Monday, January 26, 2009

Farm Jobs and Water

There have been a lot of stories lately about how the drought and Delta pumping restrictions are impacting the Valley economy. This story got national coverage and is typical.

First, what happened in 2008? The story notes "Last year, federal water deliveries were just 40 percent of the normal allocations, fallowing hundreds of thousands of acres." I have seen other quotes about how the Delta pumping restrictions cost thousands of jobs this year. While, I have no doubt that this caused layoffs and fallowed fields on some farms - I don't believe the net impact on farms was that large.

In fact, the latest employment data tells a different story. CA EDD reports that farm jobs were up by 4,000 statewide in 2008 vs. 2007 and 15,000 compared to 2006. In fact, of the 11 main sectors of the economy tracked by EDD, farms were #2 in job growth in 2008, trailing only education and healthcare. Even in South Valley counties, farm jobs are consistently higher now than they were a year ago. The agriculture sector has been expanding rapidly in recent years due to strong prices and revenues, and it is probably true that water issues limited 2008 growth over what it would have been. Likewise, weak agricultural prices in 2009 would shrink the farm sector this year even with full water allocations, but I expect water and Delta environmental concerns will get most of the blame.

I think we are definitely looking at significant losses in farm employment this year in the Valley, but will it be as bad as the 40-60,000 lost jobs being predicted by Richard Howitt, chair of the Agricultural Economics department at UC-Davis? I don't know, Howitt's studies always seem to have pretty large multipliers compared to other farming impact studies. I have a hard time seeing an estimated $1 billion in lost farm revenue creating that level of unemployment. My initial guess is that 20,000 lost jobs is more likely, still a substantial loss on top of an already painful recession. If markets stay depressed, the losses could be even higher but that would be due to the global recession not water restrictions.

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