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As water prices rise, farmers face the ‘tipping point’

Issue Date: June 8, 2011
By Kate Campbell
San Diego County farm manager Pete Makauf greets a U-pick customer at his strawberry stand. He usually plants 60 acres of strawberries at the Carlsbad farm but this year, with the cost of water, he planted only 40 acres.
Photo/Kate Campbell
The San Diego County Water Authority attributes the decline in agricultural water use in the county to drought, followed by unusually cool, wet weather. The agency also cites a 30 percent cut in agricultural water use required of participants in a water-discount program and notes that rising water rates have led to a continuing decrease in the number of agricultural water customers.
Illustration/Sarah Lee

Editor's note: This is the third part in a series that looks at agricultural water supplies from the end of the supply pipeline in San Diego County. This installment considers the implications of soaring water costs in San Diego County and what that may mean for other California farmers and ranchers.

On a rainy morning in May, San Diego County strawberry grower Fred Makauf arranged boxes at the farmstand he manages in Carlsbad. He scanned the gloomy sky and said there probably wouldn't be any children out gathering ripe berries in his U-pick fields that day.

Then a car splashed up to the stand and a family from Nevada got out. The children huddled around the trays of strawberries and eyed the fields. Their parents looked at the puddles and shook their heads. The kids frowned.

Like the family from Nevada, San Diego County residents are drawn to the beauty and nutrition found in local farm fields—rain or shine—but many farmers say they're struggling to assure that bountiful harvests of locally grown farm products can continue.

Makauf, who is general manager of diversified Leslie Farms, said there's far less farming in San Diego County today than when he started in the business 40 years ago, for reasons that include escalating water prices.

Because of rising production costs, Makauf said the farm's entire vegetable production has been moved to Mexico. Among the key costs, irrigation water that now costs $1,200 an acre-foot will rise to about $1,400 an acre-foot next year, and Makauf said that will require acreage reductions despite the farm's history of water efficiency.

"We've been using drip irrigation technology here since the mid-1970s," Makauf said. "I can't install any more water conservation technology that will save on what we need now to grow here."

Makauf said he usually plants 60 acres of strawberries at the Carlsbad farm, but this year, with the cost of water, he planted only 40 acres.

"For years, professors and think-tank environmentalists have preached that farmers would have plenty of water if they just used what they have more efficiently and grew 'high-value' crops," said California Farm Bureau President Paul Wenger. "Farmers in San Diego County have done just that. But without affordable, reliable water supplies, even the most efficient farmers can't sustain their businesses."

Efficiency has its limits, Wenger said.

"Scarcity and escalating water prices will result in the permanent weakening of one of our most renewable and vital enterprises: food production," he said. "That is not a wise policy for a state like California with an ever-increasing population."

Nursery crop grower Janet Kister of Fallbrook said some segments of San Diego County agriculture "are barely hanging on by their fingernails."

"In the Fallbrook Water District where we grow, we've been told our water rates are going up another 28 percent next year and that's on top of the 63 percent in the past three years," Kister said. "These water price increases have had a huge impact on us."

She said she foresees "less and less agriculture" in the county, "which will make it more challenging for those who stay. Our infrastructure will go away—fewer packinghouses, less available labor and fewer materials providers.

"I don't know where the tipping point is, at what point agriculture in San Diego County will fail," she said.

Every region of California is different when it comes to water, Kister pointed out. There's a mix of water sources, delivery systems and prices. That means solutions vary to maintaining affordable prices and supply reliability.

But, she said, as water prices go up throughout California, farmers will have to be creative to stay in business.

Southern California farmers will likely have their creativity tested during the next 10 years, as the Metropolitan Water District of Southern California ratchets up its rates a projected 5.5 percent to 6.5 percent a year for water deliveries to its 26 member agencies.

"Last week, I met with finance managers for 20 of the nation's largest water agencies," said Deven Upadhyay, Met's water resources manager. "Of those 20 agencies, 19 are going through dramatic rate increases right now because of infrastructure and water supply availability issues. It's a very serious phenomenon that's occurring throughout the nation."

One of the main reasons for these universal water rate increases, he said, is the problem of operating and maintaining aging infrastructure.

"Here in Southern California, the boom time for building water infrastructure was right after World War II. You're looking at a lot of systems that were put in place in the 1950s and '60s that are facing the end of their useful lives. Agencies are trying to figure out how they're going to pay for the replacement and refurbishment of these facilities," he said.

Replacement costs for Met's system today are estimated at $15 billion, he said.

"Looming out there, from a reliability perspective, are issues we're facing in the Sacramento-San Joaquin Delta," Upadhyay said. "A tremendous investment will need to be made on the part of water users throughout California to help ensure reliable supplies and help the delta ecosystem. Without that investment, you're going to see an erosion of reliable supplies that could be damaging for our economy."

In November 2009, the California Legislature passed a package of water-related bills aimed at addressing the state's water problems. The package included provisions on delta water issues, conservation, groundwater monitoring and water rights enforcement, as well as an $11.14 billion water bond now slated for the November 2012 ballot.

Tim Quinn, Association of California Water Agencies executive director, noted the state's water plumbing is a patchwork of large and small systems that are poorly interconnected.

"Previous generations built the incredible system we operate today," Quinn said. "Now, it's up to this generation to manage it better and invest in improvements to keep it vital, especially in the delta. We need to add storage to the system. We need to manage groundwater everywhere. These are critical to leaving a long-term, stable system to a future California, one that includes agriculture."

Efforts to address these issues are under way, Quinn said, "and, I will argue that agriculture has more at risk in the development of new water policy than any other segment of our economy, by far."

From her view at the end of the pipeline, Kister said efficiencies in water distribution systems will help, as will new water conveyance systems and increased storage capacity.

"There's not one thing that will be our salvation," said Kister, who is a California Farm Bureau Federation director. "It's going to take a lot of things to provide reliable and affordable water supplies to all Californians, as well as to those of us who farm in San Diego County."

She said agriculture remains an economic engine in the county and throughout the state, "but this engine cannot continue without water.

"If we want to keep food local, keep it in this country, then we have to look at what it takes to do that," Kister said. "But, with the state budget and the economy, education and everything else, this issue has been drowned out. While everyone is fiddling, farmers are slowly disappearing."

(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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