More California crop acreage is being removed from production in 2015, but most of the resulting price increases will be under 2%, according to an analysis done for the California Department of Food and Agriculture.
At 564,000 acres, fallowing will be up 33% over last year as growers cope with the state’s fourth year of drought, according to the preliminary estimate by University of California, Davis researchers. That would cut gross farm revenue about $856 million.
They compared this year’s drought effects to years of average water supply. Surface water is even scarcer in 2015 than last year.
Growers are forecast to pump 6.2 million acre-feet of groundwater to partially make up for an 8.7 million shortage. The added pumping is projected to cost $595 million.
When pumping costs, job losses, livestock, dairy and other factors are added in, the state’s agricultural industry anticipates drought losses of $2.7 billion.
The estimate pegs direct job losses at 8,560 full- and part-time jobs. But when spillover effects and increased pumping costs are factored in, total losses are closer to 18,600.
The loss in irrigated crop revenues statewide for vegetables is estimated at $107.7 million, and for orchard and vines at $82.8 million.
Resulting price increases of less than 2% on most items are “quite small,” according to the researchers. But price increases of even less than 1% will benefit growers, at least in some parts of the state, they said. Berry and wine grape producers, for example, on the Central Coast or in Southern California are most likely to benefit from any statewide price increase.
The state’s situation isn’t as dire as it would be with less groundwater pumping, but the researchers also offered a caution.
“The socioeconomic impacts of an extended drought, in 2016 and beyond, could be much more severe,” they wrote.