Last week, the Pacific Institute published the first comprehensive analysis
of the impacts of the drought on California crop revenue and agricultural employment through 2014. The study showed that during the recent drought California’s agriculture sector experienced record-high crop revenue and employment. Crop revenue peaked in 2013 at $33.8 billion, the highest level in California history, and declined only slightly to $33.4 billion in 2014 (all economic data have been corrected for inflation). Statewide agriculture-related jobs also reached a record 417,000 jobs in 2014, highlighting the sector’s ability to withstand the reduction of available water.
At the time of that analysis, revenue for nursery and animal products were not yet available. Additionally, data were not available on agricultural production expenses. However, the Economic Research Service (an agency within the U.S. Department of Agriculture) has just released an updated U.S. and State-Level Farm Income and Wealth Statistics, which gives a more complete picture of the entire agricultural sector during the drought. The data include the gross income from all agricultural products (including nursery and animal products), other sources of agricultural income, and farm production expenses. The difference between gross income (including cash income, non-cash income, and changes in inventory) and production expenses is the net farm income. Net farm income represents the return (both monetary and non-monetary) to farm operators for their labor, management and capital, after all production expenses have been paid.
These new data further support our findings that California farmers have implemented a range of strategies in response to the drought and as a result, have fared relatively well. But while some of the strategies have helped to build the resilience of the agricultural sector in the face of limited water availability, others will have lasting and damaging consequences to local communities, ecosystems, and future generations.
Let’s look at the numbers: In 2014, gross income reached a record high of $56.9 billion, 2% higher than in 2013 (Figure 1). Although income from crop production was down slightly (about 4%) in 2014 compared to 2013 (as we note in our study from last week), these reductions were offset by increases in income from animals and products, which reached a record $15.3 billion in 2014 (up 17% from 2013).