number of years to get that market back
(and) re-establish relationships.”
Dale Kasler: (916) 321-1066, @dakasler
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