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Ag Doesn't Matter!

Investors have figured out that the dollar is no place to keep the dollar.

Jun 16, 2011


Families Protecting The Valley Newsletter Tell Your Friends about Families Protecting The Valley
VOLUME 3 ISSUE 13 JUNE 16 2011
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Denis Prosperi
Chester Andrew
Bob Smittcamp
Russ Waymire
John "Dusty" Giacone
Joe Marchini
Mark Watte
Kole Upton
Piedad Ayala
Tom Barcellos
Jim Walls

Ag Doesn't Matter!

There are numerous stories out today in all the newspapers around the state about the economic impact of the drought in California.  The report was written by Oakland's Pacific Institute which concludes that the 3-year California drought didn't really impact agriculture that much.  In fact, they found that "the state's nearly 82,000 farms and ranches sold just under $35-billiion in goods in 2009, the third highest year on record."  They also found that many farmers got all the water they needed, and others found ways to get it.  The report "pointed to labor data showing that high unemployment in the Central Valley is a chronic problem that has less to do with water supplies than with the downturn in housing and construction."  We are so glad to hear that droughts aren't a problem and that water supplies didn't impact farm employment.  We would suggest that if you read a study that says droughts aren't a problem for farmers, you take a deep breath and ask yourself if such a conclusion really makes sense.   

In the past 20-years, farmers have had to study marine biology to defend themselves against environmental attacks that take their water for the protection of endangered species.  In fact, today we learned that species don't even have to be endangered to be protected.  The pumps have been shut down just for general fish protection and the decision's been upheld by a judge. 

Farmers have also had to study economics and learn to debate people like the New York Time's Paul Krugman who defends the Obama Administration's policy of printing money and devaluing the dollar.  We would suggest, and again we are just getting our undergraduate degrees in economics, that the money printing policy and dollar devaluation have had more to do with farm profits than does the information in this report.  Investors have put their money in all kinds of investments like gold and also farm commodities, not to mention farm land.  Investors know they have to get their money out of the dollar and into real things.  Investors have figured out that the dollar is no place to keep the dollar.  This has helped farmers keep their profits up, but has not helped them keep employees, nor do we suggest it's any way to run a country.  We cannot see how fallowing hundreds of thousands of acres is good economic policy.  But, then again, how can little ol' us argue with the New York Times or Federal Reserve Chair Ben Bernanke, not to mention the tremendous leadership we have in San Francisco and Sacramento?

We would suggest that with cities and counties and the state all suffering budget cuts and employee layoffs that they take a look anywhere they can to get economic activity going.  One place where it's easy to do is here in the Central Valley where they can just keep the water coming, let us know it will keep coming so future plans can be made, and not waste time with studies that try to conclude that taking water from farms doesn't have any impact on employment. 

How State's Farmers Weathered Drought

Kelly Zito, Chronicle Staff Writer

California's most recent drought cost consumers more than $1.5 billion in lost hyower and led to the cancellation of two commercial salmon fishing seasons, but its impacts on agriculture were more mixed than previously thought, according to a water policy report released today.

While water shortages drove down revenues in some farming districts nearly 20 percent, statewide the industry posted some of the highest sales totals on record.

"A lot of districts suffered and faced drought restrictions, but in other counties they had record crop plantings," said Juliet Christian-Smith, researcher at Oakland's Pacific Institute.

The 107-page study, titled "Impacts of the 2007-2009 California Drought: What Really Happened?" examined state and federal data on crops, employment, river flows, wildlife surveys, salinity levels and other indicators in an effort to gauge the economic fallout of three consecutive years with well-below-normal precipitation.

Researchers found that while fallowed farmland and parched irrigation canals drew much media and political attention between 2007 and 2009, many of the biggest and most productive farms with senior water rights in the San Joaquin Valley received the maximum volume of water they requested from state and federal operators of the California water system. And even those that received a small fraction of their requests managed to find other water.

As a result, the state's nearly 82,000 farms and ranches sold just under $35 billion in goods in 2009, the third-highest year on record.

Power and pollution

In contrast, anemic river flows during the drought cut the state's hyower production in half, forcing utilities to turn to more expensive and less eco-friendly natural gas combustion. Christian-Smith calculated that consumers paid an additional $1.7 billion for natural gas during the three-year period, a resource that added some 13 million tons of greenhouse gases to the atmosphere.

The drought took its toll on the environment in other ways, too. With less freshwater flowing into the Sacramento-San Joaquin River Delta, fish populations already in decline experienced further deterioration. In the case of the commercial salmon fishery, federal regulators shut down the 2008 and 2009 seasons completely, resulting in 1,823 lost jobs and $118.4 million in lost income, the report said.

That's not to say that food growers had an easy time during the drought years. Holders of junior water rights on the western side of the San Joaquin Valley received only about 10 percent of their requested water deliveries during drought years. And crop revenues in Kern and Kings counties fell by 9 percent and 19 percent, respectively, between 2006 - the last wet year before the drought - and 2009.

Employment problems

But the report pointed to labor data showing that high unemployment in the Central Valley is a chronic problem that has less to do with water supplies than with the downturn in housing and construction. In fact, many farmers were able to sustain their operations during the recent water scarcity by shifting to less thirsty crops, buying water from other sources or pumping water from underground aquifers.

Bill Chandler, who grows nuts and tree fruits on his farm south of Fresno, relied almost entirely on his property's wells during the drought. While that helped keep his crops healthy, he said the extra energy costs to pump well water ate into his already thin profits.

Still, Chandler is glad that his local irrigation district is buying up area land to build a series of water-collection ponds that will refill the aquifers under the land his family has controlled since 1888.

"We have to be ready for the next drought or we'll have to sell out to someone who wants to build houses," Chandler said.

Indeed, the Pacific Institute said more agricultural districts need to follow the lead of Chandler's district. More farmers must also install water-efficient irrigation systems and switch to drought-resistant crops.

But they aren't the only Californians who need to make changes, the report emphasized. To better cope with the next inevitable drought, the entire state must bolster water conservation and recycling, increase energy supplies from neighboring states and expand fish hatcheries to ensure survival of vulnerable species.

"We have to get out of this game of fish versus cities versus farms," said Chris Sheuring, water analyst with the California Farm Bureau Federation. "We're going to have 50 million people in this state soon. The demands on the system are only increasing, and the supply isn't. We have no choice but to work together."

Other Stories:

Study Devalues California Drought Impact - Contra Costa Times 

Drought Study Refutes Criticism of Environmental Measures - Bakersfield Californian 

California Farms Earned Record Revenue During Recent Drought - Bay Citizen 

How California Farmers Finessed Impacts of Long Drought  - New York Times 

California Drought Drove Up Energy Costs - Los Angeles Times 

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