Sept 8 California is forecast to produce a record walnut crop this year despite the state's severe drought, and one analyst says some alarming water use practices have contributed to the robust yields.
Almost all of the walnuts grown in the United States come from California, where the 2014 crop is expected to be 545,000 tons, 11 percent bigger than last year's, according to the U.S. Department of Agriculture's National Agricultural Statistics Service. It also appears to be high quality.
But in a client note on Monday, BB&T Capital Markets analyst Brett Hundley questioned the methods being used to produce the bumper crop.
"Even amidst a crippling drought, we found that (California) walnut growers indeed had access to ground water, and the number of young walnut trees in the ground affords incrementally greater production," he said.
"During our recent crop tour, we were alarmed at the level of flood irrigation techniques being used," he added.
Many California farmers have struggled with severe cuts in supplies of surface water from rivers, lakes and other sources. To compensate, they have been pumping record amounts of water out of the ground, an activity that is not yet regulated by the state of California.
An estimated 63 trillion gallons of water has been lost in the Western United States during the drought, which is in its third year, according to research from UC San Diego's Scripps Institution of Oceanography and the U.S. Geological Survey.
Spurred by the dramatic drop in groundwater levels, California lawmakers recently approved a package of bills that would allow the state to take over management of underground aquifers and of water drawn from wells.
California Governor Jerry Brown has until the end of month to sign or veto those bills.
"We don't view this legislation as a valve-shutoff in any regard and, frankly, we believe that the long-term viability of the industry depends on such measures, given sustained declines in surface water availability," Hundley wrote. (Reporting by Lisa Baertlein in Los Angeles; Editing by Peter Galloway)