The Economic Value of California Agriculture

California’s incredible amount of food production is made possible by irrigation.  Dry land farming dominated the State’s early days.  It was the introduction of irrigation that made the abundance and value of farm products skyrocket.  "Money Goes Where Water Flows" represents the enormous contribution irrigated agriculture adds to California's economy.

Greenwashing?  Not even close. Information displayed on this site is derived from documented sources and represents the facts about the economic benefits of irrigated agriculture.  Readers are welcome to check our facts using reputable sources. 

Quote

“My district is representative of much of the West; where water goes, jobs follow.”

Rep. Doc Hastings (R-WA), Chairman, House Natural Resources Committee

Water and Power Subcommittee Oversight Hearing on
“Water for Our Future and Job Creation: Examining Regulatory and Bureaucratic Barriers to New Surface Storage Infrastructure”
February 7, 2012

Economic Multipliers

California's crop value in 2010 totaled $27.7 billion.  Business activities on the farm accounted for spending of $19.7 billion and an additional $6.2 billion in employee wages. (USDA Economic Research Service)

Additionally, the value of farm products multiplies as it travels through the economy.  Almond, walnut and pistachio exports account for approximately $2.7 billion in crop value, yet associated economic multipliers raise that figure to more than $11.5 billion.  Export-based farm and port employment created by these three crops total more than 62,000 jobs, according to the California Department of Food and Agriculture.

Despite all of this most California farms are family owned and operated and few of the enterprises could be characterized as "corporate agribusinesses."  The majority of California farms are small, family-owned operations.  Approximately 44 percent of the state's farms had sales of less than $10,000.  Those with sales in excess of $500,000 accounted for only 11 percent of the farms.  The average California farm size is just 311 acres, compared with a national average of 418 acres.  Irrigated farms in California average just 162 acres.

Innovation = Lower Food Costs

From north to south, California farmers use innovative practices to boost water use efficiency.  Over time, improvements in the way water is stored and delivered allows farmers to grow more food using less water.  That stretches resources and helps keep costs low for consumers.

From 2003 through 2010 San Joaquin Valley farmers invested more than $2 billion upgrading their irrigation systems.  That investment circulated through the economy, creating jobs and economic benefits for on-farm and farm-related businesses.

Volume 2 of the California Water Plan includes a section titled "Agricutultural Water Use Efficiency." (http://www.waterplan.water.ca.gov/cwpu2009/index.cfm).  It says the following: "In California, growers and water suppliers implement state-of-the-art design, delivery, and management practices to increase production efficiency and conserve water.  
As a result, they continue to make great strides in increasing the economic value
and efficiency of their water use. One indicator of agricultural water use efficiency improvement is that agricultural production per unit of applied water (tons/acre-foot) for 32 important California crops increased by 38 percent from 1980 to 2000.  Another indicator is that inflation-adjusted gross crop revenue per unit of applied water (dollars/ acre-foot) increased by 11 percent from 1980 to 2000."

While these indicators cannot directly measure water use efficiency, they help demonstrate the success of California farmers through increased productivity in crop volume and value.

Huge Return on Investment

Public investments in water supply projects have far and away paid for themselves.  According to the National Water Resources Association, projects constructed by the Bureau of Reclamation return to the federal treasury over $3 billion per year in new tax revenue as a result of those projects. 

Since 1941 new tax revenue from farm operations made possible by the federal Central Valley Project totals an amazing $124.4 billion on an initial investment of just $7.3 billion.

$3,820 in Your Pocket

American consumers benefit financially from irrigated agriculture.  In the U.S., consumers pay just 6.2 percent of their disposable income on food and non-alcoholic beverages compared to 10.2 percent on average in 28 other high-income countries. http://www.farmwater.org/food_cost_results.pdf

To the average American family this represents an additional $3,820 per year if they paid the same 10.2 percent of their disposable income for food as families do in other countries.

As consumers we have choices on where we spend our money.  Efficient farming practices have helped keep food costs low while providing hundreds of healthful and affordable farm products at the grocery store.  Lower food costs means money that would otherwise be spent to feed our families can instead be used to enrich our lives through recreation, music, philanthropy, and even ballet lessons.

Jobs and the Water Connection

When water supplies are cut the impact on farms  and rural communities can be devastating. 

In 2009 and 2010 farmers on the Westside of the San Joaquin Valley had water supplies reduced due to environmental restrictions.  Farmers in other parts of the state that did not suffer these cutbacks were able to plant their fields and make a profit.

A study by the University of California and the University of the Pacific showed a direct loss of 5,567 to 7,434 jobs and $287.7 million to $286.9 million in farm income due to water supply cuts.  The number of acres fallowed ranged from 243,000 to 269,000, reducing economic output by $586.7 million to $796 million.

Photo: Farmworkers in Mendota, California, line up for a food giveaway after losing jobs because of water supply cuts.

Water supply and employment are directly related, as shown in this chart (right) depicting Central Valley Project water allocations and unemployment figures in four San Joaquin Valley towns.  When water supplies were cut in 2009 and 2010 unemployment figures rose to levels as high as 45 percent.  

Water supply also affects land fallowing decisions.  The second chart (below) shows the direct relationship between CVP water allocations and planted acreage in Westlands Water District.  As water supply decreases (red line) fallowed land increases (blue line), almost exactly mirroring each other.