Market Overview

As California's Drought Drags On, Winners And Losers Emerge

As California's Drought Drags On, Winners And Losers Emerge

California's severe drought is dragging through its fourth year, leaving the state to continue finding ways to cut back on water usage.

Many of California's biggest businesses have been hard hit by the shortage, but other firms are using the crisis as an opportunity.


Water usage in agriculture is essential, so regulations cutting back on the amount farmers can use each day have been detrimental to the industry. This is especially true for poultry processors who use gallons of water to sanitize and clean each chicken. California's poultry farms process about 3 percent of the U.S. total, adding up to a great deal of water use.

Related Link: California Drought Stocks To Look At

Organics Suffer

Farms throughout California have been required to reduce their water use by 25 percent and cut back on outdoor watering – something that has taken a toll on the state's crops, especially those that are organic.

As organic crops are typically more difficult to grow and require more resources, prices have risen to cope with smaller yields in the wake of the shortage.

However, for companies like Monsanto Company (NYSE: MON), E I Du Pont De Nemours And Co (NYSE: DD) and Syngenta AG (ADR) (NYSE: SYT), the drought has had the opposite effect. The shortage of water has created a demand for seeds that have been genetically modified to increase crop yields and reduce costs for farmers.

Cutting Back Is A Big Business

California residents have also been subjected to strict water usage limits, making everyday tasks like watering their lawns or even showering more complicated.

However, businesses who help track and cut down on water consumption have seen a boost in sales, as meters are installed and efficient usage gadgets are put to use. Mueller Water Products, Inc. (NYSE: MWA), a company that makes water meters, and Rexnord Corp (NYSE: RXN), which focuses on efficient plumbing systems, are both expecting the drought to boost sales and increase their bottom lines.

Image Credit: Public Domain

Posted-In: agriculture CaliforniaLong Ideas News Topics Markets Trading Ideas General Best of Benzinga


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