California Water Shortage: The Game Changer That Will Trigger The Food Crisis

– California Water Shortage – The Game Changer That Will Trigger the Food Crisis (Waking Times, Feb 26, 2014):

For What It’s Worth… 

(I live in the North Counties of Northern California and manage a small Biodynamic farm forgoing a previous existence as a research analyst on Wall Street and owner of a small investment boutique firm for over two decades.)

Farmers throughout California are dramatically cutting way back on how much food they will grow this year. We know this because initial bulk seed orders are way down as the seed ordering season hits it peak. Just released news about severe water cuts by the Federal government to California farmlands will mean further cuts to their planting schedules.

Livestock is being culled much earlier as cattle ranchers seek to dramatically reduce cost by purging now ever-growing expensive inventory. Two weeks previous, the largest beef recall in history, covering some 9 million pounds of beef, occurred at the largest processing plant in the North Bay Area. The beef had already been distributed across the country. Walmart and other stores are removing all brands like “Pocket Pizza” from shelves across the country while the FDA remains silent about the cause of this mass recall. The recall covers the entire past year of supply to stores from this one slaughterhouse which means the unidentified problem with the beef has largely already been consumed.

Yesterday, February 21, 2014, the Federal government just announced that the water is “not there” and water rights to Central Valley farmers are being cut by a minimum of 60%. Some farms will be told there is no water coming. This breaks a long standing 45-year contractual obligation by the Fed’s to bottom line, net-net, agree to supply a minimum of 60% water allocation to CA farms. Now the most farmers can hope for is a 60% reduction in water allocation. Or worse.

California is the largest agricultural supplier for the nation.

The financial markets are well aware of the current outlook and are bidding up future commodity prices further which puts continued upward pressure on meat, water and produce pricing faster than if it was a simple supply/demand equation.

From Marketwatch:

Much like the polar vortex spiked demand and prices for natural gas in the eastern U.S., another weather phenomenon — a severe drought — is threatening cattle and milk production and food crops in the West.

It’s a threat that can last for months and year, and parched conditions have already driven up prices on milk and cattle futures. ‘The hardest hit section of California is the Central Valley — the supermarket to the world — and [it’s becoming] increasingly clear the region won’t see relief from the devastating drought anytime soon,’ said Kevin Kerr, editor of CommodityConfidential.com.‘Retail prices for many key agricultural commodities could jump.’

That means consumers may see higher prices for everything from beef and milk to wheat, nuts and vegetables, and it’ll take time for supplies to replenish.

“If it’s not there, it’s just not there,”
CA Water Authority director State of the Water Report for California and Beyond.

The Federal government just released their first assessment for water allocations for the coming year in California and the news is devastating and will impact all greatly.

“The US Bureau of Reclamation released its first outlook of the year and finds insufficient stock is available in California to release irrigation water for farmers. This is the first time in the 54 year history of the State Water Project. “If it’s not there, it’s just not there,” notes a Water Authority director adding that it’s going to be tough to find enough water, but farmers are hit hardest as “they’re all on pins and needles trying to figure out how they’re going to get through this.”

Via AP,

Federal officials announced Friday that many California farmers caught in the state’s drought can expect to receive no irrigation water this year from a vast system of rivers, canals and reservoirs interlacing the state.

The U.S. Bureau of Reclamation released its first outlook of the year, saying that the agency will continue to monitor rain and snow fall, but the grim levels so far prove that the state is in the throes of one of its driest periods in recorded history.

Unless the year turns wet, many farmers can expect to receive no water from the federally run Central Valley Project. 

… the state’s snowpack is at 29 percent of average for this time of year.

California officials who manage the State Water Project, the state’s other major water system, have already said they won’t be releasing any water for farmers,marking a first in its 54-year history.

“They’re all on pins and needles trying to figure out how they’re going to get through this,”Holman said, adding that Westland’s 700 farmers will choose to leave fields unplanted, draw water from wells or pay top dollar for water that’s on the market.

Farmers are hit hardest, but they’re not alone. Contractors that provide cities with water can expect to receive half of their usual amount, the Bureau said, and wildlife refuges that need water flows in rivers to protect endangered fish will receive 40 percent of their contracted supply.
Contractors that provide farmers with water and hold historic agreements giving them senior rights will receive 40 percent of their normal supplies. Some contracts date back over a century andguarantee that farmers will receive at least 75 percent of their water.

One of those is the San Joaquin River Exchange Contractors Water Authority in Los Banos that provides irrigation for 240,000 acres of farmland.

The Water Authority’s executive director Steve Chedester said farmers he serves understand that the reality of California’s drought means it’s going to be tough to find enough water for them.
“They’re taking a very practical approach,” he said. “If it’s not there, it’s just not there.” (Source)

State of the Beef Report for Northern California

Cattle Ranchers in California are en masse selling their one-year-old steers and culling older livestock earlier than normal as feed costs increase due to lack of grazing lands available to feed their herds.

Ranchers can get their greatest increase in weight on beef at little cost at this time of year because they would be able to feed the animals to graze in newly grown grass pastures. At the end of the grazing season is when ranchers usually have gotten paid.  Now they are culling herds and waiting. They are selling first the one-year-old steers, that would be next year’s supply, as not to incur another years costs of feed and water until they can get their costs back and some potential profit.

Last October 2013, a “freak” fast freeze in North Dakota killed 100,000 head of beef. Over the preceding two years Midwest and Southwest cattlemen have similarly culled their herds early due to drought conditions and elevated alfalfa and hay prices.(Source)

Though beef prices continue to set record highs, this temporary short-term inventory supply “glut” on our markets has kept beef prices relatively in check. After these supplies, extremely abnormal for this time of year are worked through, beef prices will skyrocket sometime this summer or sooner.

Commodity Future traders and players should continue to aggressively bid up beef prices to further record highs as shortages become mainstream and prices for health food and beef become outrageous in the United States this summer.

Additionally and related, Rancho Feed of Petaluma, California, the largest meat processing facility in the North Bay area was shut down and closed last week by the USDA. The USDA recalled 9 million pounds of meat due to unexplained reasons and subsequently Rancho Feed has gone out of business.  Oddly, or conspiratorially, Marin-Sun Farms, a local high-end producer announced out of the blue that they were buying the operations at the closed slaughterhouse.  The new-to-be owners have initially stated that their focus will be to supply “grass fed beef to the high end of the immediate local economy”. No mention was made about who will provide the butchering for the Big Box operators across the country from the existing Bay Area livestock suppliers. (Source)

From the Feb. 21 California Report:

Initially, back in January, 40,000 pounds of beef was affected. So we’re talking about a handful of stores. Then, two weeks ago, this recall expands to 9 million — nearly 9 million — pounds of beef processed over the course of an entire year. And so, as you can imagine, the number of stores affected has grown exponentially. We’re talking now about more than 1,500 distributors, both in the U.S. and in Canada. Nestle Hot Pockets were made with some meat that was processed at Rancho. And as a result, stores like Wal-Mart are having to pull Hot Pockets from their shelves as well as things like beef jerky, hamburger patties and taquitos.

Now we should point out that there are no reported illnesses linked to Rancho’s meat, but the USDA is conducting two investigations, including one by its Office of Inspector General, and that’s not something that happens a lot in the meat industry. You’ve got two offices in the USDA: You’ve got Food Safety and Inspection Service and the Office of Inspector General conducting separate investigations of Rancho. And what that suggests is that the problems are very serious, and potentially that there was some illegal activity going on. Here’s how Tony Corbo — he is with the consumer advocacy group Food & Water Watch, based in D.C. — here’s how he puts it:

‘Either there was not proper inspection being done, or the inspectors there were trying to do their jobs and were impeded in one way or another by their supervisors within the USDA or by the plant itself.’

Now, we did get a statement from Food Safety and Inspection Service saying that the company circumvented inspections in some way, but they’re not saying much more than that. So, there are a lot of questions still swirling around this whole recall, because by law USDA inspectors are supposed to be there whenever meat is processed. So the question is: How could for a whole year potentially diseased animals be processed at this plant?

Since this is the only plant in the North Bay, right now because it is closed under these investigations with the USDA, livestock will have to be transported significantly longer distances. They’re going to be driving to Eureka up in northernmost CA or in the Central Valley of Los Banos to get their meat processed.

A USDA spokesman told us that the investigations will continue even after the sale is complete. In the meantime some ranchers, especially the higher-end meat producers, are trying to get their meat released from this recall. I spoke with renowned rancher Bill Niman, who could potentially take a $300,00 to $400,000 hit from this recall because he has about 100,000 pounds of meat in cold storage that was processed at some point in this facility in 2013. And so, there are still a lot of ways that farmers and ranchers are affected by this, even with this sale.”  (Source)

The high-end, grass-fed beef growers have been caught up in the USDA beef massive beef recall as well and may break the back of the purest and healthiest beef providers in Northern California. The local area paper reports:

Marin County beef producer Bill Niman goes to extreme lengths to track his animals from birth to slaughter. He’s hoping his records will prove his beef is safe and convince federal regulators to reverse a decision that will force him to destroy at least $300,000 worth of frozen meat caught up in the Rancho Feeding Corporation recall.

Niman and his wife Nicolette Hahn Niman are among a small group of upscale North Bay ranchers who have been ordered to surrender all beef processed last year at the Petaluma slaughterhouse. He said he has logs documenting that BN Ranch made sure its animals never got near any other cattle at Rancho. And he dismissed as “very slim” the possibility that BN’s carcasses would ever have been touched by any suspect meat. The custom-killed animals are hung on a different track, or rail, from Rancho’s own cattle when they are moved to cold storage.

The financial damage to North Bay ranchers — many of them raising high-end, grass-fed beef — makes the Rancho case rare among meat recalls, experts said. And to date no one has revealed such potentially huge losses as the Nimans.

The Bolinas couple, who started BN Ranch in 2007, said their company’s freezers contain nearly 100,000 pounds of pasture-raised meats, none of which currently can be sold. That amounts to more than a quarter of all the meat they processed last year at Rancho.

BN customers have returned another $40,000 worth of meat that can’t be resold. Niman said a Rancho owner told him the slaughterhouse isn’t liable for that loss.

“We’re the ones taking a big hit on this,” said Niman, 69, who also founded Niman Ranch in the early 1970s and is widely considered one of the early leaders in humane and sustainable meat production. He since has severed ties with the Alameda-based meat company that still bears his name.

“We not only know the inspectors were there,” said Nicolette Hahn Niman. “We were there ourselves.” The couple said the losses may put them out of business.” (Source)

Control the food and you control the people.
Alleged to have been heard spoken by Dr. Henry Kissinger

Google’s CEO Sergey Brin has unveiled a project
to grow synthetic meat for animal stem cells,
eliminating the need to kill the animal itself.

And quick as you can say “Solyent Green” . . .. and because technology has a fix for every problem they created for perpetual profiting, the Global monster “Do No Evil” firm called “Google” is seriously getting into the artificial meat creating business:

The man who has bankrolled the production of the world’s first lab-grown hamburger has been revealed as Google co-founder Sergey Brin.

The internet entrepreneur has backed the project to the tune of €250,000 (£215,000), allowing scientists to grow enough meat in the lab to create a burger – as a proof of concept – that will be cooked and eaten in London on Monday. “It’s really just proof of concept right now, we’re trying to create the first cultured beef hamburger,” said Brin in a film to mark the tasting event in London. “From there I’m optimistic that we can really scale by leaps and bounds.”

The synthetic meat hamburger will be cooked and eaten at an event this afternoon. Among the tasters will be the Chicago-based author of Taste of Tomorrow, Josh Schonwald, and an Austrian food trends researcher, Hanni Rützler of the Future Food Studio. (Source)

Due to the powerful out-of-state fracking lobbyists that operate in CA, the fracking industry have so far been successful in keeping Governor Jerry “Moonbeam” Brown from declaring a Stage I Water Emergency which would prioritize water to the protect critical food and water resources and set a state-wide mandate.

Frackers in California are feeling the pressure to keep extracting (and profiting since Natural Gas prices have gone up 69% in only two months) due to the Eastern United States continued Big Freeze event after event after event. Additionally frackers have been outbidding the Central Valley Farmers 3-1 for water rights since planting both feet and rig to fully frack-out Californina with their 40-year plans, according to fracking industry spokespersons. (Source)

On a related note, global oil consumption hit daily record highs driving oil based energy prices further north. Oil prices make up 40% or more of food costs. China is recording record car sales and gas consumption, as is India. (Source)

Agricultural insurance companies in the United States are steeply curtailing crop insurance for farmers and ranchers by simply pricing coverage costs out of reality so they can “honestly” say they are not cutting out the offering of polices.

On February 10, 2014 the California Water Board released its second “Water Shortage Contingency Plans” for 2014. The first sentence reads “A reliable water supply is essential”.  Further, the document reveals priorities for available water distribution, drought related permits and bans and some very Agenda 21 language including examples to follow like the “One Water, One Watershed” regional water management effort in the Santa Ana Watershed collaborated on. It brings together three California counties, 69 cities, and 98 water suppliers, covering 2,800 square miles, to develop regional partnerships to address the water supply and quality challenges we face today.” (Source)

“My gross sales are probably going to be cut in half,” said Bil Diedrich, who farms 1,500 acres of almonds, tomatoes and other crops in the parched Central Valley community of Firebaugh. “Some farmers out here are going to lose everything they’ve got.”

Farmers are not the only business’ that will be affected. Contractors that provide cities with water can expect to receive half of their usual amount, according to the State Farm Bureau. Wildlife refuges that need water flows in rivers to protect endangered fish will receive just 40% of normal allocations of their contracted supplies.

Farther up north above San Francisco, where I live, we rely on wells for our critical water supplies. Wells are going dry throughout Mendocino County… in February. Proud to say that Mendocino County was the first county to in California to trigger emergency water conservation measures. They were also the first county in the country to ban GMO growing at the beginnings of our new millennium.

Record sales of 2500 gallon polyethelene water storage tanks are finding their way up into the hills and mountain regions above our feeder water tributaries that supply water to our low-level lying local farms here in Mendocino County. With these storage tanks marijuana growers are planing to attach straws to the creeks up high to suck up critical water closer to source to keep their businesses ongoing. Much of the upper region growers belong to well organized and well armed “la Eme” or Mexican mafia (Source).  Reports from up in the Emerald triangle of Humbolt and Trinity Counties, reports are coming down as to infiltration to mass grow the sacred herb by Russian Mafiya. (Source)

All but two of our local farms rely on these critical creek waters coming down from above to valley to water their crops each season. Additionally, our largest nursery in the area, supplying much of Mendocino county with seed starts each Spring, went out of business this past year.

The many corporate wine makers in our region are fixing estimated costs to have water drawn from outside resources and trucked in to the area on water tenders. The regional grape growers have enjoyed vintage harvests the past few year as pinot noir grape vineyards are fetching record land prices now, if you can find one for sale.

This will put additional strain on our roads and infrastructure besides the daily lumber trucks filled with felled Redwood trees on our single vital road into and out of town.

Three families care for our own biodynamic farm and we grow healthy food for our local community and practice permaculture land stewardship. I am perplexed as to how much food I can and should grow this year. Do I just grow for my own family this year and conserve as water supplies tighten and future supply is unknown? Or plan to grow for others in the community and hope I have enough water in the ground?

My eight-year-old son hears me talk with others about all this recent game-changing news we’ve been warned about now for year and he wonders what it all means. So do I. So do I.

Solutions