California – A Food Powerhouse In Peril

Submitted by Tyler Durden on 10/25/2014

Submitted by Erico Tavares of Sinclair & Co.

California – A Food Powerhouse In Peril

Now in its third year, the drought in California has forced local farmers to switch their water use from rivers and reservoirs, which are at historic low levels, to underground sources. This has mitigated substantial production losses, but given that underground reservoirs take a long time to replenish, if the drought continues the food situation in California might get much more dicey.

Food export data provided by the US Department of Agriculture for 2012, that is, before the current drought started to bite, can provide a sense of what is at stake. [Note: while a State’s actual agricultural export value cannot be measured directly, the USDA provides estimates per major food variety based on farm cash-receipts data]. The following table shows the crops where California was ranked either #1 or #2 based on 2012 export values:

Source: USDA.
(1) Includes live animals, other meats, animal parts, eggs, wine, beer, other beverages, coffee, cocoa, hops, nursery crops, inedible materials and prepared foods.

Last July, a study on the effects of the drought on California’s food production by the UC Davis Center for Watershed Sciences highlighted that “consumer food prices will be largely unaffected. Higher prices at the grocery store of high-value California crops like nuts, wine grapes and dairy foods are driven more by market demand than by the drought.”

However, looking at the table above, future production losses could extend to a wider variety of staples: California represents almost one-fifth of all US States’ milk exports, a third of all vegetable and rice exports, almost half of all fruit exports and over 90% tree nut exports. What is equally striking is how distant the #2

States are in some cases in terms of production volumes.

So if the drought continues into the foreseeable future (and this is a real possibility), here’s a really interesting question: who will make up for any shortfall in California’s gigantic contribution to US food production?