Additional drought assistance offered

Report finds Californian agricultural will be able to adapt to reduced water allocations.

President Obama participated in a briefing on drought and wildfire preparedness with western governors via video teleconference Friday morning along with top government officials including Agriculture Secretary Tom Vilsack and Environmental Protection Agency administrator Gina McCarthy. The administration announced new actions and investments of more than $110 million to support workers, farmers and rural communities suffering from drought and to combat wildfires.

Currently, 35% of the West is facing severe to exceptional drought. In California, the mountain snowpack that supplies most of the water during the summer months is only a trace above zero.

Through the Risk Management Agency, USDA is expanding a program that allows farmers to exclude their exceptionally bad production years, which are often the result of drought, from the calculation of their crop insurance coverage. This ensures that a bad year or two caused by drought does not significantly reduce their crop insurance coverage. This action will provide an estimated $30 million in additional relief to farmers in Fiscal Year 2016, and $42 million in Fiscal Year 2017.

In addition, the United States Department of Agriculture is projecting that they will provide at least $1.2 billion this year in assistance to livestock producers facing grazing losses as a result of the drought across the West.

The Bureau of Reclamation is announcing $6.5 million in fiscal year 2015 to support water management improvement projects over the next two years. The Federal grants will be combined with local cost-share contributions, making a total of nearly $30 million available to help alleviate the impacts of the drought on communities and agriculture.

To support water utilities and households coping with drought in California, USDA Rural Development will provide at least $7 million to address the drought-related needs of water utilities and households.

Previously this year, through its Regional Conservation Partnership Program, USDA dedicated roughly $84 million to fund high-impact conservation projects focused on water quantity and other drought-related resource concerns. The funded projects support a wide range of activities, from helping farmers improve their resilience to drought to protecting drinking water supplies.

Impact of California drought

CoBank economist Dan Kowalski says that while the California drought, now in its fourth year, is challenging all sectors of the agriculture industry, many producers will be able survive the 2015 growing season without severe financial impairment to their operations.

"Despite the continuing difficulties and challenges, California's agricultural industry will continue to adapt to reduced water allocations for as long as necessary, and will find better ways to produce the crops and products that consumers demand," said Kowalski.

A new report from CoBank found that the damages wrought by the drought in 2015 will be worse than those in the previous year, but not catastrophic. With each successive year of drought, the underground water tables decline further, boosting the cost of pumping groundwater to the surface and increasing the likelihood of well failure.

The report also found that not all commodities will be impacted equally. Those yielding the highest returns on investment will be affected least by the drought because growers will redirect the limited water supply to these plants and away from those yielding the lowest returns. California's highest yielding crops are its permanent plantings, including nuts, citrus and other tree fruits, and vine-grown fruits and vegetables.

Growers will again fallow some of their land and redirect the water that would have been used to irrigate those acres toward more profitable crops grown in other fields. They are expected to fallow up to to 600,000 acres this year, about 6-7% of total irrigated acreage and 30% more than they fallowed in 2014. The resulting losses in revenue will fall most heavily on field crops such as corn, wheat, cotton, rice, hay, pasture, and beans, CoBank said.

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