Most of California is experiencing extreme drought and in a key crop producing area the drought conditions are exceptional – the worst drought rating. Last year was the driest for most of the state since record keeping began in 1895. Based on analysis of tree rings, California hasn’t been this dry in more than 500 years. Moisture conditions might improve before spring planting, but it will take exceptionally wet weather to prevent serious water problems for much of the state.

Recently state officials announced that the State Water Project won’t allot ANY water to the 25 million people and 1 million acres of cropland it usually serves. “This is the most serious drought we have faced in modern times”, according to the Chairwoman of the State Water Resources Control Board. Most of the people and farmers affected by the cut-off to the allocations from the State Water Project have some other sources of water, but the amount of water from these other sources is expected to be significantly reduced. The snow pack’s water content – where much of the water for Southern California comes from – is measured at 12 percent of normal.

The water shortage is expected to have far reaching impacts. Farmers in the state will probably leave 500,000 acres unplanted (about 12 percent of last year’s acreage) according to the Executive Director of the California Farm Water Coalition. Growers of lower-value seasonal crops may make more money selling their water than they can make growing crops. According to a University of California study nearly 38 percent of all Central Valley jobs are related to agriculture and the drought is expected to drive up unemployment.

The shortage of surface water will encourage farmers to pump more water from underground wells. The state has no role in regulating the use of groundwater. Groundwater supplies have been reduced with significant increases in use, especially since 2008. Many cities and towns also rely on groundwater.

A spokesman for the California Department of Food and Agriculture says that a drought in 2008 caused $340 million in revenue losses in the San Joaquin Valley, about 285,000 acres were left fallow and nearly 10,000 jobs were lost. University of California models indicate the 2014 drought could cause revenue losses of $1.6 billion with the overall impact on the economy exceeding $5 billion.

Much of the land in the San Joaquin Valley has been converted over the past decade from cotton and row crops planted every year to nuts grown on trees. Producers need to be able to keep the fruit and nut trees alive through the drought or face several years getting the groves re-established. Trees require significantly more water than row crops. Almonds are the third largest farm product in the state, generating more than $4 billion in revenue.

Water delivered by the state and federal water transport systems provide irrigation water for about 3.75 million acres of farmland and water for 24 million of California’s 38 million residents. The amount of irrigated cropland in California is now more than 11 million acres in total. A spokesman for the Westlands Water District says about 1/3 of the district’s 600,000 acres will be fallowed this year.

The weather problems in California may have significant impact on the agriculture sector, even beyond the state’s borders. Lower crop acreage will impact sales of production inputs and the drop in crop and livestock production will impact employment and economic activity. The decline in the production of many fruit, nut and vegetable crops will increase retail prices around the country. While 2013 was the driest year since records started, precipitation was below normal in 2011 and 2012 as well. Some forecasters fear this is the beginning of a very long period of dry weather.