By Ryan Flinn and Jeran Wittenstein

May 6 (Bloomberg) -- The drought in California’s Central Valley is so severe that it’s drying up money for haircuts.

One customer waited six months to get a $10 haircut, then asked to have his head shaved so he could wait another six months, said Armando Ramirez, a barber in Firebaugh.

“People come in and say, ‘Hey Armando, how about I give you a dollar for a cut, it’s all I have,’” said Ramirez, 63, who has owned his shop for four decades. “Saturday is supposed to be my busiest day, but I’m lucky if I get one customer before I go to lunch.”

Businesses are casualties of the three-year drought that is forcing farmers to leave hundreds of thousands of acres fallow in the Central Valley, the semi-arid agricultural region running 400 miles (600 kilometers) down the middle of the state. The drought may cost the valley 35,000 jobs and $959 million in lost revenue this year, said Richard Howitt, chairman of agricultural and resource economics at the University of California, Davis.

“I’ve never seen a drought this bad,” said Bob Diedrich, who has been farming near Firebaugh, 140 miles southeast of San Francisco, since 1973. “It’s putting a chokehold on us.”

Diedrich laid off all five of his full-time workers in anticipation of receiving no water this year to irrigate the 1,000 acres (400 hectares) of land where he grows almonds and tomatoes. The U.S. Bureau of Reclamation in February cut off water deliveries to Central Valley farmers for the first time in 15 years because reservoir levels were low. The reservoirs collect rain and melted snowpack from the Sierra Nevada for transport to farm irrigation systems.

Multiplier Effect

Farms hire workers for planting, picking, sorting, packing and other jobs. Most wages are spent locally, so when fields aren’t cultivated it hurts stores and other businesses, and a multiplier effect rolls through the economy, Howitt said.

“Our mom-and-pop shops are hurting,” said Hope Morikawa, director of the Hanford Chamber of Commerce, 30 miles south of Fresno, which has lost dozens of its 700 members this year and began offering its services for free.

Stacey Marshall can look out the window of her women’s clothing boutique in Hanford and see four empty storefronts.

“We’ve lost the scrapbook store, a cigar store and the bakery,” said Marshall, whose sales are dropping at a rate of about 13 percent this year. “The wine cellar and Boogie’s, a restaurant, closed.”

Rainfall in February and March eased the shortage, said Wendy Martin, drought coordinator for the California Water Resources Department, “bringing us back from the edge of disaster.” Still, Martin said she thinks this drought may rank among the state’s worst.

Third Dry Year

Snowpack runoff is forecast to be 66 percent of average in the year ending Sept. 30, following years of 58 percent and 51 percent, said Elissa Lynn, senior meteorologist for California’s Water Resources Department. Governor Arnold Schwarzenegger declared a state of emergency in February, asking residents of the world’s eighth-biggest economy and the most populous U.S. state to cut water use by 20 percent.

In the heart of Central Valley, half of the 30 communities in Fresno County had unemployment rates above 20 percent in March, when the state rate was 11.5 percent.

Farmers in the Westlands Water District, which includes Fresno County and part of Kings County, are planting about 200,000 acres, down from 500,000 in wetter years, said Sarah Woolf, spokeswoman. It’s the largest agricultural irrigation district in the U.S., she said.

Almonds, cotton, beans, grapes, tomatoes and other crops are raised in the area about halfway between San Francisco and Los Angeles. Fresno County grew $5.35 billion of produce in 2007, said Steve Lyle, a spokesman for California’s Food and Agriculture Department.

Hunger Amid Plenty

California’s agricultural output ranks highest among U.S. states. Now some Central Valley residents are going hungry.

“People don’t have enough to eat, and there are no jobs,” said Phyllis Baltierra, 74, the community services coordinator in Firebaugh, where unemployment is 28 percent. More than 1,000 people showed up for a food giveaway in March, compared with 200 in July or August, she said.

“We’re down to bottom here,” Baltierra said. “People are moving in with each other because they can’t afford to live by themselves.”

Mayor Robert Silva is helping organize food drives in nearby Mendota, where 85 percent of jobs are related to agriculture and unemployment exceeds 40 percent.

“My community is suffering,” Silva said. “There are a lot of tragedies going on here.”

Loss of Customers

Di Amici Cafe, the only coffee shop in Mendota, sells espresso drinks and wrap sandwiches to 60 customers a day, down from more than 200 when it opened in January 2008. Sam Rubio, 25, who left medical school to open the business, said he may have to consider closing.

Ramirez, the barber, said he tried to sell his business earlier this year but didn’t find any takers.

“You couldn’t even give it away,” said Ramirez, who works one day a week at his sister’s beauty salon more than an hour away to earn some extra cash.

A few businesses are benefiting from the downturn. At Castaway Concepts, a consignment clothing store in Hanford, more people are bringing garments to sell and more customers are buying them, said Jan Gray, the owner.

“My sales are really up,” said Gray, 53. “The economy has been a plus to me.”

To contact the reporters on this story: Ryan Flinn in San Francisco at rflinn@bloomberg.net; Jeran Wittenstein in San Francisco at jwittenstei1@bloomberg.net;

Last Updated: May 6, 2009 03:00 EDT

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