FALLBROOK ---- Water is the fuel that powers Fallbrook's largest industry, flowing to the roots of avocado trees and dripping into flower pots at dozens of nurseries.
But as the Southern California water shortage intensifies across North County, that industry ---- agriculture ---- faces withering challenges that business leaders say are already hobbling growth and could lead to further declines if projected water shortages are realized.
A shortage of water isn't the only problem facing many growers: Invasive pests that harm citrus trees have surfaced elsewhere in San Diego County, and the global economic decline is hitting home, as well.
But water is the thing that seems most worrisome to anyone who makes money off of agriculture in Fallbrook.
"I've been in the industry for 34 years, and this is the worst I've seen groves looking," said Bob Lucy, owner of Del Rey Avocado Co. packinghouse in downtown Fallbrook.
Lucy, who serves on the board of directors for the Rainbow Municipal Water District, said 2008 took a heavy toll on avocado growers, the vast majority of whom were forced by the Metropolitan Water District to cut back water usage by 30 percent.
"It just wasn't enough water," he said.
Outside of town, at the midsize Sunlet Nursery, Janet Kister said her operation, which annually grows millions of indoor and patio flowering plants, has pursued every conceivable way of conserving water.
"I think we've squeezed out every drop that we could," said Kister, who started the nursery with her husband, John, in 1984. "We are about as efficient as you can get ---- I don't know anything we could do that we haven't done already."
Across the county, agricultural businesses accounted for $1.5 billion of the economy in 2007, the last year for which statistics are available.
Of that figure, 68 percent was from nursery and flower crops, and 15 percent was from fruit and nut crops, including avocados.
While county officials do not keep a breakdown of those numbers for the Fallbrook area, officials say much of its economy is wrapped up in nurseries and avocado-related businesses, from growers to packers to grove service companies ---- all of which stand to lose if the amount of water flowing into Fallbrook continues to decrease.
Water pressure
Things started looking bad for growers in August 2007, when a federal judge in Northern California issued a ruling that severely limited the amount of water that could be pumped out of the Sacramento-San Joaquin Bay Delta.
The ruling was issued to protect the endangered delta smelt fish, but its side effects were massive, agriculture industry leaders say.
In October 2007, officials at the Los-Angeles-based Metropolitan Water District notified farmers who had for years received rate discounts under the district's "Interim Agricultural Water Program" that they would be required to reduce their 2008 water usage by 30 percent of what they used in 2007.
In Fallbrook, everyone from small-time avocado farmers to some of the largest commercial operations was left scrambling to upgrade expensive equipment and streamline irrigation systems.
"It rained quite a bit early in the year, so we were able to bank that water" to use in the dry summer months, Kister said.
She said her business spent $150,000 last year, not including labor costs, to change out irrigation equipment and install computers to automatically shut off the flow of water at just the right time.
"It was very expensive to do ---- everything is expensive when you start changing things like that over," said Kister. "But we didn't have a choice. We needed the water."
More recently, growers have been given several options to keep watering their crops and receive marginal discounts, but the threat of further cutbacks looms large.
Avocados take the heat
Fallbrook is perhaps best known for avocados ---- a product that has infused millions of dollars a year into the local economy and is even the theme of the town's largest street fair every spring.
But industry leaders who have witnessed a series of bad turns for avocado growers in recent years predict further declines if water supplies continue to dwindle.
"This is a very pivotal year, I think, for the industry," said Lucy, whose packing operation relies on local avocado groves for a product to export.
On top of the reduced availability of water last year, a heat wave during the spring avocado bloom led to what growers call a poor "crop set" ---- meaning there's less fruit on the trees than there should be.
"In my opinion, it's the small crop that's going to hurt more than anything," said Charlie Wolk, a longtime Fallbrook resident who owns a grove service to help growers maintain and harvest their crops.
This year's blooming season is coming up, and Lucy said the results could determine how many growers are left standing next year.
"We're hoping that we'll come back with a very good bloom and good crop for next year, and hopefully that will encourage farmers to stay in," he said. "If that doesn't happen, I think we'll see a lot of acreage in Fallbrook and North County go out of business."
Rankin McDaniel, president of McDaniel Fruit Co., said avocados are still a big player in Fallbrook's economy, no matter how hard growers have been hit by water cutbacks.
"I believe they'll continue to play a major role in the economy," said McDaniel, whose avocado company runs Fallbrook's other large packing service. "It's a role that will be redefined in the next few years, as we see how the water situation plays out and how the economy rebounds."
Still, some leaders are predicting that many smaller groves will go out of business.
Wolk wouldn't venture a guess as to how many, but did acknowledge that 2009 will be a trying year for the industry.
"If they farmed their land correctly, they should have been making money in past years. Hopefully, they were prudent and have some of that money set aside to get them through this year," said Wolk. "2009 is going to be survival mode for a lot of growers."
The challenges are mounting just two years after one of the most difficult seasons in recent memory for avocado growers: In January 2007, frost damaged more than 26,000 acres of groves in San Diego County, and the October 2007 wildfires damaged an additional 1,700 acres.
Losses from those two calamities were estimated to be $62 million countywide, and yet, experts say a lack of water represents even greater peril for one of Fallbrook's most important sources of income.
Nurseries
Sprawling across large swaths of rural land, nurseries constitute the gentle giant in Fallbrook's agriculture industry, rivaling the economic force of avocados.
Kister, whose 25-acre Sunlet Nursery sells several million plants every year to garden centers, supermarkets and hotels, among other clients, said her operation was forced to cut back production by 5 to 10 percent during 2008.
Spread over gently sloping land in southwest Fallbrook, Sunlet specializes in flowering plants, many of which require special care inside state-of-the-art greenhouses.
"We have a good sense now, from last year, what we can manage," said Kister, who was named San Diego County's Farmer of the Year in 2006 and has served as president of the county farm bureau.
With around 85 employees, Kister said that last year's trials revealed how far her company could cut back on water before it starts to harm the business.
"We can cut back somewhere between 25 and 30 percent ---- we know we can do that, and we've done it," she said. "Could we get to 40? No way, no how."
She said she would have to grow fewer plants, which would be bad for business because the nursery wouldn't have enough product to offer its clients, such as amusement parks and garden centers.
"Each nursery's going to fare differently," said Kister. "We're down less than 10 percent from last year. We're not doing great, we're not doing terrible ---- we're doing OK."
Contact staff writer Tom Pfingsten at (760) 740-3516 or tpfingsten@nctimes.com.
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