Drought cuts 21,000 ag-related jobs, $2.7 billion in output, report says

The drought is costing California agriculture about $2.7 billion this year, according to a UC Davis study released Tuesday, although the statistics suggest the state’s overall economy can withstand the impact.

The Northern San Joaquin Valley has a small share of the job losses and other impacts. It nonetheless has areas, such as the Merced Irrigation District and parts of the West Side, where the effects are severe.

Professors at the university’s Center for Watershed Sciences said the drought is reducing seasonal farm employment by 10,100 this year. When indirect job losses are thrown in – including truck drivers, food processing workers and others partially dependent on farming – the impact on payrolls comes to 21,000.

At the same time, the study said farmers are holding up reasonably well despite significant water shortages and the fallowing of 542,000 acres.

“Agriculture is very resilient because of the underground water,” said Richard Howitt, professor emeritus of agricultural and resource economics and a co-author of the report. “The economic impact is not as severe as it could be.”

Farm employment in California actually rose slightly in June compared to a year earlier, according to the most recent data from the Employment Development Department. But the authors of the UC Davis study said farm payrolls would have been even higher if not for the effect of the drought.

The economic losses of $2.7 billion are equivalent to about 5 percent of annual agricultural production, and about one-tenth of 1 percent of California’s total annual economic output.

Jeff Michael, a University of the Pacific economist not involved in producing the study, said the California economy is still growing, even in the agricultural-dependent Central Valley.

“Overall, the Valley has got more jobs than a year ago,” Michael said. “That’s not to say there aren’t losses, but from a macro viewpoint, we’re doing pretty well.” Economic growth in the Valley “is a bit slower than it would be without the drought,” he added.

Economic performance aside, Howitt said researchers remain concerned about the speed at which farmers are drawing down their groundwater to compensate for the scarcity of supplies from the State Water Project and federal government’s Central Valley Project.

Parts of the southern Central Valley have largely exhausted their groundwater reserves and, when it does rain again, “it’s a really slow replenishment,” Howitt said. The relentless pumping is raising farmers’ costs an estimated $590 million this year, which is included in the estimated impact of $2.7 billion.

The Merced district is delivering almost zero water this year, while the Turlock and Modesto irrigation districts are at about 40 percent. The Oakdale and South San Joaquin irrigation districts are in much better shape but concerned about a dry 2016.

The drought is leading to direct crop revenue losses of $900 million and is costing dairy and livestock producers $350 million, the report found. Crops most impacted include rice, alfalfa and corn.

Many rice farmers fallowed their land due to lack of water or so they could sell water to farmers growing more lucrative crops like almonds.

“There are people fallowing this year that have never fallowed before,” said Paul Wenger, an almond and walnut farmer near Modesto who is president of the California Farm Bureau Federation.

Wenger said he cut back the watering schedule on his farms. As a result, “Our walnuts – a lot of them are turning black. It’s not a bug that is doing it. It’s water stress.”

As for jobs, Wenger said state employment numbers mask a lack of full-time work for farm hands. “They are getting jobs,” he said. “But they are not getting the hours they want.”

This story was originally published August 18, 2015 at 4:46 PM with the headline "Drought cuts 21,000 ag-related jobs, $2.7 billion in output, report says."