The US could be a growth market for New Zealand kiwifruit exporters, says a Rabobank expert.
In 2015, the state’s farm economy will lose US $1.84 billion and 10,100 seasonal jobs because of the drought, the report estimates. And it forecasts how the industry will fare if the drought persists through 2017.
The researchers say the industry overall remains robust. The agricultural economy is still growing in this fourth year of severe drought, watered by vast but declining reserves of groundwater, which will offset 70% of the surface water shortage this year,
California is the world’s richest food-producing region. Strong global demand and prices for its fruit, nuts and vegetables has helped sustain the farm economy along with intrastate water transfers and shifts in growing locations.
“We’re getting by remarkably well this year – much better than many had predicted – but it’s not a free lunch,” said lead author Richard Howitt, a UC Davis professor emeritus of agricultural and resource economics.
He says the heavy reliance on groundwater comes at ever-increasing energy costs as farmers pump deeper and drill more wells. Some of the heavy pumping is in basins already in severe overdraft – where groundwater use greatly exceeds replenishment of aquifers – inviting further land subsidence, water quality problems and diminishing reserves.
Several small rural communities have high unemployment and dried-up domestic wells because of the drought, particularly in the Tulare Basin.
“If a drought of this intensity persists beyond 2015, California’s agricultural production and employment will continue to erode,” said co-author Josue Medellin-Azuara, a water economist with the UC Davis Center for Watershed Sciences.
The UC Davis team used computer models and the latest estimates of surface water availability from state and federal water projects and local water districts. They forecast several drought-related impacts in the state’s major agricultural regions for the current growing season, including:
- Direct costs of drought to agriculture will be US$1.84b for 2015.
- Total impact on all economic sectors will be US$2.74b ($2.2b in 2014).
- Farmers and ranchers gross US$46b annually, a small fraction of California’s US$1.9t-a-year economy.
- 10,100 seasonal jobs will go, vs the researchers’ 2014 drought estimate of 7500 jobs. The spill-over effects of the farm losses on other sectors will cause 21,000 lost jobs.
- The effects of continued drought through 2017 (assuming continued 2014 water supplies) will likely be 6% worse than in 2015.
- Gradual decline in groundwater pumping capacity and water elevations will add to the incremental costs of a prolonged drought.
Meanwhile, the scientists noted that new state groundwater laws requiring local agencies to attain sustainable yields could eventually reverse the depletion of underground reserves.
“The transition will cause some increased fallowing of cropland or longer crop rotations but will help preserve California’s ability to support more profitable permanent and vegetable crops during drought,” said report co-author Jay Lund.