CA Farmers Make Record Revenues Despite Drought

California’s Central Valley is home to some of the richest agricultural land in the country.

The region has been hit hard by the drought, and shrinking reservoirs have raised concerns that farmers’ profits have dried up, too.

However, data shows that is not the case.

According to reports from the United States Department of Agriculture compiled and analyzed by a team of researchers at the Pacific Institute, a water policy think tank based in Oakland, California farmers have made record revenues in the past two fiscal years.

In 2013, California agriculture raked in a record $51 billion dollars. The following year, the industry topped out at $54 billion.

“I think it’s counterintuitive,” says Heather Cooley, an expert at the Pacific Institute and co-author of the study. “I think many people thought that agricultural revenue would be down dramatically because there was less surface water available.”

Paul Wenger, a Modesto walnut farmer and president of the California Farm Bureau, warns that the numbers can be deceiving.

Farmers aren’t getting rich during the drought, he said.

“Our costs are also escalating,” he said. “As our costs escalate, our margins shrink, and so we’re not making the margins. Next year we’re probably looking at a losing year.”

For the first time since his grandfather gave life to the family farm back in 1910, Wenger says he’s had to dig two wells to steal from the ground what mother nature has failed to provide from the sky.

“I have to drill the well,” he said. “I have no option, and so while it’s expensive, it’s called survival.”
Wenger is not alone.

Thanks to historically dry conditions, farmers across the state have had to tap groundwater resources.

The process is not only expensive, but the resource is finite; eventually, the well runs dry.

“There’s a cost to families and communities that have to dig deeper wells,” the Pacific Institute’s Coolley says. “There’s a cost to repairing the damage to infrastructure. And there’s a cost to future generations, as well, that don’t have the water they’re going to need,” she added.

Simply put, the situation is not sustainable. High value crops, like almonds, table grapes and tomatoes, have helped keep profits afloat. So, too, has that first rush of reserve groundwater.

The numbers, however, are trending in the wrong direction.

Income for California agriculture peaked in 2014, but Wenger says that number dropped by 6 percent in 2014.

2015 is likely to be even worse, he added.

“If the drought was to continue at this rate for very much longer, we’ll be talking about people going into bankruptcy,” he said.

For now, the record revenues are a fleeting lifeline through a frustrating forecast.

“The good news is that at least now we’re making a little bit of money, which allows us to invest for our future to try to get by this drought,” Wenger said.

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