Drought Means No U.S. Water Delivery for California Farmers

Farmers in California’s Central Valley, the world’s most productive agricultural region, will get none of the water they requested this year from a federally controlled system because of the drought gripping the state, the U.S. Interior Department’s Bureau of Reclamation said.

The bureau said in a statement it won’t be able to deliver any of the more than 2.4 million acre-feet of water sought by farmers. A state-controlled system last month said it, too, wouldn’t be able to deliver any of the 4 million acre-feet of water sought by local agencies. An acre-foot is the volume needed to cover an acre of land one foot deep with water.

Governor Jerry Brown declared a state of emergency for the world’s 10th largest economy last month after 2013 turned into the driest year on record, leaving reservoirs at dangerously low levels. The dwindling availability of water means farmers will fallow hundreds of thousands of acres, boosting food prices across the U.S. and leaving farm workers jobless. The state has identified 10 rural towns with less than 100 days of supply remaining.

“In this county alone, we’re in the billions of dollars of lost economic activity,” said Ryan Jacobsen, chief executive of the Fresno County Farm Bureau. “We do compete on a global scale, but the reality is that there very likely is going to be a shortage of certain commodities.”

Environmental Concerns

The Bureau of Reclamation supplies water to 1 million people and a third of the irrigated farmland in California through a 500-mile network of canals and tunnels. About two-thirds of California’s 38 million people get at least part of their water from northern mountain rains and snow through a network of state-managed reservoirs and aqueducts known as the State Water Project.

Some of the Bureau of Reclamation’s customers will receive about 40 percent of the water they ordered because they had pre-existing contracts with the agency.

The state and federal systems are curbing delivery so that a small amount can be held in shrinking reservoirs and to protect the Sacramento-San Joaquin Delta, an ecologically sensitive confluence of two rivers that feed into San Francisco Bay. The reserves are needed to keep salt water from seeping in and damaging the water supply and to protect endangered fish and wildlife that rely on the Delta habitat.

Crop Damage

The drought in California, the top U.S. agricultural producer at $44.7 billion, is depriving the state of water needed to produce everything from milk, beef and wine to some of the nation’s largest fruit and vegetable crops, including avocados, strawberries and almonds.

The extreme dryness may boost annual food price inflation as California accounts for one-third of U.S. vegetable output, and two-thirds of fruit and nut production, Joe Glauber, the U.S. Department of Agriculture’s chief economist said at an agency outlook forum yesterday.

Retail tomato prices jumped 10 percent in the 12 months through Jan. 31, and U.S. retail prices for beef, bacon, lettuce and broccoli posted double-digit gains last year, even as total food inflation advanced just 1.4 percent, government data show.

“It’s kind of a disappointing epitaph to the drought,” said Mike Wade, executive director of the California Farm Water Coalition. “It just confirms how short water supplies are this year. In the coming months this confirms that there isn’t going to be enough water to plant cantaloupes, watermelons, things like that.”

The drought is another blow to dairies, the state’s largest agricultural business with 2012 revenue of $6.9 billion, producing 20 percent of U.S. milk output. Milk prices are up 20 percent in 2014, the fifth-biggest gain among 64 commodities tracked by Bloomberg. Class III milk futures, tracking a variety used to make cheese, reached $23.43 per 100 pounds on Jan. 31, the highest for the most-active contract since trading began in January 1996.