California water shortages to boost some crop prices

This summer, it's a triage of leaf and limb in California's water-starved Central Valley.

At Blackburn Farm in Firebaugh, workers prematurely killed one almond grove and are frantically digging new wells to save the remaining almond crop. Their neighbors are walking away from 1,600 acres of cotton to salvage tomatoes.

Water shortages in California, coupled with high fuel costs, mean customers can expect rising prices for some fruits and vegetables, particularly melons, canned tomatoes, and perhaps lettuce. The situation turns the screws on Sacramento to solve the state's decades-old water standoff between its cities, farmers, and environmentalists.

"We have wrung much of the flexibility out of the water system," says Dave Kranz, spokesman with the California Farm Bureau. "The demands are greater primarily from urban growth and redirection of water for environmental purposes."

The state is estimating crop losses of $167 million for 2008, according to the California Department of Food and Agriculture.

Several events coincided. A court reduced the water that can be moved from the flush north to the drier south in order to protect the endangered delta smelt fish. And the snow in the Sierras started strong, but stopped abruptly mid winter. Then the spring rains never came.

Ground zero is the Westlands Water District in the valley's southwest corner including Fresno County. District water managers told farmers in early spring to expect only 45 percent of their normal water allotment. Fresno County farmers left 41,000 acres out of one million acres unplanted, mostly cotton, followed by processing tomatoes, lettuce, cantaloupe, and garlic.

When the spring rains failed to appear, the District was forced to make a rare downward revision. The farmers will get only 40 percent, and even less during the hottest summer months. That's when the crops were left for dead.

"I initially reported about 2,000 acres," removed from production or abandoned, says Jerry Prieto, the Fresno County agricultural commissioner. "I've heard enough now where the numbers have probably increased to close to 8,000 to 10,000 acres, and that may continue to grow."

Earlier this month, Gov. Arnold Schwarzenegger declared a drought to get water aqueduct and well water moving more quickly around the state.

Meanwhile, all eyes are on a coming court ruling that could further cut back water transfers to protect endangered salmon. Environmentalists argue for more serious conservation not just to protect the fish but the viability of the entire Sacramento delta, the linchpin of the state's water resources. The governor is talking about building more dams in the few remaining spots available.

California grows mostly fruits, vegetables, and nuts, while the American Midwest grows staples like wheat and corn more economically. California is growing much less cotton due to global competition, sending farmers to more profitable fruit and nut trees.

"If you don't have the water, your losses have the potential to be much higher. You have this huge investment [in trees] that's going to be amortized over many years, as opposed to annual crops like cotton," says Mr. Prieto.

Farmers short on water are cutting water to annual crops like lettuce, tomatoes, and melons to save their orchards.

The Westlands district supplies 95 percent of the nation's lettuce in October, says Sarah Woolf, spokesperson for the district.

Early reports from Fresno suggest the county won't be producing lettuce this fall. Other regions will try to extend their seasons, says the California Lettuce Research Board in Salinas.

The tomato crop price was already set 12 percent higher than last year, before the water situation worsened, says Ross Siragusa, president of the California Tomato Growers Association. "I think you are going to see prices go higher" on store shelves, he says, with fuel costs also rising. California supplies 94 percent of the nation's processing tomatoes.

The combination of fuel costs and water shortages may also affect cantaloupes. Shipping melons to the East Coast costs 25 cents per pound, up from 15 cents last year. That wipes out the profit margin and makes the crop one of the first to be sacrificed in tight water times. Already, fall cantaloupe production has plummeted 30 percent in Fresno County.