WATER POLITICS

“This is a year that is just a disaster,” said Mr. Richter, who has laid off two of his four permanent employees, turned away 20 seasonal employees, and sent his son to fly over corn fields in Indiana.

The American West has been caught in the worst drought in more than a millennium for most of the past two decades, spurring farmers in businesses from tomatoes to alfalfa to cut output and change the way they do business.

What long-term impact will the drought have on the rice industry and other crops? Join the conversation below.

But until this year, Northern California farmers who grow rice, one of the state’s most water-intensive crops, have largely been spared. In the system of water allocation run by the federal government, rice farmers hold some of the state’s most senior rights, meaning they have received much of their assigned water while other crops withered.

Record dry weather this past winter prompted federal officials to cut the amount set aside for rice—turning what normally in summer are lush green fields stretched along Interstate 5 north of Sacramento into parched brown expanses.

Rice farmers in Colusa County, 60 miles north of Sacramento, received 18% of the federal water shipments to which they are entitled, far less than normal and too little for many to grow the crop at all.

“Even in a drought, rice farmers have been able to get a fairly high percentage of the water they had rights to,” said Tim Johnson, chief executive of the California Rice Commission. “Now they are experiencing drought at a level they’ve never seen before.”

California farmers sowed 285,000 acres of rice this spring, a 30% drop from the year prior and the lowest since the 1950s, according to a June estimate by the U.S. Department of Agriculture. That is the steepest decline for any major California crop this year, said Daniel Sumner, an agricultural economist at the University of California, Davis, who expects even lower plantings.

California typically produces about one-fifth of U.S. rice, most of it medium-grain Japonica varieties used in foods such as sushi and paella. Lower U.S. rice production has helped push the country’s rice exports down 16% in the first six months of this year compared with the same period in 2021, according to the USDA. Imports, the agency projects, will hit an all-time high in the 12 months ending in July.

Farmers’ income from rice in California totaled $1 billion in 2021, according to the USDA. Local farmers and officials say they are worried not just about the people who grow the crops, but about the businesses that sell them tractors and seed and store their crops before they are shipped domestically or are exported, primarily to Asia.

“Farmers will farm again when it rains. The question is, will we have the businesses we rely on?” said Mr. Johnson.

Without sufficient water for rice, many farmers are channeling supplies into their almond or walnut orchards, which take years to yield their first crop and can’t be fallowed for a season.

Jeff Sutton, whose family operates a 1,400-acre farm in Colusa County, said they opted to use this year’s scant allotment to irrigate the family orchards, while fallowing some 1,000 acres devoted to rice. “This is the first year of no rice,” said Mr. Sutton, 50 years old, whose farm dates to 1870.

Farmers say they aren’t ready to give up on rice. Many want the option to grow it whenever possible, so they aren’t too dependent on other crops. Researchers predict droughts will continue and even worsen because of climate change, but there are efforts in the state to increase water-storage options for dry years.

Some rice farmers have been able to stem their losses through sales of their shrunken government water allotments to neighbors. Halbert Charter, an almond farmer in Colusa County, recently bought water originally allotted to neighbors for $575 an acre-foot, nearly five times what he normally pays the government. “It’s allowed us to survive,” said Mr. Charter.

Industry officials say many farmers will weather the difficult year with help from federal crop insurance. But the sharp drop in plantings is crippling a critical economy built around rice, choking off business for local shops and services and threatening exports to Asian markets.

In Colusa County, the top rice producer in California, officials project a $2.4 billion hit to the economy due to the drop-off in rice and other crop production, said county supervisor Daurice Kalfsbeek Smith. She said the county anticipates that a rise in unemployment will show up by October. Colusa’s unemployment rate of 7.9% as of July is more than double the national rate of 3.5% and higher than the 5.5% average in other northern Sacramento Valley counties.

Ms. Kalfsbeek Smith said that business has tumbled for goods and services from tractor sales to rice milling and that three of the six aviation companies based in Colusa County have closed.

Kevin Dennis, CEO of De Pue Warehouse, which dries and stores rice after harvest, said seed sales last spring dropped 85% from the year-earlier period. De Pue normally processes up to 4.5 million sacks of rice, but Mr. Dennis said he’ll be lucky to process 400,000 this year.

At California Heritage Mills, a local firm that sells and ships rice around the world, revenue this year is expected to fall to $20 million from $50 million in 2021, after the farmers who own the company cut production 85%, said CEO Steven Sutter. The company laid off 20 of its 60 workers in August while leaving seven open positions unfilled.

“In the rice industry in Northern California, no one has ever seen anything like this,” Mr. Sutter said.

Even if rice plantings rebound, industry officials fear this year’s collapse could have lasting effects on the workforce at a time when finding labor is already a challenge for agricultural businesses nationwide. About half of the 100 families who get services from Colusa County’s Migrant Farm Housing Center have sought work in other counties, said the county’s agricultural commissioner, Anastacia Allen.

One of those making the trek is David Hernandez, who leaves his family, including two children, in Colusa to travel two hours each way for a job driving a harvesting combine, according to his wife, Maritza Hernandez.

“It’s so hard for my kids, because they miss him a lot,” she said.