Executive Summary for November 5th

For an overview of the latest news on the California drought, we’ve organized the most recent developments in a curated summary, including the most important stories, analysis and data. Our goal is to keep you informed of the day’s most significant events in the field.

Published on Nov. 5, 2015 Read time Approx. 5 minutes

Olive Oil: New Drought-Tolerant Farming Trend?

The next explosion in California farming seems likely to be unique varieties of olives that are grown for their oil.

The Fresno Bee reports that many farmers are planting olive trees because the olives yield a valuable oil that can be sold at high prices to consumers eager for the health and culinary benefits afforded by the unique varieties that can be grown in California’s climate.

In addition, olives are a relatively water-efficient crop.

“Farmers are looking at their portfolios and trying to manage their water availability,” said Kimberly Houlding, executive director of the American Olive Oil Producers Association in Clovis. “So when you have a tree that takes half to one-third of the water of other tree crops, then olives begin to make sense.”

Although California represents just 4 percent of the market, with major imports coming from Italy, Spain and Tunisia, it has been quietly nibbling away at the importers’ dominance. Just four years ago, California olive oil held just 1 percent of the market.

The California Olive Oil Council estimates the size of the state’s olive acreage at 35,000 with an additional 3,500 acres expected to be planted each year through 2020.

An Australian company, Boundary Bend, has recognized the potential. It is spending more than $20 million on a mill, storage facility, laboratory and office in Woodland, just north of Sacramento, to produce olive oil from California growers as it prepares to develop its own orchards. Boundary Bend aims to plant 300 acres of olives in California every year over the next seven years.

The company is also looking at building additional processing plants in other olive producing regions of the state. Adam Englehardt, CEO of Boundary Bend’s U.S. operations, has identified the San Joaquin Valley’s west side as an area of interest for new olive trees.

“We have to be able to find land at a price point that is sustainable for this company,” Englehardt said. “But we are looking.”

Hitting Natural Limits

The ongoing California drought has made one thing abundantly clear: There are natural limits on water availability in the state. The poster child for this problem is the San Joaquin Valley, where residential wells have gone dry and agriculture’s heavy thirst has caused visible land subsidence.

Less obvious are groundwater limits in the Sierra Nevada foothills, which has seen heavy rural housing development over the past two decades as retirees, wealthy Silicon Valley telecommuters and other urban escapees fled to the quiet rolling hills and mixed-oak forests of the low-elevation Sierra. Many of these new “ranchette” homes, because they are relatively remote, depend on individual groundwater wells.

The geology of the foothills is very different from the Central Valley. In short, all those new foothill wells are tapping a relatively limited supply of groundwater held with rock fractures, not deep sandy aquifers. This fractured-rock water supply depends upon annual recharge from snow melt. As more wells are drilled and less snow falls due to drought and climate change, the available water held in the rock shrinks.

“Basically, you’re just taking drinks of water seasonally out of the rock,” geologist John Kramer tells the Calaveras Enterprise newspaper. “When you run into trouble is if too many straws get into this glass and it doesn’t recover from year to year, and then you’re not in a sustainable management situation. There hasn’t been any monitoring or any controls on that, so it’s basically a big problem.”

The problem isn’t limited to the present drought. Climate change research tells us that more of the state’s precipitation will fall as rain rather than snow in the decades ahead. Thus, there will be less gradual refilling of those water pockets in the rock during long, hot summers. Instead, especially as more new wells are drilled for more new homes, the groundwater will be tapped more rapidly in the runup to summer.

In short, all that new foothill development may not be able to survive forever on groundwater. Eventually, they will have to find another water supply.

Nestlé CEO: ‘We Need to Set a Standard’ on Water Savings

In an interview with Fortune Magazine, Nestlé USA Chairman and CEO Paul Grimwood says he feels an obligation to make the company’s California food and beverage factories set an example for water efficiency.

The company has faced significant criticism in recent months, mainly over its water bottling operations in California. Critics have questioned whether it’s appropriate for a giant corporation to make huge profits off a scarce natural resource that others are being forced to ration because of the ongoing severe drought.

Nestlé is certainly not the only water bottler or food processor in California. But it has faced the most heat, perhaps because of its relatively broad scope of operations in the state. Its five water bottling plants in California have faced organized protests calling for an end to bottling operations during the drought. One of them, in the mountains outside Palm Springs, is under fire for continuing to bottle spring water under a long-expired U.S. Forest Service permit.

“Everybody has got to play their part, but we at Nestlé think we need to set a standard as well for bigger business,” Grimwood tells Fortune.

It’s doing that not by suspending operations, but by making its operations more efficient. The company plans to make its Modesto milk-bottling factory a “zero water” facility, meaning that any water used in processing will be recycled in some way. Other plants in California are being subjected to rigorous water-efficiency measures, with a goal of saving 144 million gallons of water per year.

“Whether it’s agriculture, big industry, recreational or individual, there’s enough water to go around, but everybody has to play their part by recognizing it’s a scarce global resource and by treating it with the respect it deserves. As a company, that has always been our commitment,” Grimwood says.

Top image: A load of harvested olives are dropped into a hopper at the McEvoy Ranch Tuesday, Oct. 27, 2015, in Petaluma, Calif. Olives appear to be the next big growth crop in California, in part because they require much less water than other orchard commodities. (Eric Risberg, Associated Press)

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