By Jenilee Curley, ALC Phoenix
A drought can adversely affect many sides of the supply chain industry, in particular, produce.
In areas that rely on rainfall for agricultural production, a drought can reduce crop harvest numbers and greatly affect farm profitability. Droughts can also affect the amount of snowfall and water flow needed for diversions to transport water to irrigated farmlands. These nfluences can lead to undesirable outcomes across all levels of the economy.
On a local level, farm income is reduced and the food processing sector is negatively impacted. On a national level, produce experiences price increases. The drought the Western U.S. is now experiencing has a lot to do with climate change and has had an enormous bearing on the agricultural industry. In particular, the Southwestern states of California and Arizona, where about two-thirds of the country’s vegetables, fruits and nuts are produced.
According to the California Department of Food & Agriculture, “California alone averages $50 billion in annual revenue in the agriculture industry.” In the past year, the drought has caused a $1.2 billion direct loss in California agriculture.
The snowfall in Nevada and Colorado mountains are a big contributor to the Colorado River, but with hotter weather in recent years, the snow melts a lot sooner in the year. This has consequently led to snowmelt contributing less and less water with each succeeding year.
The Colorado River is the core of the Southwest. Since the 1920s it has been providing water and power to seven states, including the 30 Native American tribes that reside in the Colorado River Basin. Until recently, the river has been running dry due to the severe drought. Lake Powell and Lake Mead are amongst the largest reservoirs in the United States. In 2000 they were full, but today only sit at 30% capacity, according to Brad Udall at Colorado State University.
Out of major concern, the water leaders in Arizona, Nevada and California signed an infamous drought agreement in 2019 that allows states to cut back on water usage. This cut back has been a huge strain on communities in California and Arizona, shrinking water supplies to tens of millions of people and farms that produce 90% of the country’s green leafed vegetables. Cruel evidence can be seen in Pinal County in Arizona, where acres of once planted land now lay unplanted, deserted by their previous farmers. Farmers fear that a decline in farm productivity, as a result of water shortages, will result in less profit for them.
A consequence of higher costs to maintain water supplies, will lead to higher produce prices for consumers across the country.
“This production increase in costs is affecting local governments as well as workers who transport food products.”, said Danny Merkley, director of water resources for the California Farm Bureau. Dwindling wells and dried up canals from less ground water to go around prompted President Joe Biden to sign the bipartisan infrastructure bill in November. The bill will help provide several billion dollars to Arizona and California farms.
With produce season around the corner, only time will tell which direction this year’s produce season should follow. The produce season in the Southwest will depend on the elasticity of supply and demand. What is certain, though, is this drought is harming our farmlands and as a result we need to better conserve our water usage. If we do not, we’ll find ourselves in an even tighter supply chain.
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Jenilee Curley is a transportation broker in the ALC Phoenix office. She attended Arizona State University and received a degree in Supply Chain Management, before obtaining a Master’s in Secondary Education with an emphasis in Mathematics from Grand Canyon University.