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It's kind of like operating a lemonade stand. Mom pays all the bills and the kids make all the profits!

The "True" cost of subsidized agriculture

August 11, 2008.

From Felix Smith

Water from the Central Valley Project (CVP) has long been recognized as a subsidy.  Much of the land on the west side of the San Joaquin Valley and the source of most of the selenium drainage / pollution would not be farmed were it not for public subsidies.  The availability of CVP water encouraged Westside farmers to develop lands that could not be farmed for lack of water and to irrigate marginal lands that could not be farmed at a profit...

Some the farm operators that contract for and receive subsidized CVP water grow crops that receive direct price support payments with the largest farms getting the most subsidy payments.  Subsidized water and crop subsidies inject a value into the land that it would not otherwise have.  The Bureau of Reclamation long-term contracts promise more such skullduggery and bogus added value. (LeVeen -1985, Rennie – 1996)

Irrigating saline-seleniferous soils with its drainage issues is a liability, not an agricultural or fish and wildlife asset of the San Luis Unit of the CVP.   In 1978, the Federal subsidy (public investment) was put at $770 million, or a value of $1,540 per acre for the San Luis Unit, with $2.7 billion or $1,100 per acre for the CVP.   This is the part the farmers will not pay back. The value of the land has increased about $800.00 per acre while the project cost was $1,540.00 per acre. This is about a $2.00 dollar cost to $1.00 dollar benefit ratio.  This does not include the annual subsidized cost of water and power that is used to pump water through the various pump lifts and canals. The annual water and power subsidy per acre of Westlands was estimated at $217.00 per irrigated acre (see pages 38 & 39 – Task Force Report -USBR 1978).

To bring the 1978 subsidy value up to 2007, a conservative 5% value for long-term Treasury Bonds (pg. 40 of the Task Force Report) was used.  The subsidy value for 2007 is about $6,652.00 per acre.  Using the Cost of Living Calculator, the $1,540.00 value in 1977 is $5,227.00 per acre in 2007.  Whatever the dollar value used, it does not include the damages to public trust resources (several races of Chinook salmon, Coho salmon and steelhead), uses and ecological values in the area of origin of the water supply such as the Trinity, Sacramento and American Rivers. The subsidy value does not include damages to trust interests of the Grasslands, degraded surface and ground-water supplies, the cost of replacement water supplies or any clean-up and allied costs associated with selenium damages, or the $100 million to $150 million drainage water study. 

Today the value of the selenium source uplands or contaminated bottomlands would be far less than the $800.00 figure of 30 years ago.  Without Federally subsidized water much of the newly developed farmed land, the source of the selenium drainage, would not be irrigated.  Such lands on the open market would be nearly worthless without subsidized water and crop subsidy payments (LeVeen -1985, Rennie – 1996). 

Felix Smith is a retired federal biologist, member if the Save the Ameriacan River Association  and the biologist that blew the whistle on the Kesterson National Wildlife Refuge. The quotes above were taken from his paper "Public Trust Doctrine, Selenium Contaminated Drainage and Unreasonable Use of Water" 

From Lloyd Carter,

Here are the numbers we should remember:

In a typical year the California agricultural industry uses about 34 million acre feet of water or more than 80% of the developed water consumed by urban and agricultural users in the state. Between 30% and 50% of that water is used to grow four low value, water intensive crops: cotton, rice, alfalfa and irrigated pasture.

Those four low value, water intensive crops contributed about $2.5 billion to California' economy in 2005. All of California agricultural production was about $32 billion in 2005. Gross state product in 2005 was about $1.62 trillion. Thus, the contribution of all agriculture to the state's economy was just under 2% of gross state product and the contribution of cotton, rice, alfalfa and irrigated pasture was an infinitesimal 0.15 of 1% (fifteen one-hundredths of one percent).  Westlands claims a billion dollar gross which would be considerably less if all the public subsidies were factored in (cheap water, power, crop subsidies). Westlands is ... only about three percent of California's farm gross and a tiny, tiny blip on the radar screen of the state's whole economy.

Lloyd G. Carter, former UPI and Fresno Bee reporter, has been writing about California water issues for more than 35 years. He is a member of the board of directors of the California Water Impact Network and Revive the San Joaquin, and President of the California Save Our Streams Council. He is also a board member of the Underground Gardens Conservancy.