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Water costs squeeze San Diego County farms

Issue Date: May 25, 2011
By Kate Campbell
Farmer and San Diego County supervisor Bill Horn says blank patches on hillsides surrounding his property represent farms that used to produce avocados, but no longer do.
Photo/Kate Campbell
Water prices for San Diego County farmers have climbed sharply in the past five years. The pattern seen in these rates from Valley Center Municipal Water District has been mirrored in other districts. At the same time as rates have risen, the number of farmers served by the district has decreased, from 1,800 in 2005 to about 1,300 now.
Illustration/ Matt Salvo

Editor's note: This is the first in a series that looks at agricultural water supplies from the end of the supply pipeline in San Diego County. Highly efficient farmers are being squeezed by both the price and availability of water, with some even going out of business or moving elsewhere. Without effective supply solutions, they say the end of the pipeline will move north, bringing increased economic stress to farmers in other regions of the state. In Part 1, San Diego County farmers offer their perspectives on increasingly troublesome water issues.

Water rushing in the creek below Bill Horn's 35-acre avocado grove causes him to pause and smile. After several years of drought, it's a welcome sound, although he doesn't rely on water from the seasonal creek to keep his groves producing.

Instead, he counts on a combination of well water and service from the Valley Center Water District, which supplies about 1,300 agricultural customers on the county's east side.

Horn, who chairs the San Diego County Board of Supervisors, has been producing avocados and citrus fruit on his farms since 1972. He said market prices for the fruit have gone up and down through the years, but water costs had remained fairly constant until four or five years ago.

Since just 2005, water costs for family farmers in the Valley Center Water District have risen 96 percent, and projected rates for 2012 would bring the increase to 129 percent in that period. Water that cost about $500 an acre-foot in 2005 now sells for more than $1,200 an acre-foot, once extra pumping costs are added. In 2012, an acre-foot of water from Valley Center Water District, where prices are similar to those charged by other county water districts, could sell for more than $1,400 an acre-foot after all delivery costs are included.

This escalation in price reflects the phase-out of a farm-water discount program, higher transportation and delivery costs, short supplies due to drought and restricted water transfers from the Sacramento-San Joaquin Delta, and dramatically higher prices for water on the spot market, as well as costs associated with transferring water from the Imperial Irrigation District under a multi-state agreement affecting Colorado River supplies. And, as the number of agricultural water customers in San Diego County decreases, some small water districts have raised rates on those who remain in farming.

Even with a wet winter and spring that have provided a breather for drought-weary farmers throughout the state, San Diego County water prices continue to soar and threaten the viability of a mainstay crop.

Some avocado growers have given up farming altogether, and others have stopped watering parts of their groves in hopes of producing at least a partial crop this year.

From his farm, Horn points to blank patches on nearby hillsides that used to produce avocados, but no longer. The official number of San Diego County avocado acres in production in 2010 will be released in July and crop experts anticipate a decline of 5,000 to 10,000 acres, on top of a 2,000-acre drop reported in 2009.

As water prices have increased, Horn said, water quality has become more problematic.

"We've got quite a bit of fruit this year, but now we're having a problem with sizing," he said. "We think those problems often can be traced back to the poor quality of water we're getting."

Total dissolved salts in district water have increased to about 700 parts per million, compared to about 500 ppm in the past. He said the increase, which affects salt-sensitive crops such as avocados, strawberries, cut flowers and ornamental nursery products, is due to water wholesalers' greater reliance on salty Colorado River water, instead of fresher water from the delta.

Pete Makauf, general manager of Leslie Farms in Carlsbad, notes that farmers in coastal areas face challenges similar to those confronting farmers in eastern San Diego County.

"In the past, we planted 60 acres of strawberries here, but decided to only plant 40 acres this year," Makauf explained. "The decision to reduce our planted acres is designed to give us a better overall price. Our water costs have gone up a lot."

But he pointed out that the costs of all other crop inputs have shot up, too.

"We're paying close to $1,200 an acre-foot for water now and we hear it's going to continue to go up," he said. "But transportation, labor, fertilizer and fumigation costs also have gone up."

The Ukegawa family, which owns the growing operation that includes Leslie Farms, has been a part of San Diego County agriculture since 1948. Although the family has deep roots in the county, Makauf said parts of the operation have been moved, primarily to Mexico, where growing costs are lower.

"We've moved our vegetable production—cucumbers, tomatoes, bell peppers—to production areas in Baja," he said. "We don't have any plans to move our strawberry production to Mexico at this time, provided we can stay profitable by rebalancing our whole farming operation."

The farm's strawberry business is a combination of wholesale shipments to supermarkets such as Henry's and Vons, and direct marketing through farmers markets, farm stands and u-pick fields.

There's a lot of strawberry production in Baja, Makauf said, adding that while he isn't seeing a big rush by California farmers to begin growing there, he does see the number of acres farmed by U.S. growers steadily increasing. Baja, too, has trouble with water quality, he noted, but lower production costs make expensive water technology, such as reverse osmosis, more affordable there.

For flower grower and San Diego County Farm Bureau President Michael Anthony Mellano, dealing with water supplies and costs has further complicated his business.

"We've had to evolve a lot over the years to stay in business," Mellano said. "Anybody who's in agriculture or in business has had to learn to do that, but the pressure to adapt has been even more intense in the past few years."

He said his family's cut flower farm must compete with Colombian producers, has needed to invest in water conservation technology, manage water quality problems, keep up with escalating input costs, find new niche crops and sharpen marketing skills.

"We currently farm cut flowers on about 400 acres on two farms in San Diego County, with our main location in San Luis Rey," Mellano said, noting that his grandfather started growing flowers in 1925. In Carlsbad, Mellano and Co. farms about 50 acres of Giant Tecolote Ranunculus flowers that serve as a focal point for The Flower Fields, which attracts more than 100,000 visitors each spring.

"Cut flowers are tricky, " Mellano said, "because each variety has different water needs, unlike acres of avocados or strawberries. All floral crops, however, thrive best with water that contains lower salt levels."

In San Luis Rey, "a couple of really good wells" provide adequate water quality. But at The Flower Fields in Carlsbad it's different, he said, noting that there are no private wells.

"When we started growing flowers here in the 1990s, water costs were maybe $400 to $500 an acre-foot," he said. "Today, it's about $1,400 an acre-foot."

In addition, Mellano said, "The frustrating thing about growing here is that we use potable water (drinking water quality) and use a fair amount of reclaimed water from the city sewage treatment plant. It's poorer quality and yet we're charged almost the same amount of money as we pay for potable water. In the end, reclaimed water costs us more than potable water, because we have to do more leaching and treatment to remove the salts."

The pricing structure for reclaimed water "is not conducive to use," Mellano said.

"We feel we should be getting a price break, especially since it appears the lion's share of treated wastewater is dumped into the ocean," he said. "When you talk about political or bureaucratic roadblocks to securing affordable water supplies, there's one example."

As county Farm Bureau president, he said he has heard farmers express concern that water prices are very high and, depending on the crop being grown, there are farmers who are simply turning off the water, particularly on less productive farms that don't have water supply alternatives.

"Highly efficient farms tend to stay in business longer, but now even those farms are struggling," he said. "The cards that have been dealt to our San Diego County growers have been pretty harsh during the past few years."

Next week: What rapidly rising water rates mean for the future of San Diego County farms.

(Kate Campbell is an assistant editor of Ag Alert. She may be contacted at kcampbell@cfbf.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.




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