Business & Real Estate

Drought dries up business for contractors in Sacramento Valley’s rice industry

Chris Taylor says he expects to sell one of his two crop dusting aircraft at Sunrise Dusters in Robbins. As water allocations remain unsettled, rice farmers are not lining up contract work until they know how many acres they will plant.
Chris Taylor says he expects to sell one of his two crop dusting aircraft at Sunrise Dusters in Robbins. As water allocations remain unsettled, rice farmers are not lining up contract work until they know how many acres they will plant.

On a sun-dappled airplane runway, it is not hard to spot the cracks and holes on the 3,100-foot asphalt strip owned by professional crop duster Chris Taylor.

On a normal rain year, the cracks would be sealed and the holes filed. But in the fourth year of California’s severe drought, the runway repairs will have to wait.

“Our business has been down 50 percent since 2012,” said Chris Taylor, owner of Sunrise Dusters in Robbins in Sutter County.

For small businesses like Taylor’s that cater to California’s rice industry, the state’s prolonged drought is drying up work and postponing expenditures. As rice farmers have cut back on their annual plantings, it’s had a ripple effect on crop dusters, truckers, insurers and others who rely on the state’s rice crop.

Last year, 434,000 acres of rice were planted statewide, compared to 567,000 in 2013, said Jim Morris, spokesman with the California Rice Commission. This year, it could go lower, depending on what happens with statewide water allocations. Most of California’s rice is grown in the Sacramento Valley.

The State Water Resources Control Board said recently that it may have to curtail water to the state’s senior water rights holders, some of whom are Sacramento Valley farmers who draw water from the Sacramento River. If those curtailments happen, it will be the first time since the 1970s. A decision is expected as early as next week.

“We anticipate this year will be at least as challenging as last year, when about one-fourth of the rice acreage was not planted,” said Morris. “We won’t have any estimates on the size of the crop until water allocations are finalized this month.” Last year, more than 100,000 acres of rice were fallowed.

For a crop duster like Taylor the drought has meant a deep cut in income. Worse yet is the insecurity that comes with waiting for water allocations. In Taylor’s case, it means he spends more time watching and waiting rather than buying and hiring.

Normally in April, he is gearing up to drop rice seed, herbicides and fertilizers on fields of about 30 clients spread from Knights Landing to Roseville and the Yolo Bypass near Davis. He typically earns between $7,500 to $10,000 per 100 acres dusted.

In 2012, Taylor dropped rice seeds on 22,200 acres. In 2013, it dropped to 16,000 acres.

Last year: His yellow AT-602 crop duster flew over only 12,000 acres. “That’s a big drop for us,” he said.

Taylor said he is making up for the income loss by laying off two employees and buying used plane parts instead of new ones. His wife, Joni Taylor, who is the company’s corporate secretary, is contemplating taking a second job.

The future looks so uncertain that Taylor is selling one of his two planes.

As for the single plane Taylor is keeping, it will endure bumpier landings, since the runway will not be repaired and he is postponing the purchase of new airplane tires.

“You do what you have to do,” said Taylor.

And, he added, “It’s not just me. It’s the trucker and herbicide maker, and the mechanic (who) are feeling it. It’s a trickle-down effect.”

Joel Corral’s trucking business knows that reality firsthand. His 15-year-old Woodland firm, Corral Transportation, hauls rice and seed for 10 farms in Yolo and Sutter County.

In normal rain years, Corral operates the 10 trucks he owns and subcontracts out another 50 trucks. This year, he will only operate his own vehicles.

“The people we lay off are the subcontractors,” Corral said. “It’s these little guys ... who will be in a world of hurt this year.”

Hard choices loom for Corral if the drought continues next year. He said a continuing drop in his hauling contracts will force him to seek employment as a driver for someone else.

The drought has also affected those who provide aviation insurance to crop-dusting companies, said Larry Gault, co-owner of Aviation Marine Insurance. The Oakland-based insurer saw a 20 percent drop in agricultural aviation insurance business last year.

On a normal rain year, Gault said, crop dusters have enough business to keep their planes insured throughout the year. During lean times, some crop dusters choose to remove planes from insurance plans to save money.

“I’ve been in business since 1979 and this drought, for the ag side, has been the hardest,” said Gault.

Insurance is no small cost for crop dusters. Annual premiums can run from $20,000 to $50,000 per plane. Many of today’s planes are equipped with air conditioning and highly specialized GPS technology to identify the exact route over a farm field. Crop dusters like the ones that Taylor owns typically cost between $800,000 and $1 million.

Farmers, awaiting word on their water allocations, have not been able to tell contractors like Taylor and Corral how much work they can expect going forward.

Sacramento Valley rice farmer Steve Butler, owner of Sutter Basin Corp. in Robbins, said working in a holding pattern, as he is doing now, creates staffing problems. Without water allocation figures from the state, very little planning can be done, he said.

Last year Butler got 75 percent of his annual water allocation; this year, he hopes to get at least that amount, which would enable him to plant 2,800 acres of rice.

“You can’t just put an employee on hold for six months and say ‘I’ll call you next spring,’ and expect them to be there,” said Butler. “This is not the kind of work where you can just snag people off the street.”

Ultimately, Butler said he believes that rice industry contractors stand to lose the most if farmers cut back.

“The employees of the farmers and the people that farmers do business with, they will suffer more than the actual farmer,” said Butler. “The farmer can eliminate his employees and get rid of equipment to insulate himself, but the employees and other businesses are just stuck facing a much lower income.”

Call The Bee’s Edward Ortiz, (916) 321-1071. Follow him on Twitter @edwardortiz.

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