The Newsom administration last year championed $75 million in drought relief to keep small agricultural businesses afloat. Yet the emergency assistance will not make it to those in need until at least summer—if the money survives budget cutbacks. With little revenue from the 2022 season, many farm towns sit idle until the next harvest, hoping the processors and farmworkers will return and revive their economies.
“All of the support industries for us—trucking, aerial applicators, rice dryers, rice mills—their drought is going to continue all this summer until the crop gets harvested in September or October,” California Rice Commission CEO Tim Johnson told Agri-Pulse. “There's still just searing pain out in rural California.”
A wet winter has led to a robust snowpack and full allocations for state and federal water projects. Fields that went fallow last year are springing to life. Yet the dust devils that once spiraled across cracked soils in the Sacramento Valley are now whirling around abandoned processing plants and truck yards in Colusa, Williams and Willows, according to Johnson.
“It's been lost on the administration,” he said.
The Legislature approved the $75 million in a budget trailer package last September, with farm groups applauding the leadership of Newsom and CDFA Secretary Karen Ross. They initially hoped the aid would arrive nearly a year ago under an urgent budget provision.
The one-time assistance brokered in a deal with lawmakers would provide grants ranging from $60,000 to $100,000 to businesses with 100 or fewer employees. The funding would be available to dryers, mills, applicators, suppliers, service providers, trucking, and small or socially disadvantaged farmers, prioritizing businesses in the hardest hit areas of the Sacramento and San Joaquin valleys.
The Sacramento Valley suffered more than $1.3 billion in lost economic income last year, with more than $700 million and 5,300 jobs lost in the rice industry alone, according to UC Davis researchers.
The drought relief program—the first of its kind—is housed in the California Governor’s Office of Business and Economic Development, known as GO-Biz. The plan was for businesses to receive grant money starting in April.
Then the state budget deficit that economists had long predicted finally took shape.
The Department of Finance ordered agencies to freeze spending as it began trimming budgets across the administration. Gov. Gavin Newsom released his initial budget proposal for the next fiscal year in January, which assured stakeholders he wanted to preserve the drought aid in its entirety. In March GO-Biz, which oversees a swath of programs for grants, incentives and financing, restarted the procurement process for the drought relief program after a four-month pause. It now plans to start taking grant applications by July, meaning the process for awarding the grants could extend well into summer.
Johnson is fielding calls every week from managers of small rice mills or applicator businesses who are desperate to understand when the dollars will flow into the countryside.
“It was a tragedy last year that we had the drought and it's a tragedy now that we've got this delayed drought,” he said. “We've got the dollars. We just can't get them out the door.”
The nonpartisan Legislative Analyst’s Office has warned the deficit is likely to grow larger than Newsom projected and others fear it could double in size from the January estimate. But Johnson is not worried the administration would pull back the grant money when it revises its budget proposal in mid-May, now that “the wheels of government have started to turn.”
To revive the conversation over drought relief in Sacramento, Assembly Minority Leader James Gallagher, who represents a portion of the Sacramento Valley, has filed a measure to add $100 million more in grant money to the program. Gallagher told Agri-Pulse he hopes to press GO-Biz to get the money out in early May, before the state has a chance to rescind it.
“I see a very big need to get relief to the agriculture sector,” he said, as he pointed to flooding in Pajaro and the Tulare Lake region—along with low tree nut prices, frost damage, supply chain disruptions, high inflation costs for inputs and an extreme heat wave last September. “We can't really afford much more costs.”
Gallagher’s Assembly Bill 1044 initially targeted the Newsom administration’s regulations on converting heavy-duty trucks to zero emissions. The measure would have carved out an exemption for agricultural vehicles that run less than 10,000 miles annually. Yet the delay in drought aid, compounded by other crises, led him to gut the bill and amend it to a proposal that would more than double the relief dollars.
Johnson believed much greater assistance is required beyond the initial $75 million and described the additional aid as “hugely needed.” The California Warehouse Association is supporting the bill as well, reasoning it would provide regulatory certainty and financial support for businesses to operate and remain viable.
Gallagher acknowledged such a budget request is always challenging and especially in a deficit year.
“But budgets are always about priorities,” he said. “And to me it's about time California made agriculture a priority.”
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A policy committee will soon debate the measure. But Gallagher noted “the real fight” will be in the appropriations committees, where bills tagged with a fiscal impact to the state routinely suffer a quiet death. Gallagher has been working with Republican colleagues as well as Asm. Carlos Villapudua of Stockton on other forms of relief. He has also spoken with Asm. Robert Rivas, who represents a rural Salinas Valley district and will assume leadership of the Assembly in June, at the peak of budget negotiations between the Legislature and governor.
The drought issues have also put constraints on retailers, according to Renee Pinel, president and CEO of the Western Plant Health Association. Demand for agricultural supplies dropped during the drought, leading many companies to move more of their products to the Midwest, where the demand is continual and less problematic.
Pinel also represents soil application companies and product applicators who are functioning on reserves from previous years and face increased labor costs for bringing back workers to the field as well as volatile input costs.
“Because you have one year of rainfall, it doesn't mean you're out of the drought,” said Pinel.
The state drought relief, she explained, would help those businesses assure financial institutions that advancing short-term loans would be a reliable investment. Gallagher’s additional $100 million would help to stabilize the agricultural economy over the long term to better prepare the state for the next drought or floods. Having such a system in place would provide assurance to retailers headquartered in other states that California can manage for great losses as well as great highs, explained Pinel.
While businesses struggle to rebound, the 230 species that depend on rice fields are catching a break, according to Johnson. The Sacramento Valley is once again growing rice on the west side, creating more habitat for the giant garter snake and other threatened species. Before the rains came, farmers managed to flood 90,000 acres to provide feeding grounds for overwintering waterfowl along the Pacific Flyway.
“We'll be able to see those benefits this year, which is really exciting,” he said.
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