California’s farm industry kept growing in 2015 despite a fourth year of drought, adding 30,000 jobs even as farmers idled huge swaths of land because of water shortages.
Preliminary estimates from the state Employment Development Department show farm employment increased by an average 7 percent from 2014.
One economist said the figures call into question agriculture’s claims that it hasn’t been getting its fair share of California’s water supply. Others said the growth in employment is a natural consequence of a shift to more labor-intensive permanent crops such as almonds.
California farms saw drastic surface water cuts in 2015 and reported fallowing more than 500,000 acres of land, with grain and other field crops taking the hardest hits, according to a UC Davis study produced late last year.
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But farms offset much of the surface water shortage with groundwater pumping. Strong nut prices through much of 2015 bolstered profits. And the shift to perennial crops such as almonds accelerated, resulting in additional hiring for tree-planting and other labor, economists said.
About 441,000 Californians worked in agriculture in 2015, up from roughly 411,000 workers in 2014, the new figures show. The industry has added jobs during each year of the drought. Agricultural employment was up in every region of the state.
Vernon Crowder, economist and senior vice president with agricultural lender Rabobank, said the shift from field crops to permanent crops led to higher employment, since field crops generally require less labor. In addition, Crowder said, many farmers were able to sustain their operations by pumping groundwater, buying water from other growers, and devoting what water they had to high-revenue commodities.
“Because of water markets, because of the diversification, because of the groundwater...they were able to keep going,” he said.
Crowder warned against concluding the farm economy is doing really well. “There certainly have been higher operating costs” for many farmers, he said. Pumping groundwater adds costs. Buying water on the open market is generally expensive.
But Chris Thornberg, an economist at Beacon Economics in Los Angeles, said the figures indicate the farm industry is exaggerating the effects of the drought on its bottom line. He said the fact that revenues keep growing proves that too much water has been spent on low-value crops such as hay. Take those field crops out of production and it barely touches revenue, and employment keeps growing.
“They’re obviously doing OK,” said Thornberg, who has argued that agriculture takes too large a share of California’s water. “There are no bankruptcies, the value of land is going up, employment’s going up.”
Richard Howitt, professor emeritus of agricultural and resource economics at UC Davis, said the industry likely would have added even more jobs if not hampered by lack of water. But, he added, “the industry has been doing very well because prices are up.” Because of those high prices, “It’s a great time to be growing crops.”
Crowder said the outlook for 2016 varies from region to region. While it appears growers in the Sacramento Valley and the east side of the San Joaquin Valley will have decent water supplies, growers on the west side of the San Joaquin Valley will struggle.
Some key commodities continue to enjoy high prices, Crowder said, although that dynamic began changing last fall. Prices of almonds and walnuts, for instance, have slipped.
Felicia Marcus, chair of the State Water Resources Control Board, said the overall increase in employment “masks the pain” felt in hard-hit areas such as the Tulare Basin, where some residents have had to resort to bottled water.
“That’s the ground zero, that’s where the wells have gone dry,” she said. “You’ve seen people in food lines.”
Jeffrey Michael, director of the Center for Business and Policy Research at the University of the Pacific, said the size of the 2015 job gains is surprising – so surprising that he thinks the preliminary figures will be adjusted downward to a more modest increase.
“There’s no doubt a lot of fallowing,” he said.