The Baseline for Drought Impacts: Valley agriculture has expanded a lot in the 5 years since the last drought.

The economic losses from the drought is the hottest topic in the Valley right now.  It is clear that the 2014 drought impacts will be larger than the 2009 drought, but how much larger?  A significant challenge in making comparisons is accounting for the remarkable changes in Valley ag over the past 5 years.  What is the right baseline for measuring fallowing and lost production?

For the 2009 drought, 2007 was arguably the best year to use for the baseline because there were already some modest drought impacts in 2008 leading up to 2009.  Although we don't have complete 2013 data yet, it is still probably best to use 2012 data as a baseline for 2014 impacts for the same reason.  Thus, I have compiled some key indicators for 2012 and 2007 for the 8-county San Joaquin Valley to see how things have changed.  The overall picture is an industry that is expanding in response to strong crop prices, revenues, and profits.

Farm Jobs in the San Joaquin Valley:
According to California EDD, there were 197,000 agriculture jobs in 2012, a 10,000 job increase (5%) from 187,000 in 2007.  Average wages increased from $10.46/hour in 2007 to $11.82/hour in 2012, an increase of 13%.

Preliminary data for 2013 shows employment was slightly higher than 2012, and wages increased nearly $1 an hour.  Farmers have complaining louder than ever about labor shortages, but total farm employment is at its highest level in over a decade.  However, farm wages have also seen significant gains in both 2012 and 2013 which supports the idea that labor is becoming more scarce.  Simultaneous increases in both employment and wages point to increasing demand for workers.  That is a sign that the industry is expanding, and the acreage data points to rapid expansion.

Irrigated Acres in the Valley:
I compiled total harvested acres for the 3 main crop types: field crops (excluding rangeland and unirrigated pasture), fruit and nut crops, and vegetable crops.

Total harvested acres in the San Joaquin Valley increased by 387,000 acres between 2012 and 2007, an increase of 7% to 5.824 million acres in the 8 counties in 2012.

Field crops increased by 72,000 acres, +2%.
Fruit and nut crops increased by 386,000 acres, +21%.
Vegetable crops decreased by 72,000 acres, -12%.

All counties expanded total harvest acres except Kern County, but Kern County had the highest increase in fruit/nut (permanent) crops at 102,000 acres in 5 years.

I have mixed feelings about this and the Valley economy.  On one hand, the strength and growth of the agricultural sector has been especially welcome in the context of a depressed overall economy.  The recent growth in agricultural wages is particularly encouraging.  On the other hand, there are good reasons to question the sustainability of this industry growth.  Many people were questioning the sustainability of over 5.4 million irrigated acres in the San Joaquin Valley back in 2007, even before an additional 400,000 acres were brought into production.  The total amount of key resources such as land and water has not increased.  I have heard a lot of comments from people inside and outside the industry about permanent crops that are planted on marginal, poor quality land, seriously overdrafting groundwater or both.

The immediate question is what is the baseline from which to measure the impacts of the 2014 drought, and how to compare the 2009 and 2014 events.  In 2009, there were about 250,000 fallowed acres compared to the 2007 baseline.  In 2012, not only were the 250,000 acres fallowed in 2009 back in production, an additional 387,000 acres of mostly permanent crops were added to the baseline level of production and are now competing for an even lower supply of water.    While it is probably best to use the more recent 2012 baseline for measuring the immediate impact of the drought, it is important to understand that this industry expansion fueled by growing plantings of permanent crops also plays a role in drought impacts.