Drought and deluge create disruptions in agriculture

In the U.S., two extremes are unfolding at opposite ends of the map. Regions in the East are seeing increased storm intensity with heavier rainfall and higher wind speeds, while regions in the West are experiencing water scarcity.

These opposing conditions — too little water in some areas and too much in others — are significantly impacting the agriculture industry, which uses 72% of the U.S.'s available water supply. The conditions can contribute to a ripple effect that may result in unpredictable crop yields, supply chain volatility, and higher prices.

For over 170 years, Wells Fargo has supported the U.S. Food & Agribusiness industry, working with more than 26,000 food and agribusiness customers and committing $37 billion across sectors. The bank helps clients address water-related challenges with commercial financing solutions that support infrastructure upgrades, nature-based solutions, and water-efficient technologies. These efforts help landowners and farmers manage water and conservation concerns to maintain their economic viability.

Stronger storms lead to heightened challenges

Heavy rainfall and powerful storm surges can cause flooding, contaminating water supplies and damaging fields and properties. These events can have far-reaching impacts since crops affected by floodwater oftentimes cannot be sold for human consumption.

In 2024, the Southeast suffered at least $3 billion in hurricane-related crop losses, largely influenced by Hurricane Helene. The storm swept through Florida, Georgia, and North Carolina, severely impacting crops critical to the local economies including citrus groves, tomato fields, and pecan orchards. Additionally, flooding and strong winds damaged agricultural facilities like barns and poultry houses and uprooted trees, disrupting soil stability and water regulation.

To reduce these types of storm impacts, agribusinesses and landowners can invest in solutions like water management systems, weather forecasting tools, and nature-based options, such as wetland restoration. Wetlands like marshes and swamps protect waterways from stormwater runoff by filtering out nutrients such as nitrogen and phosphorus.

Wells Fargo Bank's Real Estate Asset Management team in Wealth & Investment Management assisted a client in Texas to address water quality issues resulting from upstream agricultural runoff. The team developed a plan to fund, restore, and donate the 240-acre property as a wetland through phased purchases using environmental grants, with some proceeds going into a Donor-Advised Fund. The wetland is expected to filter nutrients, improve surrounding water quality, and support wildlife.

Water scarcity issues demand innovative solutions

In 2024, drought conditions hit a record nationwide. Snow drought conditions and above-normal temperatures impacted the Western U.S., with persistent drought across parts of Texas, New Mexico, and the Rockies.

Agriculture technology companies are developing data-driven strategies and precision irrigation systems to help farmers become more resilient. HabiTerre, a Wells Fargo Innovation Incubator (IN2) company based in St. Louis, Missouri, uses remote sensing, process models, and artificial intelligence to optimize water use. The system analyzes soil moisture, weather patterns, and water demand to calculate the anticipated amount and ideal timing for irrigation.

"As weather patterns shift and water resources become less predictable, farmers are being challenged to adapt,” said HabiTerre founder Kaiyu Guan. “To do so effectively, they need reliable, science-backed tools that simplify the measurement of agricultural outcomes. Our technology delivers actionable insights, enabling farmers to make smarter, more informed decisions about how they use and conserve water to sustain productivity."

Strategic investments in water management — from conservation initiatives to advanced irrigation systems — can help mitigate risks that disrupt agricultural production. These tactics can strengthen the long-term sustainability of natural resources, benefiting both growers and local communities.