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Despite Drought, California Farming Prospered

Economic data show that while California farming has seen many changes because of drought, the industry continued its strong growth trend. But total earnings are not the whole picture, especially when it comes to farm laborers.

Written by Matt Weiser Published on Read time Approx. 6 minutes
Almond grower Bob Weimer works in his almond orchard near Atwater, California, in March 2015. Many California farmers prospered despite the drought by concentrating their labor and resources on high-value crops like almonds.Rich Pedroncelli, AP

It might not be what you expect to hear about California agriculture in the throes of drought: After four years of historic water shortages, farm earnings in the state increased 16 percent, and total employment increased 5 percent.

Yet those are real numbers gathered by federal agencies that track economic data.

Average wages for farm employees also increased an impressive 13 percent since the drought began.

In short, California’s farm economy is thriving and growing overall, despite the worst drought ever recorded in the state. Particular crops and counties have not fared so well, notes Jeffrey Michael, an economist at University of the Pacific in Stockton. But overall, the drought did not keep California agriculture down, reflecting great resilience among the state’s farmers.

“The actual results have been surprisingly strong,” Michael said.

The data on income from the U.S. Bureau of Economic Analysis show that total earnings (revenue minus expenses) on California farms were up about $2.6 billion, to $18.6 billion, from 2012 to 2014, the most recent year available. Total earnings did decline slightly in 2014 compared to 2013, although revenues increased 6 percent.

Both wages and employment in agriculture increased annually from 2012 to 2015, according to the U.S. Bureau of Labor Statistics, reaching $12.7 billion and 421,213 jobs in 2015. Average annual wages per employee reached $30,266 in 2015, an increase of 13.6 percent over the four-year drought period.

The Pacific Institute, a nonpartisan think tank based in Oakland, released a report in August 2015 that is one of the only comprehensive reviews so far of agricultural data on the drought. It confirms that California agriculture as a whole continues to prosper, although it has also changed significantly.

“We did have record revenue and profit, and even near-record employment, during this very severe drought,” said Heather Cooley, director of the Pacific Institute’s water program. “It indicates how we can still have a healthy (farm) sector – including a healthy number of jobs – with less water if we think about some of the shifting that we can be doing.”

That shifting, she said, includes growing higher-value crops to maximize scarce water resources, growing crops more suited to local climates and adopting water-saving technologies like drip irrigation – all of which have occurred at a rapid pace during the drought.

Both Cooley and Michael noted that farm revenue for 2015 – still yet to be released, for the most part – may not look as promising because it was a particularly bad year for precipitation. The statewide snowpack was only 5 percent of average, the worst ever recorded.

Data from the U.S. Economic Research Service, analyzed by the Pacific Institute, shows net California farm income dipped slightly in 2014 but was still the second-highest ever recorded. (The Pacific Institute)

Data from the U.S. Economic Research Service, analyzed by the Pacific Institute, shows net California farm income dipped slightly in 2014 but was still the second-highest ever recorded. (The Pacific Institute)

But farmers made up for that shortcoming, in part, by aggressively pumping groundwater, and both expect strong revenue results again for 2015 when the data are reported. But this reality comes with a dark side.

“It really shifts the burden to future generations, who have to dig more and deeper wells,” Cooley said. “That’s what I think is the sobering piece of the record revenue and employment.”

Exceptions to the strong results can be found with certain crops and in certain locations, especially in the San Joaquin Valley, which is not blessed with abundant water even in average weather years. Field crops – such as hay and corn – saw significant declines in total acreage planted during the drought.

And that’s just as it should be, said Michael. These are annual crops that can be easily fallowed in drought years.

“That accounts for all of the fallowing that we’ve seen. It’s completely expected and normal,” he said. “But the thing that’s important to recognize about those crops is they’re all grown in abundance in other parts of the U.S. and the world. This is not wine grapes or almonds.”

Kings County, in the drought-plagued San Joaquin Valley, is one of the first counties to report results for 2015. Total farm revenue was down about 18 percent in 2015. But surprisingly total farm employment and wages both increased about 9 percent in the same year.

Michael said that is likely because the drought caused farmers to concentrate their limited water supplies on more lucrative crops. The crops with the biggest declines in Kings County – wheat, cotton and corn – don’t require a lot of manpower to produce. But those that increased – almonds, pistachios, walnuts – require more labor to grow and harvest.

Kings County walnut grower Doug Verboon confirmed that many farmers turned their focus to more valuable crops. This was partly to offset the increased cost of pumping more groundwater and drilling new wells when surface water became scarce.

“Over the last 10 years, we’ve taken out row crops and turned them into permanent crops,” said Verboon, who grows 185 acres (75 hectares) of walnuts. “And now we need water every year, and it’s put a bigger strain on our community. The groundwater’s going down fast because we haven’t had any surface water to replenish what we’ve taken out.”

Verboon, who is also a Kings County supervisor, supports more aggressive groundwater regulation as required under the new Sustainable Groundwater Management Act, which became state law in 2014.

Another big factor that aided farmers is that global market prices during the drought have been at historic highs for many of these same permanent crops: walnuts, almonds, pistachios. For example, almonds fetched $6,400 per ton in 2014, compared to $2,600 in 2000.

Currency exchange rates have also favored U.S. exporters of these crops.

So even though total cultivated acreage declined by nearly 1 million acres (400,000 hectares) during the drought, total revenue, employment and wages all increased. Land planted in fruit and nuts actually increased by about 210,000 acres during the drought, according to the Pacific Institute report.

“A lot of stuff left the country and the price went up and it was really good,” Verboon said. “But at same time, we were losing our water. You couldn’t sacrifice not pumping water out of the ground because the prices were so good.”

Verboon said some of those market prices have softened recently. And the most recent pistachio crop was relatively small – not because of water shortages, necessarily, but because temperatures were not low enough to induce the nuts to form.

So revenues may not be as strong this year. On the other hand, the statewide snowpack was 85 percent of average this year. That’s not enough to end the drought or replenish depleted groundwater supplies. But it does mean farmers like Verboon will have more access to surface water than they have had since 2011.

“The crops are growing well. We don’t have a lot of pressures,” he said.

The picture isn’t always so rosy down at the level of the individual farm laborer. In Tulare County, the poster child for well failures during the drought, many farmworkers were forced to leave the state and travel to Oregon and Washington to find enough work, said Erasto Teran, water education and outreach specialist at the Community Water Center in Visalia.

This didn’t happen because they couldn’t find work locally, but because the available hours of work were reduced.

“The farming community has been hit by the drought in different ways,” Teran said. “People who once had eight hours of work may have only four. It’s been very hard to provide food because their income is reduced.”

Things may be somewhat better this year, he said, because of the improved precipitation. He expects many workers will return for fall fruit harvests, which are likely to be better because of improved winter precipitation.

“This year, orange production is going to be a little bit higher maybe,” he said. “Even the grape production this year is better than the last two years because we have a decent rain. Not good, but decent.”

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