When Pete Olsen talks about drought on his fifth-generation dairy farm in Fallon, Nev., he's really talking about the snowpack 60 miles to the west in the Sierra Nevada.

The Sierras, Olsen says, are their lifeblood.

That is, the snowmelt from them feeds the Truckee and Carson rivers and a tangle of reservoirs and canals that make this desert bloom. Some of the highest-grade alfalfa in the world is grown here. And it makes perfect feed for dairy cows, because it's rich in nutrients.

But like much of the far West, northern Nevada is in the grips of a historic drought. The federal government has declared much of the region a disaster area. Snowpack in the Sierra Nevada is at historically low levels. That means feed will be in short supply, which is a big deal, because the alfalfa that's grown here doesn't just stay local. There's demand for it in California, Asia and beyond.

"Depending on how bad it is, it could be daunting to try and find all the feed that we need," Olsen says.

Pressure to Grow

This drought's timing couldn't be worse: Farmers like Olsen are under pressure to expand, even double, the size of their herds to meet the demands of a new $50 million powdered-milk processing plant scheduled to open in Fallon next month.

"We're just doing the finishing touches to get the plant up and running here in the next month," says Wesley Clark, the plant's manager, on a recent tour.

He says all of the powdered milk processed here will head directly to the Port of Oakland, then to China, where demand is huge.

Right now, local dairies can churn out about 800,000 pounds of milk a day. But once this plant's online, 1.2 million more pounds per day will be needed. That means thousands more cows, and a lot more alfalfa, which is one of the most water-intensive crops.

Does the drought threaten the dairy industry's expansion here? You bet.

"We've got customers secured, and customers — they need it now," Clark says. "They need it before we even start."

Clark says they've started lining up contracts to bring in milk from outside this drought-stricken region, even though they'd rather not. It's more expensive and the quality isn't as good.

A Burgeoning Dairy Industry

Local and state officials aggressively courted the plant here with tax incentives. Promotional literature touted Nevada as a great place to relocate a dairy to, or expand one. There's that ideal climate for growing alfalfa hay. There's ample water, they said. But this latest drought, and predictions of more like it to come, is raising questions about the long-term viability of farming in the arid West.

"It's hard to believe that we can add a lot more agriculture in Nevada," says Kelly Redmond, a climatologist at the federally backed Desert Research Institute in Reno, Nev. He studies farming and climate in the Great Basin.

Redmond says farmers in Nevada are increasingly competing for water with thirsty desert cities like Las Vegas.

"That's where the money and the power is," he says. "And ag has sort of given way to this, bit by bit."

Nevada was the driest state in the nation even before this historic drought. And the only reason farming is even possible here is that a century ago, the Bureau of Reclamation built the first ever federally funded dam and diversion project. It allowed water to plunge off the Sierra Nevada and down into farms in Fallon and beyond.

"The way ag adjusts is to try to become more efficient, have more efficient types of crops and just make better use of what water there is available for them," Redmond says.

Adapt and Survive

As for dairy farmer Pete Olsen? For now, he's mostly focused on the short term. This spring he'll likely grow less water-consumptive alternatives to alfalfa, such as the grain milo.

"It's not something we've had a lot of experience with," he says. "But if we had multiple years like this, this year we're considering it."

Olsen doesn't know how much irrigation water he'll get come spring. He's still planning to expand to meet the demands of the new plant. But he'll do it cautiously.

"My dad told me a long time ago, Nevada's a land of extremes, and it's been born out of my experience that he's been right," Olsen says. "We'll be really dry this year, and next year, we'll get one of those gully washer winters where you'll wish it'd stop snowing."

Olsen says he and other farmers here are also looking to the West, the towering Sierra, and praying those gully washers will come yet this winter.

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