California’s Drought and Its Impact on Our Industry

California’s Drought and Its Impact on Our Industry

The length and severity of the drought in California—now in its fourth year—are unprecedented. California began keeping weather records in 1851, just one year after it was admitted to the Union as the 31st state. In the 164 year history of California’s official weather records, this is the most severe and sustained dry period the state has ever experienced. In a typical year, Californians rely on the Sierra snowpack for about 30% of its overall water use. For that reason, the state commissions three measurements of the depth and density of the snowpack to determine overall water content residing in the high Sierras, which will eventually flow to the state’s extensive system of dams and reservoirs.

In the most recent survey taken in early April 2015, the snowpack was determined to be at just 5% of normal—by far the worst reading in the history of California record keeping. The previous low was measured at 25% of normal in April 1977.

To mitigate the effects of the drought, California farmers are using groundwater in higher proportion than ever before. Typically, groundwater accounts for about 40% of the overall use for agriculture. Today, that figure is in excess of 60%. And even that is not an adequate solution, especially for growers in the southern San Joaquin Valley are drilling wells as deep as 1,800 feet in order to avoid having to fallow land committed to permanent crops like almonds or pistachios. Often, the quality of the water being brought to the surface from these ultra-deep wells is high in salts and boron, a heavy metal. As one grower told me last year, “I can kill my trees quickly or slowly. Quickly by just giving up and not watering them. Slowly by using the lousy water I have and watching the trees get sick and eventually die from overexposure to high salt levels.”

So what does this mean for large industrial buyers and consumers? California, by itself, is the 5th-largest producer of food in the world. It produces over 90% of the nation’s almonds, walnuts, grapes, and broccoli. According to the California Farm Bureau, 500,000 acres of land were fallowed in 2014—and that number could double this year. The effect on the California almond industry is more acute than on the walnut industry, for this reason: California’s almond acreage is located in some of the most vulnerable areas affected by the drought—namely, the southern San Joaquin Valley and the region referred to as “The West Side”, running roughly from the southwest end of Stanislaus County to the northwest corner of Kings County south of Fresno. On the other hand, California’s walnut acreage is primarily located in the less vulnerable Sacramento Valley to the north and on the east side of the San Joaquin Valley, closer to the mountains.

We believe that the drought’s impact on the size of the almond crop is already being felt. Despite a forecast of 2.1 billion pounds issued in July 2014, the actual crop came in just over 1.8 billion pounds. The latest subjective forecast for the 2015 crop is 1.85 billion pounds, but growers are concerned that even this more modest forecast number may not come to pass. For walnuts, it’s a better story. Very few acres of walnut trees have had to be fallowed, and the initial indication for the 2015 crop is positive, although we’re still about six weeks from the subjective forecast on the 2015 walnut crop.

What happens if the drought extends to a 5th year in 2016? All bets are off at that point. Water usage will be severely restricted, and agriculture—already a victim of extreme cutbacks since the beginning of the drought in 2011—will undoubtedly be targeted for more cuts. In the meantime, even the casually religious in California are praying for rain.