The reoccurring drought pattern could significantly increase the value of farmland in South San Joaquin County.
As counterintuitive as that might sound with the increasing prospect the South San Joaquin Irrigation District will likely have to impose water delivery cutbacks when the 2022 growing season rolls around, it is far from being far-fetched.
There has been a spike in interest from those that grow permanent crops in the forms of orchards and vineyards elsewhere in California in acreage served by irrigation districts best positioned to have more dependable water delivery in what is shaping up as a weather trend when dry years are more the norm than the exception.
It’s not a stretch that the SSJID is among the best positioned irrigation districts, if not the best, along with Tri-Dam Project partner Oakdale Irrigation District to deliver consistently more water as the coming years unfold even in drought years when compared to other districts.
Actions founders of the SSJID took in 1909 to purchase — along with OID partners — 600,000 acre feet of annual water rights in the Stanislaus River basin — and then secure them by developing the use of the water and legally adjudicating those water rights are just part of the equation.
The two districts subsequently made farsighted moves with the decision to build Donnells, Beardsley, and Tulloch reservoirs with their accompanying hydroelectric plants in the 1950s that sweetened the ability to capture, store, and deliver water secured with water rights in the Stanislaus River basin that is legally higher than anyone else’s.
Now that we are in the second dry year of the second drought in five years hundreds of farmers up and down the Central Valley are being forced to rip out expensive permanent crops that still have many productive years of yield. They’re doing so in order to be able to have adequate water to irrigate remaining orchards and vineyards. It is something that many had to do in the last drought.
The vast majority in such a position rely on water deliveries from the Central Valley Project and the State Water Project that are cutoff during droughts. Turing to ground water pumping is an expensive proposition and works to deplete aquifers.
The more water they need to take from the ground and the farther they need to go to lift it to the surface means higher energy costs resulting in more expensive water bills. And given how PG&E is ramping up its electric charges it has the ability to push growers to the brink financially.
There is a school of thought among people who believe such a scenario will simply eliminate farms and free up water. They argue we don’t need to export food to other countries and if need be we can import food to the United States and California to make up for the loss of domestic production.
The assumption is blatantly naive and fool hardy.
For starters drought is occurring or at a high risk of doing so in large swaths of South America, African, Asia, Australia, a food-portion of Europe and throughout the Western United States. Drought is not a local issue. It is California wide, a concern throughout neighboring states in the West, and a serious issue across the globe.
Then there is the issue of how much food produced in California and its quality that is often higher than what is grown in other countries.
People have to eat. And there are plenty of people positioned well enough they will absorb higher prices for commodities that they want such as wine, almonds and other nuts. The market due to price may shrink but it will still be a viable one.
It takes three to five years to get orchards to the point they can be harvested. It’s a big upfront investment that has only flows out cash after a number of years. The pay off, and the subsequent significant revenue stream an investment like almonds, comes from being able to produce 20 years or so of solid crops.
If perennial water shortages occur for growers with permanent crops it can be ruinous financially.
And if you think farming isn’t big business and innovative in California on a scale similar to tech and housing development you are way off base. You don’t survive and thrive on one or perhaps two paychecks a year that can disappear due to a crisis if you don’t think long-term, look for cost savings and plan for resilience.
Migrating one’s agricultural business model that relies on permanent crops to areas where surface irrigation water is more dependable makes economic sense in both the short and long range.
Couple that with the fact the SSJID has a demonstration pressurized delivery system project for irrigation water that allows drip irrigation in Division 9 south of Manteca and west of Ripon and you have an ace in the hole.
The system in place has reduced water use by 13,500 acre feet while increasing grower yields.
It is feasible but extremely expensive to convert the rest of the SSJID system to pressurized delivery. But if over time the economics and dynamics of farming in California — which is by far the largest ag producing state in the union — change to the point it pencils out to pressurize more of the system, water capacity theoretically exist to convert almost all farmland irrigated with SSJID water to long-term profitable permanent crops.
The biggest contributing factor to that is the very real likelihood large swaths of farmland that relies on CVP and State Water Project Water will have to abandon highly profitable crops such as almonds due to the lack of dependable water.
And as nuts as it may sound this ultimately could work toward making housing in the South County even more expensive beyond what is happening by Manteca, Lathrop, Tracy, Ripon, and Mountain House being the de facto housing solution for the high paying job rich Bay Area that is seeing 60-year-old run down small homes commanding $1million or more.
How growers that are seriously considering migrating operations to areas with more dependable water can send new housing prices — and due to the ripple effect the resale price of older homes — to even higher levels than the growth pressures and out of kilter supply and demand already are is simple.
It’s Economics 101.
A heavy push for desirable irrigated acreage in the SSJID territory will send prices up for what an acre is worth for farming.
As things stand now, a grower contemplating retirement that is farming near urban areas such as Manteca within the SSJID territory is getting a better price for their land from developers. If SSJID farmland turns into a much safer haven for permanent crops as acreage grown is plummeting in the state due to persistent drought, selling to other farmers may yield significantly more money than selling to developers when a farmer goes to sell.
And that would accelerate price pressures on homes as what is relatively inexpensive and easy to develop flat farmland becomes so expensive that developers may be forced to buy older homes and cobble tighter high density housing to keep building.
This column is the opinion of editor, Dennis Wyatt, and does not necessarily represent the opinions of The Bulletin or 209 Multimedia. He can be reached at email@example.com