22.2.14

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Drought-Stricken California to Get No Irrigation Water; 17 California Communities Could Run Dry; Higher Food Prices Expected; Is Shutting Off Irrigation Water a Good Idea?

Posted: 22 Feb 2014 07:35 PM PST

As the California Farm Drought Crisis Deepens, a federal agency rules agricultural heartland won't get any federal irrigation water this summer.
In a move that will likely signal higher food prices nationally, a federal agency says California's drought-stricken Central Valley — hundreds of thousands of acres of the most productive farmland in the U.S. — won't get any irrigation water this summer.

Friday's announcement by the U.S. Bureau of Reclamation follows an earlier warning of no irrigation deliveries from the California State Water Project and leaves Central Valley farms and cities with only wells and stored water to get through the worst drought since the state began keeping records in the 1800s.

Statewide, some 8 million acres of farmland rely on federal or state irrigation water.

California Gov. Jerry Brown has declared a state of emergency following reports that the water content of snow in Northern California's Sierra Nevada, whose spring runoff is stored in reservoirs and moved by canals to other areas of the state, stands at 29% of normal.

The announcement is significant because California is the largest U.S. agriculture producer. According to the U.S. Department of Agriculture's most recent California Agricultural Statistics for the 2012 crop year, the state remains the leading state in cash farm receipts, with more than 350 commodities representing $44.7 billion, or 11% of the U.S. total, in 2012. Over a third of the U.S.'s vegetables and almost two-thirds of its fruits and nuts were produced in California, the USDA's National Agricultural Statistics Service said in a report. The federal agency's announcement will particularly affect San Joaquin Valley farmers who are last in line to receive federal water, San Jose Mercury News reported, adding that many farmers will have to pump already overtaxed wells or leave fields fallow this year. Farmers will leave 500,000 acres of fallow this year, the paper quoted Mike Wade, executive director of the California Farm Water Coalition, as saying.
17 California Communities Could Run Dry in 100 Days

SFGate reports California drought: communities at risk of running dry.
It is a bleak roadmap of the deepening crisis brought on by one of California's worst droughts - a list of 17 communities and water districts that within 100 days could run dry of the state's most precious commodity.

The threatened towns and districts, identified this week by state health officials, are mostly small and in rural areas. They get their water in a variety of ways, from reservoirs to wells to rivers. But, in all cases, a largely rainless winter has left their supplies near empty.

In the mountain town of Lompico in Santa Cruz County, the creek that provides the community with water has run dry, while three wells that tap an underground aquifer aren't drawing as much as usual.

The water district has required its 1,200 or so customers to scale back water use by 30 percent to preserve what little water it has, but officials aren't sure the conservation targets are realistic.

"Here's the problem: We live in the Santa Cruz Mountains. People don't have lawns. They don't have gardens. How are they going to conserve 30 percent?" said Lois Henry, president of the Lompico Water District board.
Is Shutting Off Irrigation Water a Good Idea?

Of course it is. It was a bad idea to provide subsidies to water the desert in the first place.

California grows a lot of food. Much of it is because of subsidies that overcharge residential customers for the benefit of farm owners.

Might food prices go up?

Perhaps. So what? You cannot water the desert with water that does not exist.

I have a better idea: eliminate tariffs, crop supports, and all subsidies. We can get peppers, onions, tomatoes, and other produce and fruit items from places that do not have US taxpayer subsidies.

Activists will howl "other countries subsidize farmers". Without a doubt many do. An if so, it will be at their expense, not US taxpayer expense.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Ukraine Parliament Impeaches Yanukovich Who Fled Kiev in 'Coup'; Opposition Leader Freed from Prison; Elections Called

Posted: 22 Feb 2014 01:09 PM PST

Yet another Ukraine truce lasted all but a few hours. Civilian stormed the presidential palace Saturday morning and now control most of it.

President Viktor Yanukovych fled Kiev and is now in an Eastern Ukraine city closer to Russia.

Ukraine's Leader Flees the Capital; Elections Called

The New York Times reports Ukraine's Leader Flees the Capital; Elections Called.
Abandoned by his own guards and reviled across the Ukrainian capital but still determined to recover his shredded authority, President Viktor F. Yanukovych fled Kiev on Saturday to denounce what he called a violent coup, as his official residence, his vast, colonnaded office complex and other once impregnable centers of power fell without a fight to throngs of joyous citizens stunned by their triumph.

In the capital, protesters carrying clubs and some wearing masks were in control of the entryways to the presidential palace Saturday morning, and watched as thousands of citizens strolled through the grounds, gazing in wonder at the mansions, zoo, golf course and enclosure for rare pheasants, set in a birch forest on a bluff soaring above the Dnieper River.

With nobody clearly in charge, other than the so far remarkably disciplined fighting squads set up to protect a protest encampment in Independence Square, the Ukrainian capital and even the whole country faced a potentially dangerous power vacuum.

With security officers having disappeared from the streets, protesters claimed to have established control over Kiev. By Saturday morning they had secured key intersections of the city and the government district of the capital, which riot police officers had fled, leaving behind burned military trucks, mattresses and heaps of garbage at the positions they had occupied for months. There was no sign of looting, either in the city or in the presidential compound.
Ukraine Parliament Impeaches Yanukovich

Reuters reports Ukraine Parliament Removes Yanukovich, Who Flees Kiev in 'Coup'
Ukraine's parliament voted on Saturday to remove President Viktor Yanukovich, who abandoned his Kiev office to protesters and denounced what he described as a coup after a week of fighting in the streets of the capital.

Parliament also freed his arch-nemesis, former prime minister Yulia Tymoshenko, who walked free from the hospital where she had been jailed, completing a radical transformation in the former Soviet republic of 46 million people.

The apparent toppling of the pro-Russian leader, after bloodshed in Kiev that saw 77 people killed and the center of the capital transformed into an inferno, looks likely to pull Ukraine away from Moscow's orbit and closer to Europe.

Members of the Ukrainian parliament, which decisively abandoned Yanukovich after this week's bloodshed, stood, applauded and sang the national anthem after it declared the president constitutionally unable to carry out his duties and set an early election for May 25.

"This is a political knockout," opposition leader and retired world boxing champion Vitaly Klitschko told reporters.

Ukraine's parliamentary speaker said Yanukovich had been prevented from boarding a plane to Russia and was now in the Donetsk region, Interfax news agency reported.

Despite his defiance, the dismantling of his authority seemed all but complete, with his cabinet promising a transition to a new government, the police declaring themselves behind the protesters and his arch-rival Tymoshenko going free.

The release of Tymoshenko transforms Ukraine by giving the opposition a single leader and potential future president, although Klitschko and others also have claims.

The 53-year-old known for her distinctive blonde braid was jailed by a court under Yanukovich over a natural gas deal with Russia she arranged while serving as premier before he took office. The EU had long considered her a political prisoner, and her freedom was one of the main demands it had for closer ties with Ukraine during years of negotiations that ended when Yanukovich abruptly turned towards Moscow in November.

She had served as a leader of the "Orange Revolution" of mass demonstrations which overturned a fraudulent election victory for Yanukovich in 2004, but after a divisive term as prime minister she lost to him in an election in 2010.
Live Updates

The Guardian has live updates at this link: Ukraine: Tymoshenko freed as president denounces coup - live updates

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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