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Wine Industry Insight
The U.S. Bureau of Reclamation’s shut off of water to farmers in California’s Central Valley could blunt substantial parts of the Obama stimulus plan by:
The Obama administration said the stimulus would create or save 421,000 in California– some 10 percent of all the total estimate. California has a 9.3 percent unemployment rate, the fourth highest in the nation and the state’s highest in 15 years. California state lost 78,200 jobs in December, the highest in the nation.
FEDERAL WATER TO SHUTOFF MARCH 1
The Bureau of Reclamation announced that it would eliminate all shipments to agriculture for at least three weeks beginning March 1 and for longer depending upon how much rain the state receives until the dry season arrives.
This is the first time that water districts north of the Delta (in the Sacramento Valley) (see map) will receive a 0% water allocation. The southern districts have not been cutoff in this manner in more than 15 years.
STATE WATER CUTBACKS COMPOUND THE SITUATION
The California Department of Water Resources (DWR), said that recipients of water from the state of California would be limited to just 15% of their allocations.
According to the DWR, combined state and federal water cutbacks could idle more than 1 million acres of fields, orchards and vineyards. This, according to the DWR, will cause losses of at least $1.15 billion and cost some 40,000 jobs.
The California Department of Food and Agriculture estimates that in 2008 alone, the drought cost California some $308 million.
FARM BUREAU WEIGHS IN ON NATIONWIDE IMPACTS
According to the Fresno County Farm Bureau, “At a time when everyone across the nation is talking about economic stimulus, it is ironic that we are hit with this huge economic suppressant when Fresno County,and its residents — already plagued with high unemployment — can least afford it.
“The impacts from this year’s water shortages will be far-reaching and widespread – on a social, economic, hydrological, and resource management basis. The west side of the County makes up 25 percent of Fresno County’s $5.3 billion agriculture industry. With a 0% allocation for the west side, farmers are forced to idle large amounts of acreage that would have generated jobs, value-added food products that stimulate significant economic activity for the County and region.”
VALUE-PRICED WINES IN THE CROSSHAIRS
Nat DiBuduo, President CEO of Allied Grape Growers, told Wine industry Insight that, “while over the past decade approximately 150,000 acres of wine grapes were pulled out in the San Joaquin Valley, about 15,000-20,000 acres were planted on the west side of Fresno County.
“This new area was hoped by some of the major wineries to produce 150,000 to 300,000 tons of grapes for wine, concentrate and brandy,” DiBuduo said. “Without the water it will very likely affect production in 2009 to some degree and have an affect on future years as well. This will definitely affect the value-priced wines and those consumers that have enjoyed them.
“The other part of this scenario is if the federal and state water districts cut water to the west side these affected growers may — and probably will — try to get some water out of Friant Dam and the San Joaquin River that normally is sent to growers along the east side of San Joaquin Valley,” DiBuduo continued.
“There is also a plan to restore the flow of the San Joaquin river to reintroduce salmon habitat that will take away more of the available water. The growers on the east side of the San Joaquin Valley will have their production capabilities affected this year as the water shortages become more apparent.”