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California drought taking a toll on jobs, economy

The severe and historic drought underway in California is expected to take a large financial bite out of the Golden State's agricultural sector -- and lead to thousands of jobs being cut. It's also projected to have additional impacts on the nation's food prices.

A new study by the University of California, Davis' Center for Watershed Sciences says the state's ongoing dry conditions will deal a "severe blow" to irrigated agriculture and farm communities in California's Central Valley -- one of the most productive agricultural regions on earth -- while costing the state around $1.7 billion.

The Center, whose analysis was done at the request of California's Department of Food and Agriculture, plans a more comprehensive survey of the drought's overall economic impact on the state later this summer.

According to the new study, the drought is prompting growers to leave about 410,000 acres, or six percent of the Central Valley's irrigated cropland, fallow this year.

"I've never gone through a year like this with cutbacks like this and uncertainty," Nicole Van Vleck, who's grown rice near Yuba City for decades, told CBS station KOVR last month. Van Vleck also expects that, in her part of the valley, there will be about 100,000 less acres of rice grown this year, compared to the normal 500,000 acres.

The UC Davis study also notes the drought is costing California around 14,500 seasonal and full-time jobs this year. And those job cuts are causing a ripple effect on local economies.

"Our sales from last year to this year in February and March were down 50 percent, so it was major," John Miller, who sells farming equipment, said in an interview with KOVR. Miller said the drop in sales also forced him to lay off five employees.

As bad as the drought has been, California will reportedly be able to replace much of its projected water loss -- for now -- by pumping groundwater supplies at an additional cost of around $450 million.

"Without access to groundwater, this year's drought would be truly devastating to farms and cities throughout California," Jay Lund, the study's co-author and director of the Center for Watershed Sciences, said in a press statement.

Lund also notes that less than three percent of California' current $1.9 trillion a year gross domestic product comes from agriculture -- so while the drought is a major hardship on the state's environment, farmers and rural communities, the overall economy should be able to weather its impacts.

Less certain, however, are the direction of national food prices as the drought grinds on. California agriculture produces close to half of all the fruits, nuts and vegetables grown in America; the state is also a major producer of beef and dairy products.

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