Water Scarcity’s Economic Toll on California Agriculture: Why We Must Act Now
If egg prices are any indication of what happens when a disruption occurs in our food supply, consumers should prepare for rising prices and reduced availability in other aisles of the grocery store as well.
Unlike temporary and short-lived supply interruptions like those affecting egg prices today, we should all be concerned about the effect of increased water shortages on the fruits, nuts, and vegetables that have long been grown in California.
Background
It’s no secret that water is the lifeblood of California agriculture. It is fuel for the industry that feeds the nation and sustains our rural communities. But as droughts intensify, as some experts say they will, regulations become more onerous, and water supplies shrink even further, the economic impacts will only get worse – for everyone.
Unstable, but shrinking water supplies for farms- from drought or onerous regulation, threaten farms, jobs, and ultimately the food prices we all pay at the grocery store.
The rising price of eggs provides a simple and relevant example of how California consumers feel the effects of what happens on-farm.
The population of California’s egg-laying poultry has been decimated by bird flu, with infections first appearing in early 2022 as part of a nation-wide outbreak. California lost about 25 percent of its egg-laying birds, which was a significant hit.
In normal market conditions, suppliers in other parts of the country could have helped fill the demand, but avian influenza in other states and California’s cage-free requirements, also emerging in 2022, meant that fewer eggs nationwide were available or met the legal requirements to help fill the Golden State’s egg shortage.
The average nationally retail price in February for a dozen eggs was $5.90, according to the U.S. Bureau of Labor Statistics. In California it was $7.57, based on the March 7 USDA Egg Market Overview report of wholesale prices. Anecdotal evidence shows retail prices as high as $10.99 per dozen in some parts of California.
Simply put, fewer eggs were available because of avian influenza and California’s almost unique cage-free requirements (Colorado and Utah have similar laws). As a result, prices far outpaced the national average, even though avian influenza is a problem in all 50 states.
Egg prices in California have continued to rise as ongoing disease reduces local production– but the price Californians pay are then multiplied by the market restrictions that our regulations and water scarcity impose.
The Economic Cost of Water Scarcity
Not unlike California’s cage-free requirements that restricts our ability to obtain supplies from out of state, the state’s unique Mediterranean climate and specialty crop production means that what we can’t grow here is unlikely to come from other states. Food shortages almost always cause higher prices for consumers at the grocery store.
Recent data from the Public Policy Institute of California (PPIC, November 2024) paints a stark picture on another disruption on the horizon- the loss of farmland due to water scarcity.
PPIC reports that up to 900,000 acres of California farmland could be forced out of production, (or fallowed) due to water scarcity, costing billions in lost production and ripple effects across the state, affecting not only the price of food, but the availability of locally-sourced options.
Imported fresh fruits, vegetables, including leafy greens, are already finding their way onto grocery store shelves, but they often come from areas that use farming practices that are illegal in California, leading to the potential for more food safety and supply chain problems.
Here's why addressing this economic crisis is urgent - and what we can do about it
California agriculture is a $50 billion part of our state’s economy, employing over 400,000 people and producing more than half of the nation’s fruits, nuts, and vegetables. But water shortages are eroding this foundation.
According to PPIC’s November 2024 report, reduced surface water deliveries and groundwater restrictions under the Sustainable Groundwater Management Act (SGMA) are forcing farmers to fallow land at unprecedented rates. The economic losses are staggering:
- Higher Food Prices: Reduced production will drive up costs for consumers, with ripple effects on grocery bills nationwide.
- Lost Revenue: Fallowed land could reduce farm revenue by $2.5 billion annually, hitting crops like almonds, pistachios, and tomatoes hardest.
- Job Losses: Each acre fallowed means fewer farmworkers, truck drivers, and processors. PPIC estimates up to 50,000 jobs could be lost in the Central Valley alone.
With California producing over a third of the vegetables and almost 70 percent of the fruits and nuts un the U.S., reduced output will strain markets and increase reliance on imports, threatening food security and creating a bigger environmental (and water) footprint elsewhere in the world.
Ripple Effects on Rural Communities and Beyond
The economic pain extends beyond the farm gate. Rural communities, already struggling with poverty, face declining tax revenue and business closures as farm income drops. Schools, hospitals, and local shops feel the squeeze. As California’s food production declines, families across the nation face higher food costs and more supply chain disruptions.
Taking Action
What steps can California take to assure plentiful supplies of water for the farms that grow our food? Here are just some of the examples that can help deliver more water, protect our food supply, and reduce the number of acres that are under threat:
- Canal Repairs: A major focus are capacity correction projects in critical conveyance projects, like the Friant-Kern Canal and Delta-Mendota Canal. Repairing these canals ensures more efficient water delivery to farms across the valley.
- New Storage and Conveyance Systems: Building and upgrading water storage facilities to capture and store water during wet periods, such as the Sisk Dam Raise at San Luis Reservoir, Los Banos Creek and Del Puerto Canyon reservoirs, and the Sacramento Valley’s Sites Reservoir, can all help to offset shortages during dry years and support agricultural needs. It’s estimated that up to 3.5 million acre-feet of water is available for groundwater recharge if adequate infrastructure existed to deliver it to suitable recharge projects.
- Policy and Regulatory Changes: Eliminating policies that, according to the U.S. Fish and Wildlife Service, deliver no environmental benefits, yet continue to restrict water supplies for that farmers can use to grow food.
Solutions to Secure our Future
Water scarcity is a challenge, but it’s not insurmountable. The California Farm Water Coalition continues to advocate for policies and innovations to protect agriculture and its economic contributions.
That’s important for on-farm and farm-related jobs and because it supports reliable food supplies in California and across the nation.
And it’s important because reliable food production means affordable prices for consumers everywhere.
