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Rising water costs lead to uncertain future for farmers

Issue Date: June 1, 2011
By Kate Campbell
San Diego County flower farmer Mike Mellano says agriculture needs reliable, affordable water to operate, but supply cutbacks and soaring prices make it hard for farmers at the end of the water pipeline to plan for the future.
Photo/Kate Campbell

Graphic/Karin Bakotich

Editor's note: This is the second part in a series that looks at agricultural water supplies from the end of the supply pipeline in San Diego County. This installment looks at what rapidly rising water rates mean for the future of San Diego County farmers and the Southern California growing region.

Standing in a field of flowers seems like the perfect place for Mike Mellano to be. The San Diego County flower grower comes from a family that has produced blooms and stems for several generations and he understands what ornamental plants need to thrive—suitable climate, good soil and affordable, dependable water supplies.

"We're hearing that water prices are going higher," Mellano said during a visit to the ranunculus fields he cultivates in Carlsbad. "There are growers who are turning off water to their avocado groves and I worry about what that trend means for other crops."

He said the decision to turn off irrigation water generally starts with smaller or less-efficient farms. San Diego County leads the nation in the number of family farms with nearly 6,700 operations, the majority of them smaller than 10 acres. These farms produce more than 200 different agricultural commodities.

Mellano said growers are struggling with skyrocketing water costs, in many cases with increases of nearly 130 percent in just the past five or six years. And, water agencies warn that prices will continue to escalate for the foreseeable future. Costs to deliver water have increased; supplies have been reduced in recent years due to drought and restrictions on delivering water from the Sacramento-San Joaquin Delta; costs have risen for water from the Colorado River and for water on the spot market.

In addition, discounts once offered to farmers are ending. A program operated by the regional water wholesaler the Metropolitan Water District of Southern California provided a discount of as much as 30 percent to farmers, in exchange for interruptible service. But MWD decided to phase out the program, which farmers would have preferred had remained in place. The program will end in 2012.

The San Diego County Water Authority has an agricultural water rate that will include a small discount because farmers will not benefit from the agency's emergency water storage program, explained Ken Weinberg, San Diego County Water Authority director of water resources. The emergency supply facilities will provide stability for residential customers in the event of a major disaster, such as an earthquake damaging the authority's aqueduct.

"We've seen during the past few years a number of factors that affect agriculture," Weinberg said. "Delivery cutbacks from Metropolitan, significant cost increases, the end of the discount program and, at the same time, we've seen agricultural water use drop in half in the past few years."

Water use has dropped, he said, as local water district managers report farmers can't afford the higher water rates and are going out of business.

"Some have stumped large areas of their (avocado) groves to comply with the 30 percent cutback during the drought," he said.

The water authority is having difficulty now forecasting what the future agricultural water demand will be, Weinberg said, especially when considering avocados and citrus, which are particularly price sensitive and subject to intense market competition.

Already, citrus crops have decreased in acreage in San Diego County, and avocado acreage has fallen about 9,000 acres in the past few years. The county's largest fresh market tomato grower ceased production this spring, citing the high cost of water as one reason for not planting this year.

"We're all in agreement that because of water prices, there will be less agricultural use in our service area in the future," Weinberg said.

Under new, state-mandated water conservation requirements—20 percent reduction in water use statewide by 2020—Weinberg said the agency is looking at much lower water use by all customers.

"We're not planning for expanded agricultural water demand in San Diego County in the future," he said. "We hear from our agricultural agencies that it's hard for farmers to make investments in crop plantings for the future. That's why we're saying we're not quite sure where the future of agriculture is going to be in this county."

Gary Arant, general manager of the Valley Center Water District, said, "In essence, the very existence of permanent tree crop agriculture, including avocados, is at stake. More and more, growers are now finding it impossible to farm as their forebears had done."

He said the general public, local elected officials and community leaders have to understand that "we are on the verge of permanently losing our long-standing local avocado and citrus industry. The broader region—not just the water importers, wholesalers and retailers—needs to decide if this is an important segment of the economy worth protecting and preserving."

He points out that as demand for the district's water slackens, there are fewer customers to shoulder the costs—meaning prices will continue to spiral upward.

As water prices escalate, crop acreage shrinks.

In 2009, the San Diego County crop report showed a loss of 2,000 acres of avocados. The California Avocado Commission estimates that in 2010, another 7,000 acres went out of production.

"We're seeing attrition in our acreage base," said commission president Tom Bellamore. "We see San Diego and Riverside county avocado acreage going down and we don't see it ever coming up again."

Bellamore said Southern California avocado growers long ago invested in water-efficient technology and carefully follow water conservation practices. But that hasn't eased the economic pressure from soaring water costs—about $1,200 an acre-foot delivered now and going to about $1,400 an acre-foot next year in San Diego County.

"I don't want to suggest that agriculture in San Diego County is disappearing," said Bellamore, who grows lemons in the area. "There's every likelihood farmers there can continue with another crop. But, at the same time, agricultural water rates are going up all over California."

Mellano, who is president of the San Diego County Farm Bureau, said farmers will do what they can to cope with escalating water costs.

"My understanding from farmers who grow avocados is that there are some new technologies out there—new salt-tolerant varieties, high-density planting techniques, different approaches to managing tree canopies, emerging soil moisture monitoring devices that are much more accurate than old methods. There are lots of things that can come into play that will allow growers to go forward."

But, no matter the crop, he said farmers need certainty that they will have water available and some certainty of pricing on which to base their plans before investing for the future.

"Farming is basic," Mellano said. "We need an affordable, reliable water supply. Without affordable water or labor, there's nothing we can do."

And, he stressed, the future of farming throughout California relies on these same things, as well.

"Whether it's high value crops in San Diego County or vegetable crops in the Central Valley or the Sacramento-San Joaquin Delta, water is essential. Every farmer in the state is facing this issue or will be soon," he said. "That's true on the west side of the San Joaquin Valley and it's true on the east side of San Diego County.

"But here in San Diego County, we have every intention of finding a way of staying in business. I believe we will continue to be a significant component of the economy and the community—somehow, some way. It's just that people aren't making it very easy for us."

Next week: What the implications of soaring water costs in San Diego County may mean for all California farmers and ranchers.

(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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