14,500 Agriculture Jobs Lost in California

May 23, 2014

The High Costs of a Lingering Drought

By Jean-Paul McDonald, Farms.com

California’s agriculture sector continues to suffer from a severe drought that has plagued the state for nearly four years in a row. While the occasional rain does fall, it hasn’t been enough to help alleviate the devastating effects of the drought. A preliminary study released this week by University of California, Davis, Center for Watershed Sciences, highlights the ripple effects the drought is having on the state’s workforce and economy. A full report will be released later this summer.

Commissioned by the California Department of Food and Agriculture, the study exposes the consequences the prolonged drought has created for both the economy and agricultural workers in the nation’s largest fruit, vegetable and nut producing state. The study estimates that job losses in the agriculture sector will reach 14,500 this year, and the state’s economy will take a $1.7 billion hit. The estimates were calculated using computer models and recent water delivery figures.

The study also estimates that six percent of Central Valley farmland will lay fallow this year due to cuts in water deliveries, which amounts to around 410,000 acres of land. Central Valley farmers can expect about 1/3 less irrigation water this year than usual. With depleted rivers unable to sustainably support crop irrigation, farmers will need to pump more ground water, which is estimated to cost around $450 million.

Agriculture makes up less than three percent of California’s $1.9 trillion gross domestic product, but produces an important supply of health foods for the state and country.

Video: Will the 2025 USDA December Crop Report Be a Market Mover/Surprise?

Historically, the USDA December crop report is a non-event or another dud report as the USDA reserves any final supply changes to the final report in January of the following year in this case 2026. But after the longest U.S. government shutdown in history at 43 days and no October crop report will they provide more data/surprise and make an exception?
Our China U.S. soybean purchase tracker is now at 26.6% or a total of 3.2 mmt but for traders it’s taking too long to unfold.
The final Stats Canada production report was bearish canola and wheat projection a record crop in both (it adds to the global glut of supplies) and bullish local corn and soybean prices in Ontario/Quebec thanks to a drought. It will not help the fund flow short-term, the USDA may need to offset it?
A U.S. Fed interest rate cut of another 25-basis point next Wednesday (probability 87.1%) could help fund flow and sentiment in stock and ag commodities into year end.
More inflows into Bitcoin this past week saw prices rebound back above 90,000 with support at 82,000 and resistance at 96,000.
A V-shaped bottom in cattle suggest the lows are in after Mexico reported another new world screwworm case. Lower weights, seasonal demand and higher U.S. beef select/choice values with a continued closure of the Mexican border to cattle will result in a resumption of higher cattle futures into yearend.
Australia is expected to produce its 3rd largest wheat crop ever at 36 mmt adding to the global glut of supplies.
Reports of ASF in hogs in Spain the largest pork exporter in Europe could see the U.S. win more pork export business long-term.
If the rains verify into next week of 3-5 inches for Brazil it would go a long way to fixing the dry regions from the last 2-months, but the European weather model has been wrong for the past 2-months!
Natural gas futures are surging to the 3rd price count as frigid hold temps set in.
CDN $ is also surging to end the week on a very resilient economy and better employment numbers suggesting no interest rate cuts next week.
Finally, the CFTC report showed funds were net buyers of soybeans but sellers of corn, canola and wheat. In real time the funds have gone back to selling as they take some profits.