The Golden State grows (and typically processes and packages) about 13 percent of total US agricultural sales. Almost twenty percent of US dairy production occurs in California. The state is the leading source of fresh fruits and vegetables consumed in the United States, including over 99 percent of almonds, clingstone peaches, dried plums, raisins, and olives.
According to the US drought monitor, all of California is currently experiencing drought conditions. The most productive agricultural regions of the Central Valley are experiencing “extreme” or “exceptional” drought. Some studies suggest the current drought may be the worst in 1200 years (more and more).
Despite these conditions, California subsoil moisture measurements are, so far, less than apocalyptic (see map below and more). According to the USDA, as of July 31, eighty percent of California crops had “adequate” moisture, fifteen percent was “short”, and only five percent was “very short”. Irrigation often explains why California moisture levels are currently doing much better than Iowa’s.
Proportions depend on what, when and where is measured, but at least 40 percent of California agriculture is irrigated. Credible estimates suggest up to 80 percent of agricultural sales depend on some irrigation. Irrigation is provided by local groundwater pumping and long-distance canals (that also provide water to urban areas). In response to the drought, several constraints have been placed on irrigation and other water use.
According to Bloomberg, spot prices for water in California are up 56 percent since the beginning of the year. “The soaring prices are a reflection of how quickly California’s water crisis is escalating, with dire implications for food crops that are almost entirely reliant on irrigation. Historic drought has cut off surface water to even those with the most seniority under California’s complex water-rights system, and California Governor Gavin Newsom has declared a state of emergency, ordering water-use restrictions and some curtailments for irrigation districts and farmers. ” The spot price has continued to increase since the Bloomberg report, see chart below (more and more). Given the long-term drought, California groundwater reserves are being drained and not replenished.
Downstream demand always depends on upstream capacity. In the case of California agricultural production what is literally upstream has been reduced for most of this century and the pace of reduction has recently accelerated.