Farmers in California’s Central Valley, the world’s most productive agricultural region, will get none of the water they requested this year from a federally controlled system because of the drought gripping the state, the U.S. Interior Department’s Bureau of Reclamation said.

Crop Damage

The drought in California, the top U.S. agricultural producer at $44.7 billion, is depriving the state of water needed to produce everything from milk, beef and wine to some of the nation’s largest fruit and vegetable crops, including avocados, strawberries and almonds.

The extreme dryness may boost annual food price inflation as California accounts for one-third of U.S. vegetable output, and two-thirds of fruit and nut production, Joe Glauber, the U.S. Department of Agriculture’s chief economist said at an agency outlook forum yesterday.

Retail tomato prices jumped 10 percent in the 12 months through Jan. 31, and U.S. retail prices for beef, bacon, lettuce and broccoli posted double-digit gains last year, even as total food inflation advanced just 1.4 percent, government data show.

“It’s kind of a disappointing epitaph to the drought,” said Mike Wade, executive director of the California Farm Water Coalition. “It just confirms how short water supplies are this year. In the coming months this confirms that there isn’t going to be enough water to plant cantaloupes, watermelons, things like that.”

The drought is another blow to dairies, the state’s largest agricultural business with 2012 revenue of $6.9 billion, producing 20 percent of U.S. milk output. Milk prices are up 20 percent in 2014, the fifth-biggest gain among 64 commodities tracked by Bloomberg. Class III milk futures, tracking a variety used to make cheese, reached $23.43 per 100 pounds on Jan. 31, the highest for the most-active contract since trading began in January 1996.

David Fuller's view

This is obviously a serious problem and not just for California.  Its fruit, vegatibles and nuts are exported to many other developed countries.  Farming regions in Texas also have drought problems. Additionally, this season’s crops in parts of South Americal are being adversely affected by drought.  Australia has a similar problem.

Agricultural regions in the UK and parts of central and northern Europe are experiencing extremely wet conditions.  It is the winter season but if rainfall does not decline in the next two months, spring plantings could be delayed.  Prices for most agricultural products fell last year but they are now rising.  The early signs of food price inflation are clearly evident. 

(See also, California Farms Going Thirsty as Drought Burns $5 Billion Hole, January 29, 2014)