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USA - Drought could cause farmers $1.5 bln in losses

A new bank report has revealed that persistent drought conditions in California could cause farmers and agribusinesses up to $1.5 billion in losses. In “California Drought and its Economic Impact on Agriculture 2016,” CoBank posits the drought’s lingering effects will lead to another round of water restrictions for producers through the remainder of the growing year and beyond.
While Northern California saw the most precipitation during the rainy season, much of the state is still blanketed by severe drought, especially in the central and southern regions.
Government agencies in the state will again need to enforce water restrictions, allocating less than 60% of the state’s contracted water supplies. These restrictions will result in a 5% to 7% loss in net cash income for growers, ranchers, and agribusinesses across the state.
“Some sectors will feel the effects of these water restrictions more so than others,” Sahling said. “Crops that yield the highest returns on investment, like permanent plantings of tree crops and vines, should be impacted the least. At the same time, we expect a large reduction in acreage for field crops that require significant amounts of water, including corn, wheat, cotton and alfalfa.”
“Looking beyond this year, the outlook for California agriculture will depend on how much moisture the state receives, continued availability of groundwater and future regulations that impact access to surface and groundwater,” Sahling said.
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