Drought Threatens California’s $22B Wine Industry

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Feb. 20 (Bloomberg) – U.S. Bureau of Reclamation Area Manager Michael Jackson and Tablas Creek Executive Winemaker Neal Collins discuss the drought in California. They speak with Erik Schatzker on Bloomberg Television's "Market Makers." (Source: Bloomberg)

Driest years on record.

Have you ever seen it this bad?

I have seen the lake this low, but not when we have not had snowpack to support filling up behind it.

You are looking at this, you are looking at the snowpack, you are thinking, what are we going to see three months from now?

That is right.

What are we going to see?

Hopefully mother nature is going to help us out.

If she doesn't? it will be a struggle.

For everybody.

Throughout the state.

The governor has declared the drought an emergency.

The president was out here on valentine's day, as it would be.

In recognition of the situation that we are in.

It is bad for everybody if it does not rain.

We are looking at just making enough water releases for public health and safety needs.

This is just so people can keep drinking?

That is correct.

Erika striven cells to pass a robles -- bearish at -- eric has driven south to paso robles.

I will be back on monday.

Right now, i am still taking a close look at what is going on here in california.

The state has bigger agricultural industries.

But what is more important than wine?

I am here with neil collins, the executive one maker and vineyard manager at one of california's most prestigious wineries.

Help us out by explaining what you are dealing with right now.

And your fellow winemakers.

It is the area and the state in general.

A massive lack of rainfall over the last couple years, particularly this year.

We are hanging around at about 2.3 inches since july.

Normally we hope to be in the mid 20's by now.

You're getting 1/10 of the normal rainfall.

Really insufficient.

Normally, we would be knee-deep in clover top green right now.

It is dry.

What does that mean?

You're the head winemaker.

What does that mean for the grapes?

Normally we do not irrigate here that much.

We have been here getting already for over a month because we have seen this coming.

The grapes need some moisture to grow.

Certainly, in the long-term, we will drop fruit, we will print.

-- prune.

There is not the moisture in the soil to carry us.

There is a big problem with theoretician.

If you cannot get it from her -- irrigation.

If you cannot get it from a reservoir, you have to tap groundwater.

It is a scarce resource.

We have our own wells on the property.

But no rain, less water.

We are starting to run a little dryer.

We are pretty prudent and have been for the last five years.

Even if there is not a drought, water is a scarce resource for us.

If we can grow without as much water, we are trying to do that anyway.

If it does not rain, nothing is going to grow.

, petition in this area, i have heard, for that water is getting very intense.

It is getting pretty intense.

As more wineries move your.

That is part of the problem i suppose.

And also more people.

The whole area is growing.

More residences, businesses, agriculture.

Agriculture is driving a lot of the area.

It is a tough one.

In some areas, it is tougher than others.

How is it affecting your business?

We are going to drop a lot of fruits.

We will have a much smaller harvest than we normally would.

Some are dropping their entire crop for this year just to save the vines and give the vines a break and not push them to grow.

That is an expensive decision.

It is a huge decision.

We will certainly carry less fruit than we normally would.

We will have a lot less product to sell.

Each is a bummer.

-- which is a bummer.

But a bottle of wine, at its root, is farming.

Is there the possibility at all of a silver lining?

I hear these stories in spain of tough conditions producing the best wines.

Sure, everyone is going to look for a silver lining.

Maybe for the consumer.

Less rain means more intense bottles of wine on the table.

Potentially, i don't think -- us getting not rain -- there is not much of his over lightning for anybody.

Do you think -- could we see a scenario in which you face a tough year, but you produce some of your best bottles?

There is the potential of that.

We're just going to try to maintain our normal standards.

We do not your gate much as a rule anyway.

We are irrigating more.

We are running upon sin doing more than we normally would.

It is not a great feeling.

It is not what we want to do.

But we have to keep these guys happy.

I want to thank you for sharing your story.

That is neil collins.

This text has been automatically generated. It may not be 100% accurate.

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