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California’s drought means better prices for Michigan

 

By KEVIN WALKER

Michigan Correspondent

 

IRVINE, Calif. — When California gets indigestion, sometimes other places burp in response. With the Golden State now into its second year of drought, it’s a fact that some other places will benefit.

According to the California Department of Water Resources, water years 2012 and 2013 were dry statewide. Water year 2014, beginning Oct. 1, 2013, continues the trend. Precipitation in some areas of the state is tracking at about the driest year on record. Reservoir storage is about 75 percent of average for this time of year; groundwater levels have also been affected.

On average, about half of California’s statewide rainfall occurs in December, January and February. Only a few storms account for the difference between a dry year and a wet one. What’s happening now is farmers are conserving water use for their most expensive investment, their fruit and nut trees, said Wendy Fink-Weber, a spokeswoman for the Western Growers Assoc. (WGA).

If a tree doesn’t get enough water, it might not die of thirst but it will become weak and be more susceptible to an insect infestation.

This tactic means farmers aren’t growing tomatoes, melons, cabbages, lettuce and similar items; however, strawberries are unaffected by the drought, because they’re grown in Salinas and the Central Coast, where conditions are relatively moderate.

California agriculture is dependent on irrigation, with 9 million acres in permanent irrigation. All of the state is in a drought, but because of irrigation and other factors the picture is more complex, she said.

"Where it’s the worst is the Central Valley, because they have to import most of their water," Fink-Weber stated. "It can cost up to $1 million to have a well drilled right now" – that is, if a farmer can get someone to drill a new well at all.

Farmers are not only not planting the less valuable crops, they are putting in more permanent crops, such as almond trees and pistachios, she said.

Because of the drought conditions, approximately 17,000 permanent farm workers are unemployed. Since California is able to do farming 12 months of the year, workers there typically don’t have to travel around very much in order to stay employed, she added.

"In California there tends to be either a flood or a drought," Fink-Weber said. "Some people are predicting an El Nino weather event, which would increase the likelihood of more rain, but that would present its own set of problems.

"California has protected for floods, but it’s hard to protect for droughts. Right now it’s estimated about $1 billion in economic loss to farmers and related industries, and it could end up being $2 billion by the end of the summer."

Cattle ranchers are also being hit by the drought, because there isn’t much forage being grown right now in California. Ranchers are importing hay, but also moving their cattle to Montana and Idaho for grazing. They’re culling their herds in order to deal with the shortage of forage.

Partly because of the lack of hay and other forage in California and some other parts of the West, several reports from June stated hay prices overall had remained relatively high. Although farmers in Montana and Idaho who raise pasture are benefiting from the crisis in California, it’s not clear how much the drought is affecting the prices of other commodities thus far, though it seems likely the drought is having some effect.

According to the latest Agricultural Prices report from the USDA’s National Agricultural Statistics Service released June 27, prices farmers receive for fruits and nuts are up 6.1 percent from May and 9.9 percent from a year ago.

Some commodities to note include fresh, non-citrus fruits. Average price for grapes in 2011 was $628 per ton. Preliminary price for that product this June is $1,910. In 2011, the average price for peaches was $507 a ton.

Preliminary price for fresh peaches in June 2014 is $1,220.

For pears, the average 2011 price was $559; preliminary June price is $893. For strawberries per cwt., the average 2011 price was $104. Preliminary price for June is $88.40.

Products exclusive to California include several tree nuts. The price paid for almonds last year was $6.21 per pound. Preliminary price for June is $6.48. For hazelnuts, last year the price per ton was $5,620. Preliminary June price is $6,030. For pistachios, price last year was $5.71 a pound, a preliminary June price is $6.03.

For vegetables, last year the price for fresh carrots was $75.60 per cwt. Preliminary price for June is $79.10. For lettuce, the 2013 price was $61.50 per cwt. and preliminary price for June is $63.60. For tomatoes, the price last year was $127 per cwt.; preliminary price for June is $131.

Mostly if not completely unrelated to the current drought is the situation with asparagus. It shows how dramatically production, or the lack thereof, can affect prices overall. According to the report, in 2011 the average price growers received for asparagus was $37.50 per cwt. Preliminary price for June 2014 is $117, and it was $131 in May.

There isn’t that much asparagus grown in California anymore, Fink-Weber said. The reason is that production moved to South America after processors decided they were better off there; however, Michigan was spared the worst of that transition. Asparagus is still grown in Michigan because the fruit and vegetable processors remained.

Asparagus growers are getting more now for what they do grow in the Great Lakes State.

7/23/2014