MENDOTA, Calif. (AP) – Idled farm workers are searching for food in the nation’s most prolific agricultural region, where a double blow of drought and a court-ordered cutback of water supplies has caused hundreds of millions of dollars in losses.

This bedraggled town is struggling with an unemployment rate that city officials say is 40 percent and rising. This month, 600 farm families depleted the cupboards of the local food bank, which turned away families – more than 100 of them – for the first time.

“We’re supposed to supply the world,” said Mendota Mayor Robert Silva, “and people are starving.”

The state’s most dire water shortage in three decades is expected to erase more than 55,000 jobs across the fertile San Joaquin Valley by summer and drive up food prices across the nation, university economists predict.

“People being thrown out of work are the ones who can least afford it,” said Richard Howitt, a professor of agriculture economics at the University of California-Davis, who estimates that $1.6 billion in agriculture-related wages across the valley will be lost in the coming months because of dwindling water.

Already the wage losses have hit businesses that are the backbone of the small farm communities that sustain nearly a quarter of the nation’s agriculture production.

“A lot of problems with this country’s economy can’t be fixed fast,” said Alan Hansen, whose family-owned hardware store on the main drag is suffering a 25 percent decline in sales.

“But this can be fixed like that,” he said, snapping his fingers. “All they have to do is get the water here.”

California’s population has ballooned from 10 million to more than 36 million since water began flowing through the state’s network of canals in middle of last century, delivering water from the wet north to the arid south.

After years of discounting the environmental consequences, court orders seeking to protect threatened fish such as the Delta smelt have slowed the flows even as prolonged drought left some reservoirs at just 12 percent of capacity.

This year federal water deliveries were 35 percent of the normal allocations, fallowing hundreds of thousands of acres and causing $260 million in crop losses statewide. The governor issued a disaster declaration for the region.

Now farmers are relying on dwindling groundwater supplies and keeping their fingers crossed for 10 percent of their water allotments. Last week a coalition of farmers and urban water users filed a lawsuit claiming that state officials overstepped their authority by approving another round of potential cuts.

The valley produces 80 percent of the world’s almonds. But grower Shawn Coburn has held off spending $350,000 to fertilize his 1,000 acres this month because he fears he will not have enough water for a 2009 crop.

“If you like foreign oil, you’re going to love foreign food,” he scoffed.

This month, the government could further restrict water deliveries during the drought – and that would mean crop loans would be harder to get.

“I think that’s the next shoe to drop,” said Sarah Woolf, spokeswoman for the Westlands Water District, which encompasses Mendota.

Already the $40 million losses in Fresno County cotton production this fall permanently closed half a dozen gins. And roughly four square miles of lettuce fields went unplanted, resulting in $13 million in lost sales.

“Think of all of the tractor drivers, truck drivers and pickers that processing all of that lettuce would take,” said Tom Nyberg, deputy county agricultural commissioner. “Those jobs were lost, too.”

Two hundred more jobs vanished when the Spreckles Sugar plant east of Mendota closed this fall. A farmers co-op wanted to buy it but could not find water for their beets.

The local hardware store lost $5,000 a month in sales to Spreckles and had to lay off one of its nine workers.

Hansen, the store owner, said he understands there is an environmental balance to be struck and that the Delta smelt are a necessary link in the food chain.

“But if you follow that chain up,” he said, ” eventually it leads to us.”

Farmworkers, who make up the majority of Mendota’s 9,600 population, are at the bottom of the employment ladder.

Rosa Lopez misses her husband, who moved eight hours south to Brawley to pick lettuce. Luis Suarez, 12, tears up when he talks about his retriever Bambi, whom the family took to a Fresno shelter when they could not afford food or shots. Micaela Mendez and Maria Diaz have taken relatives into their cramped apartments so they can share expenses.

At sunset Wednesday, a dozen residents of a trailer park prepared their Christmas nativity scene and prayed for rain.

“If we don’t have faith, we’ve lost everything,” said Otilia Suarez in Spanish. “We thank God for the small amount of food that we do have, and we keep praying for a better tomorrow.”

AP-ES-12-12-08 1703EST