California’s agricultural sector is the nation’s largest, as it generates more than $50 billion in annual revenue, allowing 420,000 people to be employed in the industry. The state is responsible for over 13 percent of the country’s total agricultural output. However, California’s farmers are facing several challenges that are threatening the stability of the industry. In this post, we will discuss some of the most pressing agricultural problems in California and what are the potential solutions that can be implemented to address them.

Challenges that California Farmers Face

There are several challenges that farmers in California are facing, these are:

Water Shortage

California farmers have steadily increased productivity by switching to crops like fruits, nuts, and vegetables that produce more income and employment per unit of water while maintaining a sizable portion of the nation’s dairy and beef cattle production.

However, despite ongoing improvements in irrigation efficiency, California farms heavily rely on irrigation, and water availability is a persistent issue. Surface water has recently been constrained by climatic and legal restrictions. The Sustainable Groundwater Management Act (SGMA), which was passed in 2014, was created in response to the ongoing overpumping of groundwater that has destroyed infrastructure and dried up wells.

Fast-Paced Drought and Climate Change

Precipitation whiplash, or the increasingly dramatic swings between wet and dry conditions, is making California’s already unstable climate even more volatile. Along with much of the West, California is currently going through a megadrought that is characterized by high temperatures and persistently low precipitation.

The water years of 2020 and 2021 were the second driest two-year span since records began in 1895 and the driest since the drought of 1976–1977. We calculate that 2021’s unusually warm temperatures—nearly 3.5 degrees Fahrenheit above the average for the 20th century—led to an additional 3–4 inches of evaporative demand, or an increase in crop water requirements of about 8%.

This increase in evaporative demand has exacerbated the water supply challenges faced by California farmers. The drought is raising the costs of farming but reducing the revenue that farmers earn from their crops.

While the costs as a percentage of the regional agricultural economy were significant in some areas, the statewide economic effects in 2021 were only modest. The last drought had a significant impact on the San Joaquin Valley, but the Sacramento Valley and North Coast—areas that are typically water-rich—were the hardest hit due to extremely dry conditions. Surface water deliveries in the Sacramento Valley were lower in 2021 than they were in any other year of the drought from 2012 to 2016. About 11% of crop revenues were lost in the Sacramento Valley and 24% in the Russian River. In contrast, the effect in 2021 has so far been minimal in the San Joaquin River Basin and the Tulare Lake Basin (about 1% and 2%, respectively). These effects will worsen and spread as California enters its third year of a severe drought in 2022 and water restrictions increase.

Increasing Labor Shortage and Costs

The agricultural industry is one of the largest employers in California, with over 420,000 people employed in the sector. However, labor costs have been on the rise in recent years, due to a combination of factors including an increase in the state minimum wage, the implementation of new overtime rules, and a shortage of workers.

In addition, the Trump administration’s crackdown on undocumented immigrants has led to a decline in the number of people willing to work in agriculture. This has put upward pressure on wages, as farmers compete for a shrinking pool of workers.

The increased cost of labor is compounded by the fact that many farms are located in rural areas with high transportation costs. These factors have made it difficult for farmers to remain profitable, and have led to an increase in farm closures and consolidations.

What Can Be Done to Address These Problems?

There are a number of potential solutions to the problems faced by California agriculture. Some of them are:

Address the negative effects of increased pumping: It’s important to note that while the SGMA was passed in response to overpumping, it does not address the negative effects of increased pumping on groundwater levels or on the environment. The act sets up a framework for local water districts to develop plans to sustainably manage groundwater basins but does not mandate any specific actions. This means that it will be up to local stakeholders to decide how to address the negative impacts of pumping.

Implement better irrigation practices: One way to increase water efficiency is to implement better irrigation practices. This can involve using drip irrigation or micro-sprinklers, which deliver water directly to the roots of plants and reduce evaporation. Farmers can also use irrigation scheduling, which uses information on weather, soil moisture, and crop needs to determine how much water should be applied and when.

Encourage farmers to use alternative sources of water: In areas where groundwater is being overexploited, farmers can be encouraged to use alternative sources of water, such as treated wastewater or desalinated seawater. This will help to reduce the demand for groundwater basins and prevent further decline in water levels.

Improve trading, hasten demand management, and repurpose land: In order to address the issue of water scarcity, it is important to improve water trading between farmers and other water users. This will allow farmers to sell their excess water to those who are willing to pay more for it, such as urban users or environmental groups. In addition, hastening demand management processes, such as the implementation of tiered pricing for water, will help to reduce overall water use. Finally, repurposing land that is no longer suitable for agriculture can help to reduce the pressure on scarce water and natural resources.

Provide financial assistance to farmers: The high cost of labor and the effects of the drought have put many farmers in a difficult financial situation. In order to help them weather the current crisis, it is important to provide financial assistance. This can take the form of direct payments, low-interest loans, or tax breaks.

While these are just a few of the potential solutions to California’s agricultural problems, it is clear that action must be taken in order to ensure the sustainability of the industry. Only by working together to address the environmental challenges faced by farmers will we be able to ensure a bright future for California agriculture.

How Can California Farmers Afford to Implement These Solutions?

The cost of implementing these solutions will vary depending on the specific measures taken. In some cases, such as the adoption of better irrigation practices, the initial investment may be relatively low. However, in other cases, such as the development of alternative water sources, the costs can be quite high.

One way to offset the costs of these solutions is to provide financial assistance to farmers. This can take the form of direct payments, tax breaks, or low-interest loans from the government or private organizations. By providing this assistance, farmers will be able to afford the upfront costs of implementing these solutions and, in turn, help to ensure the sustainability of California agriculture.

Here at Farm Plus Financial, we are committed to helping farmers secure the financing they need to help agricultural operations thrive. We offer a variety of loans catered to California farmers that can be used for a variety of purposes. From water conservation loans to equipment loans, we have the right financing solution for your farm. Contact us today to learn more about our loan programs and how we can help you secure the funding you need.