Feature Stories - July 2001

Agricultural Communities Face the Future:

Drought and Energy Costs Cause Concern

by Diane Glazman

With rising energy costs and a drought looming, Nevada’s $350 million agricultural industry may be facing tough times ahead. Although less than 2 percent of the state’s population is directly involved in agriculture, a hard year could have disastrous results for Nevada’s rural communities, which are already suffering from the decline in mining operations throughout the state.

Nevada’s traditional sources of income are gaming and tourism, mining and agriculture. While gaming and tourism venues are primarily located in the urban areas of the state where the population is the densest, the sparsely populated rural region has relied mainly on mining and agriculture for its economic base. The Winnemucca and Lovelock areas may be especially hard hit by troubles in the agricultural industry, according to both Doug Busselman, executive vice president of the Nevada Farm Bureau, and Robert Gronowksi, administrator for the Planned Industry Division of the Nevada Department of Agriculture.

Cattle ranching is still Nevada’s number one source of agricultural revenue. Approximately 40 percent of the state’s agricultural income is derived from cow/calf operations making use of Nevada’s vast expanses of rangeland. Traditionally, beef cattle raised in Nevada are sent to stockyards in other states to be finished up before slaughter. According to Gronowski, roughly half a million head of cattle graze on Nevada’s ranges. A reduced snowpack in both the Ruby and Sierra mountains this winter means that the state could be looking at a very dry year. This is troublesome because it means that less water is available for livestock and also that the risk of wildfires is increased.

"A big factor in livestock operation is fires. A tremendous amount of acreage has been lost for livestock grazing in the short term, because when there is a fire, livestock are removed from the area for up to two years. That has been one of the biggest problems," said Busselman, adding that the state has already started to see range fires this year. "If we have a dry year without the storm systems that create the lightning that starts fires, we’ll be able to get through with minimal problems. At the same time, we can have a dry year with serious problems. A lot of it depends on the weather and other factors." Busselman also mentioned an additional concern — the minimal amount of moisture the rangelands have received is enough to cause the range grasses to grow. In a dry year, those grasses could become additional fuel for fires, turning a boon for cattle grazing into a double-edged sword. "We just have to wait and see what the fickle fingers of fate do to us," he said.

Drought could cause additional problems for the state’s crop and dairy farmers. If the water supply drops, farmers could be facing reductions in their water allocations. According to Martin Owens, state statistician for the Nevada Department of Agriculture, that has already happened in the Lovelock area, where the water supply has been reduced by 40 percent over last year’s figures. Owens added that drought has caused other western states to completely suspend irrigation deliveries this year.

Roughly 20 percent of Nevada’s agricultural industry is involved in the production of alfalfa hay, with much of what the state produces being exported to Japan. Another 20 percent of Nevada’s agriculture is represented by dairy farming. The remainder of the state’s crop farming is focused on what Owens calls niche markets, adding that while the state ranks 47th in the country for agricultural production, several of its crops put Nevada in the top ten ranking in the country. For example, Nevada is the seventh largest producer of potatoes in the United States and the number one producer for garlic seed. Additional Nevada crops include onions, apples, sod, greenhouse tomatoes, cantaloupe and carrots. Due to the state’s low population, a significant amount of the produce grown here is exported to other states and countries, including California, Japan, Australia and New Zealand.

According to Gronowski, alfalfa is a $20 million to $30 million cash crop for the state of Nevada, with most of it going to feed Japan’s legendary Kobe beef. Drought could severally affect hay growers in the state, reducing the amount of hay produced by restricting the number of plantings farmers can make. An additional problem is that if rangeland is reduced due to drought or fires, ranchers will need to supplement their cattle’s diet with hay, adding to costs and reducing profits.

Concern about drought may be premature, though, according to Busselman. Although some areas of the state are suffering from reductions in their normal water supply, most of Nevada is in good shape. "There is concern about whether farmers and ranchers will have enough water, whether there will be enough surface water for irrigation. And it is a concern primarily in the Lovelock area where they have reduced water available. The rest of the state seems to be reasonably okay this year. As we move forward, we need to watch for the coming winter, as that could have some consequences for us as well," he said, adding that most of the state’s reservoirs have enough water, although next year’s snowfall will be crucial to replenish them.

While drought is a major concern for the agricultural industry, so too is the threat of rising energy costs. "The energy situation that we’ve all been dealing with primarily hits agricultural producers who need to pump major amounts of water for irrigation. As we were going through the regular incremental increases through Sierra Power earlier this year…based on the projections, an average alfalfa-producing farm that pumps irrigation water was looking at an increase in energy bills from $30,000 to $50,000 annually. When projecting revenues from the sale of hay, the concern was that when energy costs hit $40,000, the farm’s profits would be entirely gone," Busselman said, adding that the Nevada Legislature’s move to halt deregulation seems to have temporarily addressed the situation.

Another issue affecting the agricultural industry on a smaller scale stems from the rapid growth in population in the state’s urban areas. Along the Sierras, both Carson Valley and Douglas County are seeing increasing amounts of farmland turned over to industrial development. In the south, Las Vegas’s booming population has brought the agricultural industry and urban development into close proximity, with less than harmonious results. Busselman cites the case of an existing hog farm that had created a niche for itself by feeding food waste from the Las Vegas casinos to its animals. When a luxury housing development was built neighboring the hog farm, litigation ensued due to the odor from the farm.

How severely the agricultural industry is affected by these concerns ultimately depends on how well the farmers are capitalized, says Gronowski, adding that if they have mortgaged themselves to the hilt in past years, they will have a tough time making it through a lean year. However, he added that most farmers and ranchers face lean years by looking to the future. "Most of them say, ‘If it wasn’t for next year, I’d have been out of business long ago,’" he said.

Agricultural Commodities Grown in Nevada