mim^ LIBRARY OF THE UNIVERSITY OF ILLINOIS AT URBANA-CHAMPAIGN 331.763 Un33f V.3 pt.1-3 Agrlc. .^SBS ■■'■■^..-ii'',.' ,■ FARMWORKERS IN RURAL AMERICA, 1971-1972 HEARINGS BEFORE THE SUBCOMMITTEE ON MIGRATORY LABOR OF THE COMMITTEE ON LABOR AND PUBLIC WELFARE UNITED STATES SENATE NINETY-SECOND CONGRESS FIRST AND SECOND SESSIONS ON LAND OWNERSHIP, USE, AND DISTRIBItTION JANUARY 11. 1972 SAN FRANCISCO. CALIF. PART 3A Printed for the use of the Committee on Labor and Public Welfare V'-':l K^ K FARMWORKERS IN RURAL AMERICA, 1971-1972 HEARINGS BEFORE THE SUBCOMMITTEE m MIGRATORY LABOR OF THE COMMITTEE ON LABOR AND PUBLIC WELFARE UNITED STATES SENATE NINETY-SECOND CONGRESS FIRST AND SECOND SESSIONS ON LAND OWNERSHIP, USE, AND DISTRIBUTION JANUARY 11, 1972 SAN FRANCISCO. CALIF. PART 3A 69-133 Printed for the use of the Committee on Labor and Public Welfare U.S. GOVERNMENT PRINTING OFFICE WASHINGTON : 1972 COMMITTEE ON LABOR AND PUBLIC WELFARE WILLIAMS, Jr., New Jersey, Chairman JACOB K. JAVITS, New York PETER H. DOMINICK, Colorado RICHARD S. SCHWEIKER, Pennsylvania BOB PACKWOOD, Oregon ROBERT TAFT, Jr., Ohio J. GLENN BEALL, Jr., Maryland ROBERT T. STAFFORD, Vermont HARRISON A JENNINGS RANDOLPH, West Virginia CLAIBORNE PELL, Rhode Island EDWARD M. KENNEDY, Massachusetts GAYLORD NELSON, Wisconsin WALTER F. MONDALE, Minnesota THOMAS F. EAGLETON, Missouri ALAN CRANSTON, California HAROLD E. HUGHES, Iowa ADLAI E. STEVENSON III, Illinois Stewart E. McClure, Staff Director Robert E. Nagle, General Counsel Roy H. Millenson, Minority Staff Director Eugene Mittelman, Minority Counsel SUBCOMMITTEE ON MIGRATORY LABOR ADLAI E. STEVENSON III, Illinois, Chairman HARRISON A. WILLIAMS, JR., New Jersey ROBERT TAFT, Jr., Ohio J. GLENN BEALL, Jr., Maryland JACOB K. JAVITS, New York WALTER F. MONDALE, Minnesota EDWARD M. KENNEDY, Massachusetts HAROLD E. HUGHES, Iowa BOREN Chertkov, Counscl Eugene Mittelman, Minority Counsel (II) 55/ 7(o3 XT 3 ^ /'3 f^ iJAruuCAjJi^-O Format of Hearings ox Farmworkers ix Rltlvl A^ierica The Subcommittee on Mio:ratory Labor conducted public hearings in Washington. D.C.. and in San Francisco and Fresno. Calif., dur- ing the 92d Congress on "Farmworkei-s in Rural America." These hearings are contained in the following parts : Subject matter Hearings dates Part 1: Farmworkers in Rural Poverty July 22. September 21 and 22, 1971. Part 2: Who Owns the Land? November 5, 1971. Part 3 : Land Ownership. Use. and Distribution : A. San Francisco January IL 1972. B. Fresno January 12, 1972, C. San Francisco January 13. 1972, Part 4 : Role of Land-Grant Colleges : A Jnne 10. 1972. B June 20. 1972, Part 5 : Appendix : A and B. (in) i H, CONTENTS CHRONOLOGICAL LIST OF WITNESSES Tuesday, January 11, 1972 Page Bulbulian, Berge, farmer, Sanger, Calif 668 Miller, Harry, attorney, San Francisco, Calif 674 Ballis, George, journalist, Fresno, Calif 693 Krebs. Al Y., member of the staff of the Agribusiness Accountability Project, AVashington. D.C 'J'30 Taylor, Paul, Dr., professor emeritus of economics, T'niversity of Califor- nia at Berkeley T'SS Long, Robert, vice president, Bank of America, San Francisco, Calif 852 Henning, John F., executive secretary-treasurer, California AFI^CIO, San Francisco, Calif 872 Friedland, William, Dr.. professor of community studies and sociology, Adlai E. Stevenson College, University of California at Santa Cruz, Calif 894 Rosenberg. Daniel R., the Sierra Club of California 909 Roberts. Keith, attorney, California Action, San Francisco, Calif 922 Meral, Gerald H., environmental defense fund, Berkeley, Calif 973 Fielder, Jerry W.. secretary of agriculture, State of California 999 Morrison, Peter. Dr.. Rand Corp.. Santa Monica, Calif 1039 Davenport, Charles, School of Law, University of California at Davis, Calif 1065 Perelman, Dr. Michael, Chico State College, California 1079 Allen. Floyd, west coast editor of Organic Gardening and Farming 1119 STATEMENTS Allen, Floyd, west coast editor of Organic Gardening and Farming 1119 Prepared statement 1126 Supplemental statement 1163 Ballis. George, journalist, Fresno, Calif 693 Bulbulian, Berge, farmer, Sanger. Calif 668 Davenport, Charles, School of Law, l^niversity of California at Davis, Calif 1065 Prepared statement 1072 Fielder, Jerry W., secretary of agriculture. State of California 999 Prepared statement 1030 Friedland, William. Dr., professor of community studies and sociology, Adlai E. Stevenson College, University of California at Santa Cruz, Calif ---__- 894 Prepared statement 903 Henning, John F.. executive secretary-treasurer, California AFL-CIO, San Francisco, Calif 872 Prepared statement 880 Krebs. Al V., member of the staff of the Agribusiness Accountability Project. Washington. D.C 730 Prepared statement 734 Long, Robert, vice president. Bank of America, San Francisco, Calif 852 Prepared statement 862 Meral, Gerald H.. environmental defense fund, Berkeley. Calif 973 Prepared statement 981 (V) VI Page Miller, Harry, attorney, Stin Francisco, Calif 674 Prepared statement 68'^ Morrison, Peter, Dr., Rand Corp., Santa Monica, Calif 1039 Prepared statement 104') Perelman, Michael, Dr., Chico State College, California 1079 Prepared statement 1^^^ Roberts, Keith, attorney, California Action, San Francisco, Calif 922 Prepared statement -^29 Rosenberg, Daniel R., the Sierra Club of California 901i Prepared statement ^14 Sorenson, Philip C, chairman, advisory committee, Agribusiness Account- ability Project, prepared statement 7o3 Taylor, Paul, Dr., professor emeritus of economics, University of Cali- fornia at Berkeley ^^ Supplemental statement '^ Prepared statement ^^ ADDITIONAL INFORMATION Articles, publications, et cetera : A Bay Guardian Inquiry Into Reclamation, "Today the law is twisted into a program to bring huge subsidies, vast unearned increments, and monopoly of water to a few," from the Bay Guardian, San Francisco, Calif., by Paul Taylor ^10 "A $5 Billion City Next to Crops," from the San Francisco Chronicle, March 31, 1971, by Henry Schacht ^<06 "Acreage Limitation: Petty Political Tyranny," from the Western Water News, September 1969, by Robert W. Long 805 "Agribusiness— A Grim Reaper?" from the Chicago Sun-Times, December 5, 1971, by Nick Kotz 801 "Arid Westlands— The Water Scandal," from the Bay Guardian, San Francisco, Calif., August 10, 1967 816 "Background on Sociological Patterns of California Farms," by Mary Clarke, associate of Ralph Nader study group (m responsive law. and member of the California Power and Land Project, Berkeley. Calif .— 681 Bibliography on the antimonopoly water law, by Charles L. Smith, June 1966 826 "Break Up Farm Giants, Urges Former Official," from the Los An- geles Times, November 8, 1971 "^ "Circumspecting for Water," from the Bay Guardian, San Francisco. Calif., August 10, 1967 820 "Corporate Farming in California," from California Agriculture, March 1970, by C. V. Moore and J. H. Snyder 821 "Efficiency and Agriculture," by Michael Perelman, Economics De- partment, Chico State College, Chico, Calif 1084 Excerpt from page 11-50 of the Nader report 679 From testimony by Paul S. Taylor, hearing before the House Sub- committee on Irrigation and Reclamation of Interior and Insular Affairs Committee, 89th Cong., 1st Sess., on H.R. 4671 and similar bills, p. 931 837 "Growing Pains Down on the Farm, Farm Lobby — a Feeble Voice on Capitol Hill," by Nick Kotz 803 "If Reagan Is Serious," from the Bay Guardian, San Francisco. Calif., June 29, 1967 812 "I« This a New Era in Cnlifornin Agriculture?" from California Farmer, September 18, 1971, by Hartt Porteous 824 Letters to the editor, from the Bay Guardian. San Francisco, Calif., September 30, 1969 819 "Mechanized Agriculture and Social Welfare: The Case of the To- mato Harvester," by Andrew Schmitz and David Seckler, Univer- sity of California at Berkeley 843 vn Articles, publications, et cetera— Continued -Montgomery Street: How it Controls California Agriculture— Ha- waii : Reports on Conservation, Tourism, Sports— The Second Gold Rush,- from the San Francisco, Calif., Agriculture, February 1970. Page A. V. Krebs, Jr --— " '^'^ "Planned Urbanization Lives With Agriculture," from the San Fran- cisco Chronicle. April 2, 1971, by Henry Schacht 805 Reports of. Profile of Power Structure in San Joaquin Valley and the Water Subsidy 694 •'Simon Calls Irvine Deal 'Unjust.' " from the Daily California, Berke- ley. Calif.. October 6, 1970. by Craig Oren 807 "The Biggest Grab of Them All," from the Bay Guardian, San Fran- cisco, Calif., May 19, 1967 809 "The Economics of Conserving Agriculture in Ventura County'" 1002 "The Farm Revolution— I," from the New York Times, December 2S, 1971 800 "The Orange County Water District— A Magnificent Accomplishment Based on Local Ingenuity and Local Funds." by Howard W. Crooke. Secretary-Manager, Orange County Water District 808 "This Incredible Water Project— You Pay for the Greed of Giant Landowners," from the Bay Guardian. San Francisco, Calif.. June 2{>. 1967. by Paul Taylor 813 Communications to : Bottorfif, Alan, the Farm News, Kern County Farm Bureau, Bakers- field, Calif., from Keith Roberts, California Action, Inc., Septem- ber 24, 1971 070 Griswold. Hon. Erwin X., Solicitor General, I'.S. Depa.rtment of Jus- tice, from Joseph L. Sax, professor of law 839 Link. Geoffrey, editor, San Francisco. Calif., fn»m A. V. Krebs. Jr., Council of California Growers, San Mateo, Calif., March 17, 1970 — 746 Steven.son, Hon. Adlai E.. Ill, a U.S. Senator from the State of Illi- nois, chairman. Subcommittee on Migratory Labor of the Commit- tee on Labor and Public Welfare, from : Hogan. Harry J., counsel. Special Subcommittee on Education, U.S. House (tf Representatives, March 8, 1972, with enclosure 1171 Selected tables : Table 1. — Selected characteristics of California corporations having agricultural ()i)erations by type of corporation, 1969 survey 822 Table 2. — Corporate and commercial farms, by farm size, California, 1969 823 Table 3. — Acreage of major crops of corporate and commercial farms, California, 1969 823 Table 4. — Number of livestock, corporate, and counnercial farms, by type of livestock, California. 1968 823 V '^ ;^fm '^v}^ '^\ FARMWORKERS IN RURAL AMERICA, 1971-1972 (Land Ownership, Use, and Distribution) TUESDAY, JANUARY 11, 1972 U.S. Senate, Subcommittee on Migratory Labor of the Committee on Labor and Public Welfare, San Francisco^ Calif. The subcommittee met, pursuant to notice, at 9 a.m. in the Cere- monial Courtroom, 19th floor, Federal Building, 450 Golden Gate Avenue, Hon. Adlai E. Stevenson III, of Illinois (chairman of the subcommittee), presiding. Present : Senator Adlai E. Stevenson III. Staff members present : Boren Chertkov, majority counsel ; Eugene Mittelman, minority counsel; Basil Condos, professional staff mem- ber; and Julia Weatherman, staff member. Senator Stevenson. The Senate Subcommittee on Migratory Labor will come to order. This is the first of 3 days of hearings that the subcommittee is hold- ing in California. We are continuing a series of hearings held by this subcommittee which began early last year and will go on beyond this hearing. I would like to say at the outset that we will keep the hearing record open if anybody here, including the witnesses who are sched- uled to appear here today, would care to add statements or comment after the hearings. Those statements and materials will be welcome. I will leave the record open also for the purpose of asking more questions of my own, and we will include the responses. I am very grateful to all of those who have accepted our invitation to take part in these hearings. We have sought testimony on a broad range of subjects pertinent to our inquiry, and we have made an earnest effort to assure that divergent interests have an opportunity to be heard. For the past 6 months, and longer, the subcommittee has been ask- ing questions about rural Americans, farmers and farmworkers, and the land on which they live. Our inquiry has brought us face to face with the vast change which has taken place in rural America, a revolutionary change which, until recently, had gone unnoticed by most Americans. Even those who have noticed it have not fully understood it. Often, in speaking of life in rural America, we resort to statistics, and the figures sometimes disguise as much as they reveal. They tell us, for example, that Americans in great numbers have been leaving the farms and moving to the cities. But the numbers do not capture the hidden meaning of the rural migration, the ruined hopes, deserted homes, a dying way of life. (665) 666 The American dream, whatever else it may mean, has always had something to do with free men tilling their own soil, prosperous, inde- l)endent citizens in control of their own lives, enjoying a full and fair return for their hard work. The dream goes a long way back. Thomas Jefferson was its most eloquent champion. But it is still very much a part of our image of ourselves. Most of us still believe or want to believe that a man of modest means can survive and prosper by his own toil on land he calls his own. There are some these days who consider that version of the Ameri- can dream quaint, if not obsolete, like the buggy-whip or the pot- bellied stove. They call themselves realists. They are devoted to prog- ress and efficiency. They advance a new sort of ideal for rural America which emphasizes bigness and economies of scale. They do not mourn the passing of the family farm and the small town. They tell us that, today, the earlier version of the American dream is little more than a nostalgic fantasy. But I am not so sure. I am not ready to abandon that old dream until we study the alternatives, until we examine the new way of rural life admired by these so-called realists. If reality must mean bankruptcy and frustration for the family farmer and the farmworker, what price reality? If progress in rural America means hunger, disease and malnutri- tion, poor medical care and low educational standards, bad housing and decaying communities, then what price progress? If efficiency means that we must have a permanent underclass of migrant workers, depressed and dispossessed, what price efficiency? If economies of scale mean that our cities must bear the pressure of rural outmigration, with its burden of welfare payments, un- employment and social tension, then we can rightly ask if reality is worth what it is costing us. We are concerned in these hearings about the human story which lies behind the statistics of rural change. Since World War II, the number of farms in America has de- clined from 5.9 million to 2.9 million. Fewer and fewer people, or businesses, own more and more land. In California, for example, 3.7 million acres of farmland are now owned by 45 corporate farms; one corporation, Tenneco, controls more than a million acres in California. Nearly half the agricultural land in this State is owned by a small fraction of the population. More than half the land area of the State of Elaine, 52 percent, is said to be owned by about 12 corporations, and 80 percent of Elaine's land area, by one estimate, is held by absentee owners. In 1969 the largest 40,000 farms in America, less than 2 percent of the total number of farms, accounted for more than one-third of all farm sales. In 1960 only 1 percent of Florida's citrus lands were held by large farming-canning corporations. Now, fully 20 percent of those lande are in such ownership. Farmer Jones and Farmer Smith, those durable figures in Ameri- can folklore and American reality, are being displaced all ovei America by newcomers to the farms with names like Tenneco, Guli 667 & Western, Goodyear, Monsanto, Union Carbide, Kaiser, Boeing, and Dow Chemical, to name a fe\Y. :Meanwhile, one and a half million family farmers are struggling for survival and a million migrant workers are living in poverty. In the face of figures like these, I think it is important that we ask some questions: What is the real meaning of this vast change ? Are we promotmg, in the name of efficiency and progress, the disappearance of the inde- pendent farmer, the decline of rural life ? What is efficient, the family farmer working his own soil or the agribusiness hiring farm workers to man its machines? What is the meaning, in human terms, of a radical new pattern of land ownership? Are large corporate owners enhancing the quality of rural life, or ignoring it in a headlong quest for profits? Is the U.S. Department of Agriculture living up to its self- declared moral and legal responsibility to farmers and farm workers? Or is it through indifference or design or soulless realism, abetting the destruction of the family farm and of farm families? Is the public policy benefitting the public, or do farm subsidies, tax breaks, wage laws, land reclamation projects and agricultural research work to the special advantage of the biggest and richest farmers ? If that is the sum total of U.S. farm policy, we must face the fact that we are not helping farmers, we are subsidizing Simon Degree. Beyond these questions lie questions about the kind of America we are building: Will it consist of teeming, troubled cities, on the one hand, and a wasted rural landscape, on the other? Will a citizen in the America we are building be able to find a decent, independent life in a small town or on his own farm land, or will he be a nameless worker in a vast food- processing combine, man- aged by a corporate owner? Wiir rural America be dominated by its own citizens, or by ab- sentees who care greatly about profits and only vaguely about the quality of rural schools, rural hospitals and rural life? Will the goal of public policy be a decent standard of living for all Americans, or simply a higher level of profits for some? Not too many years ago we were a largely agricultural Nation. The experience of rural Americans was the experience of a majority. A generation ago, when economic disaster struck, John Steinbeck was there to sketch the devastation of the rural poor in unforgettable de- tail. Walker Evans took his camera down the back roads of America and fixed in the American mind his stark gray images of empty houses, deserted farms, and rusting plows. Now we live in cities. When we leave them, we race to our destina- tions in airplanes or on superhighways. What is happening in rural America, much of it, happens out of our sight and hearing. Rural Americans, no longer a majority, have lost voices which once spoke for them. But the fate of the country is still bound up intimately with their fate. The plight of our cities arises almost directly from their plight. All of us have a responsibility to concern ourselves with the questions which are facing them. 668 Our purpose is to find a national policy whose effect is not simply efficiency or progress or Economy of scale, but a decent life for all rural Americans. In pursuit of such a policy, we are asking questions: What is happening in rural America? Why is it happening? Who is responsible ? To begin with, we must ask who owns rural America, and so far in these hearings, it appears that no one in America knows. Our first witness is Mr. Berge Bulbulian, a farmer from Sanger, Calif. I hope, Mr. Bulbulian, that you will tell us this morning a little about the history of your family's involvement in farming, the fru- gality of hard work, perseverance, success, and whether that story is possible now. STATEMENT OF BERGE BULBULIAN, FARMER, SANGER, CALIF. Mr. Bulbulian. Thank you. Senator. I could very briefly say, "Hear, hear" to what you said, but I will go ahead. I am speaking today as a private citizen and also on behalf of the National Coalition for Land Reform. This is a ne^y organization Ave have just started here in the West. We hope it will grow over the next few years to include forward-looking citizens in the South, the East, and the ^lidwest. We hope that among those who will join the coalition are small farmers, farm workers, city workers, minority groups, young people, persons concerned about the environment, and all citizens who believe that America must be something more than a happy hunting ground for giant corporations. Our coalition hopes through educational, legal, and political actior to preserve and strengthen the voice of the independent citizen ir America, to ease poverty in both rural areas and in the cities, to en courage population dispersal in such a way that more people can live decently off the land without destroying it and to redirect Govern- ment policies so that they help workers of the land rather than ab sentee owners. Our family has been farming since 1929 and my father, who is 7^ years old, and I farm 150 acres of wine and raisin grapes in Fresnc County. In spite of his advanced age my father still is actively in volved in the day-to-day operation of our farm. Together we do al the work we can and hire only that which we cannot do ourselves He came to this country from Armenia in 1920 after the massacrei by the Turks and did various forms of labor, including farm labor until he was able to save enough money to make a down payment oi 20 acres of vineyard. He has had a total of 4 years of schooling an( my mother, who is deceased, was illiterate. In spite of my parents lack of education, we were able to progress in the business of farming and today we earn a very satisfactory living. We have been able t< progress from illiteracy to a \mi versify degree in one generation. Tw( of my children are now in college and the third will be in the fall The point I am trying to make is that it has been possible for i man with a meager education, at best, to become self-sufficient an( attain a measure of success. Today, his accomplishment, howeve 669 lodest, can be attained with difficulty, if at all. The family farm is isappearing from the agricultural scene and being replaced by corpo- ate conglomerates who have no particular love for the land but are [ivolved for investment purposes. Obviously, no semiliterate farm- rorker would, in his wildest dreams, dream of owning a major land lolding. This is not surprising, nor is it particularly a problem. What 3 a problem is that he cannot even dream of owning a small piece of md. A 40-acre vineyard sells for approximately $80,000 in my area, rith about $24,000 needed for a down payment plus the cash or credit farm and live through one crop year, at least. On such a farm one an expect to earn a meager living at best if he has to pay interest and ►rincipal but can survive if lie owns the farm outright. It would ake at least 80 acres of grapes to farm with some degree of efficiency earn a satisfactory living. In short, the ambitions of people like ly father were often realized in the 1920's and 1930's, but today no oung man who is not a part of a farm family dreams of owning a >iece of land, big or small. It is simply an unrealistic dream. If America is to survive and prosper, this situation must be reme- [ied. The flow of people from the farm to the city must be stemmed nd, indeed, reversed. There is no longer either room nor need for [lore people in our cities. INhich of our pollution problem is caused y concentration of people and every elfort must be expended to ieconcentrate populations. This can be done only by upgrading con- ditions on the farm and making it possible for the millions still em- )loyed there to remain on the farm and live a life of dignity. Farm )eople, whether they are employees or employers, must be able to emain on the farm out of choice and not necessity. Impossible? No. difficult? Yes. But aren't most of the problems we face today? Probably the biggest obstacle we face in our struggle to save the 'amily farm is the attitude of many Americans, including some farm )eople, that the family farm is obsolete, it is inefficient, and, there- 'ore, unable to compete Avith the efficient and well -financed con- domerates. Well financed they are. but efficient they are not. I chal- enge any giant agrilnisiness corporation to match my efficiency, rhere is no way a large concern with various levels of bureaucracy md managed by absentee owners can compete in terms of true ifficiency with a small, owner-operated concern. I cannot hire anyone o perform with the level of competence and efficiency that I perform. L seldom do one job at a time, but often two and three jobs simul- aneouslv. While driving the tractor I watch for other things that leed to be done. I watch for pests, for nutrient or water deficiency md generallv consider management problems while doing a purely physical job.* I work long hours each day and seldom have even a 5unday completely without work. I am the manager, personnel director, equipment operator, mainte- lance man, bookkeeper, laborer, welder, and so on. When I do hire abor, I usually work with them. I can afford to buy any equipment iver built, which will lower my cost of operation. I have never failed o secure the capital needed to* make purchases of land or equipment. With 150 acres of vineyard, I believe that Ave are at or near the optimum level of operation for our type of farming. No, I can't sell for a loss and make it up in taxes, nor can I lose on the farming end 3f the business and make it up at another level as a vertically inte- 670 ^^y grated operation can, and I happen to market many of my crops, too, through a cooperative, so to some extent I have attempted to cash in on integration, but certainly not to the extent giant farmers do. I have no political clout and lobbying to me means writing a letter to my Congressman or Senator. But that is not what efficiency is all about. Efficiency has to do with the relation between input and output. No, the big agri-business firms are not efficient except in farming the government, and, even if they were, do you think that this efficiency will be translated into lower prices to the consumer when and if a small handful of agri-business giants control agriculture? And if they do give you food for a lower price, what about the social costs in- volved in the out-migration of people from the rural farms and towns? There are many costs that must be considered and most of them will not be paid at the corner supermarket. While there are no panaceas, there are solutions to the problem. I propose that we pursue a plan of land reform, yes, land reform. We have preached its efficacy for other countries, in Latin America, in Southeast Asia, et cetera, but for our own country it has been viewed with alarm. The cry for land reform dates back to ancient times and is not even a new concept in our own country. We have on the legislative books an excellent piece of legislation which I believe was meant by its f ramers as a vehicle for land reform, but it has been anything but that. I am referring to the Reclamation Act, the so-called 160-acre limitation. The Reclamation Act provides that no one will receive more water than is required to irrigate 160 acres from any federally financed irri- gation project. A couple can farm 320 acres under this law and irri- gate it with subsidized water, substantially more land than it takes our two families to earn a good living. Any land in excess of the 160 acres per person must be sold within 10 years for the price of land, not to include the value of the subsidized water. Unfortunately, the law has been enforced w^ith less than complete devotion to law and order. Vast acreages in the State portion of the combined State-Federal water project in the west side of the San Joaquin Valley are or will be irrigated with no limitation in force, a situation which three other farmers and I are trying to remedy with a suit against the State and Federal Governments. In the Federal portion of this project contracts are being signed with the Department of Interior which provide for the eventual sale of the excess land, but in many cases the land is being assessed at toe high a price. First these giants of agriculture — and there is not much sweat-of-the-brow type of land acquisition there — used their i:)olitica1 muscle to get the best terms they could in terms of repayment, then they delayed the signing of contracts as long as they could on techni- cal grounds, and then they received land assessments too high to conform to the spirit of the law, and then they will continue to farn the land for an indefinite period of time, in many cases not just 1( years, for there will be few, if any, buyers in parcels which will con- form to the law, less than 160 acres per person. I propose that the Federal Government acquire this land at realis tic prices which conform to the law and sell it to qualified buyers with long-term, no-interest loans. Yes, no-interest, not low interest 671 3r the present landowners are being j)rovided with water with simi- ir terms. The buyers may be farmworkers who want to have the ride of owning the land they work. They could be city people who re tired of the compression chamber that is the modern city. The arcels may be privatel}^ owned and operated by individuals; they lay be larger units farmed cooperatively. It may even be necessary ) provide these new landowners witli technical assistance through a rogram similar to VISTA and the Peace Corps. We have provided jchnical assistance to much of the world ; it should not be too much E a strain to provide it for our own people. I propose a major overhaul of our tax structure which is now sup- orting and encouraging the conglomerates to invade the field of yriculture. Under present laws, they need not make money in farm- ig and, indeed, can afford to lose large sums of money in farming id still profit on their overall operation. Professional people are icouraged to buy land not for farming but for speculation. They lake no contribution to the land or society, but they do profit. We ut a greater value on the income from money than we do the income [•om labor, for we tax labor at a higher rate tlian we do the gain on le purchase and sale of property. We must change the law so that ich business is taxed separately so that farm losses cannot be offset Y profits in other businesses. We must do away with the capital gains IX. Put the giant corporate farms on the same level we family farms perate and we will see who is efficient and who is not. In any event, efficiency is not the problem. American agriculture as been all too efficient already. I propose a thorough investigation of all corporate conglomerates I agriculture and other giant farming and processing firms to deter- line if their operations are legal within the framework of antitrust LWS. In our own area an investigation of Tenneco and the Gallo Wine !o. are certainly in order. Many wine grape growers who have been ^aditional Gallo suppliers were unable to sell their crops this year 1 spite of ever-increasing demands for Avine. Rumors were rampant 1 the field that there was some kind of agreement between Tenneco ad Gallo that caused these problems. These rumors may well be nfounded, but certainly grape growers in the San Joaquin Valley 'ho are alarmed by the heavy planting of grapes bv conglomerates nd other investors are entitled to know the facts as uncovered by bjective iuAestigators. Similar conditions probably exist in other ommodity areas. Karl Marx wrote of a class-structured society in which the classes ■ ould eventually conflict. Here in America we have felt that this ituation would not prevail. We are now rapidly moving toward a Dcioeconomic milieu with an elite propertied class, a professional lass, and a class of uneducated, unemployed or underemployed hard- ore poor which is ever increasing in numbers. The free enterprise ystem is probably even now more of a "closed enterprise system," n Ralph Nader's words. INIust we continue to work to make Marx' Tophecies come true, or will we strive to solve our problems with at ?ast as much respect for people as we have shown for money and •roperty ? ft. ^' 672 To me the choice is clear. Let us solve the problems in rural America, difficult though they may be, before they spawn even more difficult problems elsewhere. If we don't solve these problems, perhaps we should change the inscription on the Statue of Liberty from the now-present, "Give me your tired, your poor," and so on, to something like this, "Keep out, enterprise closed." Senator Stevenson. When did your father buy land after commg to these shores from Armenia? Mr. BuLBULiAN. He came in 1920 and bought the farm m 1929, the first 20 acres. . . r. -r • tt n o Senator Stevenson. Where was that, in the San Joaquin Valley i Mr. Bulbulian. Yes. Near the small town of Del Key m Fresno County. Senator Stevenson. He bought 20 acres, you say. Could he sup- port himself on 20 acres ? Mr. Bulbulian. Not with just 20, no. He did farm labor even then. Senator Stevenson. How much did the 20 acres cost? Mr. Bulbulian. As I recall, about $5,000. , Senator Ste^^nson. And you testified that the price of similar land would now be roughly $2,000 per acre? Mr. Bulbulian. In our area, yes, and more. Senator Stevenson. If he arrived on these shores today, penniless, a farmer, could he get started, could he buy land to support himself? INIr. Bulbulian. No. We have great difficulty ever saving enough money to make a downpayment, even considering how conservative my father was with money then and even now. Senator Stevenson. It is hard to get started in farming? Mr. Bulbulian. It is impossible to get started, not hard. Senator Stevenson. Once started, whether through inheritance or however it is you come by the land, it is hard to stay m farming, too, isn't it? . ^ . . .1. For example, you said that the small farmer is more eihcient than the large farmer. If that is so, if he can produce more efficiently than the corporation, then why can't he survive in our free enterprise system ? ^ t j x Mr. Bulbulian. There are a number of market problems and, ot course, the problems I cited here, the tax problems which make it difficult for him to compete with a situation that is not really fair competition. I think he could compete very, very easily if everybody in agriculture were in it for a profit, but many people aren't. Certainly, I am not saying a 20-acre farmer of 1929 or 1930 period could make it today. Even then, he couldn't make it on that small an acreage. • • i i.i Senator Stevenson. One of the points you are making is that the family farmer now has to compete with corporate farmers who don'1 have to make a profit in order to survive, that is what you call tax loss farming? Mr. Bulbulian. That situation prevails now. It does take a little more land, but certainly not the thuosands o acres the conglomerates want. Senator Stevenson. It takes more land and it takes more equip ment. 673 Senafo^S^^x^o'S^'rnd it takes more credit to acquire the equip- ment as well as the land. Is that one of the problems ? "Mr lr.B.LLx. Yes. You very often have to -e through perhap 2 crop years before you get your return, especially if Jou are market ing through a co-op as we do. I still am not paid off on the 1969 crop of^raisins^and we probably won't be for fveral more months. So we are talkine about at least a 2-year investment in the crop. Senator Stevenson. I don't suppose the large corporations have much dTfficulTy Ob Lining the necessary credit at a reasonable rate^ You say the cost of creSit is lower for the larger corporation than ''lr'°B™l''lnTed.-The price of interest is higher for the '"|?na\or°S™ "xsox. Continuing on the assun^ption that the little fellow!the fa™ ily farmer, is a mo?e efficient producer, he can produce at a Tower cost tLn the large fellow, are there other poiciesoth Government or activities of governmental agencies which discrimi nate agTfnst him to the advantage of the large corporation? The Labor Departmenfs Farm Labor Service, for example? Do thej help the little fellow as much as the large corporation? Mr BuLBULiAX. I can answer from personal experience to the latter part of that question. Rarely, if ever, am I able to get any help from the Farm Labor Service except wlien I don t need it. Senator Stevexsox. Except when you don t need it« Mr. BrLBULiAX. Eight. When I do need it, tliey don_t liave anv labor So I don't even bother in most cases, except to kid myseit i have done something to try to find some labor. As far as I am per_ sonally concerned, and this would probably be true of ^ number of other farmers in my area, they could probably close up the Farm Labor Service and we wouldn't miss it. ^ ^, ■ , i ^ fi,„ In addition to the first part of your question, I think mu* of the research of tlie Universitv of California is aimed at the large farm. I think they have alread^ sold out to the idea that the smal farmer is down the drain, so the> had better think of research for the large landowner^ there will be an implemeiit show in Tulare next month and one of the topics that will be discussed along ^ith the showing of the implements, if I remember the exact terms Substi- tution of Capital for Labor.'" ISIuch of the machinery that will be shown at this show, some of which was developed by university re- search, is aimed at extremely large operations and certainly not the small, efficient, family sized operation. Senator Stevexsox. You mentioned university research Do you have any opinions about the activities of Land Grant Colleges and whom those activities primarily benefit? . . Mr. Btjlbtji,iax. On this short notice, no specific opinion, untortu- "'^Another point I would like to make. Senator, is that I think the free enterprise system does not imply merely the right to get bigger; it should imply the right to get started. I think that situation no longer prevails in agriculture. 1-133 O - 72 - pt. 3A 674 U^\' W;.ii^^: ■'.: ''M^-.' f'-'t:--*- \-'^" 4^.'.' •■'"; >»".- \. ■>' '" " > •., P-..'-' ^.itrt ;/•■■•' ,' - i ■ 1/ ' ■* *;.^ .^ .-: '■ • ''^ ■ m^.,. Senator Stevenson. You made that point very eloquently, Mr. Bulbulian, in your statement. And I think it is a most significant aspect of our subcommittee investigation. You have pinpointed many issues that I am hopeful will be discussed by other persons as we proceed. I appreciate your help. Thank you very much for appearing here this morning. Senator Stevenson. Our next witnesses are Mr. George Ballis, a journalist from Fresno; Mr. Harry Miller, an attorney from San Francisco, and a consultant to Ralph Nader; and Mr. Al Krebs orig- inally of California and now with the Agribusiness Accountability Project in AVashington, D.C. These gentlemen will form a panel to discuss ownership of land in California and the Nation, the difficulties that we have in simply finding out who owns the land, and about the implications of the con- tinuing trend toward ever-higher concentration of land and economic and political power in agriculture. Please proceed in any order you like. Mr. Miller. I have a general summary of the problem, and I think these tw^o gentlemen can give some illustration that would amplify this background. STATEMENT OF HARRY MILLER, ATTORNEY, SAN FRANCISCO, CALIF. Mr. Miller. I might say that, while I am glad the subcommittee is here, since the main concern of the hearing is located outside of San Francisco, you should spend as much time as possible in the agri- cultural regions of the State, and I am glad you are going there. I myself am not from there and am not representive of its problems; if anything, I represent the urban consumer of the products of the land. The work that I did on the Nader study took place in 1970. I did it as a concerned citizen, mainly concerned about the developments in the State relating to land use,'but not necessarily agricultural land. One of the main questions we started out with was who owns the land in California. It seemed a w^orthwhile starting point. There were some debates on whether we should go into making an inventory of this material, and we decided to go ahead and do so. One of the reasons w^e decided to go ahead and do so was that it was so very hard to come by any reasonable estimates or indications of who owns the land and how the land was being used. We all knew it was being used in a way that concerned and even aggravated us, otherwise, we w^ouldn't have been involved in a study. So we set out to do this end, as I say, one of the most remarkable aspects of it was that there was really no single source or even a number of sources of this information, and it was particularly discouraging to find that the regulatory bodies of local, State, and Federal Government knew^ virtually notJiing about this very important economic ingredient of our lives, namely, land, that is, its ownershii) and its use. Those w^ho had knowledge and information had great qualms about making any of it available. 675 I would refer to the USDA which has information about the acreage of the recipients of subsidies which seems to be very pertment to the public interest ; but since they had classified it as a trade secret, it was unavailable to us under the Freedom of Information Act, ac- cording to them. J V Because we were in a hurry to get our study together, we don t have a chance to make a court test of that designation. But it does illustrate the attitude on the part of the people who are supposed to be regulating in the public interest, that they are not willing to co- operate with inquiries concerning the effectiveness of that regulation. Senator Stevenson. You are talking about the USDA, the Depart- ment of Agriculture? Mr. Miller. Yes. ^ ^ . , Senator Stevenson. Why wouldn't they have every reason to be cooperative? What reason would they have to conceal information from you? ^ , • /. ^i ui - Mr. Miller. I happen to use the Nader analysis of the problem, which is that they are controlled by the agribusiness lobbies, and the agribusiness lobbies get away with what they get away with by keep- ing it as much in the dark as possible. I think that, frankly, is the explanation why the USDA was hiding this and giving us a lot of trouble about finding out pertinent facts concerning the use ot land and ownership. ^i i j • Senator Stevenson. Does the USDA know who owns the land m California or how much the corporations own? ]\Ir. Miller. Yes, they certainly do. They know who the receivers of subsidiaries are, what the acreage is for the calculation of subsidy and so on. . , -,. a. r Senator Stevenson. But not all farmers, including corporate farm- ers in California, receive crop subsidies. Probably possibly fewer re- ceive them in this State than in other States? Mr. Miller. Yes. a ^i. So we had this problem of information and knowledge. Another potential source was the State utilities commission. There is abso- lutely no reason why the State utilities commission shouldn t have at hand information about acreage under the control of utilities, to make sure the utilities are using the land according to the niandates under which they operate, namely, to provide the public services that they are charged with providing. However, the same condition exists. They have a rough idea, in terms of dollar value, how much land is m a given utility's portfolio. They have no idea how it is being used. The SEC has made a very interesting inquiry into one of the utilities in the State which has diversified into corporate land hold- ing, agribusiness, and a number of fields completely unrelated to pro- vision of electricity and gas. I don't know exactly what the conclusion of this investigation is going to be, but the utility has obviously strayed far away from its mandate and the terms of its exemption from the Public Utility Holding Company Act. Coincidentally, the company found its diversifications into land very lucrative. That is why they went into it. The stock began to rise because the analysts began to see that the tax-loss farming was going 676 to improve their income. Another very interesting incident is that this utility has apparently cornered the market in pistachio nut production and they were going to be able to use their monopoly position to exact monopolistic profits. That is an instance of the moti- vation behind this movement of corporations, conglomerates, into agriculture. It is a very easy way of carving out a natural monopoly. If you have a piece of land suitable only for growing pistachio nuts and you can quietly go in and buy out all of the farmers trying to eke out a living on small acreage and combine it, then the world is yours. Senator Stevensox. Before we move off the point, you said that at the Federal level, USDA either won't tell you or doesn't know about the ownership of land by corporations. You have said now, if I under- stand you, there are no governmental agencies in the State of Cali- fornia to provide you with this information. Even the regulatory agencies don't have facts in the case of their regulated industries, rs that right? Mr. Miller. That is precisely the point I am making. Senator Stevenson. Have you tried the Census Bureau, or the agri- cultural census in progress? Does that agency have the information on land ownership by corporations? Mr. Miller. We did this work in 1970, in the summer, and we had a limited amount of time to get the information together. I don't recall personally liaving made any contact with the Census Bureau. We went to the people who had the information that we felt — well, w^e went to organizations we felt would be most likely, because of their duties, to have the informtaion. The Census Bureau seemed to us such a general source that they might have it, but then they might not. So we might as well go to the primary responsible agency, a utility commission with respect to utilities, the USDA with respect to subsidy receivers, and so on. Senator Stevenson. I think your assumption that they might not have the information is a reasonable one. The Census Bureau, too, does not have the information; they don't know who owns the land. Mr. INIiLLER. I don't see any reason why they shouldn't know. But inasmuch as there is a great reluctance on the Census Bureau's part to make an adequate inventory even of human beings in this country, a great deal of complaint from minority groups in California who feel they were completely slighted and undercounted in the Census, I don't know that, at this stage, we can expect them to do a much more adequate job on agriculture. But this is tlie first time that the spotlight has been turned on on agriculture in California. I think it is very healthy phenomenon be- cause in bringing to light these deficiencies in our knowledge, at least, we can piece them together, as we tried to do w^ith the Nader report. I have to say we didn't go around in various counties and make inventories. Senator Stevenson. Would that be possible? Mr. Miller. It would be possible, yes. It wouldn't be practical, T think. Senator Stevenson. It would be impossible in my State of Illinois because of the use of land trusts. Ownership of land is commonly 677 concealed for this reason in Illinois. I don't know about other States. Mr. Miller. It's happened here, but I think it is probably less common, and we tried to use certain deductive techniques m our own survey. We used secondary sources such as ^Sletzger's map, on which ownership is plotted, in counties where one entity controls large units of land. Secondlv, we used the assessor's offices to the extent we could. Assessors don't keep records from which figures on ownership and use are readily derived ; but sometimes old hands in the offices, just as a matter of common knowledge, have this information at their fin- gertips and would share it with you. There is certainly no statutory obligation for them to do it; it is just the question of familiarity. Then we sent around a number of questionnaires to which we got some very interesting answers. The first question we asked people was what acreage they owned. We developed a list of landholders from various registers and indexes. IVIost of the first questionnaires came back unanswered, so we tried to make our questions more specific by giving a figure which was our best estimate, based on all we knew about an individual or a company, the land they owned, and asked them to verify. We got better results with that, and a lot of our data checked out what we got from the secondary sources. So the general picture that emerged was one of concentration. We found that 25 corporations owned 14 percent of the privately-owned land of the State. We came out with 29 corporations owning 21 per- cent of the cropland of the State. There are about 12 million acres of cropland. Actually, there was a USDA survey of corporate farms that indicated that they owned an even higher percentage ; 45 corpo- rate farms owned 61 percent of the prime farmland in the State. So there is a great deal of concentration existing at the moment and, on top of that, there seems to be a trend steadily increasing over the last decade. The second characteristic of ownership was the fact that the new owners who have concentrated the land into their hands seem to be large corporate owners. That is something you mentioned in your opening statement, and I won't go into that in greater detail. Senator Ste\t:xsox. Is the corporate ownership of land principally in fruits and vegetables, as opposed to feed grain, cotton, and other crops ? Mr. INIiLLER. That is a question that I can't answer offhand, I don't know. My impression is that the corporate ownership is evenly dis- tributed because you have probably a situation where it is greater in the grains and the other cash crops such as cotton, sugar, and so on, because you have to have a larger basic unit to reach minimum effi- ciency, it is only around TOO acres, as opposed to 100 acres in the vegetables and fruits. Senator Ste\t:xsox. If you could furnish us at some point with further information on the*^ distribution of the pattern of corporation ownership according to activity in agriculture, it might be helpful. Another aspect of your testimony that I believe should be reflected in our hearing record^ is that when we talk about corporate ownership, we are not talking about the family corporation, we are talking about the big corporations and conglomerates. 678 Mr. Miller. That is an important distinction to make, and we have a statistic on that which indicated tliat of the corporate ownership over half was by corporations that liad most of their business in other fields than agriculture. So there is a very heavy incidence of owner- ship by the cono^lomerate corporation which is operating primar- ily in industrial and or commercial fields and secondarily in agricul- ture. I w^ill submit for the record an excerpt from page 11-50 of the Nader report, which indicates some of the statistics you need. (The information referred to follows:) 679 (Excerpt from page 11-50 of the Nader report) The results were released in December of 1970 in 'A Statistical Profile of California Corporate F&rms," jited in" Chapter I, above. The findings revealed an extra- )rdinary and increasing share of California's agriculture in corporate hands. Table 21 indicates that from one fourth to )ne third of cropland production from California's 57,289 ;otal farms comes from 1,673 corporate farms. Corporate ^•arms account for 35-6^ of California's corn, 29- 55^ of all )the.r grains, 32.5/S of potatoes, 29-5^ of. sugar beets, >3.2^ of strawberries, 38.4$5 of cotton, 29-9^ of citrus, ^l\.2% of tomatoes, 62.3^ of lettuce, 89.2^ of melons, 34.6% of carrots, etc. These levels .Jiave steadily increased. Chey now control 6.1 million acres, according to the Report's estimate . More Important, though, is the nature of the new corporate farm. First, 46. 4^ of Califoraia's agricultural corporations operate farms in two states or more. Twenty-five percent operate them in four states or more. Second, 20^ of the corporations do more than farm. Significantly, this 20^ controls one half of the acreage held by corporate farms. ?67,'000 acres are held by corporations engaging in agribusiness Dn the side, averaging 2,453 acres per farm. Those engaged In other business unrelated to agriculture hold 2,384,000 acres ind average 16,553 acres. An additional sm.all number are engaged both in agribusiness and other non-farm related business. Corporate farms engaged in just farming hold 2,866,000 acres, averaging 2,293 acres.. Further, those corporations confined to farming rent- one half of their land, rhose engaged in other business rent less than 15^ of their land and own the remainder. Third, 3955 of farming corporations are controlled by another corporation or by unrelated individuals ("Other Controlled). Once again, this 39^ Qon- family group is much larger in size, averaging 8,481 acres as opposed to 2,924 acres per family controlled farm and 1,690 acres per individual controlled farm. The- "other controlled" farm accounts for about 40^ of corporate crop^^ production from fewer and larger farms .( "Other controlled" farms are larger for eighteen of the twenty-four crops surveyed. "Other controlled" farms account for 34^ of California's cor- porate farm cattle production, 64^ of its beef cows, 55^ of yearling cattle and substantial percentages of milk cows, hogs, sows, bipoilers, hens, turkey and sheep. In summary, the once minor involvement of the conglom- erate farming corporation is minor no longer. Corporations engaged in other business enterprises and controlled by unrelated individuals or other corporations now hold sub- stantial acreage and account for substantial shares of crop and livestock production. They own most of the land they farm, with much larger than average farms. Tfa^ju-aie^-eiw 680 Mr. Miller. Concurrently with this trend in ownership, there is also a loss of the prime agricultural land at a very quick rate in the State here. Now, that is a fact that has created a great deal of dispute among the people of the Nader Task Force. Some people don't think it is too serious a problem : The State has a lot of prime agricultural land, and there is no scarcity factor here, and so on. My own impression is that it is probably a very adverse factor, be- cause what happens is you have the production being pushed into marginal soils. It means that greater economic costs are developed in developing this marginal soil and there are human costs in th( sense that more fertilizers, chemical fertilizers, and pesticides, have to be used to get this marginal land into production. So I think thai is also an adverse development. I don't know what your subcommittee or the Federal Government can do about that. One of the things I think is that the subsidiei which encourage this corporate movement into agriculture should denfinitely be curtailed. One of the subsidies that has made it attrac tive to push production into the marginal areas is the water subsidy It is a combination of subsidies Senator Stevenson. By water subsidies, you mean among othei things, the failure to enforce the 160-acre limitation? Mr. Miller. Yes. The subsidies and the tax structure are really the cause for the corporation to be interested in agriculture. They arc really interested in land. I can't say they are interested in agricul- ture; agriculture is an endeavor on land, it is attractive to them, but most of them are holding this land for speculative purposes. Sooner or later they would like to turn it over and reap the speculator "5 profits on the land. Senator Stevenson. Did you also examine in your studies the in- vasion of rural America by corporations with other purposes, namely the exploitation of timber and mineral resources, or the developmen of recreational facilities? Mr. Miller. Yes. We have a lot of material on that in the Nadei report on power and land in California. It is a fact that the corpo rate developers and subdividers have moved into the countryside ol California and bought it up and tried to subdivide it. They sub divided over 100,000 acres and there are probably less than 2,00( buildings that have been built on these lots. This is being reflected in the marketplace now. The result is the massive decline and lack oi confidence in the recreational home builders, such as Boise Cascade and that has its own problems, because they have been pushed to more and more extravagant sales techniques, extravagant financing tech niques. As far as the quality of the land goes, my impression is that, h} and large, speculative pressure has been concentrated more in lane that will have a trade-off value in recreation, as oj^posed to agri culture. Mr. Chairman, at this point I would like to submit for the recorc a selection of materials from the Nader Report on Power and Lane in California, together with an analysis by Mary Claire Clark 0I sociological i)atterns on various types of California farms. (The information referred to,' except for the excerpts from th( Nader report, which ai)i)eai' in the appendix, follows :) 681 BACKGROUND ON SOCOLOGICAL PATTERNS OF CALIFORNIA FARMS (By Mary Claire Clark, associate of Ralph Nader's Center for the study of responsive law and member of the California Power and Land Project; Berkeley, Calif.) In order to iinderstSBd California agricalture, it is necessary first to understand som-'iethin^ abou": Cr li.'.vi-r.ia farms, llany urban dwellers, including ^inost poli^ici; ns, ksiiELKKxXkai are ujiaware of the many aifferenx kinds of fc^rnis found in the state. Described below are a few iixxxknxr^pss H±x±ariasx5CEx^iH examples of California farms. Even xhis view is too simple. The niimber of variations on these patterns must be almost as great as the number of farms in the sxate. 1. The traditional "family farm" Sources of advice Governmental contacts lYear-around hands j [ Seasonal ITorkers | Spraying Thiur.ing Irrigating Picking Etc. Ztc. Despite the trend toward "factories in the field", there are still many growers in California whose ferm :lc. thc-iir castle, who live on the premises and spend many hours crivir-^: tractors and other equipment, and who have a personal h^r.d m all phases of their farm's operation. The California 'Fi-.rir. Bureau Federation and the State Dept . of Agriculture would have us beliiK^e that this kind of farm is almost universal. '' _n one very important way, the American dream of the family farm 682 - 2 does not correspond to reality. In the dream, the family farmer is assisted by iiis sons, who will one day inherit the form from him. In practice, most farmers' sons hrsve gone av.T-y to college or the cities and left the farm forever. The f,?r:.'ier is assisted by a handyman who can/ a little of everything thr^t needs to be done throughout the year. The farmer and his hnndymar hire temporary workers to help during the harvest time. There is little^ irf'-^Tjrry^ communication between the Spanish-cper>ing temporary worriers, and the farmer and his gKrjEXH Engl ishif.s pea rcing permanent hands. 2. Large sole-proprietor7or pai^tnership farm Sources of advice 1ksxxk_ as in (1) Governmenctal contacts in (1) This pattern is doubtlessly more common than the first. The farm or ranch is larger. The grower still lives on the premises, but cannot maintain personal supervision of all aspects of his operation. He concentrates on certain aspects, primarily sales, and delegates the rest to a foreman or series of foremen answerable to a head foreman or saigKxxisHX superintend* The foremen hire temporary workers to cultivate, irrigate, spray, thin, and harvest i:» the crops. The temporary workers are responsible only to the sub-foreman and have little if any contact with the superintendent, much less the owner himself. 683 - 3 - ^. Absentee lend lord, corporation frrir. OV/l^;iLR rces of advice ■ as in (1) i Resident: Manaser or Superin'cendenU GoverrjTientpl contac as in (1) Pest Control Operators and otJier " contracted services The dominating characteristic of this fsrsTi is that 1 tut owner is not a farmer at all. The land is owned hy a :tor, dentist, lawyer, baseball player, or someone else hundreds miles away as a tax refuge, a place to relax oh weekends, [ so forth. Or the land may be owned, not by an identifiable Lividual?! but by a corporation or investment company for iculatige purposes. The owner has nothii'i:: "■-'•-■ do with ^EsisiaKs i day-to-day problems of farm operation. He xurn^; ell of .s over to a manager, who may be full-time and living on the .dings or part-time, managing farms for several absentee iQlords at once. ^ The manager may hire a farm labor o oir.. rn c t or the necessary recruit/seasonal workers .XEffassary The manager cOo'£ r-ox Dw f,nd does not care where the contractor recrivitr; T.h;- Laborers, = t kindof people they are, or even how many there .-re: ier the piece-rate system of payment, it is rll xhe r>.; :.-.o xo e manager. Total labor costs are the sr.me whether ?'; skilled 684 - 4 - worlcers work a full day and make good wa^on, 'jO workers work only h.Tlf a day,Ror 75 totally inexperienced wornierE /'. Xwle rround There may te a nearly complete turnover in the wore force each d?y and make miserable wages./ Alternatively, managers v.-itr. very heavy labor demands may send an agent to the Iv';exiCr' n ':,')•(. nr to recruit "green carders". These men arrive without i.i,^:.;.r families and are housed and fed on the ranch in ariry-.-v-y _e barracks. They have almost no contact with the society around them. ^KKKxmayxiiK To date, the owners tf corporate i':: r.T.s have been almost totally insulated from the social, health, and ecological implications of their land ov/nership. 4. "Association" or "Cooperative" farm o^:'^niR I Sources of advice LS in (1) Assoc.latrioa Sprayi.nSj Other Special Services G overnment a 1 c ont a c t s as in (1) This kind of farm is particularly common in the citrus industry, although almonds, walnuts, avocados, and certain other crops fe.lso have strong"Associations" of "Goorjerative: to v/hich landowners may turn over all their responsibilities if they wish. Under this pattern, the absentee ovmer of an orchard grove in Tulaie County, for example, may have the choice of joining the Strathmore Sunkist Association, the Blue Goose Association, or remaining indepenflibnt . He has no interest in 685 - 5 - c aptitude for supervising his own EsgsxizaixaK orchard, co - signs up with Sunkist . From this moment, every phr.ss- of the le operation is cared for by/Association: irrigating, pruning, isking, spraying, and marketing. The owner does not need to ire anyone to stay on the farm, or invest in any eouipment nless he feels it is to his advantage. At the end of the season ssociation bookkeepers calculate the value of the services sndered by the Association to^fhis landowner/ the price vhich is fruit has brought in the marketplace, and pay him the diiferenc( Most of the key decisions in the farm's pperation re made by roving fielfl representatives of the Association. hey decide when an orchard is ready for picking, and how much s to be picked. (Citrus operates under a pro rate system whereby limited he price is maintained by releasing only a s?sex±xe^ amount f fruit each day throughout the season; S^see section of his chapter for market orders)^ The representatives decide hen an orchard should be sprayed with pesticides, what it hould be sprayed with and the amount. Crew leaders employed by the Association recruit the ecessary seasonal help. A crew leader may take his workers several different orchards in the same day. The seasonal OEker may work for the same crew leader year in and year out. his employment system probably xsxxkE asr offers the farm 'orker more stability than the other three. Accurate and ■recuent communication between the Association's field •eTDrecentatives and the crew leaders, and thus the seasonal to workers, is essential far the health and safety of the farm /oricers in these orchards. 686 WHO \vor;Iar days through political fraud, ecoaocalc pressures, legal harrassrrents and conventiorxal purchases. KCL in 1966, is, however, far more thnn a land giant ia a remote agricul- tural county. It is an IntcaaLional corporate octopus. A modern iUu.trar.ioa of the nuxi.. that th^ sin. of fathers shr.U be visited upon sons. KCL operates cattle feeding yards In ColSCoruia and Knnr,n.., oil leo.ses along the Gulf Const and in Aur.tralia and Zanada. Tvinty_five percent of Arr^rican automobiles are equipped wii.h e>:haut;t pro- ducts p.oduc.. by a KCL subsidiary, .^alU.r ..nuf^Curing. One of .alUor's thve 695 int3 ia located in Aberdeen, Mississippi. Another subsidiary, Deluxe Products, ich tnalces oil filters has a plant In Holly Springs, Mississippi. KCL holds controlling Interest in J. I. Case farm machinery. It is devel- Ing real estate for residential, comnvsrcial and Industrial use in Bakersfield, \ta Konlca, and Hawaii, KCl ovms interests in a Palo Alto electronics firm, a Coalinga asbestos mine, :o-op winery. It holds canal companies, an almond hulling plant, a fruit :klng operation. Itii directors sit on the following boards, in some cases with high office: akers Trust, General Electric, .Hatson Navigation, Pacific Mutual Life Insurance lifornla Ink, Hewlett-Packard, Varian Associates, Pillsbury, Owens-Illinois Glass stem States Life Insurance, American Trust, Emporium Capwell, Pacific Telephone, stem Pacific Railroad, Pacific Gas & Electric, Rand Corporation, Brunswig Drugs, curity First National Bank, First National Bank, Firemen's Fund Insurance Com_ ny, and others. The KCL operation was put together In the 1870's and 80's by Jaxes Haggin d Llcyd Tevis, two San- Francisco financial manipulators, and Bill Carr, who » ined fame as chief political hatchetman for the Southern Pacific Railroad. The trio, with Carr as the man in Bakersfield, moved into Kern County with icnensK,oueh dummy filings. The Vlsalla land office v,as put at the disposal of Carr all through a Saturday night and Sunday to file the entries. The Desert Act allowed entries up to 6M acres for $1.25 an acre, while charges under the regular Homestead Act were $2.50 an acre for 160 acres. The new act also waived the residency requirement on the grounds that the so called desert lands could not be Inhabited until reclamation projects were completed. Bitter protests led by the Chronicle forced a federal Investigation which proved that most of the dummy entryxen had perjured themselves In the affidavits ,H. ^ .ever seen the land on which they filed and they did not know If It was desert land .- In fact large portions were farmed without Irrigation. Among the dummies were employees of firms controlled by Tevis and Haggin. Including .ells Fargo and Central Pacific Railroad, plus government employees under Carr's cont, St the mint and the customs houses. All the dummies gave their land to the rim in a later hearing, the ring admitted that It had inspired entrymen friend: to their interests. Haggln declared the whole fraudulent operation was justlEI, because reclamation and Irrigation projects were feasible only under large o^e ship and that the ring planned, once the projects -ere complete, to sell off th land to settlers. The federal government bought this argument. Haggln's claim that the big operators would build Irrigation projects and sell >ff is comic in light of moc day developments; i.e.. the Central Valley's Projec •. financed by the federal government and the State ..ater Project financed by ::tate and Federal funds are bringing water to these lands. incidentally. KCL land is not for sale -- the cosf factor was so low that sales would put the company in an unfavorable tax petition. However. KCL in 1 - 3 - 697 i sell 10,000 aores in northern Kern County. The reason according to the KCL id office in Bakersfleld is that the situation might arise when the company jld no longer guarantee delivery of irrigation water to these lands, farmed by lants. The future Is uncertain because the federal government has been talking >ut enforcing a federal law which limits the delivery of irrigation water from bsidized projects to no more than enough to irrigate 160 acres of land. Kern /er water is now supposedly subject to that law ..- as yet unenforced — because i river is regulated by the federally constructed Isabella Dam, The federal government debates this issue with itself while KCL tenacles jch far beyond the "home'- base In Kern County, In fact, ••"honae" base is not m County, but San Francisco has been since the beginning. KCL never held a jckholders' meeting In Kern County until 1961. Southern Pacific Railroad owns 201,000 acres in the Valley, It got this \6 free about 90 years ago for building a railroad part of which was never Dpleted. The Boston Ranch Company holds some 37,000 acres. It is owned by J. G. swell who also holds 32,364 acres in his name. Also under Boswell control j: Crockett-Gambody, 28,503 acres; Tulare Lake Land Company, 10,392; and Her and Lux (by lease), 25,313 acres. Over 168,000 acres is owned by the Tejon :ianch which is controlled 50 per It by the Los Angeles Times, explaining perhaps that newspaper's great concern r water development. Tejon holds another 100,000 acres south of the Kern jnty line. Another large holding in the San Joaquin Valley is the 52,000 acre Vista I Llano owned by Anderson, Clayton and Company (ACCO) , the largest cotton rketlng firm In the world. ACCO is the most extensive private financier of aps in the U. S., a key exporter of Brazilian cotton — and coffee, part owner a large ship operating combine, a manufacturer of oleo, soft drinks, instant - A - 698 pizza, salad oil. ACCO ovms an insecticide plant In ilexlco. a soap factory In Brazil, a farm in Peru, cotton oil mills In Argentina, cotton gins In Paraguay. It has agencies In Thailand and Turkey, Korea and Holland, Yugoslavia and South Africa — and 38 other countries. Another large holding Is the DlGiorglo F/ult Corporation owning a total of 26,000 acres of California farm land. DlGloi glo subsidiaries 'nclude: Jood Canning. S & .^ Foods. Treesweet Products. Sua Vista Foods. Klamath ',umber. Earl Fruit. Philadelphia Terminals Auction. New ^ ork Fruit Auction, and Chi-ago Fruit Auction, The New York and Chicago auctions are owned A5 and 13 per cent rc-r-.c. tively. DlGlorglo controls the growing, ^nd shipping, the canning and the selling of its products on the eastern markets. Directors of DlGlorglo also sit on the following boards, in some cases with high office: Bank of America. Union Oil, BroadwayJIale Stores. Pacific Telephon Lockheed Aircraft, Petroleum Equipment Suppliers. Southern California Edison. Foremost Dairies. Flbreboard Paper. Cali'omia Ink. 15ank of CaUfomia -terchan National Realty. Transamerica Insurance, Firemen's Fund Insurance. ^ cific Gas and Electric. Crocker-Citizens National Bank. Bell Telephone of Neveda. and othe The biggest portions of the larger holdings are controlled from San Franc>« (KCL and DlGlorglo). Los Angeles (Tejon Ranch), and distant points (ACCO). Ever some of the local big operators are Involved in non-farm corporations. The Giff family of Fresno owns some 60,000 acres In this area and farms perhaos another 60.000 under lease mainly from SP. P.ussell Glffen Is a duector of the Pacific Gas & Electric, the world's largest private utility. j Now under construction through t .e westside of the Valley, is the State- ^ Federal San Luis irrigation and muni, i pal w.:er project. The main canal enters. from the north approximately at Los Banos and extends south-southeastward thro^ the middle of all these above mentioned holdings except DlGiorgio. The canal w turn sharply eastward ne..r Bakersf i .Id and will leave the Valley through the Lc Angeles Times' Tejon Xancb. - 5 ^ 699 This project will be subsidized by the State and Federal taxpayers — over 000 per acre in some places. On water projects financed in any way by U. S. : fundsi the Federal law sets a subsidy limit to any one owner: enough water irrigate 160 acres of land (320 acres for man and wife). This subsidy limit 1 been waived on the crajor portion of this land by Federal administrative fiat — itrary to legislation by Congress. Jhen small farmers, unions, and church ups in 1964 stormed a U. S, Senate interior subcommittee in protest, the eral administration announced some re-tightening of its loose regulations. iCe then. Department of Interior officials have once again relaxed in favor the large landowners. In one 600,000 acre portion of the Valley, Federally subsidized irrigation er will be delivered through a local governmental agency created under Calif» ia State .Jater law. The name of this agency is the .>Jestlands Jater District, owns 120,000 acres in this district; Giffen end Anderson-Clayton operate here. n the district holds an election each person has one vote for every dollar's th of property he owns. The SP land agent drives down from San Francisco to t 20 per cent of the vote all by himself. It is not surprising that he holds of the director's chairs. The president of the district is l^ussell Giffen, 00,000 acre operator who also is a director of Pacific Gas &£ Electric. Manager of the district is a lawyer named Ralph Brody. Brody began his eer in the U. S. Bureau of Reclamation which builds the water projects. He rned the water law so well that v7hen Pat Brown was elected Governor, he named idy his special counsel on water. Brody succeeded in snaking the State water m -J which will deliver water to the large landowners — through a hesitant ite legislature, Brody succeeded where two Republican Governors had failed, lost immediately he was hired as the manager of ..'estlands and appointed by 'ernor Brown as chairman of the California State A'ater Commission, a body ch makes basic decisions on irrigation water projects. A conflict of interest? - 6 „ 700 It is Ralph Brody who speaks for the State of Callforala at Congressional hearln on Federal appropriations for water developments. It Is almost funny to have hi sitting before a U. S. Senate committee as Jater Commission chairman and Introdu himself as manager of the land barons* /estlands .4ater District. On the charted portions of this ma?, some of the richest land In America awaits full exploitation. The largest block of class I soil In the U. S. lies just south of Los Banos In .^estlands. It Is useless, of course, without Irrlga. tlon water. Its value dry is estimated at about $100 per acre; with pumped wat. from expensive deep wells, around $350; with subsidized canal water. $1,000. T> land will be worth just about what the taxpayers will pay out In subsidies. These subsidies and the fabulous increment In land values explain why, whc a $1.75 billion bond issue to finance part of the State's contribution to the project was on a November. I960, ballot, the biggest financial doners to the 1 successful "yes" vote were Tejon Ranch and Southern Pacific. . ' The area of the historic Delano grape strike Includes the following holdin DlGlorgio 26,000 (4.700 in strike area) Schenley 3.700 (plus 700 leased) Anthony Bianco 6,795 .7. B. Camp ....... 4,908 Anton Caratan 1,129 Mi la Caratan. ..... 2,133 P. J. Divlzlch 5,500 John Dulcich 1»^31 Elmco Vineyards .... 3,610 Guimarra 12,459 George Lucas ^^0 Pandol & Sons ..... 2,288 D. M. Steele 4,187 * 7 - I 701 A & N Zaninovlch , 2,283 Marko Zanlnovich 3,686 V. B. Zanifiovich 2,157 se holdings are not entirely in the stvlke area, .vho are the owners of these ds? Anthony Bianco, for example, owns grapes outside of Delano. His headquarters in Fresno, and he owns 2^0 acres of grapes in Fresno County. He also owns acres of grapes at Arvin which is near Bakersfield. He has packinghouses at ger in Fresno County, and in Delano. He also grows grapes near Thermal in erslde County, where he also has a packinghouse. He has a 500 acre peach hard near Tipton along with 200 head of cattle and pasture land. He has cherry hards near San Jose, but his biggest ranch is A, 003 acres of lettuce, cotton, eyards, and citrus near Glendale, vrizona. This was bought by a syndicate •med by A. Biancos, Sr. , and Jr., Carl Jarson of Detroit and Peter Malbandian Phoenix for $2,600,000. The Delano ranch cost $500,000 and the Tipton ranch o cost $500,000. Bianco has an office in New York to handle eastern shipping. ships 3,000 rail and truck lots a year. Each carlot holds about 1,250 lugs, he ships a total of 3,750,000 packages a year. Of course, not all of these ! grapes, and not all of the fruit is grown by him. He buys from Lodi and lesto southwards throughout the San Joaquin Valley. Anthony Bianco is a director of the Grape Crush Administrative Committee ich administers the bulk wine marketing order. He is also on the board of the Lied Grape Growers Association, a grower wine processing co-operative. .J. B. Camp, who was an .assistant director of the Agricultural Adjustment / ninistration (AAA) during the New Deal was head of the entire cotton division, i was also the director of the Southern ':iep,ion. He canne fresh from his job of ricultural appraiser for the Bank of America (1929_i933). He made his money f the destruction of potatoes on a Kern County airstrip which was the New Deal's - 8 - 702 way o£ putting business back oato Us feet while 19 million workers ^re unem?loy«i .nd hungry. He owes his fortune to the Democratic Psrty. He was presldwt of the quasl-faclst Associated Farmers of California, the director of the agricultural committee of the State Chamber of Commerce. His wife Is a farmer In Edgoflela County. South Carolina and Is a director of the Bank of Trenton. South Carolina. J. B. Camp IS mainly a cotton gro«cr, and Is a small grape grower. DeUno has been a relative late comer In the .history of California agrlcuU cure. AS m almost all of the State-s farming, the wellsprlng of wealth and powr, 1. water .. captured, pumped, stored and spread out on the rich land at the con™,. of the grower. Even by arid California standards, the Delano area was not well^ndowed by nature .. It was mostly sagebrush, with no rivers nearby .- so the f.«t «ttler> went elsewhere. The keystone development came In the 1920.S when Joseph DlGlo^ an entrepreneur with a Sicilian grape background, began to pit vines and well ^ water against the Delano sagebrush. After a faltering start and much experlmen. tatlon. DlGlorglo and others who saw him making It, expanded their operations an, perfected their grapes. ^ they drew more and more water out of the ground for their multiplying vines, the underground water table sank lower and lower. The expense of drlU.n new wells down to the fading water table became prohibitive for all but the bigg operations* According to records cited by Chief Englneer-Manager. Sam Fortler of the Oelano . Earlimart Irrigation District (the strike area), between 1905 and 1948' the water level dropped at least 100 feet; and In some parts of the district, a, »ch as »0 feet. DlGlorgio and the other grape growers were literally pumping themselves out of business. in the 1930.S, the U. S. Bureau of Reclamation began work on the huge Cent^ valleys project. One of its long range aims was to bring river water some C 9 - 703 niles into the Delano area, this rescue water began to arrive, via th^ Friant. canal, in 1951. Since then t'ne water table has gradually risen. The average rise has ^en 2et; as high as 100 £eet. Federal officials place the cost of supplying Central Valleys Project watef 700 an acre, of which the growers repay $123. The remaining $577 per acre 5 from Federal taxpayers and the users of project electric power. The 150 acre subsidy limit is supposed to apply to the Delano area. Some he big growers, mostly notably DiGiorgio, have agreed to this limit in signcJ races; but compliance has been bogged down in weak-kneed enforcement of a law and DiGiorgio continues to use subsidized water for much of its ings contrary to the letter and the spirit of Federal law. Others of the growers, Schenley for example, have decided not to sign any agreements of liance with the Federal l^:■:\ and the huge whiskey maker is allowed to pump the subsidized water he wants from the underground wells replenished by tax vercd water. The production of grapes in Delano is a big business established by hard- ing, creative men. It is a big business which was once rescued by Federally idized Irrigation water end now depends upon this water for its very existence. California growers are enriched and empowered not only by subsidized irriga_ . water the world's biggest welfare program some have claimed. The big •ers strengthen their coacrol of our lives through political manipulation which igs them the tax financed subsidies of soil conservation programs, marketing srs, acreage alloc.menvs for crops, guaranteed prices, etc. These government programs are administered entirely by local committees of ners. The big grower,-, control the committers which parcel out the subsidies. Tho size of some of these subsidies strains the i;Ti>-!gi nation. - 10 704 Oa Juae 19. 1967. Senator John VJlUiams of Dela.ar., inserted in che Con. gressioaal .ccord. a list of direct price support p.y.cats vcceivcd by big farmers, .hrouchout the United States. Included on this list were the following big opera., tors on the west and south sides of the f.au Jooquin Valley and the a.ounts of direct subsidies (welfare) they received froo. the Fcocral treasury during 1966. ,, $3,313,000 J. G. Bosvjell ^ * .. T ..... ^ i . 2,397,073 Giffen, Inc , , „ 1,468.696 Scvjth Lake rarms Salyer Land Company » »• , ,, 622,840 Vista Del Llano ... Kerp. County Land Company » . , ^ 622,569 /lest lake Farms . , ^ 121. C06 « Tejon Ranch ....*».•••*• (The above U just a sample oC th,, CallEoral. farmer welfare recelplents ^ Usccd by senator .Jllliams. A total of 84 £ari„H8 operations in Callforaia received direct price support payments of over 5105.003 in 10S6.)- This paper beccnes. In tins lishi . "-ore thar, ,-,p. ocpose of past politcal frauds a.d current political giveaways. It beco,„. a «aming to all of us who cherish freedom and would perfect its practice in .v™.rica. The warnlns is si«Ay this: if the economic Political power structure lUu trated by this paper is further enriched and entrenched by hu^e water subsidies, individual freedom will b. even »>re severely limited, if not entirely eliminate in the San Joaquin Valley - and thereafter much of the State. 1 The landownershlp pattern on the east side of the San Joaquin Valley .is ju, the reverse of what exists on the west and so.th sides. According to the U. S, Bureau of .Reclamation in the entire area served by the mant.Kern Cmal from Fresno to Bakcrsfield. over 80 per cent of th. holdings -.re under owner.-.,ips of less than 160 acres each (a notable except ;„n is the Delano.Ea, limarl Irv----., District as cited above). .. 11 - 705 The scale of holdings is reflected in the local corcmianNties, Small farm MTunities, according to a U. S. Senate subcommittee on small 5^5 iness, offer re opportunity for small business, for community activity and Participation, for >S. A recent study by Fresno State College revealed, also, that %xq small fame: the east side of the Valley pay higher wages than the big operators ati the west le. ********** THE STOCK PORTFOLIO OF A "TYPICAL" RANCHES W, Todd Dofflemyer was, until his death March, 1966, a substantial shlpf^r «nd )wer of oranges in Tulare County. For many years he sat as a member and ch.ii.(T^.v the Exeter Irrigation District Board, which administers the Federal Governn.rit'^ :er program, providing growers with water at a small fraction of its real c(.^t. >dless to say, Dofflemyer and his fellow board members, all of them large jrovj^s Ing the water they admiaister, were not over-zealous in their enforcetrent of tio jgram's 160 acre limitation, ilr. Dofflemyer's will, available in the Tulara jnty Pvecorders office, makes very interesting reading, especially its itemizt_ >n of his somewhat lavish investments in stocks: .1 '. '<. "!' shares Agnico Mines, Ltd. shares Abex Corporation shares American Cynamid Corp. shares Amtel, Inc. shares Arvin Industries shares Arvida Corporation shares Benquet Consolidated, Inc. shares Callahan Mining Corp. shares Cities Service Company shares Denison Mines, Ltd. shares Deer Horn Mines, Ltd, shares Dome Mines, Ltd. shares Eurofund, Inc. shares Englehard Industriesm, Inc. shares Great Western Sugar Co. shares Uecla Mining Company shares Homestake Mining Co. shares Ideal Cement Company shares International Harvestor shares International Pakcers shares Japan Fund shares Kerr-McGee Oil Industries shares Lockheed Aircraft Corp. shares Melville Shoe Company 100 1000 200 110 303 100 300 1000 150 200 100 200 IDOO 200 100 AOO 200 103 165 100 200 432 shares Signal Oil & XJas Company- shares Siscoe Mines, Ltd. shares Southern Natural Gas Company Timken Roller Bearing Company shares Tennessee Gas Transmission Co, shares United Aircraft Corporation shares United Shoe Machinery shares Upper Canada Mines shares Union Carbide & Carbon Corp. shares Allegheny-Ludlum Steel American Can Company shares American Smelting & Refining Company shares American-South African Investment Company shares Anaconda Copper Company shares Atlas Consolidated Mining shares Atchison, Topeka a Santa Fe Railway Company shares Babcock & .-Jilcox Company sharer. Bunker Hill Company shares Cerro Corporation shares Colt Industries sh^ires Continental Can Compony shares Draper Corporation 12 - 706 IMPERIAL VAL: I:u;:-'«ii'ial County, California/ or. the U.S.-Xexican ;:.oracr, lo cr.c ::,:c>;c:'. riches ^ agricultural County in zr.e unix.ed States. Th^s v/via:.ch is 100% dependent on a' heavily subsidised federal irr-.- c,a\:ion system (welfare plan) which illegally delivers wauer uC :.arg£ landowners. These farraers get additional welfare support in -che foriTi of: *s-absidies for growing and not growing crops. ^soil conservation funds for iirproving their lands. *land laanagerTient and crop advice. '^'illegally low farrr. assessrr.ents. ^cheap labor, iriost of it foreign, nvach of it illega^. One of their welfare prograrris - couton-grain subsidies - m ^Soj o^:^d 252 Irrperial growers $8 million corr.pared to the $7.o lail- :.i.on rviceived by the 17,760 local residents on poor people ,'s w^ a. fare . .-^ou'c 2 4 per cent of the Iraperial County population is on poor people's welfare. The official co^unuy -une-.T.ployrrient figure l^ ov^:;r 11 per cent -- nearly 50 per cent above une suaue-wice r«^M,; According to the local director of the state errployivienu office, y^ per cent of Irriperial farr:. jobs are held by Mexican co:::.T.u-cero v;/.G cross the border daily. In the pasu 10 years, one of ev^ry ■^v.'o fcrm jobs has disappeared. Farrr^ employraent has plurruV.eued frorr. 14,700 to 7,500. In the peak season, jobs are scarce; m wne off-season, non-^existent . ?Gor people's welfare, in contrasu to what is available to une landowners, is laeager, and many tirr.es not readily au hand ^es- oecially for those who are not up-to-date articulate on -cneir righus.) So folks get hungry, Sooching the abrasive Irr.perial gap between the few rich and che .v.any poor is the "war on poverty". One of the local ointiuenu.:- 707 tr.is war is the Rural Davelopir.er.u Corporation (RDC) whicii , set out to promote housing, educate -che fanri workers, and ^elop jobs. It has an English and citizenship prograra in .cr. studcnuS receive a stipend of $20 a week — hardly laore .n gas rr.oney to get to school, in a rural area. This winder ■che classes progressed on the long range benefits of citizen -cicipation and learning English, RDC SwUdents, -ceachers ana •vinis -craters becarr.e overwhel~>ed v;ith the blowing-m-tne-wmd :ili-cy of trying to talk away the rising tide of uneiuoloyrr.ent , )rivation, and hunger. The end of February 1971 (beginning of ) far.» sl-uTTip season in Iix.perial) RDC was able to release $5,0GC : eruergency food distribution. The money was passed ou-c m ) food orders per family; 166 families were helped. Perhaps, :dly more than another futile gesture, but RDC could 'nt stand Dre talking about democracy and conjugating verbs without -cry- i zo do "something" irrjr.ediate for starving people. 2 citizenship classes of RDC were used for outreach to contact -.gry fam.ilies. This is some of what they found on the first / of food distribution: *'^* A famiily with eight children. The father breaks his J and then can'.t find work for several months. In January he sappears. The wife and kids live in a small trailer. Tnere no -cable in the kitchen and the rest of the trailer is laid t as a haphazard sleeping quarters. x** A widow with eight children pays oveif $100 monthly for ur rooms with no inside running water. *** A family with 13 kids. Last year, the man joins the rr» workers strike to improve wages. He is blacklisted by iperial Valley ranches. *** Numerous farm workers with faiTiilies cannot find work .ring the. February- June off-season in Imperial. Welfare is .creasingly hard to come by, so they migrate to Texas or tne u. Joaquin Valley of California (sometimes without their farrdii 708 *^* A farm worker's widow v;ith five children lives i.n c. one-bedroorTi house . *** A family with six children. Wife is dying of cancer. As the v/oman gets weaker, her husband stays at home to take care ^ of her last three months of life, (he can't afford to do this.) | He can't afford any kind of help. One week after receiving their food voucher, the wife dies. As this is being v/ritten, -cr.e hus- band is taking up a collection among his neighbors and friends to pay burial expenses. *** A family with three kids. Husband falls off tractor, and an operation at the county hospital' leaves him almost para- lyzed. Kis disability runs out, but his scar from mid-stomach to mid-back' swells painfully whenever he exerts himself. He v;orks occasionally when a job is available, but he doesn't think he can continue. *** A family with six children has been living in a three room house for six years (rent:$45) ^o inside toilet or bathroom No m;oney for school clothes. RDC distributed $5,000 worth of $30 food order vouchers. A few hundred people were fed. RDC is planning to pass aut an addition $10,000 this spring — a few hundred people will be fed a couple of r^ore times. How far. does a $30 food order go with six to 13 kids??? It takes some of the edge off the hunger. Draws some of uhe fire out of the anger, but nothing will have changed in Imperial Valley. The rich will continue to be very rich. Very powerful. Very subsidized. Very illegally subsidized. The poo^ ■will contine to be deprived, powerless and effectively ignored, and all the kids will once again be hungry a week after the last food voucher is issued. The poor will continue to be poor because the rich are hogging the public welfare. ■^■Ouhing will ever change in Imperial County until the basic pri- orities of that society are radically altered to conform to the democratic principles and laws of this land. The first step in -chat direction is a recognition that Imperial County is a corpo- ra-ce-socialistic province in which the ruler's claims to wealth and power rest on the questionable laurels of unfair and of time. 709 illvic/al subsidies (welfare) payruents and the bald exploitation Gif the poor, particularly those of Xexican heritage. Let us r.ow look at these . laurels. 710 TK2 VJATER SUBSIDY Iiuperial County is a hot, dry, low desert. The annual rainfall ranges between two and three inches. The soil is rich fron; Colorado River silt deposited over the eons, but farr.iing v/ould be invoossible without irrigation. The big Colorado is the source In 19 01 the first irrigation water was brought to Iraperial frcia the river 50 ir.iles . away. Four years later, a roaring flood washei away the diversion works, and water poured into the Valley for two years until 190 7 when the Souuhern Pacific Railroad finally filled the breach. Even after that irrigation in Iir.perial was a chancy business. The Colorado was unta.T^ed. The flow was sea- sonal. The Alait^o Canal which fed water into the valley froir. 'cr.e river traversed part of northern .Mexico first. The U.S. Bureau of Reclarr.ation said these conditions "severely impaired the full economic development of the area." Imperial landowners wanted an American Canal and a harnessed Colorado. They got both with the Boulder Canyon Project: Koovez Parker, Davis, General Wash Dam.s and the first delivery of irriga tion water through the All-American Canal in 1940, "lu now may • be said with confidence," bragged the Imperial Irrigation Dis-cric "thau no section of our nation is more assured of a perm.anent and prosperous future than is this valley." In other words, the Boulder project financed by the U.S. taxpayers and built by the Bureau of Reclamation saved the Imperial Valley from recurring disastrous floods and now delivers into perpetuity and on order the irrigation water required to make that desert a garden. Tne subsidies built into this system would stagger the conniving imagination of that mythical, welfare mother who continues to produce kids so she can collect more dole. (1) FR5B DAMS The Imperial farmers v/ho use irrigation v/ater fro m the Colorado, project do not pay one red cent for the cost of the three dams which regulate the river, store their irrigation wa ter, deliver the water on their demand and save them from floods.. ■5- 711 ?.'.vi Burcciu or Reca-arriatiori S"cates: 'I-Ioover Daiu pioneered reclaraation' s present-day giant/ multiple- purpose developments. Its benefits encoiupass the whole concepu Df river control." "The da:u controls floods and stores water for irrigation, r.vanici- 3al and industrial uses, hydroelectric power generation, recrea-uion '^■:,c. fish and wildlife. . .This v/ater is released in a regulated, year' round flow to farms, homes and factories downstream." '".va-cer s'cored in Lake ivlead (behind Hoover Dam) irrigates 3/4 mil- lion acres of land in this country (over 1/2 million acres in ;:he Imperial Irrigation District) and 1/2 million acres in Xexico... 'Colorado River water stored behind Hoover Dam irrigates some of '.merica's richest farmlands." ;alifornia Department of Water Resources says, "Davis Dam, 57 .■dies downstream (from Hoover)... is used primarily to re-regulate :he water... in accordance with downstream water requirements in :he United States and iVIexico. . . 'Senauor Wash Reservoir. . .provides for a limited but valuable umoun-c of additional regulation.". Despite these statements of the irrigation benefits derived from these three daras, the Bureau of Reclamation in its financial statements does not allocate one cent of the dam's costs to irrigation; therefore, irrigators repay nothing . They get a- free ride. A subsidy. A dole. Xost of the Hoover and Davis dams' costs are allocated to hydroelectric power and reimbursed by power, yxost of the power is used in urban areas which means that the electric customers in the cities (as far away as Los Angeles) are subsidizing irrigation for Imperial farmers. When Bureau of Reclamation cost expert Gene Hines in Boulder City, Nevada, v;as asked why none of these dams costs were allocated to irrigation in view of the admitted irrigation benefits, he said, "Apparenuly- there were no obvious beneficiaries at the time the costs were allocated." The Boulder Canyon Project Act was authorized December 21, 1923. The Imperial Irrigation District (IID) was organized in 1911, and 712 bec;ar. actively leading the carr.paicjn for the Hoover Da:.; ar.a .-^.ix A;v.erican Canal in 1920. The Xezropolitan Water District of Souwhern California (Los Angelesr;area) , another agency v/hich •delivers irrigation water illegally fron-. the Colorado, was organized in 1928 before the project was approved, and its representatives lobbied for its passage. Estimated Irrigation Subsidy From Colorado River Dams* Parke^r-Davis G&4arl Wash Total Cost $i77i''00 0,000 $152,000,000- $ 58,000,000 Estimated Irrigation S-ubsid; $35,000,000 $30,000,000 $58,000,000 *3ased on a 20% ratio for irrigation on Hoover, Parker, and Davis, and 100% for General Wash. The 20% figure is on the low side to compensate for the large amo'unt of city water in the Los Angeles part of the project. Irrigation is allocated over 50% of cos-^s in the federal, Central Valleys Project in California. I' guess that 100% of cS^neril Wash is chargable to irrigation because the only purpose of the darfi is to regulate the river for the farmers. The Boulder Canyon Act contains language which permits the irrigators to get free dams. The legislation says: "that no charge shall be made for water for irrigation for potable pur- poses in Imperial or Coachella Valleys." Such phrasing, however, does not preclude a realistic evaluation of the subsidy involved. In standard Bureau of Recl< ma-cion procedure, the function of the allocated cost concept is to give a clear picture of the division of expenditures by func-cion on multi-purpose projects such as Boulder Canyon. Tne rei.Tbursable costs reflect, the division of repayment obligation; if any, by the various users. The Bureau policy on irrigation, for example, is that the users are charged not on the basis of costs but on the basis of the Bureaujs estimate of their"abilit 713 .o ipay. " In the Central Valleys Project the bureau allocated tver GCj of costs to irrigation. The reimbursable costs - rhat the irrigators were actually required to repay - was 17^. 'he aruounu of the irrigation subsidy there / is easy to figure. ;Ou so on the Colorado. Appa::rently the big landowner-speculator loalition (led by Los Angeles Times and Irvir^e) which promoted hie projecu desired to have the subsidy (welfare) tracks (covered) ,s much possible. i ruL_j J .OOD COXTROI ^nor proportions of Hoover Dam costs and the entire cost of »d,\-a'j:-Um. V»asn Dami are allocaued uo flood control v;hich is a to- ;ally non-reirrJDursable item. "^he cost is paid by the federal .axpayers, nothing is paid by those protected from floods — ike the IID, Another subsidy. Another welfare progr£jri. Non-rei~JDursable Flood Control cover Dam. ' ' ^ L. Wash $25,000,000 $58,000,000 XOoe_: None of the Parker-Davis Dam.s ' costs are allocated o flood control or irrigation as noted above; but out of the 152,000,000 expenditure some $13 million is allocated to Xuni- ipal and industrial water, presumably for the Metropolitan Water istrict whose water is diverted from the Colorado at Parker am. >;o w a vG i?7 — vr^--i-h-A~.r<^vrr.h-.i-r-c;:.:->n^--^.^'^g-t--Q '^nlu'in tl"-'^ p..---^j»-<^ ^•- OTO 1.- - r^- .r ^^^lK^A 13 l'•Mllt^^ ;:a:^ges— tni&~$X^-mi4,lion"to-'eiectrr^c~ptnver . Tne Met ^i—iiye-TTo •»^i^i'— on<»rgnniver could run-in a 160 acres each for a couple other relatives .so. Reclarr»ation law further states that one owner iTiay obtain iougn water .rrigate endless acres if he signs a contract .th the federal governir.ent in which he agrees to make available >r sale his "excess land" (over 160 acres) within 10 years at price which does not take into consideration the increir.ent in ilue resulting fron; the sugsized water. The purpose of this iction is to prevent "undue enrichment" amd tp stop profiteers :om gouging buyers for the "unearned increment" in land prices jntributed by the federal project.. Harry Horton, late buyer for IID, once told Congress that ider terms of this section, the big operator could sign the >ntracts, farm their lands for 10 years, sell at aboul :ice and come out quite well. any Another part of reclamation law provides that the acreage Imitation shall apply to all waters which are stored, regulated 4d/or delivered by facilities financed in whole or part by the lited States. The same law requires that irrigators live on i: near their land. The specific rationale for these regulations is that the 2ncfits should be widely dispersed because all federal irriga- ion water is heavily subsidized through free interest, free lood control, electric power, etc., and as . a result the land ^yrockets in value. The general rationale; the better society -10- 716 ru ijirot*uj-y c; 'ec is •c.h.u one ir; v/hich tile pov/er ana "cne v/ec*x'cn and controlled. Clearly this law applies to the Irr.perial Irrigation Discric 3u-c in the larr.e duck February, 1933, days of the Hoover Ad::.iniii- tration IID was e^cempted, without benefit of a governiuent legax apinion (by a raysterious seried of rr.eiuos) . IID's attorney v/ro-ce Assistant Reclan\ation Coiiu-r.issioner Porter Dent asking for a rul- ing on the 160-acre limitation in Imperial "Provided, that such ruling would be that the 160-acre limitation did not apply." Dent passed the request, with an approving memo, on to Xorthcutt Sly, as Assistant Secretary of Interior. Ely agreed v;itnout following the usual procedure of abtaining a legal opinion ircm ■c:\(^ department's solicicor. ?Si exemption le;:ter was drafted anc signed by Secretary of Interior Wilbur. Two v/eeks later, Roosevelt replaced Hoover in the Wnite .-.o\ and Northcutt Ely took a retainer with the IID-- a postion he still hods . Wilbur': his fed' In 1964, Interior Soiiciuor FrsnA: Barry ruiea L.na. |_e\:ter was "clearly wrong," and that the lav/ applied, eral trunabou-c set the stage for a court case preluded oy ar.oun^ anotne] object lesson. -.in Calirornit cur-ous set of events politics . To fight the new attack, Imperial's largest landowners org nized Imperial Resources Associates (IRA) . Its -initial guiamg light was Robert Long, vice-president of Irvine Ranch (10,000 a in Imperial, 33,000 in Orange County, both illegally receiving Colorado water) Long is now a vice-president (in charge of agi^ cultural loans) for. -Bank of America, world's largest back, fma cier of over half of California's farm production. Long's favo ite speech was a warning about how the little farmer would sufi along with the big grower if acreage limitation were enforcea. IRP. elected as its president, Stephen Elmore whose three family companies farm over 17,5 00 acres in Im.perial. Presently the Rq m.auion Corr^r.issioner , Floyd Dominy, representing the agency man- dated -co enforce the law, went to Imperial and told the growers "I -chink it is time to examdne v/he-cher the 160-acre principle : •11- 717 .zf^ciua^it zor tod^*y ' s zarrair.g." Following tr^j^s rousing support : l£A7 and order by Dor.\ir»y/ IID and the: fariT.ers rejected all for- il Bureau of ReclaiTiation proposals to apply the liiui-cation. On .nuary 11, 1557, the U.S. Justice Departn-ient filed a suit against :d in San San Diego federal court. IID went into battle with its regular legal battery while ^ hired 0'Xelvenyy& Myers. Oi2'i/ a bi-partisan political powerhouse in California, attaches .e of its top men to every iiTiportant candidate in every irripor^ant )litical race in the state. In 1970, they had a man with Reagan id a r:»an with Unruh. In the U.S. Senator's race they assigned r:.an to George Xurphy, a irian-^to Norton Sir^on and three n-icn to )hn Tunney, the eventual winner. One of Tunney's Ouyi assistants .3 Warren Chrisopher who first rr.et Tunney in Washington v;hen Tu.'^ney ;3 the congressman frorr* Imperial and Christopher was a deputy iworney general on leave frorr, O&X. That was when Christopher's irtners were defending Imperials big farmers from this federal slaugh-c. Perhaps a conflic' interest? Another O&X partner, Allyn Kreps , was a honcho in the winning i68 campaign of California's other liberal senator, • Alan Cranston, reps in 1964 ran the initiative campaign which killed much of ;lifornia's fair housing law. Chief sponsor of that law was isemolyman Jesse Unruh, the candidate for governor. Kreps managed 1 1970. Republican Governor Reaganblasted attempts to limit farm size 1 Imperial, and the State of California in the person of its Demo- ratio attorney general entered to case on the side of the big aerators. In January 1971, U.S. District Judge Howard Turrentine ruled »e 160-acre law did not apply in Imperial. His decision relied iinly on the 19 33 Wilbur letter and the fact that it had not been ienly challenged by the Congress. The Justice Department brief xd said, "...the V7ilbur letter must' be-.irecognized for what it was — partisan effort by a lame-duck administration to effect, by iminis'urative interpretation, an exemption. . .that proponents iver dared risk seeking directly." *: 718 clGcisio; v;< C;.l:.Jor-i^ : i r^a c. io n history: nos'c lovj'er cour'^s -: "J.S. Suor ■ji.c l^nGGv;r* Court rules for th^ ccrsc*' •tc*ke- " people . hx, owe. ;poir.t/ Tur- re.vcine w£.s quoted as saying, "Let's get it on the way uo -che SupreruG Court." However, appeal now c.Q,'z>eT.^s on the poliuics of adiuinisuration. Nixon has long been on record agains;: liiTiitation . The governrr.ent has until early April to i case up to Appeals Court. y.aanwhile another suit is pending in San Diego Federal Co-ui' Abou-c 125 rr.ostly landless Ii-nperial' Valley folks are asking that •the resident requirerr.ents of zhe law be enforced in IID. A iitt- quo-^ed section of the law states that farn-.ers irrigating wi-cn ic orally subsidized water rr.ust live or. or near their land. A£Out ; 70-. of IID is held by absentee owners living outside of whe co-ur,, The case is to be heard in ir.id-Xarch. Art 3runv/asser of San ?rc, Cisco is attorneyyfor the folks led by Dr. Ben Yellen. ^2':.^ bautle over acreage lin-.itation has been long end biuuo: Xever in the nearly VO-^year history of the law has it been stric enforced. The special interests arrayed against enforcerr.enu ha" in the final analysis, been too strong for the public interest prevail. The stakes in terms of power and wealth in Imperial a' throughout the West (particularly California) are staggering. of all, the big operators could not build t heir ovm irrigation_ iects and pay the full costs ; so they turn to the federal gover men-c for subsidies. The subsidies involved are only the begin.n and in uhe long view not much more than incidental. Delivery Q v/ater to arid land multiples the value up to tenfold. Water rr.£ possible great wealth. With a small nurrJper of big oper a-cors . j :::. Imperial, the wealth is thereby con centrated as is control c uhe comr.v.uiities' economic and political destiny . Imperial's b; operators not only have babies on their water welfare program, they have continentals, private planes and their very own U.S. Senators . Strict enforcement of the loO-acre law in Im.peria-l would dethrone, but far from impoverish a priviliged class of ownersj who have been enriched on the public dole 'for over 30 years. •13- :orc_nc; -co ^vo'^t 719 .gures of -cr.e Iir.peri^.! County office; , . c^griculuural Stabilize.-cion and Conservation Service, 139 lividuals and con\panies farrr. over 60^. of the IID (300 /OCC plus :cs) in operations of luore "chan 1/000 acres each. '2'i.'i'3 139 ;ure is further narrowed when uhe overlapping and joint owner- .p5 are considered. The Zlr.ore faiXiily, for exarr.ple, has three -.panics with a total of over 17,500 acres. Cong lorr.or ares have '■ed inwO Irr.perial uO cash-in on control of x.he Colorado and :ap wat:er: Purex, United Fruit, Kaiser-Aetna, Dow, and Irvine .ch. The closest estirr.ate of outside, absentee ownership, is )ut 70^. of IID's 500,000 irrigaucd acres. VlhaT^ the "fariuers" organized against the 160-acre limitation ; driving force carr.e froir. Irvine Ranch with headquarters in .nge Co-unty, near Los Angeles, and the Elrr.ores who live on the .sc near' San Diego, (see p. 22 for other Irr.perial lawsuits) 2Z7< CAPITA YEARLY. a^'l:o.ci-. Aln".ost every aavancerr.ent.in larri uiecnanization, new cne:T>ica^s !. crop rTianagrrienti. techniques has beer^ developed uhrough research :'ject5 conduc-ced a.z. the University of California. These nev/ :hods are prir.'.arily responsible for the drastic decline in far;:. }s . The University has done nothing in research to help ir.prove : conditiions of farrr> laJoor. ELECTRIC SUBSIDIES As noted earlier a disproportiona'ce share of the Colorado /er Daiu costs are charged off "co electriciuy. Xouhing is charged f -co irrigation. Pov/or users, :Tlainl^^ city dv.'ellers fro:: as far :.v as Los Angeles^ subsidize irrigation for Ir.;perial . This elec- Lc subsidy is coiTipounded in IID, itself. The disuricu acus as elec-cric utility. It distributes power; soiue of which i-c gener- is au drops along the All-Arr.erican Canal, son^e of v;hich it gener- is v/ith steaiu, gas and diesel planus and sorae of which iu buys jIu ■c'r.Q. Bureau of Reclaraation. IID rates are relatively high for rublic power agency/ not because cosus are particularly high, c because the district uses its electric revenues to give uhe u-igators another subsidy. Paul Post recently retired general p-erinuendent of IID power sales, says that subsidy was planned :>•;.". the beginning and has been carried out. The 1969 IID annual poru shows that the power division paid to the federal govern- r.t $420,000 to cover canal costs; the wauer division paid nothrng. previous years comparable but lesser amounts were paid from -che ::.e power account. On close look, IID's financial statment reads ,\.e a report from a power company, not an irrigation district. 1969 Imperial Irrigation District Annual Report ter sales .• $5,700,00 ecuric sales $13, 000, 000 rural delectric sales $600,000 $12,000,000 $400,000 residential, commercial electric . . .512 public agency electric -133 O - 72 - pt. 3A - 5 722 _^iVG;::ies ....24 0/000 acre fetu ..2,500/000 acre fee^ 'ov/r. rG3iacr.-t:s .ir.c i^oor 'oeoplo v;c -::::■- -icncs — oav hi.cn electric azas so -che big ^anccv/ners ILLEGALLY LOW FARX ASS:^SSMn:XTS Ir. the ruid-60s local crusadir.g Dr. Ben Yellen begar. exposi/.-. -iake low as5essrr.ents" on farrr. properties. 3y corr.parir.g sale price; ■CO values assessed by the cour.-cy for tax purposes/ he found tha-c far::, la.-.d was being assessed ;ina assesssG at: zd 9 .2^i of narket value, v/nr^e A state I-Iori-^eowners TTI^^tion study confirmed Yellen's charges. In 1566 Yellen announced for county assessor. He ran a close third/ buu uhe dler" incur:;benu was defeased anyway.^ The victor: a inan who hac .ssessor-tax collector for the IIP . hi ,ot ^-.'uit as laKG assessed A spot check in February 19 71 seeas to maicate u.icu ... low assessrr.enus" of six or seven years ago are not quite as fake as -chey used to be; but the farmers still seem to be favored. ends. -.to be assessed at near market value; cityland, over- And it seem^s that the most gross overassessments occur on the cheaper houses. The old-soak-the-poor philosophy of Imperii Counuy is being carried into the 70s. To substantiate these charg. a co;:.plete study of county land sales for the past year would be required. CHEAP LABOR squashed tight yp against Imperial's southern line is the colossll Mexican slum/ Kexico's fastest growing city. Stories of Yankee gold draw -literally hordes of destitute "campesinos" here from the sparse interior. Mexicali's population is soaring over 450/000. The whole of Imperial County is only 74,000. Tne pressure on the border is lean, hungry and relentless. Legal bor- Ir crossings have risen from 8.2 million in 1965 to over 11 millic^ in 1969. The apprehension of illegal Xexican aliens in the .mper^j district has nelrly doubled in five years. The U.S. border pauro" -17- 723 AcC up o,>33 \v£"i»jc4C..w. '^.\ 12o5; i3/5i/0 in -.l>Vu. I.v.j>er::^al / s 7 /SCO farrr^ jobs are held by cor;, leral and illegal. The border patrol is outrageously •u.-.der- r.ed and deiuonstrably unethusias'cic about the wetback issue. io an open corriiTiunity secret in Irr.perial that thousands of Mex- ns v/orx illegaj.ly on the U.S. side of the border. Sor.".e are backs who cross surreptiously , either evading the border pacro! passing with forged papers. Others cross "legally" as visitor shoppers and stay on illegally to v;ork. Many r.-.iddle and upper oS I.v.perial households have cheap doruestic help in this cate- y, and illegals are know.i uO work in rr.any different Ir.-.perial s and hundreds of rrdles north of the border. ^^ronrca^^y, one :;.ilega^ was exposec recently worx:.ng zor .r on poverty progran\ in Fresno nearly 50C rr^iles north of .CO. I-Ie had been there three years.) Tne ooraer pressure v/orxs i^oz th ; business wants to rr^ove sout enue, sorae 89 U.S. ov;ned a5se~.b ; ways : worx-'-rs want to go i. Under a co.ivenient no-dutv y Pa. anus are o"era' yc-' .".aps tne ^argest er.".p...oyer in "cnis cauagory is Matte^ Toys v;."»rcn 2,000 worxers m a Mexrcaj.r plant. Their v/age rates: $2.24 to $3.53 a day, sorr.etiii^es slightly e for piecework. The people work six days, earn about $22 weekly, The burden of this nearly open border and the concentrauion land ov/nership is reflected in Irr.perial's stagmant econorr.y. Donald VI. Baerresen, research direcuor of the Center for anced Studies in International'. Business in Los Angeles says, re in Southern California rr.uch of our suaggering welfare cosus due to the overflow, legal and illegal, of indigents across the der . " Between 1950 and 1970, Irr.perial Cou.-.uy's population rer;.ained tic at 74,000. The percentage of Anglos declined from 59-6 to ; Chicanes increased frorri 33^j to 37^o. Over 75% of the county's low incorue fa~>ilies live in Calexico, tiny (10,000) cor.-jTiUnity just across uhe border fron-. Xexicali. Beuween 1960 and 1959 while fariw jobs declined 50^/,. construc- -. jobs dropped 10 ^i rrianuf acturing jobs reniained static. 724 oj: -cr; lov/er (2) "Unemployment: rates on are far highe Over 24!i of Imperial County is on poor "people ' s v/elfare. The docuor-patient ratio in Imperial County is one for every i,30G while "che national average is one for every 650. A 1970 U.S. Department of Labor Suudy concluded: (1) "Co:.uuUtors generally are. paid the sarr.e wage rates as resident border coiraiiunity , but v;age rates in rr.ost border areas ^are than in the ren-^aining sectors of the border states and lov/ei he national averages for sirr.ilar. industries -^•lr•.^rTr.^n^^ ra^.es on the United States side of the border., r than the average unemployment rates for the border scales and are among the highest in the country... (3) "Border areas have a relatively high incidence of federal wage-hour violations . " Clearly, the concentration of landownership, much of it absen-cee, is sucking the local wealth ouu of the county. . Clearly, American corporate socialism, both agricultural and industrial, is exploiting the poverty on both sides of the border. The poor, in effect, are subsidizing the rich througn cheap wages, just as the rich are being subsidized through varioi welfare programs they have courtesy of the U.S. government. Dr. Yellen has filed suit in VJashington, D.C. federal court- in an attempt to have the Bureau of Reclamation set the electric ra;:es for IID. Federal law requires that when the state P'ublic Utilities CorTumission does not set rates for such as IID, the fed- eral government must. . Yellen also promoted California Rural Legal Assistance (CRLij to file a one-man, one-vote suit" against IID, because the voting dis-cricts were not close to equal. Judge Kirk in the Imperial Sup.-.rior Court ruled against CRLA. The case was appealed and de manded to Kirk. CRLA will seek to have Kirk disqualified this t 10 years before becoming a ju dge. Kirk workedj around. For over the lav; firm which represented IIP ,19. 725 ^r. Ballis. In trying to verbally summarize all of those four ngs, I am going to mention some specific names of specific people i specific companies, and I don't want to leave the impression it these are necessarily the bad guys, because I don't think they are i guys. Most of the people I mention are upstanding members of \ community, they support children's hospitals and United Giving i Boy Scouts and they get medals from the Fope and all that sort stuff, and, to my knowledge, only one of them beats his wife. What I am going to use them for is illustrative purposes. It is my lie contention that the law and the ethics of our society specifically courage the exploitation of land and the speculation in land at the ^ense of the people who live and work that land, whether they be lite, black, Indian, Chicano, it doesn't make any difference. I think it has been so in our country since the very beginning. Slavery, seems to me, is only the most outrageous example of that. Even in historic instances when the so-called common good has m explicitly legislated, the weight of that ethic, that exploitative tic of ours, has demanded an administration which has subverted 5 common good in the interest of expended exploitation. There are, ion't know, a hundred legislative acts, I think, which illustrate it point, and I will mention just a couple. First of all, the Homestead Act was passed in Lincoln's days and i propaganda around that was that each settler and his family re going to get 160 acres and a mule. Within a couple of decades i speculators had cut the cream off the top of all the land that was lilable. In 1902 under the first Eoosevelt administration, the Recla- Ltion Act was passed. We were going to open up the West and a tier and his family were going to get 160 acres of water and we re going to prevent water monopolies as Berge Bulbulian pointed b earlier. That law has never once been effectively enforced. During the second Roosevelt administration we had the crop sub- iy program. The rationalization for giving money to the farmers ls that we were going to keep small farmers on the land, guarantee mi an income, and they wouldn't go running off to the cities and iate slums. It was a great idea, but, within a few years, that also s turned upside down and for the past 30 years the crop subsidy ogram has been used to enrich and encourage huge corporations go into agriculture and force small farmers off the land. How about the war on poverty ? That is the Johnson administration d the Kennedy administration. That is a great idea, too. The Gov- iment is going to help the people fight poverty. But in the adminis- ition of that program the two most effective proven ways in this Lmtry to fight poverty were very quickly administratively outlawed d this have been so since. There are two ways in this country for pressed minorities, oppressed groups, whether minority or ma- rity type people, to be able to improve their economic conditions as ^roup. One is to organize unions, specifically prohibited by the war poverty. Two is to take over local governmental agencies which ss out money, like the Irish did in the eastern cities. You can't ' that either in the war on poverty. You can't organize politically d you can't organize economically under the war on poverty, so I you can learn to do in the war on poverty is to dress right and to 726 ( speak correct English, which doesn't necessarily put any beans in the pot, and it certainly doesn't upset the applecart of the powers that be. Now, there are other things which I won't get into. Model cities is the same sort of thing. It enriches the people already in power under the pretext of giving people some control. Urban renewal is the same thing. In California we have what is known as the William- son Act. Under the AVilliamson Act, another very great idea, what we were going to do was to help farmers stay in the farming business and not tax their lands so heavily that they would be forced to sell to subdividers. That is a great idea. If a farmer agreed to keep his land in agricultural production and was near a city, you would give him a lower tax rate. That is a good idea and I don't think there's anybody who disagrees with it. But the way it's been administered m California is that every large landowner has all of his land under the agricultural preserve and thereby cheats the other people on taxes. For instance, in Fresno County, on the west side of Fresno County, I will show you a map in a minute, which is dominated by large hold- ings, Southern Pacific, Anderson-Clayton, those sort of corporations, all of their land, 70, 80, 90 miles from the nearest city, is m agricul- tural preserve. By putting it in a preserve, their taxes are lowers As a result Fresno County alone last year lost $5 million m taxes. They didn't actually lose it. The $5 million in taxes was shifted to the small businessmen and homeowners of the city. What happens? I would like to go back before I turn out the lights and show this map, and talk about politics, because I thmk it is very important that we understand that, as far as these issues are con- cerned in California, there is no political party and somebody, some great journalist one day wrote— and I forgot his name— that there has never been a great Senator from California because every senator from California is dominated by large landholders, to a man. For instance, in Imperial County, just to take a piece out of that report, the Federal Government has had a suit going to enforce the 160-acre limitation. There is a judge who ruled on that case last year. He ruled against the enforcement of the law. Before he was made a judge, that man was in the law firm which represented the Imperial Valley Irrigation District, which is the large landowners m the Im- perial Valley. At the time that the Government was drawing up its case, 1966-1967, in the Imperial Valley case, the Imperial Valley landowners organized the Natural Resources Associates to raise money to fight that case. The leading organizer of that campaign was a man named Long who at that time was the vice president ot the Irvine Ranch. He is now vice president of the Bank of America^ and I understand is going to testify here. " In many of the speeches that he made at that time he said that the small farmers were going to be hurt by the enforcement of the acre- age limitation. He went around and raised money from these large landowning folks, and they hired a law firm. The law firm was O'Melveny and Meyers, a large Los Angeles law firm. At the time that O'Melveny and ]\Teyers were representing the Natural Resources Associates of the Imperial Valley a senior partner of O'Melveny and Meyers was working as an TTnder-Secretary or Assistant Attorney General to the Justice Department in Washington. 727 !^ow, it might be said that O'Melveny and Meyers had sort of a ittle service between their offices in Los Angeles and Washington ause they always had a man strategically located in a Federal ce and when statewide political campaigns come up in California ^lelveny and Meyers has some radical Democrats and some very Lservati\x Republicans, so that they also have a man in every lead- ; campaign, whether the candidate is Norton Simon, Rafferty, nney, Cranston, or whoever it might be. ^ow, at the same time in the Imperial Valley that the Federal vernment was bringing their case to enforce the law, the case ich I always call sort of a strawman kind of a case, the Commis- iier of the ^Bureau of Reclamation went to El Centro in the Im- 'ial Valley and spoke to a dinner of the ranchers in which he said t the 160'-acre limitation is not a very good law and ought to be LUged. and he is charged with enforcing the law. ^ow, this all sounds very scandalous, but, you know, in terms of ver, it is very reasonable. On certain kinds of issues, it is the large downers' government and they get out of their government what y want and sometimes they get it legally through the law and letimes they get it illegally when an attorney general signs legal nions on New Year's eve at midnight, and they get it from Ken- [ys and they get it from the Eisenhowers, and they get it from Pat Browns and they get it from the Ronald Reagans. would now like to show this map Avhicli sort of gives an idea of land ownership pattern in one part of California. ?his is a map of the San Joaquin Valley. This is Highway 99 (in- iting). AVe have Bakersfield here (indicating), Tulare here (in- iting), and Fresno here (indicating). Each one of these little ares represents one section of land, 1 square mile, 640 acres. )o you see the red checkerboard here? That is Southern Pacific i, 210,000 acres in this part of the San Joaquin Valley which V got free from the Federal Government about 90 years ago for Iding a railroad, part of which was never completed, lie black holding down here in the Kern County is the Kern mty Land Co., now part of Tenneco. In that part of Kern County re is 840,000 acres of land. That is roughly equal to a 1-mile-wide p of land extending from San Francisco to Los Angeles. If you e trouble getting all of that, it is 6 miles wide from San Fran- to Sacramento. They obtained this land in a number of very cresting free-enterprise fashions, through what might be called itical efficiency. They got one piece, 100,000 acres, this piece right e (indicating), on the last day of the Grant administration. How bat for long-range planning? On the last day of the Grant admin- ation, INIarch 3d, 1877, Congress passed what might have been ed at that time a war on poverty measure for Civil War veterans. f\ras called the Desert Land Act and under the terms of this act ooY veteran and his family were allowed 640 acres if they went out 1 rode across that land and said it was desert land and agreed that y would go out and live on that land and improve it. -t is very strange, because this piece of legislation was sort of hed through the Congress and signed by President Grant and the ry didn't get to the newspapers very quickly. The story did get 728 very fast by telegraph to two places in California, three places, to the Federal Land Office in Visalia and San Francisco and to the promoters of the Kern County Land Co. Over one weekend when the Federal Land Offices were closed to the public, they were open to the Kern County Land Co. The Kern County Land Co. sent m their employees, one after another, and they perjured themselves by say- ing "I went ou there and I rode over the desert lands. I am going to take the wife and kids out there and we are going to improve this ^^ Over one weekend and in the beginning of the fallowing week in San Francisco in the Federal Land Office they got ahold of 100,000 acres of land. . ^, _ i i. • U4. u^ In those days the San Francisco Chronicle was what might be called a radical newspaper today. They started talking about the land barons and the land steal and all that sort of thing and the next thins; you know the government appointed a Commission, i guess that is where we get that idea about Commissions, it is not anything new. They had this investigation and the Commission held hearings, iust like they do today. Of course it was without television and ail that. They got all of those Kern County employees up there one by one, they said, "Sure, the boss gave us the money to get that piece of paper and sure we gave the boss the piece of paper when we got out of the office," and most of the people had never even seen the land on which they filed. , The president of the Kern County Land Co. was also questioned by the Commission and he got up there and said, "Yup, that is what we did, and the reason we did it is because it takes large, efficient corpo- rations to develop the West." . ^ . .1 1 ^ _^^^ They kept the land; they still own it. In fact, they own a lot more of it. They have all of it but 360 acres, the 360 acres they gave for a new college in Kern County, and the college, fortunately, is right in the middle of that black spot. That is sort of nice, too; its like eating your cake, giving it away, and still having a bigger piece, be- cause what has happened is, when the college is built there, they will build a town around the college and the dormitories and restaiirants and everything else. This is what Irvine Ranch has done in Orange County. I think Kern County Land Co. learned that trick from Irvine Ranch. • ^ +i + I guess everybody knows about Tenneco, so I won t go into that. Over here (indicating) we have this orange piece that is called the Teion Ranch, but it is controlled by the Los Angeles Times, which in part explains why the Los Angeles Times is interested m the pricet of farm labor, and irrigation projects. /• -,• ^- ^v We have another little piece, the purple piece up here (indicating) which is called the Boswell Ranch, which is 37,000 acres. It is con- trolled by J. G. Boswell Co. J. G. Boswell also contro ^'/"^^^^^^ s^^"' eral different other names, including his own, about 12.),00() acres. and J G. Boswell is one of the heavy owners of Safeway htores along with Norman Chandler of the Los Angeles Times, and the> are sort of related by marriage, which is kind of like keeping tUt world in the family. 729 5afeway and the Los Angeles Times also own Shasta County where 5 Pit River Indians are having trouble. So that puts it all together, id Safeway Stores was the leading chain in the country in opposing ) organization of farmworkers. ill of these folks, of course, all of these corporations hold director- ps on the Stanford Research Institute which does all this welfare earch. Boswell, of course, is the leading recipient of public wel- •e in the world, last year having received $5 million for growing i not growing various and sundry crops, like cotton and barley. ^ rhere is another man up here named Russell Giffen, and he doesn't ^^e any particular color, but he owns 130,000 acres of land and he the second largest recipient of public welfare in the world. He eived about $31/2 million. Russell Giffen until last year was a member of the board of direc- s of Pacific Gas & Electric Co., which is, I think, one of the third gest public utilities in the world, and the Food Machinery Corp., ich makes farm machinery and armored cars, ilight in the middle of this now we have the State water plan that s created by Pat Brown and John Kennedy. That is the water plan ich ;Mr. Biilbulian mentioned that is going to deliver huge amounts water to large corporations illegally through the courtesy of iral Democrats. These guys don't care who they take their ney from. Uso under construction alongside that canal is a freeway. Now, freeway is being built by the Federal Government mainly and it being built, it is my understanding, in direct violation of the delines for the Federal Highway System, because the Federal ^hway System said that, I think, all urban areas over 50,000, or lething like that, have to be connected by the Federal Highway item. Tliis is Interstate 5, and the areas of over 50,000 that it 5ses will be Bakersfield, Fresno, and Modesto, ^ow, this is sort of like long-range planning, too, because what )pens is we have a transportation system and then we have heavily »sidized water and then, when somebody wants to build a new i or they are talking now about putting a branch of the University California in Fresno County, you sort of figure now where is that ng to be, and you know darned well, on the basis or Irvine Ranch I Kern County, what happened there, that the branch is going 3e right next to or in the middle of the largest corporate land hold- : in Fresno County. It won't necessarily be the best location and it a't necessarily be the worst, but it will be the one which is deter- led by the power wliich controls that county, and not in the best Brest of any education. riie subsidy on the water, by the way, the cost is going to be about 500 an acre for every acre which will be irrigated and the land- ners Avho use the water will repay approximately $1,000 an acre. . don't think this is particularly outrageous. I think it is a condi- 1 which exists and, if we understand how society is controlled, n we understand this is the way it will happen. These guys have power: it is their government, so they will get what they want of it. It doesn't make any difference who is in office. There is a 730 radical friend of mine wlio was asked once during the presidential campaign of 1968, which I think is a pertinent point, as to whom he was going to support, w^hetlier it was going to be Nixon or Humphrey. He said, "Well, you know, I don't think it makes a whole hell of a lot of difference because, look at it this way, if you go down to the beach and watch these guys riding a surfboard and you see a guy who is really good on the surfboard, you don't say, 'Look at that guy push the ocean around,' you say, 'Look at that guy ride the wave.' So a good politician will be a man who rides the wave." The problem here is to create a new wave, to create some new basis of power. As long as this power will subsist and is allowed to expand and is encouraged by the administrators who will not enforce the law, by the politicians who go down to Delano and wave a Huelga flag and go back to Washington and give all of California's water to the large corporations, this condition is going to exist, and it is going to get worse. Now, the interesting part of this map is that it is really not, if you really look at it, a map of the San Joaquin Valley. This is a map of the Imperial Valley. This is a map of the Sacramento Valley. This is a map of INIississippi, and this is a map of the South China Sea, because the South China Sea has been divided up this way, too, by the same people who are interlocked with this setup. Senator Stevenson. Is that map a part of materials you are sub- mitting for the record ? Mr. Ballis. Yes. Senator Stevenson. Is it a part of other materials? Mr. Ballis. No. Senator Stevenson. We will mark that exhibit 1 and expect t( receive a copy of it for the record. ^ (The map, exhibit 1, has been retained in the subcommittee hles.^ INIr. Ballis. I will say one more thing, then I will stop. The latest example of how this system works, it seems some dedi cated bureaucrat went down and started nosing around Kern Count; a couple of months ago on the crop subsidies, and under the prograii now a grower has to have a set-aside acreage in order to qualify t receive a subsidy, and they found that some of the growers were set ting aside airstrips and desert land and stockyards in order to qualif; for the crop subsidy, and some of the farmers doing this are official in the Department' of Agriculture back in Washington, and anothe who set aside an airstrip happens to be the chairman of the A.S.C Committee in Kern County which is supposed to administer this lav Senator Stevenson. Thank you, Mr. Ballis. I am going to have to ask all witnesses to keep your statements ji concise as possible or- we won't have enough time to heai* everybody. STATEMENT OF AL V. KREBS, MEMBER OF THE STAFF OF TH AGRIBUSINESS ACCOUNTABILITY PROJECT, WASHINGTON, D.C Mr. Kkebs. I would like to submit my full statement for the recor* and I will just mention some of the highlights of my prepared stat ment. Senator Stevenson. Your statement will be entered and made part of the record and i)rinted following your testimony. 731 [r. Krebs. Mr. Chairman, the Agribusiness Accountability Project reciates the opportunity to present testimony today on the impli- ons of hand use and ownership as it affects farmworkers, farmers, consumers, particularly here in California. [y name is A. V. Krebs and I am here as a member of the staff of Agribusiness Accountability Project, which is based in Washing- D.C. Our project is a public interest research organization that is isored by the Center for Community Change and the Project on porate Responsibility. We are funded by the Field Foundation, or over a year now wx have been attempting to document the ire and extent of the role of the big business in rural America. 1 California, the terms "big business'' and "land use" are almost mymous, for nowhere else in this nation is land, vast tracts of I, deified as they are here in this State. s Arthur Miller noted rather wryly in his "Lines from Cali- lia," a "philosophy is a keen sense of land values and the patience ait." espite the colorful legends about California the State never even a frontier or real homesteaders, for it was already owned by a ;t few land barons before it ever came into the Union. Through- the past 125 years, most of that land has remained the property few while being plundered for whatever would bring its owner st and profitable dollar. 'e have cited some statistics on how rich California is in terms of cultural production. In that sense it is really not surprising that fie Gas & Electric, in this ad which appeared in the New York es a couple of years ago, shouted: n the second gold rush. Discover the gold in agribusiness. The super- less nurtured by northern and central California's rich soil, ideal climate, iful water, and ingenious farming know-how. Big crops, and a big variety ops make big business for farmers, processors, packagers, manufacturers, countless other industries. It is all agribusiness, the No. 1 industry in rush country. r. Chairman, like that first rich bonanza that came upon this e over some 100 years ago, this gold rush today also has its rather id and shameful side. rom the beginning, through a combination of massive land grabs, mce, foreign exploitation, political intrigue, slave labor, just plain d, the frequent ignoring of State and Federal laws, the giant vmg^ processing, and packaging conglomerates like the Del ite Corp., Tenneco, the DiGiorgio Cor])., Simkist Growers, with r interconnecting directorates, w^ho control the vertical integrated of food from the field to the table, California's agribusiness has v^n wealthier, more elite, and more powerful. is aimed at total control of the State's economy. In the process oing so, it has enjoyed the enriching benefits derived from State federally subsidized water and transportation, abundant amounts loney from Bank of America, and free and almost unlimited use le research facilities of the land grant ITniversity of California, exorbitant IT.S. Department of Agriculture cash giveaw^ays total- nearly one-half billion dollars in crop subsidies just since 1966. Tiat has happened in the past in California and is even now asifying is also beginning to take place on a grand scale through- 732 1 out American agriculture. Large, impersonal, and often vertically integrated corporations are becoming the dominant force in rural America. Land ownership, of course, remains the touchstone of agribusiness, particularly in California. We cite some figures not only of outright landowners but some landowners through subsidiaries. It is no acci- dent that land concentration is so high in this State. In combination with the historical reasons mentioned earlier, it should be emphasized that U.S. farm programs have been more directed toward farm prop- erty values than the welfare of the people. No wonder the large growers in this State, backed by this kind of government policy, have parleyed their vast land holdings, with ready reserves of private capital, to amass huge personal fortunes. The large farm corporations in this State today have, indeed, be- come unique creatures of the banks. Just as Dr. Frankenstein is remembered for his special creativeness, so the Bank of America in this State is revered by many for its ability to manufacture ne^ forms from old bodies. At one time the Bank, as recently as a couple of decades ago, was one of the largest landowners in the State, with nearly 600,000 acres It was making a profit from agriculture of $642,000 a year. I would direct the particular attention of the committee and als( to the members of the press to the testimony you will be hearing probably tomorrow in Fresno, from Mr. Peter Divizich and his ex perience with the Bank of America. The Bank has evidently noi seen itself in any less of a role in dominating agriculture, as Mr Divizich will be telling you. It is no wonder, shortly before he stepped down, that the bank' chief executive officer, in 1968, Rudolph A. Peterson, when speaking to a California Canners and Growers luncheon said: Why is a banker talking about agricultural policy? Because Bank of Amei ica has a deep stake in agriculture. We are the world's largest agriculturs lender with lines of credit for agricultural production running at about billion dollars a year. Our total agricultural commitment is probably aroun three billion. We have been in agriculture a long time and we intend to stay i agriculture for a lot longer. In a very real sense, then, agriculture is oi business. Mr. Peterson, I should add, Mr. Chairman, is a good example c the modern agribusiness gentleman farmer for, in addition to sen ing as chairman of the Bankamerica Corp.'s executive committee, li is also a board member of Time, Inc., Kaiser Industries, Broadway Hale Stores, Standard Oil of California, Consolidated Foods, and one of three bank board members serving with the DiGiorgio Cor] The agribusiness accountability project has prepared for the heai ing a profile of California agribusiness, which attempts to demoi strate the deep inroads that giant corporations have made into tl State's agricultural economy. Some of the activities of corporatioi like Pacific Lighting Corp., as Mr. Miller noted, a utility compar moving into diversified areas, is documented here. We focus our attention only on 50 major corporations, makir subjective selections to indicate a wide range of agribusiness holding An examination of this profile would show that these 50 corp< rations not only have deep roots in California agribusiness, but all 733 1 integral parts of the national corporate power structure. Agri- >iness in California may not be any more Californian than it is •al. Agribusiness is corporate power, period. The agribusiness ount ability project has found that one does not go into the fields fight agricultural power today, one goes to the financial districts the cities, from ^Montgomery Street in San Francisco to Wall •eet in Xew York. t is important to know, for the committee to know, what this )file is not. It is not intended as a complete directory of the agri- ;iness community in California, nor do the individual profiles ampt to exhaust the picture of the corporation and its agribusiness olvement. Rather, this profile simply is an indicator of the kind financial power that is at work on the land throughout rural lerica. should add that, under present laws of corporate disclosure, it mpossible to get a focus on the true nature and extent of corporate aination of rural America. Whether you are a public interest re- rch organization, an independent family farmer, an agribusiness 3kholder. or even a U.S. Senator, you must engage in an absurd I frustrating game of corporate hide-and-seek just to obtain a gh picture of American agribusiness. kfore Senator Nelson's Subcommittee on Monopoly, we presented imony which we would like to enter in the record of this com- tee, demanding greater corporate disclosure laws, particularly in realms of agribusiness and agriculture. senator Stevexson. It will be entered in the record, and some of the Serial will appear in the appendix. You are also entering a profile California agribusiness in the record, too, is that correct ? Ir. Krebs. Yes, that's right. The prepared statement of Mr. Krebs follows :) SKS^4 WHP ',:sK 734 statement of tho Agribusiness Accountability Project Before the U. S. Senate Migratory Labor Subcorrmiittee San Francisco, California January .1 1 , 1972 AGRIBUSINESS AND LAND IN CALIFORNIA Mr Chairman, the Agribusiness Accountability Project appreciat the opportunity to present testimony today on the i)aplications of land use and ownership as it affects farmworkers, farmers and con- sumers, particularly here in California. My name is A. V. Krebs and I am here as a member of the staff of the Aaribusiness Accountability Project which is based m Washing- ton D C. Our Project is a public interest research organization that is sponsored by the Center for Comm.unity Change and the Project on corporate Responsibility. We are funded by the Field Foundation. For over a year now, we have been attempting to document the nat:ure and extent of the role of big business in rural America. In California, the terms "big business" and "land use" are almost synonymous, for nowhere else in this nation is land, vast tracts of land, deified as they are here in this state. As Arthur Miller noted rather wryly in his Lines from California, ' a philosoph is a keen sense of land values and the patience to wait." Despite those colorful legends we read about and often see on TV California never even had a frontier or real homesteaders for it was already owned by a select few land barons before it ever came into the Union. Throughout the past 125 years, most of that land has remained the property of a few while being plundered for wharevG would bring its owner a fast and profitable dollar. A Second Gold Rush California today leads the nation in food production: — it furnishes 25 percent of the U. S. ' s table foods, the largest single producer of over 50 of the some 200 common crop varieties used in this country; 735 — it accounts for one-third of the nation's canned and frozen vegetables and fruits making food processing, canning and packaging alone a $2.5 billion industry; — it purchases over $1.8 billion of seed, fertilizer, machines — and labor, each year; — its cash farm receipts are over $4.5 billion, making agribusiness in this state v;orth over $16 billion, a value which exceeds that of its production of aircraft and transpor- tation equipment, the next largest industry, and four times that of California's petroleum production; — eight of the top ten agricultural counties in the U. S. by value of all farm products sold are in California as three percent of the nation's farms and farm acreage account for almost 10 percent of the total U. S. cash farm receipts. No wonder this Pacific Gas and Electric ad which appeared a )le of years ago in The New York Times shouts: "Join the second I rush! Discover the gold in Agribusiness: the ... super-business :ured by Northern and Central California's rich soil, ideal late, plentiful water and ingenious farming know-how. Big crops — a big variety of crops — make big business for farmers, processors, lagers, manufacturers and countless other industries. Its all .business — the number one industry in Gold Rush Country...." But Mr. Chairman, like that first rich bonanza that came upon ; state over 100 years ago, this "gold rush" today also has a lid and shameful side. From its beginning — through a combination of massive land grabs, ence, foreign exploitation, political intrigue, slave labor, d, the frequent ignoring of state and federal laws, and giant ' Ing, processing and packaging conglomerates (like the Del Monte '. , Tenneco Inc., DiGiorgio Corp., and Sunkist Growers, Inc., . their interconnecting directorates) who control a vertically grated flow of food from the field to the table — California's business has grown v/ealthier, more elite, and more powerful. In its quest for total control of the state's economy, agri- ness has enjoyed the enriching benefits derived from state and rally subsidized water and transportation, abundant amount"" of y from Bank of America, a free and almost unlimited use of the arch facilitie;- of land-grant University of California, and bitant U. S. Department of Agriculture cash give-aways totaling ly one-half billion dollars in ASCS subsidy payments alone e 1966. 736 3- But what has happened in the past in California and is even nov, intensifying here, is also beginning to take place on a grand scale throughout American agriculture: large, impersonal and often verti- cally integrated corporations are becoming the dominant force in rural America. l^e Agribusiness Accountability Project believes that it is time to ask some rather fundamental questions about the role of big business in agriculture. If agribusiness is to become what PG & E called a "super- business," are consumers, taxpayers, citizens and laborers alike willing to pay an exacting price for an unappealing sameness in thei food, a publicly paid for but privately profitable corporation, a • blighted rural landscape and a chaotic and crowded urban environ:— with able-bodied workers being replaced by machines? Land and Land Ownership Land and land ownership, of course Mr. Chairman, remains the . touchstone of agribusiness, particularly in California. In 1969, the Agricultural Extension Service of the University of California and the Economic Research Service of the U. S. Department of Agri- culture found in a survey that 6.1 million acres of land out of a total of 11.8 million acres of cropland were owned by corporate farms, with 45 farms (less than one-tenth of one percent of the state's commercial farms) controlling 3.7 million acres or 61 perce of the land surveyed. Some of these large California agricultural landowners include —Vista del Llano Farms (Anderson Clayton, Inc.)— 52,000 acres — South Lake Farms (Bangor Punta) — 60, 000 acres - 40 acres leased — San Francisco and Fresno Land Co. (Bank of California, N.A.)— - 7500+ acres — Blue Goose Growers, Inc. (Pacific Lighting Corp.)— 6,000 acres — Southern Pacific Co.— 163,000 acres — Tenneco, Inc.— 362,540 acres - 33,698 acres leased — Standard Oil Company of California— 306, 000 acres — Purex Corp.— 30,000 acres It is no accident that land concentration is so high in this state. In combination with the historical reasons mentioned earli- it should be emphasized that U. S. farm programs have been more directed toward farm property values than the welfare of people, wonder the large growers in this state, l^ackcd by thi 5^ kind of 737 overnmerit policy, have par.layod their vast land holdings with readv eserves of private capital to amass huge personal fortunes, l*he large farm corporations in tliis state today have indeed ecome the unique creatures of the banks. Aiid just as Dr. Franken- tein is remembered for his special "creativeness" so the Bank of merica in this state is revered by many for its ability to manu- acture new forms from old bodies. Between 1926 and 1930, Bank of America reportedly foreclosed on ome 1,321 farms. It abandoned the least profitable ones to the overnraent for unpaid taxes and through an affiliate, California lands, operated some 2,642 farms by 1936, growing over 60 crops and ealizing an annual profit of $643,000. In the early 1940' s, after becoming the state's biggest land- wner witli over 600,000 acres, the Bank began selling off its hoicest properties to select growers. A look at the Bank's board f directors today shows how it has successfully concentrated agri- usiness in California. Shortly before he stepped down in 1968 as the Bank's Chief xecutive Officer, Rudolph A. Peterson asked a California Canners nd Growers luncheon: "Why is a banker talking about a Because Bank of America has a de ture. We are the world's larges with lines of credit for agricul running at about a billion dolla agricultural commitment is proba We've been in agriculture a long to stay in agriculture for a lot real sense, then, agriculture is gricultural policy? ep stake in agricul- t agricultural lender tural production rs a year. Our total bly around $3 billion time and we intend longer. In a very our business. " Mr. Peterson, I should add, is a good example of the modern gribusiness "gentleman farmer" for in addition to serving as chair- lan of the Bankamerica Corp. executive committee, he is also a board lember of Time Inc., Kaiser Industries, Broadway-IIale Stores, Standard Oil of California, Consolidated Foods, and is one of three (ank board members serving with the DiGiorgio Corp. 69-133 O - 72 - pt. 3A - 6 738 "A Profile of Ca] ifornia Agribusiner.; The Agribusiness Accountability Project }ias prepared for this hearing a "Profile of California Agribusiness," attempting to demonstrate the deep inroads that giant corporations have made into the state's agricultural economy. We focused our attention only o;, 50 major corporations, making subjective selections to indicate a wide range of agribusiness holdings. An examination of this Profile will show that these 50 corp- orations not only have deep roots in California agribusiness, but also are intergral parts of the national corporate power structure. Agribusiness in California may not be any more "Californian" than it is "rural." Agribusiness is corporate power, period. The Agribusiness Accountability Project has found that one does not go into the fields to find agricultural power today one goes to the financial districts of the cities, from Montgomery Street in San Francisco to Wall Street in New York. It is important to know what this Profile is not . It is not intended as a complete directory of the agribusiness community in California, nor do the individual profiles attempt an exhaustive picture of the corporation and its agribusiness involvement. Rather, this Profile simply is an indicator of the kind of financial power that is at work in rural California and throughout rural America. Under present laws of corporate disclosure, it is impossible to get a focus on the 'true nature and extent of corporate domination of rural America. Whether you are a public interest research orga,niza- tion, an independent family farmer, an agribusiness stockholder or even a United States Senator, you must engage in an absurd and frustrating game of corporate hide-and-seek just to obtain a rough picture of American agribusiness. On November 23, 1971, the Agribusiness Accountability Project appeared before Senator Gaylord Nelson's Subcommittee on Monopoly. In our testimony, we called for more comprehensive public disclosure laws concerning agribusiness corporations. Project Director Jim Hightower noted: "Corporate agriculture today affects far more than the investing public, and it is essential that we expand the traditional rationale for disclosure. Corporate agribusinesses are making private decisions that are having an enormous maybe devastating public impact. Putting aside the questions of v;hothcr we can control those decisions, at least the American public and their policy makers have a rig) it to know about tliem. " 739 -6- We renew that call lioro tod^iy for qreatcir cx'rpor.:to dj r;f'] o:- ir- : . : is an -osGontial first sLop i:oward restoring some Rc-rnb.l anco ol ilance to tlie power re].atd onh.}iip botv/een tlie American people and lerican bu.siness. Need e d: ban d_ J^^of o r_ni Corporate disclosure, however, is only one step tov/ard lallenging big business' invasion of agriculture. What is needed >st urgently today is some serious thought and action on the rjuestion : land reform in the United States. As a model aimed at making corporate America more responsive to \e conanon good, economist John Kenneth Galbraith has suggested that le railroads of the country be nationalized. Tlie Agribusiness :countability Project endorses that suggestion, for wo see in such i action a chance to demonstrate an effective land reform program. le Project calls for federal repossession of the massive land >ldings awarded the railroads years ago, and we call for a redis- •ibution of those lands into family- farming parcels that would be irge enough to be economically efficient and commercii^lly viable. Nationalizing a railroad like the Southern Pacific Company, )r example, would mean that the federal government could reposse^ id redistribute more than 3.8 million acres of land that originally (longed to the people of Nevada, Utah and California. Certainly, ich a plan would bring about a large measure of the true land (form needed in America, where more than 70 percent of the )pulation is squeezed onto less than 2 percent of the land, ilifornia, were less than 10 percent of the farms own more than I percent of the available cropland, is a state wTiere land reform ; a critical need. Redistribution of public lands, presently in the liands of the lil roads, would be one step toward lielping the little man of this )untry, and it would be a welcome step away from the long-stauding ideral practice of subsidizing large corporations at the expense : millions of rural Americans wlio want to remain rural, but who •e being forced instead to live on the fenced-in concrete of our -ties. Tlie Project also enthusiastically endorses the aims of ti:e (wly-formed National Coalition for Laiid Reform, based here in ilifornia. The Coalition is riglit in its statement that "ownership : land by those who work and live on it is tlie key to al leviatin-r iral poverty, easing url)an overcrov/ding, reducing welfare costs aiid loniploymcuit, protecting the rural onvi ronnion t and building a sironqer :mocracy." The Project will work with tL>: Coalition and support i L s :fort every chance wo cfot. 740 In addition, thoro is much to commend in the ponding Roc] amotion Lands Authority Act sponsored in tlio Senato l)y Senator Fred Harris and in the House by several California Congressmen. The buying of "excess land" at pre-water prices by a special, presi- dentially-appointed board and selling or leasing that land at post- mark et prices, with profits going into an education, conservation and economic opportunity fund is a progressive concept, an effective step toward land reform and a welcome investment in rural people. Senator Nelson's Family Farm Act of 1972, also introduced in the House by Representative Abourezk, is an equally important means toward barring large corporations from permanently establishing themselves in agriculture. Placing these corporations under the anti-trust and monopoly provisions of the Clayton Act would allow efficient family farms to prosper once again and to help stabilize our rural communities. If true land reform is to flow from these kinds of suggestions, however, it will be necessary to shore-up the government's anti-trust enforcement capabilities. At present, that capability is inadequate, as demonstrated recently by the decision of the Federal Communications Commission to drop its proposed study of the giant AT&T. Another indicator of our government's enforcement potential is the fact that the entire budget of the Justice Department's Anti-trust Division is only l/20th of the advertising budget of Proctor and Gamble. If the anti-trust and monopoly laws of this country were to be enforced, agribusiness would feel an immediate impact, for market control has become. the name of 'the game in agriculture. "Put the pro in produce," Tenneco reminds us. Large, vertically-integrated corporations are the dominant (and increasingly overwhelming) force in American agriculture. These are giant processors, feed companies and others "up" the food line, either growing their own crops on their own land or making one-sided contracts with independent farmers, forcing the farmer to serve the corporate interest rather than his own. These also are the corporations that are moving off to Mexico to exploit even cheaper labor there and to undercut the independent producers here at home. Their motive is profit, period. They have demonstrated a willingness and an ability to exorcise their economic power in about any way that will increase that profit, even if thut may not be in the best interest of rural America. Alfred W. l-^ames, Jr., the Chief Executive Officer of the Del Monte Corporation, expressed tliis single-mindcdnoss of agribusiness in this statement: "Del Monto's corporate game plan calls for continuing dovelo})iiiC!nL based on our estcibliahed strength in producing, distributing, an'l iiiarkcting food. Within I 741 that framework we v/ill continue to explore specific opportiinitics offeriny the potential for above-average earnings growth." Mr. Chairman, our proposals here today may seem a bit radical :o some, but they are tame indeed when measured against the truly ■adical changes often violent changes that have been wrought .n rural America by agribusiness interests. Certainly our proposals jre modest when you consider the enormity of the problem witli which T& are faced: how to make giant corporations, particularly the lozens that are invading agriculture, more accountable to the public :hat they should serve. In California, the problem is particularly acute because of :he enormous power which agribusiness has bought over the past 12 5 •ears. It overshadows all of California's public and private .nstitutions, its businesses, its politics, its educational system ind its social life. As Anne and Hal Draper have written in their excellent pamphlet, Tne Dirt on California : Agribusiness and tlie Jhiversity^ ; "It would be an exaggeration to say that agribusiness is the master of the social order in California, but it would be an exaggeration only because agribusiness '-hades into the financial power structure so neatly, and it is that combination which is the master. " 742 [Prom the San Francisco, California Agriculture, February 1970] Montgomery Strep:t : How It Controls California Agrici'lture.- Hawaii: Reports on Conservation, Tourism, Sports The Second Gold Rush (By A.V. Krebs, Jr.) Join the second gold rush ! Discover the gold in Agribusiness . . . Big crops— and a big variety of crops — make big business for farmers, processors, pack- agers, manufacturers and countless other industries. It's all Agribusiness — the number one industry in Gold Rush Country.— From an ad for PG&E in the N.Y. Times, Dec. 11, 1968. Corporate giants are striking it rich in the fields of California. A mesh of interconnecting directorate — composed of executives from banks, utility com- panies and other mammoth corporations — controls the flow of food from field to table. The large corporate farms that control California agriculture have become creatures of the banks. Ever since the wealthy miners of California's first gold and silver bonanzas returned to San Francisco with their fortunes a century ago, this City has been the financial capital of the West. Today, in the midst of what the Pacific Gas and Electric Company advertises as the "second gold rush" the City is again prospering — this time from the wealth being taken by farmers out of California's rich and fertile land. But these farmers are not the individualistic, industrious men America has so long revered, who work from dawn to dusk seeking to provide by the sweat of their brows a modest living for them and their families. They are rather the same corporate giants such as Bank of America, South- ern Pacific, Wells Fargo Bank, the Di Giorgio Corp., Kern County Land Com- pany and others who have for so long controlled the political and social des- tinies of California. In close alliance with the utility companies, such as PG&E and Pacific Tele- phone Co., and other huge growing, processing and packaging conglomerates like Safeway Stores, Inc. and Del Monte Corp., with their interconnecting directorates they control a vertically integrated flow of food from the field to table. At present, California leads the nation with a $4.3 billion total cash farm Income. It grows 40 per cent of the nation's vegetables, fruits and nut crops. It raises 90-100 per cent of the total U.S. production in 15 crops and leads the nation in another 25 crops. By the time the 200 commercial crops are har- vested, transported, processed and packaged their market value reaches some $16 billion. One of every three jobs in the state is dependent on agriculture or a closely related industry. Despite its great economic and political power, agribusiness in California still rests on the backs of 750,000 ill-housed, ill-fed farm workers who in 1967 earned an average of $2024 ("the highest paid farm workers in the U.S.," according to state agribusiness spokesmen). The efforts of Cesar Chavez's United Farm Workers Organizing Committee (AFL-CIO) in the last four years to gain better conditions and wages for these workers through union recognition and collective bargaining (rights denied by law to agricultural laborers) has now begun to cause some uneasi- ness within the S.F. business community. For it is in the buildings on Montgomery Street and that immediate area where historically the important decisions that inevitably determine the wages and working conditions of the state's farm laborers are made. Citizens of San Francisco, both the rich and not-so-rich, play important roles in making these decisions. Long Ix'fore John Steinbeck wrote his classic Grapes of Wrath, farm workers were seeking l)etter wages and conditions through orgainzation. Beginning with tlie Chinese, who were brought to this country by S.F.'s "Big Four" in the late 1800s to work on the (continental railroad and then later dumped into the San Joatpiin Valley, tliis City's entrepreneurs have contolled the lives of Japanese, Hindu, Armenian, Portuguese, Italian, Mexican, Filipino, Negro and Mexican-American farm workers used in California for over a century to grow and harvest its bountiful crops. 743 It was in the depression-ridden Thirties that a major effort was made by variety of unions — including some that were backed by the Communist >arty — to organize farm workers. When the threat that they might succeed ecaine so immediate, vigilante groups were formed to terrorize workers. Chief among those groups was the Associated Farmers of California, Inc. dth headquarters in San Francisco's Russ Building. The initial funds for the rganization were raised by Earl Fisher of PG&E and Leonard Wood of alifornia Packing Company. A study by the Simon J. Lubin Society of California, Inc. in 1938 showed lat some of the major contributors and backers of the Associated Farmers t the time included Santa Fe, Western Pacific. Union Pacific and Southern acific railroads. PG&E, Southern California Gas Co.. Transamerica Corp., the tate Chamber of Commerce, Joseph Di Giorgio and Mortimer and Herbert leishhacker among others. Not only were the Associated Farmers responsible for enacting many of the nti-pickeUng and so-called "emergency-disaster" ordinances in many of the :ate's rural counties (which still exist today), but they also maintained a :rong and powerful lobby in Sacramento. Carey McWilliams has described this era in the state's history as "constitu- onal facism." In III Fares the Land he writes : "The gentlemen who sit in their offices in San Francisco and Oakland and rite checks to the Associated Farmers are not the men who, wearing the arm- inds of the group, organize mobs to browbeat and coerce agricultural work- rs. They have cleaverly stimulated the farmers and townspeople to act as leir storm troopers. Nevertheless, the real headquarters of vigilantism in alifornia are to be found on Montgomery Street in San Francisco and not 1 the great valleys of the state." A somewhat less violent but quite vocal version of the Associated Farmers boasting that they are "the second largest statewide farm organization") ;ill exists today with offices at 225 Kearny. It is reported that they maintain Qe of the state capitol's highest-salaried lobbyists. At their 1968 convention the organization not only called for state and fed- ral legislation to outlaw the UFWOC's national table grape boycott but also assed resolutions opposing extension of unemployment insurance coverage to irm workers "because it would undermine motivation and place a premium ti idleness" ; opposed any legislation "designed to guarantee or force collective argaining rights for farm workers": asked that the hraccro program (which -as terminated in 1965) be transferred from the Department of Labor to the >epartment of Agriculture : and called for an investigation of the State Indus- rial Welfare Commission's right to establish a $1.65 minimum wage for omen and children. While it is not known whether the Associated Farmers still enjoys the finan- ial backing of their past patrons, many of those same giant corporations, long with the California Farm Bureau, the Council of California Growers nd the State Chamber of Commerce, maintain a powerful lobby in Sacramento nd Washington. D.C. (When the Delano table grape boycott first began to attract national atten- Lon, the State Chamber of Commerce sent more than 80,000 letters to business ^aders, trade associations, and chambers of commerce throughout the nation rging opposition to UFWOC's action, calling the campaign an effort to orga- ize workers by "blackmailing their employers.") Many Congressmen and U.S. Senators have been heard to echo former U.S. ecretary of Labor James Mitchell's words that California agribusiness is the toughest lobby of all" in Washington. There are many examples of this )bby*s political and financial power. During the S.F. Board of Supervisors' debate in 1968 to determine whether tie City should support the Delano boycott, it was learned, although none on tie Board would say who publicly, that several of them had been approached y powerful members of the State Legislature from agricultural areas who 3ld them that San Francisco could well face retaliation on City projects if : did not drop the boycott issue. Grape growers, who have suffered a 25-35 per cent loss in sales because of lie boycott, have managed in an unusual exercise of power to convince the I.S. Department of Defense to increase their shipment of table grapes to Viet- am by more than 800 per cent in the last two years. 744 It is reported that many pounds of the two million shipped in the first half of fiscal 1908-69 are either rotting in Saigon warehouses or being sold on the local blackmarket for $42 per 2()-pound box. (California growers have re- cently been receiving between $3.25 and $3.75 a box for these same grapes.) Many shipments of these grapes destined for Vietnam have been moving freely across Bay Area docks. Another exercise in agribusiness' power came to light last summer when State Assembly Minority Leader Jesse Unruh charged that "numerous Cali- fornia table grape growers are anxious to join in negotiations with the UFWOC, but are under pressure not to do so by more powerful, corporate growers." Unruh, however, when questoned by this writer, declined to name the specific "corporate growers." UFWOC picket captains report that some growers have told them in the past four years that they would be willing to negotiate a contract with the union, but if they did it was highly likely that their bank would not extend further credit to them. In a state where seven per cent of the farms own 79 per cent of the land (and employ 75 per cent of the farm workers) the large corporate farms that presently control California agriculture have simply become creatures of the Financing more than half of all agriculture in California today is the Bank of America. The bank's recently retired president, Rudolph A. Peterson, in out- lining "a new national agricultural policy" before the California Canners and Growers in November 1968, explained that corporation's role. "Why is a banker talking about agricultural policy?" he asked. "Because Bank of America has a deep stake in agriculture. We are the world's largest agricultural lender with lines of credit for agricultural production running at about a billion dollars a year. Our total agricultural commitment is probably around $3 billion. We've been in agriculture a long time and we intend to stay in agriculture a lot longer. In a very real sense, then, agriculture is our business." Peterson is also on the boards of Dillingham Corp. (which controls much of Hawaii's sugar crop). Time, Inc., Kaiser Industries, Consolidated Food Corp., the State Chamber of Commerce and the Di Giorgio Corp. The latter firm, whose headquarters are in San Francisco, is headed by Robert Di Giorgio. Once one of the largest growers in California (and a long- time symbol to farm workers of anti-unionism), the Di Giorgio Corporation today has become an international consumer goods, forest products, recrea- tional vehicle, distributing and land development complex. Besides being president and chief executive oflScer of his own corporation, Di Giorgio is also on the boards of directors for Pacific Vegetable Oil Corpo- ration, Broadway-Hale Stores, Union Oil Co. of California, New York Fruit Auction Corp., Philadelphia Fruit Exchange, Inc., Pacific Telephone and Telegraph, Bankamerica Corp. and Bank of America. How the world's largest bank manages its agricultural loans, the property its owns and the workers who harvest the crops on that land came to public attention after the UFWOC charged that a 5000-acre bank-owned ranch in the strikebound Delano area was refusing to bargain collectively with its more than 500 employes. Bank oflacials contended that their ownership was only temporary and that the land was leased to a firm called "Agri-Business Investment Co." The arti- cles of incorporation for the leasing firm, however, showed as two of its officers attorneys employed by the bank. The land's former owner, who after being allowed to run up a $7.8 million loan debt and forced into bankruptcy, had to sell it to Bank of America for $5.8 million. The bank also obtained a certificate of indebtedness and lien on all his crops (mostly table grapes), which means that he will probably be pay- ing off the money he owes the bank for the rest of his life. One union spokesman said that his union had signed up most of the ranch's workers and had asked the bank to negotiate with them, but their request was promptly rejected. In response, bank officials noted that although they were a major agricultural financier they were not themselves engaged in farming. As one can see from the numerous positions held by ex-bank president Pet- erson (who was recently appointed by l>resident Nixon to head a task force to reappraise; the U.S. foreign aid program) and Di Giorgio, the labyrinth of agribusiness' interconnecting directorates begins here and eventually spreads into every major bank and large corporation in the state. 745 or example, PG&E's public relations campaigns have been handled in past by Whitaker and Baxter Public Relations of San Francisco, the same 1 that is presently spending a $1 million table grape growers' 'war chest" n effort to counteract the national boycott. nother typical example of the influence and power men in agribusiness e todav 'in California is Peter Cook Jr. In Pacific Telephone and Tele- ph's 1968 Aymual Report. Cook is simply listecl as -Farmer. Rio Vista." But k is more than just a farmer; he is vice-president and director of the [fornia-Western States Life Insurance Co. and Westerlic Corp. He also res on the boards of directors for Wells Fargo Bank. Emporium Capwell Pacific Telephone and Telegraph Co., Western Pacific Railroad, and is a ner member of the board of directors of the Kern County Land Company, ch owns land twice the size of Rhode Island. rells Fargo Bank, with headquarters in San Francisco, is another large k that numbers among its board of directors many in agribusiness. The k's chairman of the board. Ernest C. Arbuckle, for example, is also a mem- of the executive committee of Safeway Stores. Inc. On Safeway's board re are men who, in serving as directors of other corporations, own nearly million acres of land in California. Hiile farm workers go without adequate housing, food and decent wages. California's small and marginal farmers continue to decline at a rate of 3 a vear, men like J. G. Boswell II, who sits on the Safeway board of direc- ;, draws huge cash subsidies from the Federal Government for not grow- cotton. esides owning more than 108,814 acres of California land and about 500 ?s of table grapes in Arizona. Bos well's company leases some 25.000 acres n the famous Miller-Lux holdings which Carey McWilliams described in lil in his famous Factories in the Field. In 1967, for not growing cotton, Boswell company received $4,091,818 in subsidies from the government's icultural Stabilization and Conservation Service. That same year 2270 cot- farms in four San Joaquin Valley counties — Kern, Tulare. Fresno and gs — received $65,414,483 in subsidies. 1 1968 Boswell received approximately $500,000 from the Australian gov- tnent for growing cotton on land he owns in that country, thus contribut- his share to a bountiful world cotton market for which the United States, in effort to protect its own prices, was obliged to pay Boswell more than $3 [ion to twt grow cotton in this country ! his same company's 37.555-acre Boston ranch is also slated to be irrigated n the state and federally-subsidized multi-billion dollar Westlands Water ject. The federal subsidy on this project is estimated to be over $1000 an ?. Legally, only farms of 160 acres or less qualify for this type of subsidy in California that law is often overlooked if not ignored by agribusiness, nth men like Boswell on Safeway's board of directors it is not difficult to lerstand why the nation's second largest retail food chain remains a major lout against the UFWOC's efforts aimed at getting them to remove their le grapes from their shelves. The supermarket chain, which is the largest dler of California table grapes in the Western United States, buys more ti 250 railroad carlots a year from the Giumarra Bros. Fruit Co. riumarra. who claims to be the world's largest table grape grower, owns le 3.500 shares of B. of A. stock as part of his $25 million corporation. >espite the UFWOC and other farm labor groups' efforts to "revolutionize" ifornia agriculture, the trend toward corporate farming continues with •ex Corp.. Dow Chemical Co. and the United Fruit Company emerging as : farmers in the state. San Francisco, of course, will continue to play a jor role in these new businesses for as Richard B. Cooley. president of Wells go Bank, has said : San Francisco is an executive headquarters city and much of its economy ends upon paper rather than products." »r, as local trade unionist Anne Draper and her Xeic Politics editor-hus- d point out in their recent pamphlet. -The Dirt on California : Agribusiness [ the University" : It would be an exaggeration to say that agribusiness is the master of the ial order in California, but it would be an exaggeration only because agri- iness shades into the financial power structure so neatly, and it is that ibinaton which is the master." .nd it is in San Francisco, a city which prides itself for its freedom, its cern for social justice, and its achievements in labor organizing, where t "shading" takes place every day of the year. 746 COUNCIL OF CALIFORNIA OROV\/ERa 520 EL CAAAINO REAL • SAN MATEO, CALIFORNIA 94402 • 347-66Bi CARLF.WENTE Hmwcoiv Ckolrmon of tU Boord DEAN BROWN PrMidant O. W. FILLERUP EMcutiv* VIo* PrMid«nt March 17» 1970 6«>ffrey Link, Editor San Francisco 120 Green Street San Francisco, California Dear Hr. Link: 941 II On A. V, Krebs Associated Farmers sti • story by the n page 25 of the February 1970 Issue of San Francisco, In • story . Jr., the statement Is made that, "while It Is not known whether ™.«w.-v— Farmers still enjoy the financial backing of their past patrons, nany of'those same giant corporations, along with the California Far« Bureeu, the Council of California Growers and the State Chairber of Commerce, Mlntaln • | ful lobby In Sacramento and Washington, O.C." power- We won't presume to speak for the other organizations named, but the Council of California Growers never. In Its ten years of existence, hat •alntalned a lobby either In Sacramento or Washington. We do not endorse, oppose, support, or lobby for or against any legislation. We are strictly an Informational, educa- tional and public relations organization which seeks to reflect the thoughts, ldeas» and attitudes of California agriculture. Upon further reading of the story, we have come to the conclusion that the rest of the article shows about the same degree of accuracy as the statement concernlhg the C.C.G. Analysis of the article reveals It as a poorly researched effort et muck- raking, it really Is a co#IIatlon of quotes and material from the same tired old sources iihlch themselves have been proved of doubtful accuracy. Let us examine another statement from the article. Mr. Krebs says there ... .«^- J — — -»g« of Department InsyraiME* rrovUtoM of the UnemptoyMAt Insurance Code." (which Is aH farm workers) dor 1l»9 1967 Oiowt that the MAXIMUM nonfcer of people who did AKY farm work that year was This Includes people who may have worked an hour, a day, ■ week, or just are "750.000 Ill-housed, Ill-fed farm workers who In 1967 earned an average of |2Q2^«*' Hsport 830, no. 6, from Research and Statistics Section of the Depart of Eanloyment. entitled "Agrlculturel Workers Covered by the Disability lnf»ra •..JTiLtJ^ ^\u^ iin««nln«MM>i> Incurance Code." (which Is all farm »«>rkers} dtt minutes, ThU Is only a matter of an error of 61,000, true, but that constitutes - - — -'ty. But more lnwrtant, *- ♦»- *-'•♦ ♦»»•♦ *•- accurate flaui one really wants them. •tter of an error of 61,000, true, but tl»at consxiwes •>r«|ty faff sltad city. But more Important, Is the fact that the accurate figure! IVfAMy to Obtain. If OM " 747 e 2 Link ch 17 Before we leave this subject of the farm work force, honesty In reporting tates that we exhaust all easily available sources. The "California Annual Farm Labor Report" for the year 1967, Issued by the artment of Employment, shows the following figures for that year. The peak nunt>er workers was 375,300. Of those, 91,000 were farmers and members of the farm family, ther 9'*, 200 were hired year-around employees. That leaves only 190,000 seasonal workers, of whom 135,000 were local kers. So the great myth of "migrancy" comes down to the fact that out of the total 375,000 workers, only 5^,800 were migrants, or Just over ]k per cent. Furthermore, 000 of those were Intra-state migrants, California residents who maintain homes In s state arid travel for short periods to harvest crops. The difference in the 688,000 and the 375,000 can be accounted for by the ge nun*)er of casual workers who may "give farm work a try" for a day or two and not be counted as true farm workers. The state says a professional farm worker is one who does nothing but farm k, and who Is employed In farm work In each of the four quarters of the year. Insurance figures show that there are close to 100,000 of these; that their Ian earnings In 1967 were $3,669.; and that about half of them wor'ced for four ferent employers and had median earnings of $4,670, One final note on this subject. The state's figures do not show earnings work outside California, so there are 22,600 interstate workers whose annual ntngs were higher than shown and which would Increase all the earning statistics, Mr, Krebs says collective bargaining rights "are denied by law to agrlcul- al laborers," This Is not correct. Farm workers have the right to bargain lectlvely. They are excluded from the National Labor Relations Act, and, as a ult, collective bargaining Is not mandatory. What he did not say was that California agriculture Initiated In this islon of Congress a bill to give farm workers a collective bargaining law all of tir own. It was Introduced by California's Senator, George Hurphy, and hearings rently are being held. Mr. Krebs also could have checked his figures on the movement of table ipes with authoritative agencies, rather than simply copy the propaganda claims of i United Farm Workers organizers. The Federal -State Markets News Service Indicates that grape movements are >ad of last year. Prices are down, primarily because I969 was a tremendous crop ir. The harvest for grapes was considerably larger than the previous year and ipettng crops such as apples also had bumper harvests. The prices of these fruits are determined by the supply and demand, with government support programs; therefore, In years of large crops, like I969, the Ices are lower. 748 Page 3 Mr. Link March 17 was learr reporter lyman Unruh ted Farm rters is in Krebs' One always should be suspicious of statements starting with "It or "It has been reported." This generally means that It is something the wants to say, but can find no supporting evidence for the statement. 1969 saw an event that flatly contradicts the quote from Assemb A dozen California grape growers DID enter into negotiations with the Uni Workers organizers. Among those negotiators was one grower whose headqua San Francisco and, therefore, probably should be considered as one of Mr. establishment people. Those negotiations failed completely because of the union representatives' refusal to bargain in good faith. The negotiator for the growers, during a Los Anqeles press Conference after the collapse of the talks, said that on the very d.y the talks were broken off, these growers were prepared to sign contracts. That was the time, he said, when the union people reneged on all previous agreements and caw forth with new demands, making further discussions useless. Any discussion of errors of fact or ommisslon In the Krebs' article would not be complete without a comment on his statement that DlGlorglo Corporation Is a "lonq-tlme symbol to farm workers of antl-unlonlsm." He should have added that it was the DlGlorglo Corporation which was one of the first farming organizations In California to negotiate a contract with the United Farm Workers Organizing Committa and, to borrow Mr. Krebs' term. It has been reported that the subsequent fa ure of the union to furnish competent workers, the obstreperousness and Intract Ibl 1 1 ty of the union officials, were among the major reasons the DlGlorglo people got out of tl farming business. Another place where Mr. Krebs was trapped by a careless quote was his sta ment that "seven per cent of the farms own 79 per cent of the land (and employ 75 P cent of the farm workers)." The most recent census of agriculture compiled by the Bureau of Census, U.S. Department of Commerce, shows that seven per cent of the farms actually own 78 per cent of the land. ..some 29 million acres out of some 36 million devoted to agri culture in Cal Ifornla. However, nearly 23 million acres of this Is devoted to pasture-timber lar Over half of all the farms Involved are livestock or grain farms, neither of which employ large nunfcers of workers. As a matter of fact, all the farms In California I 000 acres or more enployed only W,000 workers, according to the census. Using c 375,000 peak figure, this would be about 13 per cent of the workers, not 75 per cer Mr. Krebs seems to be amazed over the fact that such Industries as P.G. i Pacific Telephone, the various banks and the railroads all have an Interest In California agriculture. If he were jnore familiar with agriculture, he would not be quite so surpi First, agriculture Is the largest Industry In the state. It uses about one third ( the rail transportation, the majority of the highway transportation, and nearly oni half the value of all waterborne exports from California ports. This would accouni the Interest of such firms as Southern Pacific, Santa Fe, Union Pacific, Western P 749 Link :h 17 any other railroad or steamship company, California farmers use an average of more than 60,000 kilowatt hours a -, almost seven tl«es the national average. This would explain the Interest In (culture on the part of P,G, & E, and Southern California Edison, The most recent census of agriculture shows that California farmers own J than 100,000 automobiles, 125,000 trucks, 140 tractors, 20,000 other pieces of linery. This, coupled with their expenditures of $100 million a year for petroleum iucts would account for the interest shown by manufacturers, distributors and • lers of these products. There were more than 70,000 telephones on farms. Just one shipper of Ifornia fruits and vegetables, whose offices happen to be in San Francisco, said annual telephone bill runs over $100,000. This would account for the telephone )any's interest in agriculture. The most recent report from USDA Economic Research Service shows that ifornia farmers spent $222 million for repair and operation of capital items, 1.2 million for depreciation and other consumption of farm capital and $178,8 lion In Interest on farm mortgage debts all in one year. This would account for the Interest shown in agriculture by the Bank of ■lea, Wells Fargo, Security Pacific, United California, the Federal Land Bank and Intermediate Credit Bank, to name a few. About the only independent small banks : in the state are those which are located in agricultural areas, serving farmer :omers, primarily, which seems to contradict Mr, Krebs again. Mr, Krebs apparently is trying to make some sort of comparison between the line In the number of farms and the size of some farms in California, First, It should be pointed out that 12 other states in the United States ■ank California In size of farms. Including such citadels of family farming as ►as, Nebraska and Oregon. Second, It must be said that it is true that the number of farms in Ifornia Is declining and that the remaining farms are getting larger. This Is as I an economic fact as the disappearance of the corner grocery. It wasn't the in store that drove the corner grocery out of business. It was the customers, f preferred to shop In the larger, more complete, store. It Isn't the larger ^r who Is driving the small one out of business, it is the inflationary economy :h makes It Impossible for small growers to stay In business. High farm wages, :s, mechanization, and other costs have made It uneconomic for the small grower to rive. But this Is not confined to California. Undersecretary of Agriculture, »hll Campbell, recently said that "In 19^*7 there were nearly 6 million farms In country with roughly 26 million people living on them." By today there are )ut 3 million farms with only 10 million people living on them," he added. In California the comparable figures are 137»000 twenty years ago to about 750 Page 5 Mr. Link March 17 65 000 today. A Uttle arithmetic shows that the disappearance of small fanners In California Is almost exactly at the same rate as the national figures. It would appear that while Mr. Krebs may have used some accurate figures, he drew some completely invalid conclusions from those figures. Sincerely, 0. W. Ftllerup Executive Vice President OWF/bd 751 April 9. 1970 tor r FBANCISCO HAGAZINS ) Gr««n street I Preuclseo, Calif. 9^111 tort one reading th© vast news releases and newsletters II shed by the California Cotmcll of Growers should be e to clearly see that this organization not only opposes teetlvG le;?l0latlon for farm workers but ridicules and tlCBizQs thoae groups ytho support such measures, would be nnlve of tis to think that nuoh an organization oh boftsts of refloctlng*the thoughts, Idoas and Itudes of California agriculture" did not exercise a slderable degree of polltloal ausole in the state and Ion* 8 oapltol* her than engage in a ntxnbers game with the Council 1 ht simply point out that farn labor fltatistics both in Ifomla and the United States are difficult for anyone state with accuracy given the Inexact methods by VThich ious goverran.ent agenciea GQcertaln their figures, fact still renains, however, that aony tens of thousands California farm workers are ill-housed and ill-fed • current farm labor situation clearly shows that unless ageaent is required by law to bargain collectively with ir workers eny group or organization reprerontlng the kers is powerless* For example, in sone eight elections card checks held, 89.^^ of the nearly 2500 workers voted union representation* Yet today the UFWOC has only three tracts with table grape growers. The rest claim their kers are happy and don't want a union. ing sharp exception to my remark about the DlGlorglo poration being a "long-time symbol to farm workers of i-unionism, " the Council of Growers betray an ignorance California history. They should have read Dr. Ernesto arza»s new book SPIDERS IN THE HOUSE AND WORKERS IN THE LD (Notre Dame Pressjf., an account of the infamous 7-50 Di Giorgio Arvln strike, before making such a remark. A. V. Krebs Jr. B.D. 3t Route 28 Somerville, N.J. O8876 752 pf:sticides Washington (TJPI). — The Environmental Protection Agency was asked to- day to issue an emergency rule to prohibit experimentation on California farm workers who are being used as "guinea pigs" to test the effects of crop i cides on humans. A formal complaint was filed by the agribusiness accountability project, a Washington-based, public-interest research organization, who charged that the experiments by two companies were "reprehensible and unpardonable." The organization charged the insecticides manufactured by the two firnu were similar to "A form of nerve gas developed in Nazi Germany during World War II," which they said caused serious nervous disorders. The two manufacturers were identified as the Niagara Chemical Co "* Middleport, N.Y., a subsidiary of the FMC Corp., which produces the i cide Ethion, and the Chemagro Corp. of Kansas City, Mo., maker of .. pesticide Guthion. The organization said the two firms paid bonuses to farm workers last summer to pick crops in the fields seven days after the pesticide had beei sprayed, even though the California Department of Agriculture requires a 30-day delay period. According to a report by the organization, Niagara signed 19 workers at th( Euclid Packing Co. near Linsay, Calif., and make experiments in late July anc early August, 1970. Chemagro signed 30 workers at the Terra Bella orcharc and the Whittemore orchard, both in Visalia, and made tests in late August am September. Blood samples were taken from the workers for which they wen paid $3.50 for each test. A report made for the organization by A. V. Krebs Jr., a field researcher said the organic phosphate insecticides "short-circuit the nerve processes o: not only insects and animals, but also human beings." He said the two companies made the tests to prove a seven-day waitini period after spraying was sufficient. _ . Dr. Raymond E. Johnson of the Environmental Protection Agency s Pesticid OflSce said "there are some valid aspects to their (agribusiness accountabilit; project) charges, some serious aspects." Johnson said to his knowledge "there are no restrictions that I know of to prevent such experimentation, except those of decency and morality. "It's a serious thing," he added. "It's extremely difl^cult to solve this prol lem, because regardless of the use of restrictions, we are still unable to regi late human behavior." Johnson said his Office has "seen this problem shaping up since last sun mer. "We are generally familiar with the problems of re-entry of people int fields recently treated with organic phosphate chemicals," particularly i southern California, Arizona, and in tobacco fields of North Carolina. The organization which made the study said it was formed "to inquire mt the accountability of large American corporations and agribusiness interest for the plight and powerlessness of migrant and seasonal farm workers." Thei study was a joint effort by three groups, the Project on Corporate Respons bility, the Center for Community Change, and the Washington Researc Project. The investigation showed farm workers selected for the Niagara tests ii eluded a 38-year-old woman suffering from anemia, a 15-year-old girl who ha suffered a skull fracture in 1969, a 44-year-old man with diabetes, and a 2- year-old man being treated for chronic headaches. Blood tests bv both companies showed significant drops in red blood ce levels among the workers, a test which "is conceded to be a specific measui of central nervous system damage," the organization said. Jerrv J. Berman and Jim Hightower, leaders of the projects' researc program, charged the experiments ^represented "a case of corporate atrocit committed for corporate profit." 753 statement of the AGRIBUSINESS ACCOUNTABILITY PROJECT November 23, 1971 Subcommittee on Monopoly Senate Select Committee on Small Business CORPORATE SECRECY — AGRIBUSINESS Mr. Chairman, the Agribusiness Accountability Project preciates your invitation to present testimony today on a ndamental issue in our society corporate secrecy. My name is Philip C. Sorenson, and I appear today as e Chairman of the Advisory Committee of the Agribusiness Ac- antability Project. I am accompanied by Jim Hightower, Director the Project, and by Martha McNeil Hamilton, who is Director Government Research for the Project. The Agribusiness Accountability Project is a public terest research organization that is sponsored by the Center r Community Change and by the Project on Corporate Responsi- lity. We are funded by the Field Foundation. For over a year w, we have been attempting to document the nature and extent of e role of big business in rural America. Because of corporate d governmental secrecy, this has not been an easy effort. AN OVERVIEW OF AGRIBUSINESS IN RURAL AMERICA One thing we do know is that agribusiness corporations nerally have become the dominant force in rural America. Their •ncentration of agricultural markets and their power over rural :ople is increasing every day. It is our finding that American iriculture has moved from the fields to the cities the •133 O - 72 - pt. 754 (2) critical decisions today arc made in the board rooms in New York, Washington, Chicago, Atlanta, Kansas City, Houston, Los Angelr.s and other centers of big business. There is no doubt that agriculture J^ big business. 1: 1970, Americans paid $114 billion for food. Fiber, tobacco and other agricultural products add billions more to make agricultur the biggest business of all bigger than aut6mobiles, bigger than defense hardware, bigger than electronics. Agriculture is the biggest Contibutor to our balance of payments and a major source of employment. Three out of every ten jobs in private employment are related to agriculture. But it is not the average rural American who is pocket ing the billions generated by agriculture. Instead, it is agri- business that enjoysthe profits-— a complex of huge seed and fee companies, chemical and fertilizer producers, farm machinery manufacturers, processors, canners and packagers, marketers and distributors who increasingly are moving into productiong. On the surface, agriculture appears to be a highly dispersed industry thatwould not lend itself to takeover. A majority (56.5 per cent) of all farms in the country are classi- fied as "small." In fact, their impact is "small," in spite of their numbers. They accounted for only 7.8 per cent of farm sales, according to the 1964 Census of Agriculture. On the other hand, a mere nine-tenths of one per cent of this country's farms accounted for 24.3 per cent of all farm SiHIlMKF^i 755 (3) es. These giant producers averaged sales of $272,000 that r. The U.S. Department of Agriculture estimates that by 1969 se "largest" farms "accounted for at least one third of total es by all farms." The Department projects that by 1980 these er farms will account for more than half of all farm market- USDA attempts to minimize the importance of corporate iculture by pointing out that corporations account for only per cent of all farms and seven per cent of the land in tns. It says nothing about the real power agribusiness exerts the market place and through contracts. Campbell's Soup, for mple, owns no farm land, nor does it lease any, but through tracts with producers it effectively controls thousands of es and hundreds of farmers. USDA does not bother to report t. Thanksgiving is only two days away. This traditional ebration offers a dramatic insight into the corporate inva- n of agriculture. Pilgrims and Indians provided their home- wn food for the first feast, but corporate America has pre- kaged the dinner this year. The Smithfield ham comes from T. The turkey is a product of Greyhound Corporation. The tuce comes from Dow Chemical Company, the potatoes are pro- ed by the Boeing Company, and Tenneco, Incorporated brought : fresh fruits and vegetables. The apple sauce is made 756 (4) available by American Brands, while both Coca Cola and Royal Crown Cola have provided the fruit juices. For desert, there are strawberries by Purex. But we should hesitate before bowing to give thanks to the corporate providers. This Subcommittee has pioneered in the investigation of corporate agriculture. You know from your 1968 hearings that it is an unproven myth that corporations inherentl are more efficient than family agriculture. You know from your investigations in the field that corporations do not make good neighbors and that they change more than the pattern of farming when they move into an area. You know that there are serious questions about the quality of food that comes off the assembly line of corporate agriculture. And your hearings raised the fundamental and still unanswered questions about corporate mono- polization of agricultural products which may lead to price fix- ing . Mr. Chairman, we are not suggesting a return to the old homestead. It is obvious that the answer is not to give everybody forty acres and a mule. It should be just as obvious that the answer is not to continue stumbling along blindly, al- lowing corporate agribusiness to re-make rural America in its o peculiar image. It is one thing to buy Thanksgiving dinner fro corporate America rather than a family farmer, but it is quite another thing to add on the staggering social and cultural cost that come with the shift in the make-up of agriculture. 757 (5) — 1.5 million farm workers averaged an in- come of $1,083 in 1970, while another mil- lion workers averaged $2,461 by doing some non-farm work too; — some 12 million rural Americans exist in poverty, with millions more existing just on the edge; — more than 2,000 farms a week fold more than 3 million have folded since 1940; — for every six farms that fold, a small-town businessman boards up his store; and — whole rural communities and small towns are being abandoned. The very character of our country is changing farmers eing reduced from free enterprisers to corporate cogs, small are being abandoned for urban and suburban concentrations, ural America is becoming a factory. Our national leadership et to question whether these radical changes are desirable. want more in rural America than corporate profitability, we must have a national rural policy. But before we can op any rural policy, we must strip away the myths and under- in detail the reality. That means asking agribusiness cor- ions to tell us more about themselves, and asking the feder- vernment for enough information about agriculture to analyze rends . 758 (6) ' Mr. Chairman, the conventional argument for corporate disclosure has been the right of the investing public to know. -As explained below, that right is not being protected adequately and corporations should be asked to reveal more to investors about their agricultural involvements. But corporate agriculture today affects far more than the investing public, and it is essential that we expand the traditional rationale for disclosure. Corporate agribusinesses are making private decisions that are having an enormousg— mayb devastating public impact. Putting aside the questions of whether we can control those decisions, at least the American public and their policy makers have a right to know about them. The public has a double investment in agribusiness— both as consumers and as taxpayers. The federal government alor spends billions of tax dollars to subsidize agriculture. Invar: ably, these subsidies work primarily to the benefit of agri- businesses subsidies including farm program payments, researcl at land-grant colleges, water from federal reclamation projects and loopholes in the federal tax structure. But the fact is that the public cannot now know much at all about agribusiness corporations. Consider this basic question: Who are America's farmers? It is impossible to know even that. 759 (7) In 1965, the Internal Revenue Service (IRS) reported J, 265, 382 farm income tax returns were filed. Only 17,578 )se were filed as corporations. By those figures, 99.5 per )f the farms in this country are family or partnership rors, suggesting an agricultural system with strong compe- i safeguards. But the IRS count includes only those corpor- } whose "principal business" is farming. For giant conglomerates, the acquisition of a fanning liary can mean substantial capital gains, favorable depre- m rates on equipment and machinery, and tax losses written jainst non-farm income all amounting to major tax savings. leir principal line of business is not farming, and they lot bother to file a farm income tax return. IRS does not include Tenneco in its farm count, even 1 this conglomerate controls close to 2 million acres of Land. Tenneco's Kern County Land Company received a farm im payment this year of $1,3 million the fifth largest —and it received a $13.2 million credit on its income tax 39. Boeing Company has bought 100,000 acres for farming in rn Oregon, but they will not appear as a farmer under IRS ' Boeing will use federally-subsidized water for its D crop. This list of "farmers" can go on and on Goodyear and Rubber, Purex, Penn Central, Alico, Standard Oil of Drnia, Prudential Insurance, Bank of America, etc. 760 (8) I But these conglomerates are not the only corporate fanners missed by IRS. Del Monte, Libby McNeil and Libby, Stokely-Van Camp/creen Giant, Ralston-Purina, Coca Cola and Pillsbury are vertically- integrated agribusinesses that have e: panded directly into farming without being counted as farmers 1 IRS. Frequently, these processors and marketers turn to farmi: in order to secure cost savings in their purchase of farm pro- ducts that they use in other business activities. In the proc they eliminate markets and drive down the prices for independe farmers struggling to stay in business. In spite of the huge acreage owned and the massive impact of their fanning operatic they do not even have to file. a farm income tax return. Information at the Securities and Exchange Commissic is not much better. Two documents filed there by public corpc ations provide the bulk of the information available on specil businesses. They are the Form 10-K, filed annually, and the Form S-1, filed at the time securities are registered. But these forms tell us little or nothing about the farming opera- tions of the corporations. We can learn from these forms tha a corporation is involved in farming, but not the extent of i investment in farming; we can learn that a corporation owns farm land, but not the location of that land. We have summar the available information from the current 10-K and S-1 forms Tenncco and Stokely-Van Camp and appended them to our testimo SEC requires information on linos of business withi 761 (9) ilti-faceted corporations only when the division amounts to 10 sr cent or more of the corporation's total sales and revenues, .th constantly increasing conglomerate-growth, this could allow jor producers of specific commodities to omit farming from their •ports . Vertically integrated processors and distributors can oid discussing their farming operations even if farming does count for more than 10 per cent of sales and revenues, ecifically exempted from the 10 per cent requirement are tuations "where material amounts of products or services are ansferred from one line of business to another..." These y be considered one line of business. The conventional argument against disclosure has been mpetition the right to protect business operations from the ying eyes of competitors. Yet the function of vertical inte- ation and conglomerate growth has been to limit competition. 11 processors, exporters and marketers fcring to farming the ticentration they have created in their own areas of business? wording to the National Commission on Food Marketing in 1966, "There is a tendency for business in the several fields of the food industry :.o become more concentrated in the hands of a few large firms In neither food processing -nor distribution do econ- omies of operation resulting from large size neces- sitate high concentration in national markets." can reasonably expect vertical integration to extend this 2nd toward concentration into farming. 762 (10) SEC disclosures through expansion of already existii mechanisms can provide the information with which other agenc of the federal government, and the public, can develop an und. standing of who controls or is gaining control of agricultura production in America. For instance, the need for disclosure about contrac arrangements between agribusiness corporations and producers be met before any complete analysis of trends in food product can be attempted. The information available now on numbers c producers of commodities is inadequate for the purpose. in poultry production, for example, 35,126 farms produced broilers in 1964, the latest year for which figures available. On the' surface, that appears to be a highly comp tive situation. In fact, since 1964, 98 percent of broiler production has been under contracts, with Ralston Purina, Sw- \ and Pillsbury being the dominant contractors. in the case of broiler production, the trend towar agribusiness domination is clear. In other coimuodities, we left to guess. 131,650 farmers were raising vegetables in 1964, cj an apparently competitive situation. But agriculture secre- designate Earl Butz, a former member of the board of Stokel- Camp, said last week that of 12,000 acres producing vegetabi processing by Stokely, 9,000 are under contract. No matter" 763 (11) lany farmers are nominally suppliers of Stokely, in fact three- uarters of the land is under Stokely's control, and those farmers re not free to compete for better prices. RECOMMENDATIONS . The Securities and Exchange Commission should expand its eporting requirements to provide a clearer picture of farming perations of vertically- integrated agribusiness corporations nd conglomerates. Attached as appendix 2 is our suggestion or additional requirements, I. All farms in USDA ' s "largest" category, those with annual ales of more than $100,000, should be required to submit an nnual registration form to USDA, supplying the same type of nformation as the SEC would require on farming operations of ublicly held corporations. Attached as appendix 3 is our uggestion for the requirements of this registration. II. The Federal Trade Commission or the Justice Department hould be required by Congress to issue an annual public report n vertical integration and the movement of conglomerates into arming, with the purpose of assessing the impact of increasing oncentration in agriculture. Expanded disclosures such as hose suggested above wouid help in compiling this report. ^.^ We particularly endorse Ralph Nadar ' s November 9th recom- andation before this Subcommittee that corporate income tax 2turns should be public information. 764 (12) So far we have talked about the major issues involve in corporate secrecy, information about corporate activity the is not available for public inspection because no federal ager requires its disclosure. For the industry analyst, the muckraker, or the int. ested stockholder, the roadblocks set in his way by those who oversee access to public information can be just as important and twice as frustrating. Our task of analyzing what is going on in agricultu and who is behind what is going on in agriculture has been cc cated in a variety of ways, ranging from petty harassment to perverted interpretations of the public's right to know. we have several letters that reflect difficulties ^ have encountered in gathering allegedly ■■public" information Let me summarize three cases, briefly. —MS. Kathryn Seddon is a corporate researcher for Project. AS part of her job, she spends hour after hour at pouring over material that has been filed with the commissic agribusiness corporations. Because of the volume of materia she has to deal with, it is frequently expedient to photocoj^ pages from annual reports or proxy statements rather than laboriously copying information by hand. Ms. Seddon isn't lazy. She simply has a large vo ■ of material to handle in a short time. A LBASCO machine in the public reference room of ' '^rs 765 (13) EC makes copies for 25 cents a page, a high price in comparison o other photocopying machines. Ms. Seddon wrote the commission, uestioning the high prices and asking what benefits the SEC re- eives from LEASCO ' s operations. As it turns out, "The Commis- ion's reward for entering into this contract is the public ser- ies it performs through encouraging the dissemination of public nformation..." According to their answer, a rather esoteric eward for a business arrangement. SEC does not lease space to ' he company for the machines or derive any monetary benefits from he operation. —Ms. Sue DeMarco is actively working on a study of and-grant colleges for the project. As a result, she has eeded to go to USDA occasionally to interview agriculture de- artment staff. On a recent occasion, she was told that she Duld not park her car in a visitor's parking lot. Ifyou are amiliar with the location of USDA's main offices, you know lere is no nearby available parking after 9 a.m. A USDA official explained to Ms. DeMarco that "visitors" 2ant people on "official business that is of benefit to USDA." pparently, he believed that an analysis of the activities of ind-grant colleges would not be of benefit to USDA. Ms. DeMarco has made a formal request for permission to irk in the visitors lot on subsequent visits to USDA. —Shortly after I went to work for the Project, USDA 766 (14) released its list of recipients of farm program payments of m- than $5,000. Since there is a substantial history of legitim congressional andpublic concern over how public funds are dis buted and who farm program payments benefit, I was disappoint to learn how limited USDA ' s concept of "public" is. USDA did not take issue with whether the names of r pients should be made public, but it did see to it that acces to the information was limited. It made one copy available t the general public in a small room in a back hall of its Wasl ton office; another copy available to 535 Senators and Repre. tatives through the Senate Appropriations Subcommittee on Ag: culture. For those who found it .inconvenient to spend hours USDA squinting at the figures in six inch-thick volumes of c puter printouts— -or for those who don't live here, USDA had another alternative: for $150, an individual can have his ov. printouts; or for $75, an individual with a computer can hav magnetic tape to use to run off his own list. J in other words, the public's right to know is ofte limited by' the public's ability to pay. _j These examples, not critical in themselves, sugge: that providing for wider disclosure of corporate informatio: not enough. There must be a change in the attitudes of the custodians of public information, a change that reflects th fact that government employees are at the service of all of. 767 APPENDIX 1 TWO documents filed with the Securities Exchange Commission rovide most of the information used in assessing the nature f a corporation's business, particulary its agricultural rtivities. These are Form 10-K - filed annually under aquirements of the Securities Exchange Act of 1934 — and .rm S-1 -filed at the time securities are registered under le provisions of the Securities Act of 1933. Requirements )r completing these forms are attached. We have chosen two examples to indicate the type of iformation regarding agriculture which is available from ese forms. The amount of detail in reporting varies •nsiderably from corporation to corporation. Some scriptions of a business 's agricultural activities are r more comprehensive than others. Our examples are neither ' e best nor the worst. 768 TENNECO CORPORATION Form 10-K for Fiscal Year ended December 31, 1970. Filed with Securities Exchange Commission on March 31. ly/u, Item 1 : Business. I The description of business includes three categories direct! related to agriculture. They are "Packaging". "Land Use and Development", and "Manufacturing". Introductory paragraphs reveal the number of employees engaged in all lines of busin. in a lump sum. The following types of information are given each category: Packaging- a general description of the type of container produced and their uses. For example. .. "cartons are used principally in the packaging of soap and detergents, food pr: and beverages and a wide range of consumer goods. Molded pulp products are supplied for packaging of apples, other fruits and eggs, for use as transfer plates in the baking industry and for use as prepackaging trays for meats, fruit.' and vegetables used in self service markets". —a percentage breakdown of sales according to type of container (for instance, paperboard) . I| ...number of plants according to type of contain: produced and the number of plant locations —aggregate amount of shipments for each categc/ of container except for plastic products 769 — the source of raw materials — described as -independent logging contractors", the operation of reclaimed paper stock collecting plants, and "other sources". —acres of land used in the operation are described as follows: "Packaging owns, leases, or has cutting rights over approximately 206,000 acres of Michigan forest land and over approximately 285,000 acres of timberland in Alabama, Mississippi, and Tennessee". —competition within the industry is described as "intense". Land Use and Development -- — a chart lists total number of acres owned and total number of acres leased in each of two states —total number of acres devoted to irrigated farm lands (no locations listed) — total number of acres farmed by Tenneco West and number farmed by independent farmers under lease —a statement that "Most of these irrigated farm lands have been upgraded from grazing lands". —a vague statement that Tenneco West has "substantial water rights on the Kern River in California and an extensive k •133 O - 72 pt. 3A 770 canal system which serves Tenneco West's lands and certain lands of others" . a statement that Tenneco is also engaged in development of commercial land in Bakersfield, California. the name of the subsidiary v^hich acts as "sales agent" for growers and shippers in four named states Manufacturing — a listing of divisions including J.I. Case. Under J.I. Case, —a list of the types of agricultural machines and "other items" produced. per cent of J.I. Case's total sales accounted for by agricultural equipment the statement that "markets are highly competitive the total number of independent dealers and retail outlets in the United States and Canada which market J.I. Case products the number of domestic manufacturing plants and a list of fives states— but not cities — in which they are located, but no information about how many are in each state. names of foreign countries in which subsidiary pi are located. J.I. Case Credit Corporation, an unconsolidated subsidiary of J. I. Case, is simply described as financing "purchases and lease of Case products by dealers and their customers." 771 The share of Tenneco's business during the last four years is reported in dollar amounts for "Packaging", "Agriculture, Land Development", and J.I. Case according to "operating and non-operating revenue" and "income" before interest, taxes and extraordinary expenses. Net sales for the years 1966-1970 are reported according to broad categories: Machinery, equipment and shipbuilding Packaging Land Use Item 2 ; Summary of Operations. In the notes to the Financial Statement, Tenneco lists recent mergers and acquisitions and describes briefly the terms (cash and stock) of the transaction. £^em_3: Properties. (The guidelines ask for location, general character, whether or not leased, etc.) "The Company believes that the plants and equipment of its subsidiaries, substantially all of which are fully utilized in their operations, are in general well maintained and in good operating condition." Item 4 ; Parents and Subsidiaries. Lists of names of subsidiaries include subsidiaries of subsidiaries, place of incorporation and percentage of voting securities owned by parent company. At the end of the list 772 appears the statement that "certain other subsidiaries which Tenneco West, Inc., and Tenneco International Inc., own, either directly or indirectly through totally held subsidiaries .. .names. . .are omitted since in the aggregate as a single subsidiary they do not constitute a significant subsidiary." Item 5 : Pending Legal Proceedings. Tenneco provides a brief description of pending legislation identifying the court and the prinicpal parties involved. The date of filing is not included. Items VI-IX are omitted as they do not bear directly on agricultural activities. Item J^O: Financial Statements and Exhibits Filed. Schedule V of the financial statement is entitled "Plant and Property". ^ Tenneco attaches a dollar figure to the property used in the three divisions: — packaging; machinery, equipment and shipbuilding; and land use and other. A separate financial statement is filed for J.I. Case Credit Corporation. At the end of the report, Tenneco lists other exhibits on f with the Securities Exchange Commission. The list includes I the type of exhibit, date, filed, and registration number. mm 773 rENNECO CORPORATION S-1 Statement, Filed October 21, 1970, Amendment Filed November 23, 1970. rhe S-1 statement occasionally provides information which supplements that available from the 10-K reports. The most recent Tenneco statement yields the following: Report of use to which proceeds of the sale of stock will be put — a specified dollar amount is to be used to pay in full "short term notes". The "balance" will be added to general funds and "used for the expansion of the business and its subsidiaries. The proceeds of such short term notes were used .:. by the .Company for the expansion of its operations, and by Tenneco Corporation for the expansion of the businesses of its subsidiaries". Description of business — the description of the three categories of agricultural-related business is almost identical to that which appears in the lO-K form. Additional information is reported regarding "packaging" activities: the name of a subsidiary and the location of its plant and its output the number of forested acres owned, leased, or on which the subsidiary has cutting rights and the names of the three states in which the land is located. i 774 STOKELY-V/U^ CAMP, Inc. 10-K Form for Fiscal Year ended May 31, 1971 Filed, August 30, 1971. Item 1 ; Business. described as "processing foods for human consump principal products listed are canned and frozen vegetables and fruits, edible oils and non-carbonated drinks principal markets are described as "food wholesa and "other processors" the industry as a whole is described as "highly competitive without a dominant leader". Stokely considers itself a "larger processor of seasonal and non-seasonal vegets and fruits". sources of raw materials. Vegetable and fruits grown on contract. Dry beans and oils are purchased on the "open market" . Item 2 . Summary of Operations. Dollar figures for sales, cost of products, tax etc., are reported for the last five years. There is no brea according to product. Item 3 . Properties. Stoliely provides a summary description of types of plants "owned and operated" ... throughout the United States 775 and Canada". The location of an edible oil refinery is given. Item 4 . Parents and Subsidiaries. — The names of subsidiaries, place of incorporation, and the percent of voting securities owned by Stokely are listed. "All significant subsidiaries are included in the consolidated statements." Item 5 . Pending Legal Proceedings. — Stokely briefly describes a suit pending against it and names the party to the suit and the date on which it was filed. Items 6-9 omitted. ^ Item 10 . Financial Statements and Exhibits Filed. — Schedule V-"Property, plant, and equipment" Aggregate figures for "additions at cost" and "retirements or sales" appear for 1971 and 1970. Details regarding these changes in property are not provided because "neither the total additions nor total deductions for 1970 and 1971 were more than 10% of the balances at the end of the respective years." 776 APPENDIX II PROPOSED SEC DISCLOSURE REQUIREf4ENTS FOR PUBLIC CORPORATIONS IN FARMING: I, Farm Land Owned A. Acreage 1. Locations j . . — by property taxing jurisdiction • — addresses 2. When acquired 3. Acquisition cost of land purchased during reporting year B. Crops Produced 1. By conventional measure (bushels, car lots, pounc etc.) . - ^ '" 2r^^''Subsidies received II. Farm Land Leased A, Acreage 1. Locations — ^by property taxing jurisdiction — addresses - - 2. When acquired 3. Acquisition cost of land purchased during reporting year B. Crops Produced 1, By conventional measure (bushels, car lots, poun etc.) 2. Subsidies received 777 (2) III. Suppliers of Crops A, Under contract ." 1, By crop —number of contractors — volume B , Other "suppliers 1, Number 2, Volume IV. Employees A, By Division (annually) .._^ '. l._,_Numiber ! \ • ' J ' ^" V: V • ".••■" 2. Volume ■• ;■ .'":'". B. Agribusiness employees (reported quarterly) 1. By activity (farming, processing, marketing, packing, .' etc.) ' • •...-./ • --K;,-:..- ,-■. 2. Number 3 . Volume 778 APPENDIX III ANNUAL AGRIBUSINESS REGISTRATION Producers * ' . A, Acreage owned 1, Locations a. by taxing jurisdictions b. addresses 2. When acquired 3. Acquisition cost 4, Food and fiber produced a. by convensional measure b, subsidies received B, Land leased 1. Locations a. by taxing jurisdictions . b. addresses 2. When acquired 3. Acquisition cost •4. Food and fiber produced a. by convensional measure b, subsidies received C. Employees 1 . Number 2. Wage *Produccrs with agricultural sales of $100,000 or more in the reporting year 779 (2) ♦Producers: name, type of ownership a) sole proprietorship (names of ovmers) b) partnership (names of owners) c) corporation (name of corporation and names of all share- holders owning 10% or more of corporation stock) D, Itemization of other agricultural businesses and/or activities (packing, shipping, in-put companies, pro- cessing, etc.) 1. For those activities accounting for 5% or more of the cost of production 2. Itemize sales figures for any activity producing $50,000 or more in sales 780 lATxMs Nw.8,M7t :t:y,^-^^;C'.i^/^i^-^-^-^'^^*^4^^ *-v- --ih Urges Former^ Official ' REEDLEY WV— A for- flnce'Rooseveirg have op-^ ' tner Ne\^ Deal.ttmdal ha*'- posed* a full parlty'pfice. urged a breakup of.' large supppft program, he add- ] agriculture land holdings •'into family - sized units ), which he called Hhe back- ^Jbone of farming." > .' ; The only way to design a ;';farm program in^ which :' large subsidies would hot ;go to large lando^^^ers is i to divide "conglomerate M corporations," said Fred f'W. Stover, president of • ■ the U,S..Farmers Assn., in \ a speech here. - : Subsidies are "a reflec- tion of this great need for ■ a wider distribution of the . ownership and control of [ productive property," ' Stover said. . . "However, he said the >: chance of "drastic redjstri-. / bution of land ownership" 'is remote "without an al- most complete political upset." ; . A U.S. Department of ■ Agriculture official under, ' the late President Frah- ! klin D. Roosevelt, Stover (Contended farmers need lull price parity for their produce which he said cost the government less than $200 million when used by the President in the early 1940s. ! But administrations "What ' we" have ^Is a costly program that ben%^ fits, but a few," charged Stover, a retired Iowa corn farmer,. "We heed a pro-' gram that benefits all far-- mers, especially the small- er growers, and it would ^ be much cheaper than >ye, operate under now." "''"'. : He _urged farmers and farm workers to cooper- ate in attempting to break ^^ up large' holdings. "Cesar Chavez and his^ union are not a threat to* the small farmer," Stover said. "But if he organizes . so effectively and tightly that the big corporations, have to get out of farming, then he's not hurting the small farmer, he's helping him." . V ' •v:j">** ^ '»'>-> Stover said he feels that "a small farmer can oper- ate more efficiently and be more productive than the big farmer. The small far- mer is still the backbone of farming unless he lets himself be run out by these cold war managers in Washington and the big boys who farm on the side." . ■' ;. ' 781 Mr. Krebs. Corporate disclosure, however, is only one step toward hallenging big business's invasion of agriculture. What is needed nost urgently today is some serious thought and action on the ques- lon of land reform in the United States. As a model aimed at making corporate America more responsive the common good, economist John Kenneth Galbraith has suff- ^ested that the railroads of the country be nationalized. The Am- .usiness Accountability Project endorses that suggestion, for we see Q such an action a chance to demonstrate an effective land reform )rogram The project calls for Federal repossession of the massive and holdings awarded the railroads years ago, and we call for a edistribution of those lands into family farming parcels that would « large enough to be economically efficient and commercially viable Nationalizing a railroad like the Southern Pacific Co., for example! rould mean that the Federal Government would repossess and re- istribute more than 3.8 million acres of land that originally belonged the people of Nevada, Utah, and California. Certainly, such a .Ian would bring about a large measure of the true land reform eeded m America. I want to emphasize that land reform is only one part of it, because ou can distribute the land to any number of farmers and still have he policies of the U.S. Department of Agriculture, the limited way f getting farm credit, the denial of farm workers' legislative rirk Times editorial, and two current Chicago Sun-Times news )ries on agri-business, with a request that they accompany this itement in the printed record. Senator Ste^-exsox. They will be entered in the record together th your entire written statement and any exhibits, at the close of ur remarks. Dr. Taylor. The Chairman has invited me to view from an his- rical perspective current developments in California agriculture, :luding the ownei^hip, use, and distribution of land, together with eir impact on farniAvorkers, farmers, and othei^ whose lives are ected by it. and the extent to which our government policies and ograms are meeting and serving the needs of all the people of rural nerica. My response will relate to the 1970 headlines on the volumes of <0 hearings, namely, "Migrant and seasonal farmworkers power- sness * * * who is responsible?" Broadly speaking, it is the de- lons of others than farmworkers, decisions in the marketplace and the halls of government, that create the conditions into which this >committee is inquiring. Generally speaking, mi^^rant and seasonal :m workers simply accept and adjust to conditions created by ^^,^\ ^i^li residence unstable and income low, they tend to have all influence within their communities on the wages to be paid, - housing to be furnished, the legislative protections they are to 784 receive, et cetera. In those respects owners of agricultural land ai far more influential. The decline in access of people to land, a cons< quence of unabated farm enlargement and concentration of Jam ownership, is an important element in shaping the problems not on] of farmworkers, but also of working farmers, town businessmen, an^ indeed, all elements of rural society. j i In California concentrated landownership appeared early, o structing the rise of small farms owned by those who worked thei The California Constitution Revision Commission recently sur marized in a staff report as follows : I quote : The Forty-Niner era produced several diverse breeds of persons. One these was the claim- jumper, who usually employed force to attain his eni Another, the land pirate, often resorted to more subtle means. Fraudule Mexican land grants were commonly employed to separate the gullible ne comer from his life's savings. By 1879 California abounded in depressi debtors and the forced sale of their properties resulted in increasing hardsl and concentration of land ownership in the hands of a few wealthy individu. and large corporation. * * * The Constitutional Debates of 1879 were r with denunciations of the twin curses of cheap imported labor and la monopoly. Labor-saving machinery was driving men off the land and into 1 cities. Huge corporate interests were said to be hovering nearby, ready gobble up the property titles of pauperized landowners. These means of acquiring lands produced the condition describ by Ambassador James Bryce in the early 1890's as the farmers' di culty in acquiring small freeholds and the reliance of Calif orni enormous farms upon a mass of unsettled labour, thrown with( work into the towns at certain times of the year. The temper of th- in charge of the land in early California was never more vivk, expressed than by the California Farmer in 1854, foreseeing a futii of great crops of cotton, sugar, et cetera. I quote: Americans will not become the working men of our tule land, in our fields and our cotton plantations and other departments of the same kinci labor. At the South, this is the work of the slave, but slavery cannot e- here. * * * Then where shall the laborers be found? The Chinese! And evi thing tends to this— those great walls of China are to be broken down that population, educated, schooled, and drilled in the cultivation of tii products, are to be to California what the African has been to the South. J is the decree of the Almighty, and man cannot stop it. Without water, land in California is valuable mainly for pasti age. A Federal Commission, sent to California to explore the fe ^ bility of irrigating lands in the Central Valley, reported m 1874 t irrigation was feasible, that government subsidies would be necesss: and that the coming of water would increase land values many t( The incentive to capture these subsidies and windfall profits t anticipated public investment was electric. In 1877, only 3 years af the Federal report, the Visalia Delta described it : No one would believe that shrewd, calculating businessmen would ir their money on the strength of land rising in value while unimproved, for the farmer himself has to abandon it who endeavors to add to its value ^' out water. At the same time, purchasers are not lacking who would add their already extensive dry domain and the people * * * will find thems confronted by an array of force and talent to secure to capital the ov* ship of the water as well as of the land, and the people will at last have pay for. ♦ * ♦ 785 rhis 95-year-old forecast explains why Congress, to protect the blic interest, included in the 1902 reclamation Irav the well-known -eage limitation and residency requirements. These were designed assure that prior monopoly of arid lands shall not, upon the ning of water, deny access to the many who would move up the ricultural ladder and themselves farm the irrigated soil as means livelihood and homemaking. Reclamation law states, and I quote : ^0 right to the use of water for land in private ownership shall be sold for ract exceeding 160 acres to any one landowner, and no such sales shall be ie to any landowner unless he be an actual bona fide resident upon such i, or occupant thereof residing in the neighborhood. * * * rhe landless farmworker seeking access to land, in whose interest s law seeks to open opportunity, has been unable to protect his n interest. Passing a law does not assure enforcement. This law ; been under tenacious attack Avithin each branch of government, unanimous U.S. Supreme Court decision reversed a California preme Court opinion holding acreage limitation unconstitutional. 1959-60 Congress refused, after 4 days of extended Senate debate 1 2 days in the House, to exempt a California water project jointly ng Federal reservoir, pumps, and canals, from acreage limitation. e administrative branch shortly nullified congressional debate and ion by giving exemption, anyway. On the west side of Central lley Federal construction proceeds to serve with water 500,000 es or more, around two-thirds of which are ineligible to receive a single owner holds over 100,000 acres within the project, n Imperial Valley 233,000 acres exceed the legal limit. The De- 'tments of Interior and Justice refused last spring to appeal a ieral district court decision that acreage limitation does not apply Imperial Valley, although Justice had argued stoutly in court that Ices. Justice declined to argue that residency — in the same sen- ce of the law as acreage limitation— applies. Last November in a : brought by landless persons a Federal district judge held that dency does apply. n this decision, barely 7 weeks ago, the Federal judge cited ad- listrative laxity and pointed to the powerlessness of the landless. ^ opinion holds that : rem its very inception reclamation policy has been to make benefits there- 1 available to the largest number of people. * * * The idea was to create lass of self-reliant family farmers * * * to provide homes for people, les are possibly only where speculation and monopolization are not possi- * * * The fact that residency has not been required by the Department he Interior for over 55 years cannot influence the outcome * * * it is well ed that administrative practice cannot thwart the plain purpose of a valid * * * lapse of time serves to dramatize the unavailability of relief in the and points toward the need for increased access to the court in the future. Existing law aside, frequently it is argued that family farming is a nostalgic relic of the past, and that its displacement by indus- hzed agriculture is inevitable and proper, especially in these s of heavy machinery. The claim of cutting unit costs of some ^s has limited validity and can be easily exaggerated. As condi- s approach monopoly, it is questionable how much of cost reduc- es shared with consumers, and it overlooks the working farmer's -interest in maximum production per acre. Smaller farmers gen- 59-133 O '2 - pt. 3A 786 erally deny the claim of superior efficiency and they support acrea;; limitation. Use of larcre-scale machinery is not dependent upc laro-e-scale ownership of land. Contract operation of machines \ smaller farmers is common practice in California today, as here ar elsewhere for a century. Superior operatinjr efficiency is msufficiei explanation of the swallowin- up of family farms by largc^ fam and conglomerate corporations. Other factors are tax loopholes be taken advantacre of by purchases of farmland, local tax practic. that reflect suburban sprawl in higher assessments of ad]acent lai used for farming, and superior reserves of funds seeking mvestme hedo-es against inflation. A Presidential task force in 1967 demand- that" the Interior Department "enforce the 160-acre limitation ,ai called for a halt to western reclamation, saying that witliout it t South could have stronger agricultural and rural economies, wi fewer poverty-stricken people." , . . • u A question far more fundamental than which scale of farming ir the edge over the other in operating costs is to compare their toi social efficiency from a public viewpoint. The impact of uncontrollc even assisted, displacement of smaller farmers by larger, even gia farmers, is far more pervasive than simply obstructing farmworke and wouldbe farmers' access to land. The impact is felt throughc the business, social, cultural, and political life of the entire ru community. A classic 1946 study comparing two contrasting co munities of generally equivalent numbers and economic base is va today. It compared Arvin, resting upon industrialized, large-sc acrricultural production, with Dinuba, resting upon family-size tai incr Dinuba was found to be a community homogeneous m ev sense. Arvin lacked balance and homogeniety. The smaller farm cci munity supported nearly twice the number of separate busir establishments, about 20 percent more people per dollar volume acrricultural production, a volume of trade nearly two-thirds grea albetter standard of living with expenditures for household supp and building equipment more than three times greater. Dess t.n one-third of the breadwinners in the smaller farm communitv ^m ao-ricultural wage workers, compared with nearly two-thirds m laro-e-scale farm communitv. Physical facilities for community incr": such as paved streets,"^ sewage and garbage disposal, were i o-reater in Dinuba; schools, parks, and recreation facilities were n plentiful; local participation in local government was greater;- ganizations for civic improvement, social recreation, and relig observance were twice as numerous. Dinuba supported two i: newspapers, Arvin but one. _ -, .• i i ,..n< In conclusion, not only the laxly administered national reclama< law but programs for direct financial assistance to farmers ten favor large-scale farming. In the year immediately preceding i o-ressional enactment of a $55,000 ceiling on agriculture subsidy i ments, a single California farming corporatioii received ove^ million It may be well to observe whether the Department of .^ cult lire will be as lax in its interpretation of the $55,000 ceihn the Department of the Interior has been in interpreting residi law. Government assistance to qualified landless persons to pun farm homes, a program begun during the Great Depression, has n 'WO'. 787 )nly limited profrress toward improvinof access to land. Migrant and easonal farmworkers, notably exposed to regularly recurring unem- )loyment, are left uncovered by Government programs of unemploy- 'lent insurance. These are examples of imbalance in Government n-ograms which, in the interest of the whole rural community, it vould be desirable to correct. AVith respect to reclamation, I recom- iiend specifically that Congress adopt S. 2863 sponsored by four ^enators, and its equivalent in the House, H.R. 5236, sponsored by even Congressmen. These bills aim to enforce reclamation law by authorizing the Gov- rnment itself to purchase ''excess" lands at the prewater price at ihich existing law obliges their owners to dispose of them. "With hese lands in Government possession, effective planning of the en- ironment becomes possible through attachment of land-use regula- ions; agricultural greenbelts, and access of people to land can be •reserved, and revenues can be devoted to the support of education ii the land-grant tradition. Social efficiency in the interest of the oinmunity as a Avhole is the proper guide to policy. A final word perhaps should be said in partial explanation of the owerlessness of farmworkers to secure the effective enforcement of creage limitation law that would improve their access to land in lie western reclamation belt. The issue is discussed usually in terms f farming efficiency, but this obscures the powerful incentive to iwart enforcement in order to obtain speculative windfall profits lat acreage limitation law says shall not be monopolized. This incen- ve naturally is strongest when development of cities is expected on mds receiving subsidized water under reclamation law. An example might be the 88,000-acre Irvine Ranch in southern 'alifornia, which receives Colorado River water developed under le Boulder Canyon Act which authorized the building of Hoover )am by the Bureau of Reclamation. Apparently, the Irvine Co. itends to develop a City of Irvine on 50.000 acres of its propertv, three times the size of Manhattan Island," and anticipates that it ill he inhabited by half a million people. This, of course, is but one wspicuous example. It may serve, however, to dramatize the fact lat in many western reclamation areas urban speculation hopes, =5 well as a search for agricultural gains, explain the strong opposi- on that stands in the way of access of farmworkers and would-be irmers to land developed in its supply of water by the U.S. Bureau f Reclamation under reclamation law. I will tender these documents, which I Avill not read, but which ipport what I have said. Senator Stevexsox. Thank you. Dr. Taylor. The information vou ilmiit will be included in the hearing recoi-d at the close of vour 'marks. ^^oiild you remain iust for a question or two? Dr. Taylor. Certainly. Senator Stevexsox. "if the Land Reclamation Act had been en- )rced over the years, including the 160-acre limitation, would this '- Itself have been enouirh to have changed the complexion of land .vnership in rural California now? 788 Dr Taylor. It avouIcI have been a crucial factor. I think oth proo-rams could have helped, such as an expanded Farm Securn Program, which began as a resettlement proofram in farm securit I thTnk the Government could assist the smaller farmers m ways th could be very effective and very widely dispersed in their impact ai balance the imbalance in a lot of its procjrams, such as those 1 cited few moments ago. . , ^ vr • •£ x Senator Stevt.nsox. What will happen in rural California if t policies and the activities of the Government a rent changed^ VV the trend toward ever-larger concentrations of land continue or wi in your opinion, new natural forces enter the picture to arrest tli trend (y» • For example, if it is true that the family farmer is a more efficie producer than agribusiness giants, which, as you point out, are a socially inefficient, won't the giants in the ordinary course ot ag business developments, begin to depart the rural American seer Isn't this happening already in some cases? Dr T\YL0R. If I understand your question, you are asking me enforcement of the reclamation law especially is approved by i bill which I have recommended and which is m the Senate and ' House, nevertheless . Senator Stevenson. AVhat I am asking you is, if nothing happe if the bill isn't passed and the attitudes of governmental agenc aren't changed , Dr Taylor It will accelerate the disappearance ot the ruial c( munity as we have known it, and the crowding of many more peo into the cities. Some people can go into the cities to their own i sonal advantage, and there is no objection to that as far as 1 can but I think there is great objection to the sweeping of people ott land into the cities which are not equipped to take care ot them i to provide employment and the other services to which people entitled in our society. , , • . ^- ^o,.v Senator Stevenson. And though the giant corporation isn t efficient a producer as the small farmer, at least m many cases, it stay with it and, for ulterior reasons, such as the appreciation m 1 values, it is not going to start getting out of agricuUure becausi its unprofitability? . • n ;4! Dr Taylor. If reclamation law is enforced, and especially it new law is enacted which will improve its enforcement, then i tl the opportunity for agribusiness to sweep people off the land disappear: then agribusiness won't be able to do it. Senator Stevenson. Just from enforcement m California^ Dr. Taylor. No; in the 17 Avestern States. Senator Stevenson, In the 17 western States? Dr. Taylor. Yes. Senator Stevenson. Water is that important? Dr Taylor Yes. The rest of the country is financing our reclr tion out here, and I think it has a responsibility and a right to what kind of rural society we should have m the West. Senator Stevensox. We i)erceive the same trends m the other ] of the country, in which i-ural America isn't so dependent on ir tiou proorranVs, and wliere the IGO-acre limitation isn't an issue. 789 Dr. Taylor. Tliat is true. You are speaking of the Middle West, or example? Senator Stevexsox. Yes, where I come from. Dr. Taylor. I come from the Middle AVest, too. I think it is a uestion for the Government to examine as to ^vhetlier or not we isli to allow that trend to proceed without curbs and controls in lie public interest. I think it is open to serious question whether the rovernment ou communities where this can be beneficial to create employmer opportunity, and of recasting ani improving the role and stsi of agricultural laborers. The Commission should study prob]. and measures such as these in the broadest perspective, fort democratic character of our society is at stake as well as > best use of technology for production. 793 Senator Ste\t:xsox. Thank you very much, Dr. Taylor, for your timony. I order printed in the record at this point your entire tement to^rether witli exhibits, some of wliich will appear in the peridix. 3r. Taylor. Thank you. The information refen-ed to follows:) 794 Statement befom -.enate f^.ubcommi t r.ee on Migratory Labor presenting individual vievv:j ; of ' Paul S. Taylor : San Francisco January 11, 1972 ^^s^ 795 statement of Paul S. Taylor prepared for Senate Subcommittee on Migratory i^bor hearing, San Francisco, California, January 11, 1972. My name is Paul S. Taylor, and I reside in Berkeley, California This atement represents my individual views. I first became familiar with migrant Dor before World War I m the Middle Western Wheat Belt; since 1927 I have udied agricultural migrants in many parts of the United States. To amplify ■ eatment of historical aspects of the problem I attach four of my previously .printed studies on migratory workers, a recent New York Times editorial and c current Chicago Sun-Tixnes news stories on agribusiness, with request thTt the. company this statement in the printed record. request mat tue^ The Chairman has invited me to view "from an historical perspective- orrent developments in California agriculture" "including the ownership use a distribution of land. " together with their "impact on farmworkers, fl^Jmers d others whose lives are affected by it. " and the "extent to which our gov^rn- ent policies and programs are meeting and serving the needs of all the pIopL mo hfTr""'- "• ^y5,-P°"^^ -iii -1-te to the 1970 headlines on the voltes 1970 nearings VIZ. . "Migrant and seasonal farmworker powerlessness rke'r/''T ' '' ^J°^^'^ speaking, it is the decisions'^ of others th'/farm^ . )rker8 - decisions m tha marketplace and in the halls of government - that eate the conditions into which this Subcommittee is inquiring ^nerallv :SS'bv"oti:^' 'w^r"'°r' ^— -^-« «-Ply accept an|- adjust to c'onditions eated by others With residence unstable and income low, they tend to have f "^i^^"",^^,^^^^ their communities on the wages to be paid! the housing to furrushed. the legislative protections they are to%eceive.^tc ^ those ^ clslVZlTetoti^a ''''^' land are far more influentikl. The dec W in ntration of l^rlo \ consequence of unabated farm enlargement and con- fo?i f / ^^^°^,^^^s^^P. IS an important element in shaping the problems l:tlliet:ZTt: T' ^;^t-i-°^— king farmers, town^u'sinessmen ""d .eea an elements of rural society. «rr,?fl^f^^°'"'''^ concentrated landownership appeared early, obstructing the rise vTsttn'cZ:j:Zi Z l °tr "'° "°'^^' '^^"^- ^^^ California Const[^fion " vision Commission recently summarized in a staff report as follows- rge corporations. . . The Constitutional Debates of 1879 were rifp vuitl, ■bas^ador"^!^" °R^''^'^'"^? ^^^' produced the condition described by iS "sr^J^f J^^ "" '^^ ^^^^y nineties as the farmers' difficulty in •^a Us^'o '^sl^^^;;' h"^ California-s "enormous faTms " toass of unsettled labour, thrown without work into the towns at certain 796 times of the year. - (Bryce, American Commonwealth, Chap. XC) The temper ortrose i^ charge of the laiim early Californ^ expressed than by the California Farmer in 1854. forseemg a future of great crc of cotton, sugar, etc. : AiTiericans will not become the working men of our tule land in our Rice fl^MsI^ our Cotton plantations and other departments of the same kmd o labor At the South, this is the work of the slave, but slavery cannot exist here Then where shall the laborers be found? The ChmeseJ And and ev'erVthbig tends to this - those great walls of China are to be broken down ^d^^that^opulation. educated, schooled and drilled -^he cultivation ofTo^ products, are to be to California what the African has ^e^^ to ^he South Thiris th^ decree of the Almighty, and man cannot stop xt. (Cahforn Farmer, 1, May 25, 1854, 104. ) ti Without water, land in California is valuable mainly for pasturage A federal report, the Vis alia Delta described it: No one would believe that shrewd, calculating business men would invest th. money rS^e strength of land rising in value while unimproved for even th Srmer himself has to abandon it who endeavors to add to its value without watTr XTthe same time, purchasers are not lacking who wo>.ld add it to Thefrklready extensive d^y domain and the people . . . will find them selve, corironted by an array of force and talent to secure to capital the ownershi o?fhe water as well Z of the l.and. and the people will at last have it to pa> for. . . (May 5, 1877) 6 This 95-year old forecast explains why Congress, to protect the P^bUc ^terest incited in the 1902 reclamation law the well-known acreage UmitaU Sid residency req^remenL These were designed to ass^.re that prior monopc ^ ari^ la^ds s^n not. upon the coming of water, deny access to the many wh. wo"d m?ve u^ the agricultural ladder and themselves farm the irrigated soil as means of livlihood and homemaking. Reclamation law states: No right to the use of water for land in private ownership shall be sold for a tract exceeding 160 acres to any one landowner, and no such sale shall 1 mSe to any landowner unless he be an actual bona fide resident upon such land, or occupant thereof residing m the neighborhood ... (43 USC ^H) 7. The landless farmworker seeking access to land m whoee Jf Merest this -^ seeks to open opportunity, has been unable to protect his own interest. Pass J a^w does'^not L'^sure ei'orcement. This law has been under t--acious attack^ ea7h branch of government. A unanimous U.S. Supreme Court decision reve- a CauIoTnia Supreme Court opinion holding acreage limitation ^^ ons titution, ?357 U S. 275) In 1959-60 Congress refus ed. after four days of extended Se t debate and two' in the House, to exempt a California J^^^.f /^^^^^^^^fa'Smini :i federal reservoir, pumps and canals, from acreage hmitation. The admmist brich shorUy nullified Congressional dexate and action by g^^-gJ^^^^P'^^^^,, ^ On the westside of Central Valley federal construction proceeds to serve wiu wSter ^00.000 acres, around two-thirds of which are ineligible to receive i Tskigle owner holds over 100, 000 acres within the project. In Imperial ValL 79: 3. 000 acres exceed the legal limit. The Departments of Interior and Justice tuaed last Spring to appeal a federal district court decision that acreage limitation aa not apply to Imperial Valley, although Justice had argued stoutly in court It It does. Justice declined to argue that reai'loncy - Ln the same sentence of : law as acreage limitation - applies. Last November in a suit brought by idless persons a federal district judge held that residency does apply In this decision barely seven weeks ago, the federal j -id c-e cited adminis- .tive faxity and pointed to the powerlessness of the landless''. The opinion xis that ^ From its very inception reclamation policy has been to make benefits the*«- from available to the larges^ number of people. . . The idea wa« to create a class of self-reliant\amily farmers ... to provide homes for people Homes are possible only where speculation and monopoHzation are not ?f 't^l J^;.;io' f ^^""^ IT' "^"^^^^y ^^^ ^°^ been required by the Department ^ . V °5 ^°'' °'^^'" ^^ y^^'^^ ^^"^°^ influence the outcome ... it is well sstUed that administrative practice cannot thwart the plain purpose of a valid xaw. . lapse of time serves to dramatize the unavailability of relief in the past and points toward the need for increased access to the court in the tuture. (Yellen et al v. Hickel, Partial summary judgment in the U S District Court for the Southern District of California. No. 69-124-Muri Nov. 23, 1971) Murray, Existing law aside, frequently it is argued that family farmLng is but a 'T^Sflu^ ^ P^'^' ^""^ ^^^^ ^'^ displacement by industrialized agriculture o^^evitable and proper, especiaUy in these days of heavy machinery. The clai^ .utt^g unit costs of some crops has limited validity and can be easily exagger- a. As conditions approach monopoly, it is questionable how muchof cost iucuon 18 shared with consumers, and it overlooks the working farmer's self- ii nfTn'^^'^T.-P"^^^'''^" P"^ ^""- S"^^^" ^-^— ^ generally deny the J of superior efficiency and they support acreage limitation. Use of large- ^^J^^^^^^^y ^^ r^ot^^pendent upon large-scale owner stiip of land. Contract av as tTe^rf ^V"^"^"" '^""^""^ '' "^"^'"^^ P^^^^^^ - California !mciem eL!S.ir''fT '°^ ^,"-^^^-y- Superior operating efficiency is ,^cient explanation of the swallowing up of fam.ily farms by larger farms and Iglomerate corporations. Other factors are taxEoophoJes to'be take i^^a^t^.e d.w' "' ^^^"^ ^^^' ^°^^^^ practices that 'reflect sub.rb^ sprawT ° agher assessments of adjacent land used for farming, and superior reserves 96fd:m^fdX:^'f ^'^'^^^^-^^^ ^'"^^°- A^PresidenLl Task Force ciled fS "Lu ^''"°" Departmenfenforce the 160-acre limitation. " caned for a halt to western reclamation saying that without it -the South ;^ have stronger agricultural and rural economies, with fewer poverty i-cken people. " (The people left behind. 118- 9) ^ ^ r t^'Sh^.''''' ^^"^ "'^-''^ fundamental tthan which scale of farming has the edge n aniln operating costs is tto compare their total social efficiency mJ^u/r^l^r^; ^""^ ^P^^' °' uncontrolled, even assisted, displlcement maAIer farmers by larger, even giant farmers, is far more pervasive th;», 'SLfeu't^^'f "^"r^!^^' ^^^ ^°^-^^ ^-^— ' access^to J^r Thr re rurll ' ^^^^°^' '^" business, social, cultural and political life of the Is of g"erX"e?^v^.V'''\" 1946 study comparing two contrasting commun- pared Ar.T^^ ^T "^^"^ ^^ economic base, is valid today It i iLuba ;^3tiL?L^' upon industrialized, la^ge-scale agricultural^roduction ^uba, resting upon fam:iy-size faj.-Ti.ing. Dinuba was found to be a 798 i^ ^rrt^yy, Bensc Arviii lacked balance and horrjogeniety. community homogeneous ^ v. >r?,!d neari^tv,ice the number of separate Committee report No. 13. 79 Cong.. 2 sees. 1946) 11. m concluaion. not only the laxly administered ^"tlTlJttl^^^^^^ ^ Gov^rLSent\seisLnce to qualified landless persons ^° P-^J^^^^t^^ progr , a oroaram begun during the Great Depression, has made only limited ProgJ « to^Irf^pro?^g access to land. Migrant and seasonal farm>«orkers. notal exposed^ regularly recurring unemployment, are left uncovered by by four Senators, and its equivalent in the House, H. R ^236 i^?, bv h^ seven Consressmen. These bills aim to enforce reclamation lavw by a^orTzing thi gov^rmnent itself to purchase -excess.- lands at the pre-war price at which existing law obUges their owners to dispose of them With ?hese llnds^ government possession, effective planning of the environmeni becomeTpossible through aUachnent of land-use regulations, agricultur^ B^ee^belts and access of people to land can be preserved, and revenues fin ?e devoTed to the sup^or? of educatiot, in the land 8/-^ tradition. S^acial efficiency in the interest of the community as a whole is the propt guide to policy. 799 A final ^vord perhaps should be said in partial explanation of the po^verlessnes^ farmv.o rker.^ to secure the effective cnforceir.ent of acreage Uniitation la%v t vvouH inaprove their access to land in the v.estern reclaix.ation belt. The issue ;3iscu3Ged usually in termG of farming efficiency, but this obscures the pov^erful ^entive to thv.art enfcrceiricnt in order to obtain speculative windfaU profits Ijt acreage liixiitatiorx law says shall not be monopoHzed. This incentive naturally itrongest when developu.ent of cities is expected on lands receiving subsidized ;er under reclari.ation law. An exan.ple iiaght be the 8cJ. 000- acre Irvii.e ranch in southern California, ch receives Colorado River water developed under the Boulder Canyon .ict ch authurized the building of Hoover Darji by the Bureau of Reclair^ation. .)arently the Irviue Company intende to develop a City of Irvine on 5U, 000 acres ts property, '/^lu-ee tin.es the size of i.^anhatten Island" and anticipates that •ill be inhabited by half a ii.iUion people. " This, of course, is but one spicuous exaiv.ple. It may serve, however, to draii.atize the fact that iii ly western reclamation areas urban speculation hopes, as well as a search agricultural gains, explain the strong opposition that stands in the way of iess of farmworkers aaid would-be farmers to land developed in its supply of er by the U.S. Bureau of Reclamation u^ider reclan.ation law. ?end as docur..ents: "Acreage lin.itation: petty political tyranny. •• vVestern er News, September 1969. "A $5 billion city next to crops. " San Francisco onicle, 31 iMarch 1971. "tlanned urbanization lives with agriculture. " : Francisco Chronicle, 2 April 1971."'iimon calls Irvine Deal 'unjust'". Daily ■liornian. 1971. "Orange county water district. " ;Vestern water News, Oct. -Nov. K i:::ccerpt fron. In.perial Irrigation District News.' Feb. 1965. ) 800 [From The New York Times, December 28. 1971] [Editorial Page] The Fabm Revolution — I The short but sharp fight over the confirmation of Earl L. Butz as Secreta of AricuuLe tur^^^^^^^ spotlight on some unhealthy long-term trends on t natton's farms. Despite his estimable personal qualities, Mr. Butz encounter ^position because he epitomizes the rapidly growing power of giant conglo emte corporations which have extended their activities into agriculture a Ire already in a position to dictate the price, quality and variety of ma ^"^As^'in any situation where two or three suppliers are able to dominate^ market the buyers-in this instance, every housewife and her family-beco ^ctims. The quality and variety of food in this 'ZTlnTJJ^lt!a\nl^^ to deteriorate because many crops are grown harvested and marketed in w. which fatten corporate profit margins rather than please anyone s Palate ^ Corporate farming is most profitable if crops can be machine harvested. ^ quaUty of most tomatoes has declined because only hard tomatoes with tb skins can be picked by machines. The same process is now being applied strawberries and other fruits and vegetables. T^se Invisible losses to the housewife are matched by the social costs to small farmers and small towns of America. Not all faT^'f/JL^hprn s^r as the chicken farmers who have become "poultry peons, but whether a sr ?lrmer is growing potatoes in Idaho, fattening cattle in Texas, or raising t in i^wa, he finds that the processors can whipsaw him on prices and he co rate conglomerates with their far greater financial resources can dictate ^TrpfraS^and^ig commercial farmers ha., the -pital to introduc^^^^^ ern technology rapidly with consequences which are unplanned and unprov ?o? Thus; the mechanical picking of cotton evicted hundreds of thousand: sharecroppers and marginal farmers from the land within a few years their migmUon contributed significantly to the welfare and housing crise ^^Up \o'now, in the absence of any national policy or regional plan, the J J business corporations have simply availed themselves of technical chang ma^Tze profits and have left society to cope with the human consequei Thev have succeeded in stigmatizing critics of their narrow, smgle-mi approach as enemies of progress. But the nation no longer accepts this where the automobile or the supersonic transport or the strip mine is concer It is time to examine this technological mystique of "progress" in agricuii and subject it to rational choice and deliberate judgment. The Farm Revolution — II A million family-sized farms were consolidated out of existence in! 1950's and another million in the 1960's For ^x-farmers, the postwar v^^^ in agriculture has doomed their cherished wjy of life, fmall tovvns whici^ by serving farmers have also suffered. It has been estimated that one ,i town businessman goes under for every six farmers ^l^o q^J^e farmm^^^ Is the trend toward fewer farmers desirable? Is it inevitable? Does the ing over of the actual growing of crops and livestock by food processors^ conglomerate corporations serve the public interest . :„.pn«P' Earl L. Butz, the new Secretary of Agriculture has evoked intense^ troversy because he answers these questions in the affirmative. He has pre(^ there will be a million fewer farms in 1980. Formerly a director of t^o cultural conglomerates and a dean of Purdue Umversi^ty winch has research ties with agribusiness, Mr. Butz is an unabashed apologist tor ^^ Secretary Butz's assumptions of inevitability and progress are not nece?^ valid! The rapid mechanization of Southern agriculture released many croppers nnd marginal farmers not "to do something else "s^^^^' ,^^%^\V claims, hut to rot on Ihe welfare rolls in urban slums or— as Senate in\( tions of hunger have shown— to starve in rural slums. The entrance of diversified corporations into agriculture has not pre better or cheaper or more varied food. America does not ^^ecojne a hea more diversified, more self-reliant society by reducing farmers to the sta (•orT)oration dependents wholly controlled by long-term contracts for^i crops or selling in markets dominated by a few large companies. 801 If the nation is to contain and roll back corporate power in farming, how- ever, there will have to be a legislative and political struggle as intense and prolonged as the effort to control the highway lobby. Senator Nelson of Wis- consin and several other Democrats have introduced a "Family Farm Act of 1972" which would require corporations owning more than $3 million in non- farm enterprises to divest any lands used for agriculture. But much more is needed, including a revision of the depreciation and capital gains sections of the tax law which favor corporations and wealthy non-farm investors, a law requiring processing companies to bargain coUec- rively with cooperatives of small farmers, and a radical revision of farm subsidies and farm research priorities. Far-reaching changes in the organization and technology of agriculture af- fect consumers and taxpayers as well as farmers. Only if these issues are brought out of the political ghetto of the farm bloc and made matters of wide- spread national concern can policies be devised which take account of all the ?osts and consequences of the farm revolution. [From the Chicago Sun-Times, Dec. 5, 1971] Agribusiness — A Grim Reaper? (ByNickKotz) Washington. — The controversy over Earl Butz's nomination as secretary of igriculture has its obvious political aspects. It also focuses rare national atten- :ion on revolutionary changes in the nation's largest business, its food supply system. These changes are having profound effects on the fate of rural Amer- ca, as well as on congestion in our cities. The obvious opposition to Butz was explainable in terms of partisan Demo- cratic politics, of farmers' unhappiness with low corn prices, and of the nom- nee's role in the 1950s as an assistant to Agriculture Sec. Ezra Taft Benson, vhose name still raises farmers' blood pressure. Butz is such a convenient )olitical target that some Democratic strategists actually were worried that his lomination would be defeated by the Senate. They'd rather have him around 'or the 1972 election. But another explanation is needed for the spontaneous and intense grass 'oots farmer hostility against Butz, a man most farmers never even heard of mtil his nomination recently. The issue goes far deeper than the genial, 62- rear-old appointee and the exigencies of partisan politics. Butz simply sym- )olizes a force in the changing food supply system that many farmers have ome to regard as their oppressive economic enemy. A thumbnail sketch of Butz's career marks him to the farmer as a repre- sentative of "agribusiness" — a descriptive word that wasn't around a few "ears ago. For the farmer, agribusiness means all the other elements in the ood supply chain that are highly organized and represent big business : the lational retail food chains, the giant national food processors, and the conglom- 'rate companies that perform an interrelated series of functions in the food ystem. The farmer has seen these other segments of the food supply system con- solidate their economic power while he — even as his numbers have dwindled »y millions — remains unorganized and relatively powerless in the marketplace. rUe agricultural marketplace has changed radically and farmers wonder vhether traditional laws of supply and demand function anymore. In bygone 'ears, many buyers competed for the farmer's produce. But the middleman and he open competitive market now have virtually disappeared. For example, >afeway and A«S:P buy lettuce directly from the fields of California, and armers say such companies' huge purchases set the market price. Most disturbing to the farmer, the giant firms in agribusiness now are verti- •ally integrating their business, combining and performing many steps in the and-to-market production of food. Ralston Purina Co. and other feed manu- acturers now own, feed and process poultry for sale to supermarkets. The >nce independent farmer has been left with only a sharecropper's role of caring or and feeding Ralston Purina's feed to Ralston Purina's chickens. Similar ntegration is now planned for hogs and cattle. 69-133 O - 72 - pt. 3A 802 In short, American agriculture has become more and more like other, big business— increasingly dominated by conglomerate companies and administered prices. Even, efficient, large-size family farmers find themselves isolated at the bottom of the food chain— forced to supply cheap raw materials to the eco- nomic giants above them. Against this background, Earl Butz steps in and Clifford Hardin steps out as agriculture secretary in a do-si-do that totally confirms the farmer's percep- tions about how things really are. Hardin started out as an agricultural economist, became an "Ag school" dean, served as a land grant university president, became agriculture secretary • and now departs to become vice chairman of Ralston Purina, taking a seat on its board of directors being vacated by Butz after 13 years. Butz also started out as an agricultural economist, served as a Purdue Uni- versity department head, became an assistant agriculture secretary under Benson, then returned to Purdue where he ran the agriculture school, while serving on the board of four agribusiness corporations— Ralston Purina, Stokely-Van Camp, International Minerals & Chemicals, and J. I. Case. The energetic Butz also found time to make 100 speeches a year, mostly in the employ of the General Motors speakers' bureau, to serve on various agri- business-financed foundation boards, and to take an unsuccessful 1968 fling at winning the GOP candidacy for governor of Indiana. Knowledgeable farm observers in Washington are convinced that an actual Hardin-for-Butz swap was engineered by a few executives and lobbyists from agribusiness. , „^, .^ „ In political terms, the Butz-for-Hardin trade indicates that the White House has little understanding of the rising populist resentments of farmers and small town businessmen. The merchants watch their towns dying, as more and more farm houses are boarded shut, and as the new conglomerate farmers buy their supplies wholesale from the factory rather than from local stores. President Nixon and the Republicans are not unique in their failure tc respond to these growing rural concerns. The Democrats have not performed all that differently. With either political party, the economic power of agri business has far more political clout than farmers have, except where thej have joined in giant, corporate-like co-ops. When Butz was questioned by the Senate Agriculture Committee, Sen. Hubert H. Humphrey (D-Minn.) mad( much ado about farm prices and the farm programs of Ezra Taft Benson. Bui he did not touch on the agribusiness ties of Butz. Agribusiness companies anc their executives have been among Humphrey's major political supporters. When Butz said there would be a million fewer farms in 1980 than ther< are today, he was merely agreeing with estimates of USDA's economists. Th< nation lost a million farmers under Benson and another million under Orvill- Freeman and neither official was to blame, or could do anything about it, sai( Butz. But it is not politic to say such things and silence about hard truths ha obscured what is really happening. Much of the decline in the nation's farm numbers has probably been ue avoidable. Industrialization, scientific developments, and new economic arrange ments made it inevitable that millions would fall by the wayside. The central issue for national policy today, however, should be whether thi trend will be permitted to continue to the point where rural America become a wasteland, devoid of people, except for those farmers who serve agribusines factory farms as feudal serfs. The continuing depopulation of rural Amenc adds greatly to urban problems. Butz, along with most persons making farm policy today, regards preser farm trends as inevitable and representing "progress." If the nation decides, however, that it cannot afford too much more of tn kind of agricultural progress, then it will have to pursue far more radios policies than those which both Democrats and Republicans have addressed 1 the "farm i)roblem." The pric(^supi)ort and acreage-retirement programs historically have serve the interests of the wealthiest farmers, rather than millions of small fami farms. ,i If the efficient family fariner-lMisinessman is to survive, he will need iJr more help thnii Just Miiotlier farm i)rograin. Fanners need legal authorizatu for collective hargainiug ])()wer simibir to that now held by labor unions. Sni.i farmers and farm workers need financual and technical assistance to organi^ 803 o-ops. Farm workers need unionization to win a living wage. Antitrust laws kill have to be applied vigorously against agribusiness firms that try to mo- opolize farm commodity or food systems. The government will liave to direct ts vast food purchasing power toward the family farmer, rather than as a ubsidy to agribusiness. Government and university officials will have to break up the cozy trian- iilar arrangement in which government and land grant colleges serve agri- usiness and neglect other rural interests. The career of Butz at Purdue rpifies this arrangement. But it is not unusual, except perhaps for the number f his cori^orate directorships. Agribusiness firms put money into the land rants for research that will directly benefit them.selves, and the universities nd federal government eagerly co-operate. Too often forgotten are the needs f family farmers, farm workers, and rural communities. The nation also will have to bring more than political rhetoric to the oncept of "rural development," which is now being served up as a magical Iternative for those displaced from agriculture. The President's propo.sal to replace pre.sent rural aid programs with several illion dollars in revenue sharing would represent .scarcely a drop in the bucket 3 meet needs of the vast rural expan.ses that lack services and jobs. As an Iternative, the Senate Agriculture Committee is pushing a rural development ill, but the question is seldom asked : Development for whom? A Johnson administration idea for rural development in Mississippi included reation of a vegetable industry in which wealthy cotton planters would be the rowers and processors. Farm workers and small farmers who share in this Ian would have $1.30 an hour jobs picking vegetables and $1.60 an hour jobs 1 the processing plant. But even such rural development schemes as these have ?en few. The last three Presidents have talked in generalities about the need for jral development and population balance. It will take a lot more to bring rosperity back to rural America. Growing Pains Down on the Farm FARM LOBBY — A FEEBLE VOICE ON CAPITOL HILL (By Nick Kotz) Washington. — The name Tenneco is not yet a household word to U.S. con- imers, but it weighs heavily on the minds of the nation's embattled farmers nd of government officials who worry about the cost of food and the fate of iral America. For Tenneco Inc., the 34th largest U.S. corporation and fastest-growing )nglomerate, has become a farmer. Its new activities symbolize an agricultural revolution that may reshape ^vond recognition the nation's food supply system. Dozens of the largest )rporations with such unfarm-like names as Standard Oil. Kaiser Aluminum id Southern Pacific have diversified into agriculture. What concerns farmers, rocessors and wholesalers is that the new breed of conglomerate farmers does ;)t just grow crops or rai.se cattle. The corporate executives think in terms of :ood supply systems," in which they own or control production, processing id marketing of food. "Tenneco's goal in agriculture is integration from seedling to supermarket," >e conglomerate reported to its stockholders. Its resources to achieve that 'al include 1970 .sales of $2.5 billion, profits of $324 million and assets of t-3 billion in such fields as oil production, shipbuilding and manufacturing. The conglomerate invasion of agriculture comes at a time when millions of irmers and farm workers have already been displaced, contributing to the :oblems of rural wastelands and congested cities. More then 100,000 farmers jear are quitting the land, and more than 1.5 million of those who remain 'e earning less than poverty-level farm incomes. Their plight is severe. Although the U.S. cen.sus still counts 2.9 million farmers. 50,000 grow one- iird of the country's food supply and 200,000 produce more than one-half of 1 food. The concentration of production is especiallv pronounced in such ■ops as fruit, vegetables and cotton. 804 In 1965, 3,400 cotton growers accounted for 34 per cent of sales, 2,500 fruit growers had 40 per cent of sales and 1,600 vegetable growers had 61 per cent The medium to large-size "family farms"— annual sales of $20,000 to $500, 000— survived earlier industrial and scientific revolutions in agriculture. Thej now face a financial revolution in which traditional functions of the fooc supply system are being reshuffled, combined and co-ordinated by corporate giants. . ^ - . , , "Farming is moving with full speed toward becoming part of an integrate! market-production system," says Eric Thor, an outspoken farm economist an( director of the Agriculture Department's Farmer Co-operative Service. "Thi system, once it is developed, will be the same as industrialized systems in othe U.S. industries." , . , ^ Efforts to bar large corporations from farming have come too late, say Thor: "The battle for bigness in the food industry was fought and settled 3 years ago — chain stores versus 'ma and pa stores.' " . ^ . Contrary to popular notion and most galling to the efficient, large, indepenti ent farmer, the corporate giants generally do not grow food cheaper than the do. Numerous U.S. Agriculture Department and university studies show tha enormous acreage is not needed to farm efficiently. For example, maximum cost-saving efficiency is generally reached at aboi] 1 500 acres for cotton, less than 1,000 acres for corn and wheat, and 110 acre for peaches. Thousands of independent family farmers possess such needed acn age, and farm it with the same machinery and techniques used by their ne' In fact, studies show that the largest growers incur higher farm productio costs as they employ more workers and layers of administrators. The farmer sees everyone he must deal with in the food production syste: acquiring more power— except himself. The supermarket chains, the grocei manufacturers and the new conglomerate farmers all have economic clout i the marketplace and political influence in Washington. Even migrant far workers, still the lowest paid laborers in the country, have made some progres signing contracts with the new conglomerate farmers, who are vulnerable boycott of their brand products. Only the individual farmer, with the exception of powerful co-operatives a few crops, remains unorganized in the marketplace. A battle to achieve market power now pits rival farm producer grou; against each other, farmers against processors and farmers against migra farm workers. ^ • ^ The battle has produced some strange new alliances and has strained o ones. It is now being fought with strikes and boycotts and in the halls of Co cress In terms of effective political power, the 200-odd Washington lobbyists i presenting the food industry are far more influential than farmer lobbyis Food processors have plants scattered all over urban America and can appe to urban as well as rural congressmen. For example, the Grocery Manuff turers of America, a trade association, maps out its legislative campaigns wi charts showing the location of food plants in each congressional district. ^ "Most members of the agriculture committees wish this farm bargaim issue would just go away," says one agribusiness lobbyist. "Whatever they ( the politicians figure they will make one friend and six enemies." The Nixon administration also feels and reflects the conflicting pressui from farmers and food manufacturers. The administration has tentativ( supported a Farm Bureau mandatory bargaining bill. But a high admmist tion source confides. , ^ "The White IIou.se owes a political debt to the Farm Bureau, but we are very entliusiastic about this legislation. If you look at our proposed qualify] amendments, vou'll see there really isn't much left." The imlitical disputes and maneuvering are still largely regarded by c sumers, urban politicans and the news media as intramural issues involv: "the farm prol)h'm." , ^ * -i. , But the broadest issne involves the future shape of America and of its ru communities. . , . . , What will become of rural America if the greatest migration in histor: 40 million to the citi<'s in 50 years— is further accelerated? Farmers h) provided the economic base of the small towns and that base is becoming I ilously small. 805 [From the Western Water News, September 1969] Acreage Limitation : Petty Political Tyranny (By Robert W. Long) Slightly over a century ago, the Civil War strived to settle by combat a few issues involving human rights, plus a decision as to who would govern a young nation. At the same time an economic decision was made by someone unknown that government policy relating to distribution of government lands to war veterans (the 1862 Homestead Act) would be limited to 160 acres. Such an expanse of land no doubt represented an adequate economic unit at the time. By the turn of the century this principle was established doctrine in the minds of eastern and midwestern politicians and therefore readily incor- porated into the Reclamation Act of 1901, which governs the unit of land to be served by irrigation water from federally sponsored projects. It was also hazilv referred to in the Boulder Canyon Project Act of 1927 when the Colorado was finally harnessed for the benefit of the entire southwestern region of the United States. The result of these actions is that Western United States have been forced to live under an archaic and ridiculous law, fostered by provincialism and eastern political jealou.sy, for over a hundred years and thereby subjugating economic realism to petty political tyranny. Even in our modern era, when the West has gained in political strength through population migration, there continues to be substantial resistance to change from unconcerned Congress- men representing regions with little or no involvement and our own liberally- oriented Representatives. Part of the continued opposition to a realistic revision of this old law stems from a misconception that by these means the myth of a small family farm will be sustained. Volumes of literature have been written on the issue of acreage limitation by federal fiat and tons of recorded testimony in Congress have piled up over the years in an almost unbelievable mass which today serves as a monument to how a free republic can bog down in a nearly hopeless tangle of sentiment, petty politics, legalism and economic unreality. The State of California has finally come out with the first sensible program since U.S. Senator Clair Engle attempted to devise a workable formula to solve the problem in the inid-1950's. Briefly, California has proposed that all restric- tions relating to irrigation water from Federal projects be initially set at 640 icres and that anything above this level be subjected to additional levies to be letermined by administrators in localized regions. This proposal deserves serious and prompt consideration as a step toward correcting the increasing nequities which are arising from attempts to administer a ridiculous law in our rapidly changing agricultural economy. There is absolutely no merit to continuing this ancient concept ; and worse, t IS tending to inhibit the necessary adjustments in new methods of food )roducting in this country, thereby forcing our highly mechanized agricultural ^ndustry to compete with domestic and world production at a still greater lisadvantage than ever before. Is this sound public policy? Is it really fair or just for nearly two-thirds of I geographic area in America to subject the Western third of the nation to a orm of vassalage? Maybe this is what causes the seeds of a civil war. Instead, )ur Western Representatives should present to Congress a united front in iiipport of modernizing reclamation law relating to Federal irrigation projects, j-veryone will be a winner. It is urgent that we place before the Congress this ear a united front, and I urge our Western Representatives to support Cali- ornia m this important effort. [From the San Francisco Chronicle, Friday, Apr. 2, 1971] Planned Urbanization Lives With Agriculture (By Henry Schacht) When James Irvine bought around 100,000 acres of Spanish grant land in ooi ne could not have guessed that just over a century later it would be this inl ^^.v "?^"^^ astonishing example of agriculture living successfully side by lae with planned urbanization. 806 The Irvine Company owns approximately one-fifth of Orange county. The largest master-planned acreage in the world under one ownership, we were told when we toured the new City of Irvine and the neighboring Irvine Ranch ^^S& ^thouTand acres are in orchards. Irvine is the largest Valencia orange grower in the State. Thirteen thousand acres raise alfalfa, vegetables, nurserj crops, and berries. Another 50,000 to 00,000 acres of barley and rangeland sup port the cattle operation. . ,^ , i. Even though much of the ranchland is now in an agricultural preserve t< protect against urban-level taxation, intensive development is necessary t.. make the ranch pay off in its situation. ' When we were there a thousand crates of asparagus were being packed daily Half or more were being flown out to European markets. Eleven hundre. acres are planted to asparagus. The plan is to expand to 1500. Ihe ranch wil have $450 invested in every acre of "grass" when it comes into productior Not until the third year of cutting will it show a profit. But Irvine hits a; early market with good quality and heavy yields. Over the pull asparagui should be a winner. „„Kfl^„,„, The ranch has also placed its faith in such crops as celery, cauliflowei string beans, bell peppers, lettuce, carrots, tomatoes, sweet corn, cabbage, pan ley. A typical rotation, we were told, might be from celery into canning tom? toes and after that to sweet corn and cauliflower. ^ .r,^ „., Strawberries are a leading crop. Yields run as high as 2o tons to the acr- Management thinks this can be surpassed substantially m the future. Orchard land raises oranges, lemons, grapefruit and avocados. A majc long-range readjustment is in progress with the orchard crops. As older o chards, or orchards hit by "quick decline" of citrus, are pulled out, they ai not replanted in the flat valleys that run into the hills. Instead they are beir moved up to higher, warmer hill land where frost danger is lower. Sprmkh irrigation makes it possible. ^ . t i Water for the ranch comes 27 miles by gravity flow from Irvine Lake rese voir. Some also is drawn from Colorado river water. And 10,000 acre feet a: pulled up from the ranch's own deep wells. Rainfall on the average is only eig. to nine inches. , ^.,, , n ^ rr^ r^^ At times heavy winds shrill through these coastal hills and valleys. To pr tect crops and orchard trees windbreaks of eucalyptus are planted for miU When new land is to be developed windbreaks are planted two or three yea ahead, water being hauled to the young eucalyptus, so protection will be the when the new plantings need it. i • ^- ^^ or«r Another budding problem born of the surrounding urbanization is smc Leafy vegetables already are showing some effects. Citrus may, too. When the Irvine Ranch was founded this was cattle country. The ranch st runs a herd of 15,000 Herefords. But the economics of the cattle business recent years had led management to buy stocker cattle for later sale to cat • feeders They come from Mexico and the Plains. Lower grade cattle, mix(, looking "like a cross between a jackrabbit and a beagle," but they make mon "^Vhe unlimaTed^may equate a big ranch with big profits. Bigness can just | well mean bigger than average losses without expert management. A^ e gathei that the ranch was under pressure to produce as a "profit center within t huge Irvine Company complex. We didn't see the books but got the feel^_ things were in hand. [From the San Francisco Chronicle, Mar. 31, 1971] A $5 Billion City Next to Crops (By Henry Schacht) Back in the 1800s three men named Bixby, Flint and Irvine got together* buy up two and part of a third Spanish ranchos. ™ They did quite well on their deal. Bixby's land now includes the city of Long Beach and some choice oil pi erties If "you were to stand on the corner of 7th and Broadway in downtown Angeles Flint's land would be all around you. Buried under office buildiiE 807 Irvine's properties are now administered by the Irvine Company which is still extensively engaged in rancliing but is simultaneously developing a planned city destined to cover 50,000 acres of company territory and be inhabited by half a million people. This stunning development lies today cheek by jowl with citrus grooves, asparagus fields and rolling coastal rangeland. The city of Irvine is to be three times the size of Manhattan Island. The final tab for creating it is estimated at $5 billion with the land alone valued at 20 per cent of that. We toured it the other afternoon in the company of Bill Williams who heads the Irvine ranching setup. We liked what we saw. The city is planned to the nth degree. It is both functional and beautiful. One Irvine official is quoted as saying, "The people are coming here whether we plan for them or not." Irvine has done the planning. The whole thing is remarkable. I After our bus had passed through downtown Irvine, past the huge Univer- ! sity of California campus and through the surrounding residential develop ments, it seemed impossible that just over a ridge cattle should be grazing near the faded red barns of the livestock headquarters. We ate barbecued steak in an oak grove in Bomber Canyon. Looking around i you might have thought you were in some faroff coulee of Montana. Yet over the hills in one direction was Irvine and in the other the beach community of Newport. How can an agricultural operation live right next to that kind of high- density, high-tax development? By the book the taxes and the restrictions I should kill you. j One thing Irvine has done is to take advantage of the law permitting ranch- i ers to place their land in an agricultural pre.serve, agreeing not to turn it over I to commercial development so long as it is taxed only at its agricultural poten- 1 tial. Forty-eight thousand acres were placed under such an agreement with Orange i county in 1969. The term is 10 years. Time to breathe and plan, i Another move has been to switch land out of older crops such as grain and , into higher-cost and higher-risk, but also higher-profit, crops. Bill Williams says, "If we still grew barley, as we were years ago, at $2 an acre profit, or were trying to grow low-profit lima beans instead of asparagus and strawberries, or if we were still planting orchards at 48 trees to the acre i instead of 140 to 160 now being planted, we simply could not stay in business." This is what it takes to survive as a rancher in one of the Nation's fastest- growing counties and right next to the largest planned city on our continent. [From the Daily Californian, Berkeley, Calif., Oct. 6, 1970] SiMox Calls Irvixk Deal -rNjusT" (By Craig Oren) Los Angeles. — Norton Simon, a member of the UC Board of Regents, charged yesterday that private interests would be "unjustly enriched by $430 milhon' in connection with a proposed development plan for the area round the Irvine campus. At a press conference in the Ambassador Hotel, Simon announced that he cn^iS ^^^ ^^^^ Regents to file suit against the Irvine Company, which owns some «U,000 acres of land around the Orange County campus. The Company, in response to Simon's charges, promptly denied any wrong- The story behind Simon's allegations goes back to 1960, when the University aecided to locate a new campus on the Irvine Ranch, which is owned by the Company. I STUDENT HOUSING The University negotiated an agreement with the Company, under which the i-niversity was given the 1000 acres on which the Irvine Campus is located and an option to buy on another 660 acres to be used for student housing. I in return, the Company agreed to accept as a "preliminary planning concept" a plan calling for development of a 10,000 acre, "University-oriented" com- munity, of about 100,000 in population. 808 ' Under this plan, housing for students and staff would be provided near th< campus. The main business district and City Hall of the proposed City were t^ be very close to the campus. . , .. ^. i Several years later, in 1904, the University exercised its option and pur chased 510 acres. Since then, student liousing has been constructed l)y this land although there still is a substantial housing shortage that has forced man; students to live far from the campus. REVISION Now Slowever, the Irvine Company wants to revise the original plan. A( cording to a new proposal released in March, the city would have a populatio of 430 000 and would cover, not 10,000, but 53,000 acres of land. In addition, the area around the campus would be high-income housing an the downtown area would be more distant from the campus. Simon claims the move is aimed at increasing the Company s profits. In prepared statement, Simon said the move would profit the Company at lea.' $430 million. He based this figure on an average price rise of $10,0(K) Per aci after development, which Simon claims is a conservative estimate of what tt actual increase in value would be. , t iir 4- The Irvine Company's executive vice-president, Raymond L. Uatson, mau tains that the revised plan was adopted "in order to better plan for the entii ^"^"People are going to come to Orange County whether we like it, or not Watson maintains. "Our only choice is whether or not we will plan for the or not." "INTEGRITY IMPUGNED Watson also called Simon's charges "groundless implications. We categc ically deny any allegations that impugn the integrity of our planners, he sai Watson contended that provision had been made for student housing. T University is building housing in the 510-acre area we sold them, he said. "ANOTHER ISLA VISTA" But Simon maintains that the proposed plan will result in "another Ij Vista" and will result in slums in neighboring cities. "This plan is a disast' for the University," Simon said. Simon has expressed opposition to the plan since its announcement. Houev, he has gained little support from fellow Board members. Simon has indicated that if he cannot per.suade the Board to sue, as is c(, sidered certain, he will initiate independent legal action to stop the plan. The Orange County AVater District— A Magnificent Accomplishment Ba! ON Local Ingenuity and Local Funds (By Howard W. Crooke, Secretary-Manager, Orange County Water District) outline of program The format for the expanded program was provided in the 1953 and la. amendments to the Orange County Water District Act adopted by the Li fornia Legislature. These amendments expanded the area of the District' include all the lands receiving water from the groundwater basin. In additi to an ad valorem tax on all properties within the District. The 19o3 ame] ments provided for the levy of a water replenishment assessment or 'pu tax" on all ground water produced, at a rate which would take care of rep( ing the annual overdrafts. . i. i More recently, in 1901, the Legislature adopted amendments to the Act wl provided for an increase in the ad valorem tax from not to exceed 8 cents i $100 of a.ssessed values to a top limit of 20 cents per $100. with all funds < cruing from anv levy over the 8-cent rate to go into a special fund de.si ixii: ' as the "Water iteserve Fund," to be used exclusively for the purchase ot ^^ for ground-water replenishment— water from outside the watershed of ^ Santa Ana River. 809 DRY YEARS, PLUS GROWTH The year 1959-60 was the second driest season in the history of Orange Vjunty. The following year was the driest of all time. Demands for water in )range County in these same periods increased in direct proportion to the irea"s well-known population and industrial growth. In .^pite of this adverse ombination of circumstances, due to the District's water importation program, veil levels were held al»out constant during this period. With the return of near iormal rainfall in the 1901-62 season, well levels raised substantially. During the 1961-62 .*:eason, about 85 per cent of the water used in Orange 'ounty was imported for direct use and ground-water replenishment. As pre- iously stated, the Orange County Water District imported 220,000 acre-feet of 'olorado River water for ground-water recharged in 1961-62. Because the lear normal rainfall that year was well distributed, irrigation of lawns and rops was drastically reduced. THE DRAMATIC RESULT A dramatic result of this favorable set of circumstances is brought into ocus by the ri.se in well levels throughout the area of the District. For ex- mple, all the wells operated by the City of Santa Ana, which are located ap- •roxiraately in the central portion of the basin, were 17 feet higher on the verage on September 1, 1962, as compared with September 1, 1961. Obviously, such progress has been at considerable expen.se to the citizens of ,he District. The cost of the water that was purchased for ground-water re- harge alone in 1961-62 was nearly $3,000,000. LEADERSHIP AND FORESIGHT I These leaders who.'^e foresight sparked the present replenishment program iave continued to look beyond the horizon. The District is now laying plans hat will preserve the integrity of the ground-water liasin and assure a firm ivater supply in spite of possible adversity in the area of tlie District. Excerpt from statement bj- Paul S. Taylor In opposition to H.R. 9 proposing authorlza- I Hon of the Colorado River Basin Project. March 1967. House Committee on Interior. ! 90th Cong. 1st Ses., p. 6S7] I The Chief Counsel of Imperial Irrigation District. Reginald L. Knox, is ,eported to have said that "If the (Imperial Valley) opinion of Solicitor rank Barry is correct, it also applies to all areas receiving water from the 'olorado River, including land in the Metropolitan Water District v.hich sup- lies water to some extremely large holdings on the coast. According to Knox, lere has never been any reference to that area, but if the opinion is correct, it rould necessarily apply there also." Imperial Irrigation District News, Feb. 9G5. Vol. XXVI. No. 9, p. 1. Apparently the Secretary of the Interior has lade no move to apply the law to lands receiving water from the Colorado :iver under the Boulder Canyon Act through the Metropolitan Water Dis- "ict of Southern California. [From the Bay Guardian. San Francisco. Calif.. May 19. 1967] I The Biggest Grab of Them All , Once again, as Paul Taylor warns in the start of an important series on age 3, the battle is on to abolish the 160-acre minimum in Theordore Roose- elts Reclamation Law. The purpose of this great act of conservation was imple: to prohibit land and water monopoly, to allow the landless to own and |Ork farms of their own. to distribute to the many the benefits of public ^ater and public reclamation. I It never worked that way in California. Land speculators early got much of .le choice California landscape and wholesale evasion of the reclamation law jUowetl them, not only to retain it, but to .skyrocket its value through publicly Jb.sidized reclamation. Now. their descendants want to make the sky the limit y abolishing the limitation outright. 810 It should be clearly understood that these landowners are asking the publir to givVthem The use of water that belongs, not to them, but to us all. further t fhouK IK' dearly understood that they are asking the public to contribute about $1 000 an acre toward the cost of getting water to them-money thej never my Tad.. In the San Joaquin Valley, for example, some 3G landowner: owrrthrelquarters of a million acres; getting water to their lands will cost th. nnblic some three-quarters of a billion dollars. "^ I ?s unconscionable that the taxpayers of California, as wdl as of the na tion as a whole, should be asked to supply this gargantuan subsidy for th iZitot a handful of private and ^'orporate interest^s^ For the point ^^ha, the original 100-acre provision was and is a large sut)Sidy— now $100,(X)0 pe person $320,ioo for man and wife-which was fully justified if it opened u fand ?i landless farmers, workers and veterans, if it arrested the dangerou t?end to Corporate and absentee farming and if it helped conserve the state '^BTthesVLTopp'^^^ that can be realized only if the redamation la^ is preserved and enforced in the public interest, not abandoned on behalf c ^'now witTthe press of population and the loss of 365 acres of farm land davTn'cTl fornia, the law offers the greatest opportunity of all: the machiner bv which the federal government can buy excess acreage to preserve yaluab agrrciUtLl land' to assure greenbdts around cities and to control urba sprawl and to conserve the state's natural heritage. j [From the Bay Guardian, San Francisco, Calif.] f A Bay Guardian Inquiry Into Reclamation "TODAY THE LAW IS TWISTED INTO A PROGRA^[ TO BRING HUGE SUBSIDIES. VAST UNEARNED INCREMENTS, AND MONOPOLY OF WATER TO A FEW (By Paul Taylor) I Gov Reagan has now assumed leadership in the 80-year-old campaign huge landowners to grab the West's most valuable resource-water. The grab centers, as it always has, upon Theodore Roosevelt sReclamati. Law and overriding the 160-acre provision that prohibits land and wa monopoly by limiting the use of federally devdoped water to no more tb. 160 acres per owner and 320 acres per man and wife in California. Sen Wayne Morse once called the attacks upon this anti-monopoly Provis. a proposed "water 'steal' reminiscent of the great scandals" of Teapot Do and the "great land frauds." At stake in the fight to diminate the provisi • hundreds of millions of dollars of public subsidies, the ^^''^^^?if'''''\^,f,h devdopment in California and the perpetuation of concentrated pditi 1 power that goes with land and water monopoly. • • „ 4„ .' ^lieir "intim ( knowledge and substantial experience" with the problems. The pmnt the c,i mittee is heavily freighted with the same land-holding interest (c^airm_ Burnham Enerson, water attorney for the Kern County Land Co ) who 1^ fought for decades to abolish the ceiling and open the floodgates to subsidi ^ Given the governor's mandate and the make up of the committee, theri little doubt but what it will recommend. . , . ., The practical purpose and effect of the 160-acre law are often mi^^n^e;-^ bv the public. It is to place a ceiling on the amount of public subsidy that - individual landowner may lawfully receive (about $160,000) and a man «' "^IL^^'n;;Klf?n'S!tions n.ule public subsidies of $160,000 and $320,(^ J reasonal,le, and consequently "archaic?" What should the ceilmg '•;; -J^^ ^ the sky be the limit? Tlie urge to remove subsidy ceiliiig.s of this m.iMHO makes attacks upon the 160-acre limitations by landholders with .>0 00 150,000 acres readily understandable, but, from any public point or ^ hardly justifiable. 811 I invite tlie attention not only of Californians to this question, but of eople in all parts of the nation, whose money is being misused in the West, hose sons are being confronted in the West with opportunity diminished 9low the intention of the law and whose solemn statutes are being twisted ke pliant rubber hose from their true purposes under the pressure upon iiblic officials from powerful western interests. The trutli is the first casualty in the usual public discussion of the 160- ?re law and California's water development. So let us begin by speaking of •uth and of its concealment, for the next step after evasion of the truth is ;asion of the law. The truth about the 160-acre law can be discovered easily. It can be read in le text of the law itself as enacted by Congress. It can be read in a penetrat- ig analysis by a faithful and competent administrator of the law, former ecretary of the Interior Harold Ickes. It can be read in authoritative words ' the Supreme Court of the United States interpreting the law. The statute says simply, that "No right to the use of water for land in -ivate ownership shall be sold for a tract exceeding 160 acres to any one ndowner." Ickes, secretary of the interior under President Franklin Delano Roosevelt, nd that "It is the age old battle over who is to cash in on the unearned icrement in land values created by a public investment." (Ickes to Frank !;arvoe. editor of the San Francisco News, Oct. 31, 1945) The Supreme Court spells out the functions of tlie 160-acre limitation un- istakably : "That benefits may be distributed in accordance with the greatest )od to the greatest number of individuals. The limitation insures that this lormous expenditure will not go in disproportionate .share to a few individ- ils with large land-holdings. Moreover, it prevents the use of the federal clamation service for speculative purposes." . . "irrigation .... without in- rest charge is a subsidy, the cost of which will never be recovered in full." The function of the 160-acre limitation, then, is to assure that the people's oney and the people's water are used to create opportunity for the many, by •eventing the few from monopolizing the subsidies, the water, and the incre- ental land values created on reclamation projects by public appropriations, refer specifically to reclamation projects in the Imperial Valley and in south- n California under the Boulder Canyon Act and northward in the San •aquin and Sacramento Valleys in the Central Valley project. .Here are the clues, in acres and dollars, of the magnitude of the stakes and I'wer of motivation for the Western forces to evade the reclamation law. )out 200,000 acres, or 40 per cent of the irrigated lands in Imperial Valley, jCeive California Kiver water in evasion of the law. |In the San Joaquin valley, 36 large landholders have been identified as ,>ners of three-quarters of a million of acres of irrigable land, averaging .000 acres apiece. At Westlands, on the west side of the San Joaquin Valley, ,^ners of 400,000 acres — an area about half the size of Rhode Island — are on e eve of receiving illegal water from the Bureau of Reclamation. Southern icific alone holds 120,000 acres here. There, at Westlands, the national treasury is pouring a half billion dollars to a half million acres, with a.s.sessed value of only $26 million, and present pulation of only 25,000 persons. Unless their owners qualify their lands ider the 160-acre limitation, three-quarters of the half million acres are ,?ally disqualified from receiving benefits in the form of public money and blic water. ,To recapitulate, the plain truth is: (1) reclamation heavily subsidizes ivate landowners; (2) the 160-acre limitation, properly enforced, prevents Iter monopoly, places a liberal ceiling on individual receipt of public sub- lies and controls distribution of unearned increment in land values — all to otect the many from the few; (3) the 160-acre limitation, applying to ' nership rather than to .scale of operations, does not stand as a barriar to |iciency as embodied in mass production methods and use of machinery on a 'ge scale. These are truths. They expose untruths which underly evasion of law and i? campaign to remove the 160-acre limitation. jWhat are the techniques of law evasion? They are as numerous and inge- pus as representatives of large landholdings and unsympathetic administra- p can conjure up. A few examples : 812 Ignore the legal prohibition of delivery of water to an individual for moi than 160 acres, and substitute delivery of water to a district, instead, allowin the district to distribute the water as it pleases. . ^^,, ,.,, ,o„. Ignore the legal requirement of agreements from owners of excess lam pr or to letting contracts for construction and, instead, construct the proje first' leaving excess-land owners unlimited time thereafter to volunteer, or n* to volunteer, to dispose of their excess lands. Create an outright fiction. The truth is that the law applies to al proje water whether it reaches land by canal on the surface or by undergrou, TeservoiT. The tactic is to simply ignore the law if the water reaches the la, via the underground, an escape hatch used since 1937. „.^«,v Opposition to the excess land law moves in two °^^^" ^^^^^^'^i^^f ' ^^"^^ the law itself and pressure on administrators to weaken enforcement. T* former tactic is preferred, for congressional exemptions are final, if they c; be won However, the effort to obtain outright exemption.s is likely to arou DODular and effec ive resistance in Congress. But, of the alternative, a spok< ml^a for la?ge landholdings candidly explained to Congress that in some cas nonenforcement "would not be a safe solution . . . landowners could no rely coXued future nonenforcement." The twin campaigns against the law a Us admhiistration have proceeded simultaneously with fluctuating intensi Gov. Reagan now breathes life into the first. r>^^i„^ofj We stand face to face with the end of the reclamation era Reclamati: began as a great measure of conservation initiated under President Theod( Roosevelt, planning and assisting the development of western waters to ere; nfiw'admin?^te?erhowever, the program is no longer reclamation It | twisted into a program to bring huge subsidies, vast ^'^^^'^f,}'^''^^^^^^^ monopoly of water to the few. We are not only "giving away to a very f Te water that belongs to all the people; we are ^P^nding huge sums^ o^^^ i nublic's monev a large portion of which never is returned to the trea.su ry, Siake sure that the ffw actually receive these waters that belong to the ma Instead of gratitude for this largess, the law is attacked as ou model, unfair by those whom the law sought to bring under its control, butjl virtually control the manner of its administration ^n the greatest u.. reclamation projects. Since Congress and the Supreme Court ^^^ave sustai the l?w?he pressures are heavy upon administrators to provide the exei. tion that the egislative and judicial branches of government have denied. The p^^^^^^^ is that the real orientation of the 160-acre imitation f, 1902 to this very day, is and always has been toward the future, not the pt The futui-e that impends in California is a future without open spaces m valleys, without greenbelts, with its most productive agricultural lands o whelmed bv ever-spreading urban slurb and sprawl, prospectively, from Sieg^to Mt. Shasta. Measures initiated by the State although commend in purpo.se, are limited in possible effectiveness, and could be greatly .\ mented bv a program of government purchase of excess lands. Accordhig to estimates by the AFL-CIO, there are 900,000 acres todaj CaUfornia that are "excess" and not in conformity with the requisites of i ''L\^rrnmenr';^i"chase of these excess acres would ^e ^^ ^orig step tovr assuring conservation of natural beauty in the valleys and ori the plain ( California and the West. The West has a right to demand that the fed . governXt live up to its responsibilities under reclamation law for the n ity of its future. [From thp Bay Guardian, San Francisco, Calif.. June 29, If Rkagax Is S?:rioits . . . 1967] I A. Alan Post, state legislative analyst, wrote cautiously in examining Reagan's 190G-07 budget, but his meaning was unmistakably clear. The State Water Project, he said, is "increasingly monopolizing the st bonding capacitv." More: future water bond sales "may increa.smgly nl on he sale of other general obligation bonds of the state. ' Still more : T extent that this occurs . . . the effect will be either higher interest rat^ei an stat<' bonds, whether water bonds or school bonds, greater financ.i other programs from increased taxes, or the curtailment of expenditur either the water program or other programs." 813 ! What does this mean? This means, as Prof. Paul Taylor makes plain in his emolition job on the water plan on the opposite page, that the people of the tate of California are further subsidizing the public movement of public water ) enrich a handful of huge private landowners, mostly in Southern Calif or- 'ia. The ultimate cost : billions of dollars. It is almost that simple. Reagan, faced with Post's financial alternatives, is spelling out his prefer- -ence in letters of 96 point Tempo Bold. First : He intends to curtail expendi- ires for "other" programs, beginning with education and mental health, econd : he intends "greater financing of other programs from increased taxes" — (I the case of education (perhaps from higher student tuition fees) ; in the ise of BARTD (perhaps from higher bridge tolls charged to motorists.) Third, he has no intention of applying the same budget-chopping standards 1 the financing of the water project that he does to everything else. Rather : e intends to spend $100 million more on the project in 1967-68 than did his i-edecessor. Gov. Brown, in his last fiscal year in oflBce. This will bring the ate's project expenditures to a grand total of $370 million a year — almost iree times the annual expenditures projected in 1960 by the project's feasi- lity report. Reagan's silence on the state's massive contribution to the project contrasts jiarply with his eloquence on austerity for everybody else. To cut education, ental health and other humanitarian programs while raising the ante to keep lis special interest project moving — this more than anything illuminates the ■allow base of Reagan's Creative Society. I More: this isn't even good business. For, as Taylor points out, the whole pro- ,ct easily could be returned to the federal government where it belongs. This iould free California of horrendous expense and it would help insure that lonopoly and speculation would be controlled by federal reclamation law on nd benefitting from federally developed water. i'This alleged state project," Sen. Wayne Morse once said, "is merely a ision created in the hope that it can somehow transform everybody's water to later reserved only for a few people." This is the point of the project : "every- I'dy's water," moved at "everybody's" huge expense, for the luxury of a "few tople." If Reagan is serious about economy, this is where he can start. [From the Bay (Juardian, San Francisco, Calif.. June 29, 1967] This Incredible Water Project — You Pay for the Greed of Giant Landowners part 2 of a bay guardian inquiry into the unfolding drama of water (By Paul Taylor) Popular efforts to move water in vast quantities, like building the pyra- ds of Egypt, provide some of the west's historic dramas. Moisture comes to e western earth unevenly in quantity, and inconveniently in time. So the problem for technology is to move water from where it falls at the rong" places and at the "wrong" seasons to lands elsewhere that can be vde productive when it comes at the "right" places and the "right" seasons. The problem for public policy, in words of the Supreme Court, is to insure at popular water-moving efforts bring "the greatest good to the greatest mber of individuals." The California State Water Project has now become the most important a controversial act in this continuing drama of water. It seems fitting, ?refore, to use dramatic form to present this account. PROLOG ,rhe cost of huge dams, and canals running hundreds of miles, always has ^?n tar beyond the ability of immediate landowning beneficiaries to pay. They ^ ays have needed public subsidies and lots of them. Everybody in the West i|ew this at least as long ago as 1902. i^vestern citizens and their representatives in Congress— Californians prom- 'nt among them— united at that time in appeals to Congress to bear finan- ' water-moving burdens too heavy for landowners and even for states. 814 The 57th Congress responded: "Yes, under suitable legal controls over pr vate monopoly and speculation in the benefits from Inderal appropnatiopt we will open the doors of the Federal Treasury." The 100-acre Reclamation Law insured this principle of control by limitir the use of federally developed water to no more than 1(K) acres per owner ar 320 acres per man and wife in California. The practical purpose was to place ceiling on the amount of public subsidy an individual landowner could la\ fully receive (now about $1,000 an acre.) Later when reclamation projects generated hydroelectric power, Conjrr. added a public power preference clause of lower power rates to con.sumei Thus- the meaning of the phrase "under reclamation law' combined ope handed financial largess to private beneficiaries with stringent public contrc over monopoly and speculation. , .^^ • • •. .- i The objective of the present drive against the 160-acre provision is simpb to destroy public controls, but to retain the largess. ^ . .v, ^ ' California reaffirmed 30 years later the 1902 decision pointing to the desj ability of federal, instead of state, financing for water-moving programs I; cause of the state's financial incapacity to subsidize programs on this scale. • 1933, California voters approved a $170 million water bond issue, but invitf federal aid at the same time. ^ ^^ ■ ^^aJ The Legislature followed with an appeal to Congress to authorize fedei construction of the Central Valley Project "in accordance with reclamati ^^ California thus got a ^V/^ billion federal project, with two crucial con tions- (1) federal, not state money, paid for the project and (2) reclau tion law protected the public against monopoly and speculation. There were early fears that California's large landholders might be unw ing to accept reclamation benefits if forced to comply with the 160-acre It They were put to rest by 1905. ^ ^v, ^ "For California," house organ of the "booster" group of the day. carr this statement from a civil engineer : -^^^fi^/i fv "Already owners of more than 70 huge tracts of land have signified tt willingness to subdivide their lands for the benefit of intending settlers. Ti shows which way the wind blows and may be taken as an indication t ^ when the government is ready to go ahead our Patriotic landed propriet will be willing and ready to cooperate." . ,. „ In confirmation, landowners at Orland in the Sacramento \ alley soon . cepted a 40-acre limitation to help bring the first federal reclamation pro, '""a g2ne?atio^n later, "the wind" had changed, In 1944, hitherto conce.- hostility of the landowners surfaced and a wide array of tactics was unves to remove the 160-acre provision. x ^ • cjf^^-oWi These tactics were products of what Secretary of the Interior Stev^arli Udall now calls "careful planning." One showed the willingness of landowii to shift the heavy financial burdens of reclamation back to the state. J Business Week of May 13, 1944: , ,. , , ^4= w r "A proposal, said to have originated among the big landowners of Ir.r County ... for the State of California to take over the Central A alley Pro. paying the entire bill . . . This . . . would side-step the 100-acre limita i. However, outright state purchase of CVP was too costly to be poll ic possible. Besides: Secretary of the Interior Harold L. Ickes indicated^ the federal 160-acre law would be included in any contract of sale to the s Thereupon, after more -careful planning," the large land-owners camd with a "compromise" tactic in the early 1950s. The tactic : to impose upor state as much, but preferably not more, financial burden than migii^ necessary to free most of the big landowners from Reclamaton Law. The name of the "compromise" tactic : the State Water Project SCIO.XE 1. l!)58-1i)(!0 WASIII^M;T0^' The State Water Project was revealed to Congress in 1958 by Califoi offic-ial spokesmen. Tn explanation, they said they wanted two things Congress: first, federal assumption of the burden of a half-billion dol ar _ tion to CVP at San Luis (Westlands) ; and second, permission for the ient Slate Water Project to use "joint" reservoir, canal and pumping facil free from the 160-acre law. I 815 ' In Washington, this gave immediate incentive to California spokesmen to aaximize the financial burden the State was about to lift from the shoulders f Congress. Later, the incentive would be reversed — that is, to minimize he burden being imposed upon the people at home. Sen. Thomas H. Kuchel flatly told the Senate on Aug. 15, 1958, that "The itate Project will cost the people of California $11 billion when completed." H^aturally, this was good news to Congress to hear that the people of Califor- ia were ready to transfer so heavy a financial burden from the nation's back their own. In this spirit. Sen. Arthur V. Watkins of Utah rose "to congratulate the itate of California and California's representatives in the Senate, Senator uiowland and Senator Kuchel, on the fact that the great State of California ,ill build the project, and a still greater project which will cost in the neigh- orhood of $11 billion, and do it on its own." In Washington, there could be no mistake nor misunderstanding. Less than 1 year later, Kuchel said the cost would be "nearly $12 billion." Sen. Clair Ingle, who had replaced Knowland, stood shoulder to shoulder with Kuchel. he "ultimate cost of the state water plan is presently estimated at $11 bil- [On," said Engle. "The Federal San Luis Unit of the Central Valley Project ! but a small part of a tremendous self-help program of the State of Cali- !)rnia." I Gov. Brown joined in testifying to the weight of the financial load he be- eved the people of California were prepared to assume. The "state itself," le told Congress on March 16, 1959, "is launching an unprecedented water development program of its own. We know that we cannot and should not ?pend entirely on the federal government. 1 hope and expect that the State iC California will commit itself to invest more than $11 billion in the next 25 ?ars over and above the Federal program to insure adequate statewide water ^velopment." SCENE 2. 1960-1907 — CALIFORNIA Little news of these public proffers of the lavish generosity of the people of le State trickled back to California from Washington except, perhaps, irough the Congressional Record. When the water bond issue surfaced in November, 1960, the price tag on the tate Water Project "compromise" was, not $11 billion, but only $1.75 billion, f less than one-sixth of the figure quoted only the year before by Kuchel, agle and Brown. [The state needs water, the voters were told, and they approved the plan by I slim margin. Construction started, notably on the Feather River at Oroville am, and the state began to shoulder its assigned financial burden. The first financial returns are now coming in. Gov. Reagan's Water Re- j'urces Task Force warned in May : "from the standpoint of short-range finan- |ng' the "next three to five years are the critical ones;" that "authorized nding could be exhausted as early as the beginning of 1970," and that here is a short-term deficiency of up to $300 million, and a long-term defi- i?ncy of up to $600 million." Meanwhile, Reagan attacks as too high the budgets of education and mental ,'alth programs. He has yet to level similar attacks against the State Water ii'oject. .Under these financial strains, some division of interest and opinion within e state is appearing. "If a bond issue is indeed sought for bailing out the liter plan," stated a recent San Francisco Chronicle editorial, "in all equitv should be a bond issue voted not by the State at large, but by a special >uthern California water district, composed of farm lands and communities at will benefit from the transported water, together with the vast acreages Southern California desert lands that real estate speculators hope to en- -h themselves by." The Governor's Water Resources Task Force says nothing about the prin- l^ai pressures that burden the state with a State Water Project— land-own- i? pressures to circumvent the acreage limitation and public power prefer- |te policies of Reclamation law. The task force says nothing about the $11 ijion cost estimates made by Kuchel. Engle and Brown. I instead, it favors turning a few units of the State Water Project here and ere back to the federal CVP— to save the state some money. But it says 816 nothing about the obvious financial solution for the state; to bring into Cali fornia the huge federal interest-free subsidies by returning the entire State Water Project to federal reclamation, with this transfer would come the mo nopolv and speculation protection of the 160-acre provision Ignoring these "gut" issues of finance and policy, the task force offers sooth ing reassurances that "the State Water Project is eminently sound in engi neering and concept." It recognizes Reagan's budget-cutting by appealing fo "economies wherever possible, no matter how small and insignificant each on. "" Reaean^s'' st^at^e^'treasurer, Ivy Baker Priest, immediately jarred the placi- mood in which the task force closed its report The State Water Project sh reported, already is imposing on the people of California an annual intere^ ca??yng charge approaching $28 million. This total will rise to about $6 mUUon a year when the balance of the .$1.75 billion water bond issue is sole But this is only the beginning. The San Francisco Bay Area Rapid Transi and the Southern California Metropolitan Water Districts soon may be obligee because of the enormously expensive water bonds, to pay higher interest rat. on their own fresh bond issues. For much the same reason, each motors crossing the San Francisco Bay Bridge may be paying an extra dime eac time he passes through the toll gate. EPILOG The State Water Project, then, is seen as a "compromise" tactic that enabl giant landowners to circumvent the federal 160-acre I^^^^^^.f^^^^^ ^aw ke. their vast holdings intact and force California taxpayers to pick up the tab^ bringing public water to their lands for their private development purpos As such, this "compromise" must run a long gauntlet of questions. Amoi ^^When Kuchel follows task force recommendations and tries in Washingtr to save the state money by handing back a few water projects units to fe e?al reclamation, will Congress remember his promises that things would ^o the other way-ihat the water project would relieve the federal government ^ Wm"resfacSt without question his attempts already started to^ turn from the state to the Federal government Black Butte, >"ew Hogan a million peripheral canal, and "such sums as may be necessary to carry oi construction of the San Felipe division of CVP? Will Congress note that Kuchel proposes to do this, in S. liii, ^im exemption from the 160-acre law for ground water? ^= n„nfnri. How much additional financial burden is it worth to the people of Califori (if anything), or indeed to the people of the U.S. (if anything), to help la landowners to circumvent the 160-acre law? To help, say the Southern Pac Railroad with 120,000 acres alone in the Westlands Water District? The public is entitled to "careful planning" in its own interest, and in : open To whom, among its official spokesmen or appointed task forces, can . people of California turn to learn the financial burdens and policy manipi tions surrounding the State Water project? [From the Bay Guardian, San Francisco, Calif., Aug. 10. 1967] Arid Westlands— The Water Scandal (By Paul Taylor) | Of the countless episodes in the chronicle of the West as ;'The Plundc] Province" there are few to match in effect and extent the giveaway or , lions, if not billions, of dollars worth of public water to a small group ot i.J owners in a huge section of the San Joaquin Valley. ., The name Westlands may someday be to water what Teapot Dome_ was to Westlands is the name of a water district covering a vast /)00,00U- r chunk of semi-arid land on the west side of the San Joaquin \ allej- The^ trict, stretching from Los Banos to Kettleman City, has only 22^^00 f^' in an area about two-thirds the size of Rhode Island. Landownerss 240 of tj are huge-for example, the Southern Pacific Railroad owns 120,000 acre^« 187 square mile.s. 817 For 25 years, landowners here have mined water from their underground 'servoirs as miners once mined gold. So exhaustively have their pumps icked up water that the land surface is sinking about a foot a year and the aderground reservoir is badly depleted in quantity and quality. 'The sinking nd jeopardizes the canals, now being built, that are needed to bring water to •eck further land damage. All this is changing. Reclamation is coming and with it the inevitable -mponents of urbanization : more intensive farming, new towns and cities, ore people, soaring land prices, gargantuan profits to those who own land. Reclamation means the public subsidy of moving water to private lands. At estlands, this subsidy amounts to about $1,000 an acre (money the landown- s never repay) and an ultimate public investment of $500 million in an ea with an assessed valuation of only $26 million. This subsidy underscores a question that persistently dogs the efforts of estern landowners when they seek to gain Eastern and Southern support to vest federal funds in western reclamation. The question: Who reaps the benefits? The answer: The private landowners, ere's the background : At the beginning of reclamation in 1902, Congressman ?orge W. Ray of New York warned : "Behind this scheme, egging it on, encouraging it, (are) the great railroad terests of the West, who own millions of acres of these arid lands, now )rthless, and the very moment that we, at the public expense . . . construct ese irrigation works and reservoirs, you will find multiplied by 10, and in me instances by 20, the value of now worthless land owned by those rail- ad companies. . ." To quiet these fears of water and land monopoly and uncontrolled specula- m, westerners inserted a provision in the reclamation bill that no individual idowner can receive water for more than 160 acres. With this in the bill, the est's spokesmen assured Congress that reclamation would bring about the reaking up of any large land holdings which might exist in the vicinity of 3 government works." In simple words. President Theordore Roosevelt explained that "every dollar spent to build up the small man of the West and prevent the big man, St or West, coming in and monopolizing water and land. Roscoe Pound, a great dean of the Harvard University Law School, once id that "the life of the law is in its enforcement." The 160-acre law is still in 1 vigor on the books, but its administrators have reduced it to a dead letter. For the fact is that about three fourths of the Westlands district— that's 3,000 acres, or 600 square miles, owned by 240 individuals — is legally inelig- e to receive the massive benefits fiowing from reclamation. And Stewart L. iall, who carries responsibility for enforcing the law as secretary of the erior, hasn't asked the landowners to comply with the law before thev get ter. rhe project is designed to bring water to the landowners by two routes: (1) canal on the surface: (2) by raising the water level in the landowners' lis through a combination of percolation from the surface delivery, and by luction of the overdraft. The fewer the pumpers (to explain' the last rase), the higher the water table for those who continue to pump water 'm the ground. rhe first dodge : the public pays for both surface and ground water improve- nt, but the excess land owner (who owns more than 160 acres) can escape ? law and keep his holdings intact if he can get enough water underground, ^ne second dodge : Interior sweeps under the rug the 1914 statute requiring ' Secretary of Interior to obtain compliance with the law from excess lands ners "before any contract is let or work begun." This destroys enforcement 10 cover this wholesale frustration of the law at Westlands, Interior pre- s to Ignore the 1914 statute and duck behind a 1926 statute holding that 'ess lands in non-compliance shall not "receive water." Thus: the phrase ceive water" is narrowly interpreted to mean surface water only ; landown- ^tting ground water are permitted to escape enforcement. However, as the department's own solicitor made abundantly clear in a ;1 legal opinion, this amounts to a distinction without a difference and per- s 'no cover" at all. "As the excess land provisions have evolved from 1902 tne present. . . ," Solicitor Frank J. Barry wrote, "Congress has sought not weaken but to strengthen ; not to open loopholes but to close them ; not to ourage speculation but to stop it." ) '^-133 O - 72 - pt. 3A - 11 818 At Westlands, Udall has chosen to weaken, not to strengthen; to ope gaping loopholes, not to close them ; to encourage speculation not to stop i From the beginning, giant landowners have shown their clear purpose, : one way or another, to avoid or to circumvent the 160-acre law. The owne". have welcomed support from administrators when they were compliant ar attacked them when they were dedicated to "the law." This phase, which b gan to unfold in the 1930's and 1940's, underlies what is before our eyes in tl ^^As'federal funds began to flow into the Central Valley Project in 1935 ai Congress placed the project under reclamation law in 1937, the drive prompt began to remove the 160-acre law, either by congressional or by administr ^^As^early as 1937, so a spokesman for Kern County Land testified to Cc gress landowners "were assured by officials of the Bureau of Reclamation th we count with certainty that before the project was completed the acrea limitations would be removed. Until 1944 this was the general understanding Bureau officials, he claimed, gave assurance on the ground, in part, that ( forcement of the law would be impossible since much of the project would devoted to recharging ground waters. ^. ^ . ^ v In 1944^ Russell Giffen, now head of Westlands Water District re-emp sized this feeling among excess-land owners, between 1937 and 1944, that t 160-acre law would not be applied to them. "Two members of o^y^ comimti went to Denver and talked with Mr. Harper of the Bureau," he testifi. "It was indicated to them there that the 160-acre provision was not to ^^T^en'^as "if to'bind a bargain, the large landholders put up $25,000 in mat ing money for groundwater surveys on the west side of the San Joaquin V ley, apparently at the suggestion of Bureau of Reclamation of^'^als- When bureau officials later, under orders from Secretary of the Inter Harold L. Ickes, failed to support attacks upon the 160-acre law in Congrj Giffen testified: "It seems to me that the Bureau was completely in ba^d ,fa in taking the $25,000, knowing that our district J^?^^- 7% accept that^ In Congress, Sen. Sheridan Downey and Rep. Alfred J. Elliott (from Kern-Tulare-Kings counties district) led the attack on the 160-acre layv u the late 1940's. By then, growing public awareness of their special intei efforts ended their political careers. t^^ rr^ «,oot nr.r^^- The Downey-Elliott drive moved in two directions: 1) To seek cong sional exemption from the 160-acre law; (2) This failing, to remove fi^ office those Bureau of Reclamation officials who were supporting the .1 before Congress and trying to enforce it in the Central Valley. In due course, a Downey "rider" to an annual appropriation bH denie place on the public payroll to Commissioner of R^^l^^^^ion Michael W. Stri and Sacramento Regional Director Richard L. Boke-on the P^^f text they w not "engineers." By this subterfuge, they were driven off the payroll for se monthsT only the re-election of President Truman in 1948 made possible t TAiimi'fl t*PiiiPiit ^ In 1964, Udall conceded mildly to Congress that over the past 35 years, : Executive Branch (that is, his department) had "on «,c^a«!^«^^^ff^/^^^^^' degree of concern for the excess-land owner which may be difficuU to re cile with the policies embraced by the excess land laws Application of 160-acre law, he added, has been "uneven and uncertain and the difl:er.( mav be the result of sheer accident or careful planning. . ^ ^ Are 30 years of "careful planning" by large landholding interest now pa off'' Is official "good faith" in the sixties replacing the bad faith cha against high Bureau of Reclamation officials in the 1940's when they suppoi the 160-acre law? , , . ^ . 4..«„ At Westlands, death comes to the law by calculated circumvention. 819 [From the Bay Guardian, San Francisco, Calif.. Sept. 30, 1969] LETTERS TO THE EDITOR You have a very interesting paper, but I do wish you would take another )ok at the California Water project. It is true that it w^ould have been much heaper. if under the Federal Reclamation Laws, the Federal Government ad built the project. You should know, however, that there were many, many projects ahead of 2e California Water project and it probably would have been twenty years efore the Oroville Dam was built. I had to make the decision based upon uman lives. The floods of 1955 caused 35 or 40 deaths and millions and mil- ons of dollars worth of property damage. If we hadn't built the dam, there would have been greater damages in 964, 1965, and 1968. Northern California needed flood control and recreation projects and they Iso needed additional water. Southern California needed more water and elped pay for the entire project. It is true that large land owners would benefit from it, but I saw no way of uilding the project if we had to fight the 160 acre Federal limitation. As a latter of fact, there are far more benefits to more people in a large corpora- on that distributes its earnings rather than the acreage limitation which ?nefits relatively few people. One hundred and sixty acres is not a small farm, ?cause these farms are worth on an average of about $1,000 and a 160 acre irm is worth about $160,000. This is not the small farmer of the reclamation lys of 1902. When I was governor, we ear-marked the tideland funds for education. The eagan administration, under pressure from the water interests of Southern alifornia, repealed this statute and gave the funds to the water project. This as absolutely wrong and resulted in diminished education for the people ': this state. It is a long story and I don't think you have it all. Edmund G. (Pat) Brown, Beverly Hills, Calif. editor's note The Guardian supported you for governor in 1966, a position we feel is rengthened with each passing day of Gov. Reagan's administration. But we sagree with you on many critical issues, notably your state water project id its descent toward ecological and financial disaster. You admit federal construction would have been "much cheaper," but you y the state was obliged to build Oroville Dam to halt repetition of the disas- ous floods in 1955. Exactly the opposite view was expressed two years he- re you became governor by Sen. Kuchel, a man intimately familiar with ospecis to get federal appropriations for construction in California. He told )ngress in 1956: "I would venture the guess that if the State had not in- cted its interest in Oroville, we would have had long before last year's »od a federal dam at Oroville." Specifically, what flood control and recreation benefits does state construc- )n bring to Northern California that would not come from cheaper federal nstruction? (By the way, did you tell the people as you told Congress in o9 that Calif ornians will put up $11 billion to build the State project?) Already the financial pinch is on, and only $2.8 billion has been spent. True, u did not slash education and mental health as Gov. Reagan is doing, but u inaugurated the water project and the financial pressure on him to divert nds to salvage it. Your preference for large corporations to distribute "more benefits to more ople," instead of giving them direct benefits of owning their own farms 'der acreage limitation, is curiously reminiscent of Mellon's "trickle down" eory. How much really trickles down? Compare the quality of life in communites the east side of the San Joaquin Valley with those on the west side sup- rted by large corporate farming and you will have the answer in five min- es : not much trickles down. 820 In fact, as Robert Jones' grape strike story makes plain, the corporal growers have put together a massive public relations attack to break the grap boycott and keep Chavez's farm workers from forming a strong union an getting their fair share of these corporate benefits and earnings. We recommend your forth-right statement that 160 acres "is not a sma farm." It exposes properly the current propaganda by enemies of acreaj limitation who seek to cajole the uninformed city folk into thinking 160 acr- is too small to afford a decent living. When you were attorney general, you courageously reversed your predec€ sor and carried the fight to preserve acreage limitation to an 8-0 victory the U.S. Supreme Court. You then were fulfilling the Democratic Party Pla- form. Query: After you became governor, why did you switch and scuttle th acreage limitation on the water project that, as you say, benefits "large lai owners" and costs California so much more than federal construction? Further query: What kind of water project is it, anyway, that brin Rep. Henry Reuss' Conservation and Natural Resources Committee to S; Francisco to try to protect the North from what the Chronicle calls the "Wat Raiders" of the state project? [From the Bay Guardian, San Francisco, Calif., Aug. 10, 1»67] CiROUMSPECTING FOR WATER ji "I grant you," the late Sen. Clair Engle once said, "you start kicking tV 160-acre limitation and it is like inspecting the rear end of a mule. You wr to do it from a safe distance because you might get kicked through the side I a barn. "But it can be done with circumspection and I hope we can observe circi- spection." .^ . , ^. ^ This, ladies and gentlemen, is the Engle formula for California s big la - owners, and their powerful political allies, to circumvent the 160-acre proviso that prohibits land and water monopoly by limiting the use of federally ^ veloped water to no more than 160 acres per owner. That is to say, by circii- spection. Keep this in mind because our latest circumspectors— Sen. Murphy, Qr. Reagan and Reagan's advisory committee on water — are now at full ga i across the land. . . , . . Their ploy : to propose federal legislation, through Murphy, to raise the > acre limitation to 640 acres (doubtless a tactic to get 1,280 acres on the c man and wife formula. ) ^. • 4. ^ The background: President Theodore Roosevelt, a great conservationist, ii through the 160-acre limitation as a conservation measure that would profcn land and water monopoly, conserve the land and open up farming opportuni s The big landowners— Southern Pacific Railroad, Kern County Land and C have for decades fought to abolish the ceiling and open the floodgates to i« enormous development profits of subsidized water. The 640 formula is their latest maneuver. It has surfaced from Reagi advisory committee on water that is heavily freighted with the same land-t a ing interests (chairman: Burnham Enerson, water attorney for Kern Coit^ Land) who have led the limitation fight. There was little doubt, as the CjU« ian pointed out when the makeup of Reagan's committee was announced, \« it would recommend. ^v. ^ • o The public subsidy now amounts of $1,000 or an acre, money that is ne repaid. This is $160,000 for each man under Reclamation Law, Why shou now be raised to $640,000, or $1,280,000 for man and wife, under the new i phy/Reagan formula? Isn't $160,000 enough in these days when we can t r ci up enough money to pay for the sick, the aged, the mentally ill, the co;g student? . i «,rf Last September, President Johnson's advisory committee on rural pon made two important points: (1) that "no more public money should Di vested in developing privately owned farmland; (2) that the Departmei Interior should enforce the 160-acre limitation. We agree. The Murphy/Reagan business should be kicked through the si the barn. 821 [From California Agriculture, March 1970] I Corporate Farming in California I (By C. V. Moore and J. H. Snyder) I Corporate farms tend to be larger, both in terms of acres of land operated nd gross farm sales. California's farming corporations tend to concentrate in le intensive high-risk-capital enterprises. The fate of incorporation appears . have slowed considerably in the past three years. In the future, it is likely tat existing corporations will expand the size of their present operations, ong with some consolidation of smaller corporations through purchase by, or erger with, large diversified corporations. Also, as farms achieve a larger ze, they will tend to adopt the corporate form of business organization. , There has been a growing concern over the expansion of the corporate form business organization and interest in what its long-term effects on Cali- rnia's agriculture will be. This report summarizes a recent survey of Cali- .rnia farming corporations. I In the spring of 1969, a mail-out questionnaire was sent to 2,566 firms thought be incorporated and engaged in agricultural operations. A total of 1,915 spondents returned completed questionnaires for a 76 per cent response. Only 233 of these schedules qualified for further analysis, the remaining respond- ts had no agricultural operations in California, were inactive corporations, were not incorporated. A nonrespondent bias check was made through per- nal interviews to determine if nonrespondents were significantly different an the earlier mail-in respondents. Nonrespondents corporations were found be significantly larger operations than the original respondents and all data esented here and in accompanying tables have been adjusted to reflect this I^s. Corporate farms in California operate about 5,638,000 acres of land or an iierage of slightly over 3,600 acres per unit, (table 1). The average acreage ]!r farm was influenced by who controls the corporation. Where the controlling !j)ck was owned by an individual, corporate farms were smaller (about 1,700 J|res) while farms controlled by stockholder groups were larger (almost 8,500 ifes) per unit. Extremely large corporate farms influenced the average acreage ijward. For example, although the average corporate farm contained over r.(X) acres, 53 per cent of the farms in the survey contained less than 500 acres. Alany corporations with agricultural operations engage in outside business ij-erests ; some of which are completely unrelated to agriculture. For all farm- U corporations in California, 18 per cent had outside business interests, but (jly 9 per cent had business interests that were completely unrelated to agri- (jiture or agribusiness. not new ^arm incorporation is not a new^ phenomenon in California agriculture. Al- il^st half of the active corporate farms at the time of the survey were incor- lyated prior to 1960 and a few of these were incorporated prior to 1900. An iportant impetus to incorporation came in 1958 when federal tax laws were 5 ended to permit certain closely held corporations to be taxed as partner- ^ ps. The impact of this change in the tax laws was felt primarily in the Mt half of the 1960's. The rate of new incorporation has slowed considerably s|ce 1966. ^I^ommensurate with their larger acreage, corporate farms have high gross ^es of farm products per farm. Twenty-seven per cent of all corporate farms tJ gross sales of farm products of $500,000 or more in 1964. Corporate farms citrolled by other corporations had higher gross sales than those controlled c mdividuals and families. Gross sales of farm products of a half million L lars or more were reported by 25 per cent of the corporate farms controlled c individuals as compared with 39 per cent reported by corporations controlled D stockholder groups in 1964. size disparity -Tie disparity between the size of corporate farms and all commercial farms ; California is best shown by the data in table 2. The U.S, Census of Agricul- le tor 1964 reports 57,289 commercial farms in California. About 3,000 of 822 these contained 2,000 or more acres of land. In this larger size group. 365 o 121 per cent were incorporated whereas corporate farms made up only 1.2 p« cent of the smaller size group-that is, those farms under 10(J acres in size. Th 45 largest corporate farms operated over 3 million acres of land or 60 per cer of all the land operated by corporate farms. Slightly more than 2o per cent c the smallest corporate farms operated only 0.3 Per cept of all the farmlan operated by corporations. These smaller units include feedlots, poultry farm and greenhouses which use land intensively. ^ ^ . ■ ^v, v- , Activities of corporate crop and fruit farms are concentrated in the higl value-capital intensive commodities. Table 3 compares data from the corpora- farm survey to data from USDA Agricultural Statistics, 1968. Over 60 \n cent of California's lettuce acreage and 89 per cent of the melon acreage m in corporate farms and slightly over 39 per cent of the cotton acreage wj owned bv corporations. Of corporate fruit and nut farms, citrus had the lar est acreage (almost 30 per cent). Other tree fruit such as apples peaches, ar pears were grown on smaller traditional farms owned by individuals or par nerships ; less than 17 per cent under corporation management. LIVESTOCK Corporations were also important in California's livestock industry (see tat 4) Over 46 per cent of the fed cattle sold were fed by corporations where only about 12 per cent of the beef cows were maintained by corporate farn This as in the case of field crops, indicated greater corporate activity in t intensive high-risk-capital enterprises. The major exception was the sheep : dustry The poultry industry, especially broilers and layers, involves a hi degree of concentration of capital, reflecting the movement toward vertical tegration in this industry. TABLE 1 SELECTED CHARACTERISTICS OF CALIFORNIA CORPORATIONS HAVING AGRICULTURAL OPERATIC BY TYPE OF CORPORATION, 1969 SURVEY Item Type of corporation Individual Family Other Number reported 377 875 285 Total acres (1,000 acres) 637 2,558 Z, 417 Average acres per unit !■ 690 ^' 924 8, 481 Percent distribution by acres: .q LessthanlOO 29 28 19 100to499 30 25 31 500to999 IJ If 13 l,000tol,999 8 ]\ ^l 2,000to4,999 ^ " ,? 5,000 or more ' ^^ Total -- 100 100 100 Business interest: -. 7(- Farmingonly " "? i? Agribusiness2 5 I " Non-agribusiness3. i| ° ^t Combi nation ^ Total 100 100 100 Year began operation as corporation: .- Before 1960 JS JO « 1960to66... - - - 45 46 51 1967 to 68 - 6 4 b^_ Total 100 100 100 Gross sales of farm products 1967: ,o 7 Q Less than 20,000 - « a fi 20,000 to 39,999 - » " ,7 40,000 to 99 ,999 17 1» {' 100,000 to 199 ,999 17 ZO u 200,000 to 499.999 21 ^1 1^ 500,000 or more 25 ^b J3^_ Total 100 100 100 1 Total estimated number including nonrespondents interviewed 1,673 "Perating 6 109 OOO acres of 2 Farming plus manufacture or sales of farm supplies, or marketmg, processmg of agricultural products. 3 Business activities unrelated to farm inputs or marketing of farm products. U7 5 2 32 iVK'tpl 823 TABLE 2. CORPORATE AND COMMERCIAL FARMS, BY FARM SIZE, CALIFORNIA. 1969 i 1 Number of corporate farms Percent Cumulative percent Acres in corporate Cu farms 1 Number of mulative commercial percent farms 2 Percent corporations srlOO 10 219 to 499 to 999 428 226 227 241 25.6 13.5 13.6 14.4 11.1 11.6 25.6 39.1 52.7 17.1 78.2 89.8 94.2 97.3 100.0 18. 000 37. 000 79. 000 171. 000 263, 000 617, 000 483, 000 727, 000 3.714.000 0. 3 34, 494 .6 7,773 2. 2 5, 878 5. 3, 692 9. 3 2, 437 19.4] 22-31 , OK 39. 2f 3,015 100. 0. 1.2 2.9 3.9 6 5 Ho 1 999 186 194 74 7.6 Jto4,999 } (0 9 999 ]0 to 24,999 00 or more 52 45 12.2 Total 1.673 100. . 6, 109, 000 57 289 2 9 stimated. ;erisus of Agriculture, 1964. TABLE 3. ACREAGE OF MAJOR CROPS OF CORPORATE AND COMMERCIAL FARMS, CALIFORNIA , 1968 Crop Farming corporations (acres) All farms (acres) Percent corporate 1 66, 000 662, 000 223, 000 30. 000 75. 000 83. 000 8,000 2,000 19, 000 6,000 2.000 60. 000 _ 264, 000 91, 000 58, 000 59, 000 64, 000 64, 000 2,000 9,000 6,000 107.000 . 157,000 . 7, 000 . 185, 000 1, 872. 000 1, 864, 000 92, 100 254, 000 432, 000 214, 000 1 26, 361 > 113, 248 1 45, 402 8,600 35.6 35.3 11.9 32.5 29.5 19.2 3.7 7.5 16.7 13.2 23.2 NA 'grains oes •beets 'eansand peas !S berries .n.e.s 1 687, 400 1 500. 576 1 193, 498 243, 800 102, 600 71,700 14, 100 26, 000 33, 000 38.4 18.1 29.9 24.2 62.3 89.2 14.1 34.6 18.1 NA NA s toes :e . IS . peas iS. . . beans ables. n.e.s_ crops house NA urce: Agricultural Statistics, USDA, 1969. All other data obtained from 1964 Census of Agriculture, s.— Not elsewhere specified, including specific fruits and vegetables. -Not available. E4. NUMBER OF LIVESTOCK, CORPORATE, AND COMMERCIAL FARMS, BY TYPE OF LIVESTOCK, CALIFORNIA 1968 1 Livestock Farming corporations (number) ■ ttlesold lows calved Mg cattle sold I milked t hogs sold,... ' orrowed ' s sold (1, bob). ' hens (1,000) f^s sow (1,006) ! sold All farms (number) 378, 000 2, 965, 000 119,000 995, 000 99, 000 40,000 857, 000 29,000 230, 000 687 228, 000 8,000 23,090 14,000 38, 339 2,oeo 14, 337 87,000 167,006 Percent corporate 46.4 11.9 NA 4.6 12.6 34.6 36.4 13.9 52.0 'rce: Agricultural Statistics, USDA, 1969. 824 I Exposure of plants to ethylene ga. has brought about vaHousre^^^^^^^^ mmsmmm like those of ethylene. [From California Farmer, Sept. 18, 1971] Is This a New Era in California Agriculture? (By Hartt Porteous) Mountains form a backdrop for the new type of f^^^^^^f ^^^^ ™f7„^2^; TW are citrus trees in the foreground, an experimental orchard m mc< disfance and developed orchards in the background. This may become C ah "w\i?Mppenfwhen irrigation water is introduced into an arid area VI thrieo ac7e limitation help or hinder? What does farming become under ^ToutZn T^uTare County may not give a final answer, but it is old enougl. there is a pattern of farming emerging. ^ r^„^^y.^ r A short decade ago water came into the southeastern part of Tulare C Along with it came' the 160 acre limitation. Today ^^ose once bald and ^ ^ rolling hills are sprouting white and green sticks marking new trees, in s cases great flowing verdant patches are marked here and there with high i '"Tt?e"L7e's'Xp"^^^ of bare land where cattle roam, but those, for; most partare not attached to the flow of water from reclamation proj- : Does this water solve problems or create a surplus? Lesie Taylor, of Taylor Farm Management. Inc. may have sonie ans^ because he has been on the land before and after the water came. He app to have solved financing, which is perhaps the most vexing of oday s agr tural problems, and he has pushed other perplexities out of the ^^ay oni ''Ih^'rt^Tm'finrndnThas become almost routine^ Methods to make agricu. profitable are working. Economies of big production are in^^^^^^^f , ;^^", economies of the small producer are there. Farm planning ^^f be^^^^f^ engineering perfection. Production costs have been held if not actually r '^"in'^short, farming in southeast Tulare County has taken on a new gl;i under the 160 acre limitation rule, or so it would seem. This has been ' even in the face of the accusation that the limitation was throttling, r. i ^^The^Umitl'tiol"rule"actually appears to be solving long term financing c lems for many owners. This is much the same as the financing of Pnblic ( porations. Public corporations are able to carry their debt without v repaying it, an advantage not seen in agriculture up to now. Les Taylor owns only 125 acres of the land he farms. His wife owns anO 160 acres", and his son owns 15 acres. He sees little advantage to getting b ,< He manages over 1000 acres and in the process is able to affect many r r economies which larger acreages can do. , , , , -n ^,1 „ li Les Taylor has spent many years acquiring the knowledge, skills, and a 11 which go to make up good farm management. He spent 33 years in two panics dealing with management of land. It was during this time tli started buying the nucleus of his present property. Finally buying the la 1 which he had taken a liking, he began developing it. Other people askein to develop land for them, some from the very beginning. 825 An example of the knowledge and skill necessary in today's agriculture is ihe 120 acres Taylor is currently developing. Through experience, he has found ihe right temperature zones for many of the tree crops which will grow there. |Iis engineering skill allowed him to lay out the land for elevation, irrigation, loil and all the other considerations one must take into account in agriculture. He has run contours on the highest land and laid it out for avocadoes (14-11's, laitanos and Bacons) with lemons at the next lower elevation, then Mineolas, Ind at the lower and colder elevations, Autumn Rosa plums, 1 He has taken annual rainfall and runoff into consideration and developed he natural waterways, so the land won't be subject to erosion and so a maxi- lium of wildlife can enhance living in the area. (The land is too rolling to be bveled. ) I As part of the development, he has created a natural lake which not only mtains game fish, but also acts as a reservoir for sprinkler systems which ir- gate the trees. Taylor has an Accredited Farm Manager (AFM) degree. He was president I the California Society of Farm Managers and Rural Appraisers in 1970. lit he would likely have had his skills in the bowels of a large coiporation for le rest of his life were it not for the new water. To keep owners informed, Taylor has instituted a cost accounting system hich details the same type of information (and much more) that a publicly eld corporation only passes on lightly in a quarterly report. A difference here that a computer can give immediate reports. So owners and financial insti- itions may have money matters under immediate control and judgment. A !)mputer also has advantages in farm record keeping. I At the same time, Taylor owns and operates all the machinery needed for |iis large acreage. He has such close contact with the operation, repair, and ■ aintenance of machinery that he is able to cut costs far below that of a larger ,)rporation. A single shop takes care of all equipment and allows all of an vner's acreage to be planted with no space taken for buildings or yards. I Some owners have picked a homesite for later use with enjoyable tree types jose at hand. I Ray Ca Welti is Les Taylor's superintendent of ranches. He is a skilled me- lanic and green thumb artist, as well as a beginning owner of 20 acres of •educing trees. This, too, may be an advantage of many ownerships and co- lip hopes and ambitions which large acreage owners deny their workers. The quality of living, too, in this new water area is good and has become herative farm management. Capable persons, such as Cawelti, can have owner- ailable to many people. All houses and mobile homes are modern and well 'Pt in keeping with this new found type of agriculture. In this operation, efficiency usually attributed to large acreages can be met id perhaps surpassed for an owner of less than 160 acres, while the qualitv of untry living is increased. The barren land of southeast Tulare County is fast becoming a profitable Tden with high quality country living. jLeslie Taylor, of Taylor Farm Management, Inc., and many other farm onagers like him, may be leading California agriculture into a new era of 311 being, which older irrigated areas may find a pattern for imitation. 826 Bibliography on the An tl -Monopol y Water Law by Charles L. Smith, June 1966 Note to Readers: Congress passed the National Reclarnation Act in 1902 to ^^^P/^^^^^^^^^^f °^ , the West'by federal subsidies. These subsidies ^° P^^ -^i^-.^J^S^^^f, ea o th ning from $1,000 to $2,000 an acre, according to studies by the U.b. on Budget. In order to prevent monopoly by the few of water, of «"^«^^^ j^^' .^f ,f 1"^, increment. Congress included provisions in ^^-^^^^-^\!!f,^^'^i°:if3t monopoly ' benefits any individual may legally receive. These protections ^S^^^.^fl^^^^P ^^ . the government-supplied water are sometimes called "excess land law, acreage tatjon," or "160-acre law." The U.S. Supreme Court, in 1958, described the law's purpose i'J^^^^^^^^f^:, ..The Umitation insures that this enormous -P-^^^"-^^J^^^^f f° i^even't th V share to a few individuals with large land holdings. Moreover f/^ P^^^^^^'^gJ"^!. the federal reclamation service for speculative purposes.' 357 U.S. 275, 297 U- Basic Documents c..... T.^nt Resolution #18 adopted Feb. 16, 1378, Chap. 23 California Legislatu Fr^deral Reclamation Law , June 17, 1902 (32 Stat. 388). Roosevelt, Theodore, 7 Transactions , Commonwealth Club of California 108 (191^-^1^)^ Bryce, (Lord) James, An,Prican Commonwealth. Ch. 90 in unabridged edition only,/l. .'Fact-finders report," Federal reclamat ^-nn hv irrigation, Senate document #92, 6: Congress, 1st session, 1924. Excess Land Uw, Omnibus Adjustment Act of May 25, 1926, 43 U.S. Code 423E, 44 S. 649-650. Report to legislature of 1931 on State Water Plan. California Dept. of ^blic Wc , Div. of Water Resources, Bulletin No. 25, 1930. State water Plan Association, Manual for Speaker, in Support of Central Valle y Project Act , Special Election, Dec. 19, 1933, Dec. 1, l^JJ- Gates, Paul Wallace , "Homestead Act in an Incongruous Und System," 4l America n Historial Review 652 (1936). Packard, Walter E., Th. Economic Imp l iratl o ns of t he CPntral Valley Pro.iect , Hv Foundation, Los Angeles, 91 pp. maps, tables, 19-^2. Historical Background of ^-Ufornia .gricuU.re and Its ^^^ ^^^f^l^:;,/ZTJ ' inter library loan. C.S. senate Subcommittee on Military Affairs Hearings -^f ^"^l^^^^i^S^'sf'Sir:. acre limitation, San Francisco, April /, !":"+'*» ^^^ fp Reclamation, Sacramento. jjj Business Week . "Valley Divided," May 13, 1944, pp. 21. 24. !| Hearings »-- J-^ -- ^^^^^t^ :l^^XT^-^; ^ ^^ „.3. .reau^of Ke.a.tion. .«r.^.^^^^^^^^^^ tions made available to the coirmiutee. 277 p., bept. s:> , i^ . 827 ci-Monopoly Water Lav: A Bibliography - page two :ceedings . Governor's Conference on Water, 1945, Sacrairento. itgcfflery & Clawson, History of Legislation and Policy Formation of the Central Valley Project; Bureau of Agricultural Economics, U.S. Dept. of Agriculture, March 111 Business and The Coincunitv . Goldschniidt, Walter R. , Ph.D., Assoc. Prof. Anthro- pology & Sociology U.C.L.A. (Arvin-Dinuba Study). Report of Special Conmittee to Study Probleris of American Small Business, U.S. Sen. 79:2 Print i-'13 S Res 28, Dec. 23, 1945, 139 pp. i.D.I., Bur. of Reclamation, Land Ownership Survey on Federal Reclamation Prolects . .. Sen. Cocmittee on Public Lands, Subccrmittea on Irrigation and Reclamation. Pro- posed Exemption of Central Valley Project and other Projects from land limitation provisions. Hearings S. 912, May 5-June 2, 1947, 1329 pp. 80:1. lley. Jack, et al.. House Public Lands Comnittee, Hearing on H. Res, 1st Sess., Committee Hearing it27, Sept. 24, 1947. ney, Sheridan, They Would Rule the Valley , 256 tral Valley Basin . Senate Doc. 113, ! Report, Bur. Reel., Aug. 1C;49. zzell, Alice Joy, Some Econo r.ic and Pclitical Aspects of Water Resource Development in the Ce ntral Valley of California . M.A. Thesis. U.C. •iQ49. 93, 80 Cong, iy, iii'j pp., 1947. 51st Cong. 1st Sess., A Comprehensive Dept. 728, 730-732 (1950) 1933-1949. tral Valley Project, (uhole issue), California La^^ Rev. . Vol. 38; ey. Jack Tull, Legislative History of the Central Valley Project Doctoral Dissertation, U.C, 1950. '~~ " ' ss, Arthur A., Muddy Rivers . Harvard, 1951. tral Valley Project: Federal or State? Assembly Interim Co nm. Reports. 1953-55 Vol. 13 #6, 1955. " tral Valley Project Documents: House Doc. No. 416, 84 Cong., 2nd sess, 1956- House Doc. No. 246, 85 Cong., 1st sess., 1957. tensents of Position by Various Groups. See Paul S. 10 .Stanford Law Reviev 76-111, Dec. 1957. Taylor ff *120, page 103, sage Limitation (Reclamation Law) Revieu. Hearings on S1425, S2541, S344G Before the Subcocmittee on Irrigation and Reclamation of the Senate Committee on Interior and Insular Affairs, 85th Cong. 2nd Sess, April 30 and May 1, 1958 271 pp. 6t app. * ^rt of a Special House Subcommittee on Irrigation ar.d Reclamation on Central Valley Project, California as a result of hearing held Oct. 29, 30 & 31, 1951 (1951 House Special Report), 105 Cong. Rec . 7486 (1959>. "' ^°-> California '.Jater Plan : An Evaluation, 7 pp (1960), Public Affairs In- stitute, 312 Pennsylvania Ave. S.E., Washington 3, D.C. Preface by Paul S. Taylor, Foreword by Dewey Anderson. •' ^^^- ^* > General E valuation of State Water Resources Development System . Interim Report, Boston, 19^0. ~~~ Li.Record, Application of excess land law to California "state service area" of California water project, 108 5687-5725, 6237-6240, 7809-7814, April 2. 10. May 4, 1962. •ings, Hestlands Water District Contract, Senate Cotnn. on Interior & Insular Affairs, 88:2, July 8, 196^, 37-049. 828 Anti-Monopoly Water Law: A bibliography - page three U.S. Dep Nikolitch, Rudoje. "The adequate family far. " -^-"^ /'^rpp!™"';. of Agriculture, Agrtc. Econ omics Research. July 1965, pp. o" -'^ co n.. Record - Westlands Debate. 110 17493-17503, 17912-17522, Aug. 5 5. 7, 1964; ^ TTT 9nsQ?-20608. AuR. 23. 1965. Special Library Collections on Water, including Acreage Limitation, the UC Berkeley campus at: Bancroft Library Institute of Governmental Studies VJater Resources Library can be found c Writings of Dr. Paul S - Tavlor uv-f.tern Poltti ral Cuarterl 2:229-253 "Central Valley Project: Water and Land June 1949. "IGO-Acre Water Limitation and the Water Resources Connnission,- Western Political Qtlv. . Vol. 3, pp. 435-450, Sept. 1950. "Building the Central Valley Project," Pacific Spectator , 5: Autu^u^ 1951, 17 pp. •mo's Dam is Pine Flat?" Pacific Spectator, Sept. 1954. •Excess Land Lav: Execution of a Public Policy, 64 Yal^J.^ 477-514, Feb. 195. •destruction of Federal Reclamation Policy? The Ivanhoe Case," 10 Stan..L_5£Z. -. 76-111, Dec. 1957. "Excess Land Law on the Kern?" 46 Calif. L. Rev... n, 153. 184, Hay 1958. ..Excess Land Law: Legislative Erosion of Public Policy," 30 RocV y Mt. L. Rev. , pp. 1-37 (1958). Principle." 47 Calif. L. Rev. #3, pp. 499-541 "Excess Land Law: Pressure vs (Aug. 1959). ..Excess Land Law. A Note on Pressure vs. Principle in the Courts." Westert^mit t Qtly. . Vol. 12, #3, pp. 828-S33, Sept. 1959. Statement before California Assembly Water Con.., April U, 1961, mimeo 20 pp. (^ Lib.) I.G.S. .•Excess Land Law: Secretary's Becision?" A Study inAdminis nation of Federal- Relations. UCLA Law Review 9:1. pp. ^"43, ^an. 19bZ • Statement to Hearings before the Subcon..ittee on ^^ J-^^^Hnd^ Is^io^ ^on ' House Committee on Education and Labor, 88th Congress /no HR 10440, pp. 1678-1681, April 22-28, 1964. ^ .'Excess Land Law: Calculated Circumvention." Calif. Law Rev. Vol. 52. pp. 978- Dec. 1964. Reprint #83, 978-1014. Letter to Editor, San Francis co Chronicle. Jan. 14, 1965. SHUaiOflit. setter dated >*y 19, 1965 to Hearincs f^^^^' "^f ,^"^;™^52o! . H^e Com., on Appropriations. 89th Cong. 1st sess.. rart », PP Lov,er Colorado Basin !.ro5ect. H.R. 4672, House Co,^. on Int. 6. Ins. Affairs. Str Aug. 30, 1965. See index. «estlands „ater distribution construction «"'i-"^,f' "" ^ZT. 'f pp!"" Works Appropriations subcommittees, April 26, Z/, i'^uo. « Ff wfmMi^ 829 Bibt io qraphy en the Ant i - ^/ono p o I y l6C-Acre Water Law by Charles L. Smith, Sept. 1969 Basic Documents , continued shiro, Francis and Anatole Ante I, The Great Water Project Scandal, How Reagan Robbed the State Education Funds, Open Process v 4 #9 Jan. 22, 1969. (San Francisco State College, 1600 ho I I oway, SF94132) croft Library of Western History, Univ. of Calif., Berkeley. Regional Oral History Office: Interviews and personal papers of twenty prominent figures involved with water and land problems. Clipping file and additional items, on the Central Valley Project compiled by the Bureau of Reclamation. non, Frank, The California Water Project, Daily Commercial News sixteen articles, July 9-30, 1968. Reprints 500 125 12th St'. San Francisco, Ca. 94103, ' Daker Sterling L., The Impact of Federal Government Activities on California's Economic Growth, Ph.D . Thesis . Uni v. Cali f . Berk. 1959. ifornia Assembly Interim Comm. on Water, Hearin gs. 1959, Statements by large landholders and their representatives. 75 pp., mimeo. nittee on Water, National Research Council, National Academy cf Sci- ence, Alternatives in Water V^ana g ement . 50 pp., 1966 ~e • Civil (2101 Constitution Ave., WashTn^ton, D. C. 20418) Engr . Jun e '69 , sessional Record . 1964: July 21, Phil Burtcn:keith Vurrly l?ts.' 1968: H. 420, Jan. 25; S 775, Feb. 1, McGovern; E. 2155, Niarch 22, Cche I an, P. S.Tay I or on Reaqan Task Force S 4652, April 30, Nelson. ^ o t. S 9'^2-^49, July 30, Senator ;vayne fvrrse: Pau I S. Tay I or, KPFA 1969 E 6591-92, Aug. 4, Eckhardt, Paul S. Taylor, Texas Observer 25-101^6, Jackson Salt River Project. son, StaSflj'-R?; Pe^dlr^hfroi^?^^R'ami°aJ?^o^*i3;l,leSfJ^^89g:TiM'•- Ph. D . Thesis . Univ. of Calif., Berkeley, 1951. tan, James P., Water: Who Pays? Who Profits? The ^lany Pav the Fev, Profit, Frontier , v. 18, #2, p. 6-11, Dec. 1966. foos, Robert, The Thirst y Land . Stanford University Press, 265p, 1948. iberg, 3. Abbott, I nte^posi ti on— V.i I d West Water ^vle Stanford Law Review. , v. 17, ; p. 1-38, 1964. ' Schmidt, Walter, ^ jTou _Scvv, Free Press, Glencoe, 1947. all, Merrill R., Land and Power Administration of the CVP, Journal rt Land and Pu_b_lj_c Uti I i ty Economics , v. 16, #3, p. 299-311, Aug. 1942. rnor's Task Force, £ep_ort on Acreage Limitation Problem, Jan. 4. 1968 ?pnP?;i^5°^^''''°Cs ?/^^"£^h/^^^^^ C->5P'*o'' Sacramento, Ca. 95814 ) , reprinted rv^ong.Rec.Mprph H4. 1 969, Sen.Viurnhy S^G47-^iSrV ^"^'^•' ley, Norris7-^r\7-£^l£drng tt^e ^Waiers '- A^C^^^tuVy Vf ^Pgf^trnvprcy be- tween U.S. and ^^exico, Univ. ot Cal if. Press, Berke I ey, 1966. s, Arthur A King's River Project in the Basin of the Great Central val ey— A Case Study, Appendix 7 to Appendix L, Task Force on Nat- ural Resources, Report of the U.S. Commission on Organization of the txecutive Branch of Government (Hoover Commi ssi on) , Gov' t Print- ing Office Wash., D.C. 20402, 1949. Reprinted in Reader in Bur- eaucracy, R.k. Merton et al. Free Press, Glencoe, 19^2, p.2^1^7. 830 Anti-Monopoly 160-Acre Water Law: A Bibliography - page 2 19^9 Murray, Keith, Water:You Lost a Round, the liberal democrat , March 1 Water Power and California, the liberal democrat , ^ay, July, 19 reprinteHn Cong. Record . ji| — 1, 19^4, Congressman Phil Burto Penney, Brooks, Why California Needs Land Reform, The Mrvement , v.2,# July 1966. (address above). Pinchot, Gifford, BrealiLng New Grouiid, Harcourt, 1947, 522 pp. President's National Advisory Comm. on Rural Poverty, The People Lej Rphind Sect 1967 Se^ recommendation 5 and 6 on Excess Land ir TFriiited'Areas (The White House, Washington, D.C. 20000) Reich, William, L^^, 121-, and £ower Mono p^^^^ ten programs given on KPI-A and ^J^^[> / ^^ '1^^' al^^l] ^ ^ from KPFA, 2207 Shattuck Ave., Berkeley, Ca. 94704) Reprinted in part i n Farm Labor, v 5 #3 1967. (Ed. by Henry Ar son, P.O. Box 1173, Berkeley, Ca. 94701) see Paul S. Taylor, one of the ten programs, April 23, 1967. Sierra Club, Minutes of the Executive Committee March 17, 1968 (1050 Mi lls Tow er, San Francisco, Ca. 94104) St LouU ££1^ Dispatch, Editorial: In The Name of Decency, June S, T;mkc, Allen, Statement to ^^^'^e House Comm on Urban Problems, Hea in San Francisco, July 5, 1967. Vol. 2, p.^iu ^n. 11 <^ Dent of Interior, Excess Land Provisions of Federal Reclamati Rracurce°s! "(loca'ted In^^o^iltee files, at Dept. interior, an Library of Congress) . U.S. Senate, Subcomm. on Irrigation and Reclamation, Hearing^ on Sa luiqUnit CVP. 85th Congress 2nd Sess on. ..'^^^ Luis unit, ^J^^ Congress, 1st Session, S.44 U S House of Representatives, Interior and Insujar Affairs, HeaHng h;r! 399, H.R. 7155. Srth Cong. 1st Session, 1959. Vizzard,'Fr. James L., S. J., The Water Poachers, America , v. 112, pp. 220-223, Feb. 13, 1965. --••?|^rinof^ies^t?f^i^li^^.Ta;iSra!r^He^e^He:^i?/' --?'n i^.'^^^^^^^'m^Bt^^ lirTFT TS^HSSTcTTBerkeley, June 1945, 100 pp. processed, wood, Samuel E. and.D Lembke, The Federal Threats to t^| Califor, tr'l-5?!' ^^^^W 5S^t l'%: ttrulrJX laf Francis, Calif. 94105.) . ^ ^ (-ciniti^:Tn'?!ir:ri^"n??^u-r!c^;?^fnferTo:^rss[o^ San Francisco and Los Angeles, (see speech by Theodore Roosevelt before the Commonwealth Club wher ^ predicted riots in the oiti esi f this I aw was not enforced. 7/ Tran sactions , Commonwealth Club of Calif. 108 (1912-13;. 831 ii-Mrnopoly 160-Acre Water Law: A Bibliography - p. 3, 1969 Writings of Dr. Paul S. Taylor, continued -age Limitation Review, Hearin gs. U.S. Senate Irrigation and Recla- mation subcommittee on S.1425, 2541, and 3448. 85 Ccng. 2nd Sess, ibinq ton Post . Letters to Editor ; Brody, Aug. 29, 1964. JLily 23, 1964; • Response by Ralph jMags, U.S. Senate subcomm. on Irrigation and Reclamation, on S1275, ^Bth Cong., 2nd Sescion, 1964. p. 86-88 .lament on HR 4672_et al, proposing authorization of Lower Colorado River Basin Project. House Committee on Interior and Insular Affairs, Aug. 30, 1964. p. 930- 936. .^^ement, in files of U.S. Senate Interior Committee, July 29, 1966, J'r and Land Monopoly in California, Series of three articles in ' ff;|^^^a"Cisco Bay GuardTan, May 19, June 29, Aug. 10, 1967. (1070 Bryant STT, San Francisco, Ca. 94103) ion of Federal Acre Limit Laws, KFFA -FM. April 23, 1967. jngs, House Irrigation and Reclamation subcomm. on HR 33OO et al 90th Cong. 1st Session, 1967. p. 686-687. ervation and the 160-Acre Law, Statement . White House Commission I 234ii23r ^''°^'^"'^' ^'^^ Francisco, July 5, 1967. Vol. 2, p. 213, ement to California State Board of Agriculture, March 5, 1968. reprinted in Congressional Record . E 2155, Warch 22. 1968 bv Congressman Jeffery Cohelan"! ' ^ y ', Land, and People in the Great Valley, The Ameri can West ?*i^V ^Q/,nl''''M^S^' p. 24-29+ (577 CoIlTie Ave., PalFTTtc. Cahf. 94306, $2.00 per copy, 39.00 per year) ^^h?",.^°iJpcA°L^^S^^r'f ^^^^ ^'"''^^ °" ^^^ Acreage Limitation Problem, KPFA-FM, Berkeley, June 1968, 1st of two programs. lerv^tion Education, War on Povert y and the 160- Acre Limitation ; 2nd of two programs, KPFA-FM, Berke I ey,~7unTT9^tT~ ' I q°Q49°QAQ^%^?''''lo"^''?o^o''9[;^'?^^ reprinted in Cong ressional Record 18.942-949, July 30, 1968, daily edition, by STTit or Wayne. M orse. • ""^f^fl'^ f ^^'g^''^'^ ^-^-^^^^"^?."^^^ Editor, July 28, 1969, on the R^fnL p-H P'^S-^^^'^^^' Editorial reply, July 29, 1969? Water Kai ders Ri de a Ri der . jiHgj, House Subcommittee on Conservation and Natural Resources, I Washington, D.C., h^y 1969, Appendix, pp. 229-237. San Francisco, JAugust 1969, Bay Pollution. iKopies available: Cong. Henry S. Reuss, Chairman) 'jJilJVL^^' '-••\^?^°!^o yo^.leaPj a warning from California, ^-^^^ Observer, July 18, 1969. (504 W. 24th St., Aust i n, T. 78705) . , . biweekly, $6 per year reprinted in Cong ressional Record. #6591-92, Aug. 4. 1969 bv . Congressman Bob Eckhardt. "~ / y , ^ ? uy ^Aspirations & Achievements, 115 Cong.Rec, E9677-80. Nov. 17, 19^9 832 Anti-Monopoly 160-Acre Water Law: A Bibliography - page 1, 1970 Writings of Paul S. layior, continued ater resources (statement to ^'atlonal Water ongressional Record E8597-8, Oct. 20, 1969, ??e"d~b7T^iTg. Jeffery Cohelan. Water Grants for Education, Congressional Record E9090 - 9093, October 9, 1970, entered by Senator Lee Metcalf Planning method for our wa Commission) 1 13 Co^^j, --- ■ .- . ^ -^ — rrrr^rw rnhPian daily edition, entered br<^ng.^reTTery Cohelan The Fight for Water, AFL-CIO AmejMcan Federati oni st , Dec. 1970 Miscellaneous Writings, Cent. Water Resources Library, Univ. of Cahf., Berkeley; (see also: Using Engineering to Enslave You by A. J. Ackerman, Ci vi I Eng i neeri n g magazine, July nyt)^; Cooper, Erwin, Aqueduct Empire. Guide to Water in CaHfornia, A.H. Clark Co., Glendale, 1968, 439 PP. ,,. u, -^r . 1 IP np Haven and J. W. Milliman, Water Supply, '^^^"" : im ;'s,Yechn:io y i Policy, Univ of ChicaiT-Press 2nd 1969 386 pp. (see especially Cost-Benefit discussion) ,^ Lh'i Wp, + Pr I aw Planning and Pol ic y, Cases and Materials '"'' ''lllL-^^'erTTiT; 1^^^^ (law text) McWilliams, Carey, Factories lii the Fi.eldj, Little, Brown, 1939, 33 i^FnllPtte Committee. Report of the Senate Committee on Education a ^^^^^■^^^oTff^ 26^'— 4th Cong.; 77 Cong. 2nd Session, Senate Report 1150, parts 1, 2, 3, 4, 5. 78th Cong. 1st Sess., S. Rapt. 398, parts 1, 2, 3, 4, 5. 88 Cong. .Rec. pp. 8311-8338, Oct. 19, 1942. San Luis Debate, 104 Cong. Rec. 17723 - 17735, 1958. Authorization Bill for San Luis (./estlands) 1959, 1960: Senate- 105 Cong. Rec. 7483-7498; 7665-7691; senate. iu:?uu_y. 7849-7877; 7986-8001. House: 106 Cong. ^ec. 10448-10471; 10553-10566 Exemption to California Water Project, 1962 Cong Rec., 108, 5687-5725; 6237-6240; 7809-7814 see Transcript, Federal Court in San Diego, Dec. 1970, enforcement Acreage Limitation in Imperial Valley (additional copies of this bibliography, 4 Pages:1966; 3 pages: 19< 1 ^iqe?1970 available from Charles L. Smith, 61 San Mateo Road, Berkeley, Ca. 94707 50^ each, 30 tax in California) 833 Oiiiu ct V.)t r=>oIicftor General uInpplicable to the imperial Valley. This question was considered and determined by the secretary of the interior, Ray Lyman Wilbur (previously President of Stanford University) in 1933, now more than 38 years ago. That determination was acted on, and relied on, for many years, and no question ^as^seriously raised about.it until about 30 years after Secretary Wilbur's decision. Recently, the issue v;as submitted to a court, and the court decided that the acreage limitation does not apply t6 imperial Valley. It then became my responsibility to decide whether an appeal should be taken from that decision. I considered the matter carefully and thoroughly, and over a considerable period of time. As a result of my consideration, I became convinced that (a) we would not win the case in the court of appeals, and (b) we should not win it. in this situation, I came to the conclusion that it was my duty as a responsible officer of the government not to authorize an appeal. In making that decision, I issued a statement saying that my determination was applicable to the imperial Valley only, since that was the only. place that' had this sort of a history. The statement by pet^r Barnes in his article to the contrary is entirely without foundation. As I have indicated, my determination with respect to the Imperial Valley (and Secretary Wilbur's determination 38 years ago) was based on the fact that the imperial Valley was fully developed long before any federal money was spent to build the All-American Canal. The^ federal project did not reclaim any land in the imperial ?ataiM} 835 'alley. Thus, the determination with respect to the mperial Valley has no application to other projects /here there was actual reclamation of land as a result )f the project. ry truly yours. i^m..:m Erwin N. Griswold Solicitor General 836 gs^artm^nt of lustia f*QR IMMEDIATE RELEASE f'llipAY, APRIL, 9, 1971 ggliGitor General Erwin N, Griswold announced today that t pgpartment of Justice v/ill not appeal a y,S, District Court decision he fe§t i^nd lunitation provisions of reclamation law dp not apply to prival ©Vmgd i^nds in the ]^perial Valley irrigation district of gouthern Califs l^dge Howard B, Turrentine of §an Di^gg issued the ruling jg^u^ry 5, 1971, in the Justice Deparbnent's 1967 suit against the Impc Irrigation District. The deadline for appealing the decision to the U.S, Court ( Appeals for the Ninth Circuit was tomorrow, The Department of the interior had recommended against an appeal, I5 making his determination. Solicitor General Griswold §|r§6sed that his decision related only to the situation in the Imperial Valley. "The decision does not in any w^y affect the Governmentfe PQsition y;ith respect to reclamation projects in other areas where dii facts ^i-e involved," he said. At the request of the interior Department, the Justice De] b^^ filed the civil suit seeking ^ declaratory judgment that the 160 ^ac limitation applied to private land holdings in the Imperial Irrigation I '^JTitW 837 From testimony by Paul S. Taylor, hearing before House Subcommittee on Irrieatlon Official and unofficial studies, before and since, support the Congressman's mphatic conclusion of fact. For example, Pendleton, history of labor in .nzona irrigated agriculture, unpublished doctoral dissertation^^ Berkeley 950: Klaus G. Loewald, hearings before Senate Irrigation and Reclamation ubcommittee, Both Congress, 2d session, on S. 1425. S. 2541, S. 344S pp 230- 38: U.S. Bureau of Reclamation, landownership survev on' Federal reclaina- on projects. 1946. p. 16. Congressman Jackson's gloomv prophecv stands ilfilled even today : if the acreage held in excess has diminished the ^ubdivi- on occurred without benefit of the controls that Congress wrote into reclama- on law to limit private speculation in the interest of ^ettler^ Xonenforcement of the excess land laws for a half centurv in Arizona is atched on the California side of the Lower Colorado Basin for a generation 3cretary of the Interior Stewart L. Udall showed a courageous awareness of nptanding nonenforcement in Imperial Valley when he announced on the St day of 1964 that he intends to bring nonenforcement there to an end bv vestiture of excess holdings. But the Secreatry has made no similar promise end nonenforcement either in Arizona or on southern California lands atered imder the Boulder Canyon Act other than in Imperial and Coachella ^^^^y^-^^P^^ooner was the Secretary's decision to end nonenforcement in Qpenal A alley announced, than the Imperial Irrigation District Xew<; <;um- anzing an opinion of its chief counsel. Reginald L. Knox, pointed out' thaf •If the opinion of Solicitor Frank Barry is correct, it also applies to all ■eas reviewing water from the Colorado River, including land in the Metro- .litan Water District which supplies water to some extremely large holdings I the coast. According to Knox, there has never been anv reference to that "^*' .L^S ^"^ opinion is correct, it would necessarily applV there al^^o" (Feb- lary 19t)o, vol. XXVI, No. 9, p. 1). * * Xonenforcement its roots deep in the past, has received added impetus dur- g recent years. Its temper probably never was described more clearlv than bv mgressman Clair Engle. of California, speaking to the House in 1955- I grant you. you start kicking the 160-acre limitation and it is like inspect- ^^hJUflH ?//>,'' "^"1^; Jo^! ,^^^"t to do it from a safe distance because^u ^ht get kicked through the side of the barn. But it can be done with circ^im- ^^I'J'^q.k" l?^'^ we can observe circumspection" (1955 hearings before !fS^ o.?-"^™^*^^^^ ^" Irrigation and Reclamation, on H.R. 104 H R 384 a ti.ii. SSli. 84th Cong.. 1st sess.. p. 70). * ' The devices reflecting -circumspection-' are numerous : at least one of them e h.ngle formula ' for repayment— substituting small mouev pavment*^ for hcy-incorporated in the Small Reclamation Projects Act. r^eived congres- nal approval under circumstances leaving a trail of expressed di.^^satiifac- .n ac.oss the years and on the Senate floor (102 Congre.ssional Record 13650- 3 Congressional Record 6737. daily edition May 23. 1957). Without congVel- •na approval un.^ympathetic administrators frustrate the law bv substttot- Btatton^thf/r^M^^ '!;^ ^''''-'^'^' ^J,^^'-^^^ i^^ purposes, in the place of inter- Btahons that vNould achieve them. Two examples may be cited here that I ^e discussed more fully elsewhere: 'nttorf'Jifnt'^''^''^" r^M^ 'T""^^'^^ ^^ '^'''^^'" "^^^^^'^^ for the statutory pro- lyl ve water T and ' '■^■' ^^^^'^^"- 1^ ''^^^^^ P^^ individual, shall ^i w/ttr"^ a distinction as to applicability of the excess land laws, be- ^m nnrw^ reaching project lands via surface delivery, and water reaching t wm? -f "'"'I'-i' f^ij^tinction not found in the .statute nor logically oonsist- vir .TT Justification for public expenditures for private l)enefit. See 4'w97t9l99rloiO)"" ''^^"^'^^"^ Circumvention" (52 California Law 838 Of course officials charged with responsibility for administering reel a^ tion law know and proclaim its purposes. For example Commissioner of I tion ^^)^ Kuuw a * . recently said: "I am proud that our basic prin SerreTaif esLtianrunc^^^^^^^ concept. This program is reimbunsal * * * «^d will reDav the Federal loan that finances it. We are today, as; always hLrbeen,'^?ully committed to the conviction that the family farm is nSl'alset'of f undJmental importance.'' (^ddr-s b^^^^^^^^^ Association at New Orleans, Feb. 3, 1961 ; USD! ^^^^^^^.f^^^/^tp 9^^ Solicitor of Interior Frank J. Barry, in his opinion M-36634 (Dec. 26, 196 ^P^^%^*7be resolve of the Congress, as a matter of deliberate policy, to p scribe by statute measures aimed specifically at the early breakup of p existing * * *. 839 September 1, 1971 m. Ervln N. Grlswold )llcitor General of the United States lited States Dept. of Justice ishlngton, D.C. 20530 ;ar General Grlswold: Someone sent me a copy of a letter that vent out under your signature, ted June 1, 1971, to >5rs . Stephen L. Stover of Kanhfltten, Kansas. The tter Inquired about the position of the Justice Department In the excess nd case Involving the Imperial Valley In California. As one vho has vrltten about the Reclamation Law, I was surprised to e in your letter the following: "... there Is a provision In the reclamation laws which provide that when land is reclaimed through a federal project, land holdings cannot exceed 160 acres. . . .no land was reclaimed by the construction of the All-Amerlcan Canal." Occasionally one recalls the warnings he received In law school, among em the danger In paraphrasing statutory language. My recollection is that e excess land provision of the Reclamation Law, 43 U.S.C. Section 431, says; "no right to the use of water for land in private ownership shall be sold for a tract exceeding 160 acres to any one land owner." I recall no general provision in the law that limits the excess land law land "reclaimed through a federal project," and if you examine the leglsla- ^e history of the statute, you will recall that Representative Newlands. i sponsor of the Act, took no such view. 36 Cong. Rec. 6734 (1902). Of »rse a great many reclamation projects Involve the supply of supplementary :er to land already in cultivation. To the best of my knowledge it has 'er been thought that this fact exempted the project from the provision the excess land law. 840 General Ervln N. Grlsvold September 1, 1971 Page 2 I recognize that the Imperial Valley case was a complex one; Mrs. Stover was entitled to a more accurate explanation. but I tl Very truly yours, Joseph L. Sax Professor of Law JLS/kh 841 September 21, 1971 *ln N. Griswold Licltor General fice of the Solicitor General ihlngton, D.C. 20530 ir General Griswold: I appreciate very much that you took the time to reply to my letter of ►tember 1, conmenting on the Imperial Irrigation District case. I know it would be an imposition to engage you in further correspondence, I hope you will permit me to make an observation or two about the future. ^8 you know, for m^ny years the excess land law was little enforced, and residency requirement of the reclamation law has been wholly ignored. se concerned about reclamation law were therefore understandably pleased n the Interior and Justice Departments decided to go forward with the IID e. I recognize the complexity of the issues there, but I hope that the artment of Justice will make a concerted effort to enforce the excess land Though bills are annually introduced in Congress calling for repeal of excess land provisions as an anachronism, this is certainly not the case, reat many agricultural workers, particularly in California, would welcome opportunity to become farm owners, if only that opportunity to acquire tile farm lands were made under reasonable circumstanr-es . Indeed it is own view that many of the current farm labor problems would be best olved by encouraging the creation of an owner class among family farmers. At the present time non-enforcement or limited enforcement of the excess d and residential laws stand as an obstacle to this development. Once laws are enforced, of course, steps will have to be taken to assure credit the purchase of farm lands, so the job is a complex and extended one; but orcement of the law is a needed first step. It may seem romantic today to suggest that the very motive that lay Lnd enactment of the reclamation law in 1902 is still a sensible policy; '^t I am sure that as you look into the question, you will find many i well informed people who think that this is precisely the case. 842 General Ervln N. GrUvold Septeriber 21. 1971 Page 2 It Ifl often •aid th«t the exc.?8« lind lav cinnot vork because small far are unoconoalc. Even to the extent that this is true. it does not sp^ak the problem of ownership, but only to management practices, if It Is econool necessary to oocrate and market farm products on a large scale, It Is perfec possible to do this by cooperative arrangements among a number of owners of modest sized family farms. I oake these comments only because It is so vldely believed In V'«hlngt that no significant public policy could be advanced by vigorous enforceaent of the reclamation lav. Perhaps thla vlev ^f^ected your ovn Judcnnent about the IID ca3.>. If so. I hope you will explore the question further as opporl ties arise. Cordially yours. Joseph L. Say Professor of Lav JLS/kh cc: Ben Yellen. M.D. Mrs. Stephen L. Stover Peter Barnes t/^ P.S. I am very glad to follow your suggestion about distribution of the letter you sent me on September 16. I am, however, sending copies of this letter to several interested parties. 843 Mechanized Agriculture and Social Welfare: The Case of the Tomato Harvester* Andrew Schmitz and David Seckler An integrated public-private approach to mechanical harvesting of tomatoes for canning has sharply reduced producers' labor requirements. Gross social returns to aggregate research and development expenditures are in the vicinity of 1,000 percent. Even if displaced labor had been compensated for wage loss, net social returns are still highly favorable. Since tomato pickers were unorganized, no compensation was demanded or paid. The analysis indicates a need for policies designed to distribute the beneBts and costs of technological change more equitably Social scientists could properly be concerned with developing institutional means of achieving this goal. TTHE beginning of the industrial revolu- Ltion in the 19th century gangs of work- men known as the Luddites roamed I and, systematically destroying machinery. iLheir compatriots in the Netherlands we ' the word "sabotage," after "sabot," the IT wooden shoe that Dutch workmen threw the grinding gears of the new technology, le other side of the coin is well illustrated le lament of John M. Horner, one of the itors of the wheat combine.^ Writing to his d, Colonel Warren, editor of the California \'ier, in July 1869 [11, p. 22], Homer said, .. we were brought more particularly to I ect upon our position by the burning of one lour machines. ... We ask ourselves: Have I injured anyone so that personal vengeance iDursuing us, and this burning was done to [ tify a revengeful feehng? No. We have had I misunderstanding with anyone, in fact, not i enemy in the world, a conscience void of :;nce to all men. We entered that neighbor- ed to perform honest labors, and harvested ,>00] acres in a good workmanlike manner ; the enthe satisfaction of our employers — so : ch so that most of them wanted us to consent ; larvest their next crops. I lonel Warren promptly responded with an i rial in his paper [1 1, p. 23] : annini Foundation Paper No. 310. We appreciate the • lade available for this study by various departments 1 University of California, Da\TS, and the University :higan. Ernie Blackwelder, Clarence Kelly, Philip ■ s, Gordon Rowe, Loy Sammet, and Ron Schuler also ed valuable information. We thank Roy Bom for ■ tational assistance and BUI Martin and Loren Ihnen jcal comments. ■ are indebted to Paul Barkley for this reference. J 8EW ScmoTz is assistant professor of agricultural ] Ks and Davu) Secklee is acting associate professor of ' '-urai economics at the University of California, Berke- Such acts as the one named upon a man like Mr. Horner because he had invented a labor-saving machine should arouse the spirit of theUon among all good men and they should unite and hunt up the offenders and make them feel "ihe heaviest penalties of the law for damages and then be driven from every civihzed community. The rhetoric of this ancient conflict has changed, but not its substance. "Technological displacement" — as it is now euphemistically called — remains the source of some of our great- est social problems. This is particularly true in agriculture. We point with justifiable pride to the fact that now only a small percentage of the total population produces our food needs. But we tend to forget the painful process of adjust- ment that accompanied the transition from a rural to an urban society. We have forgotten that for many people the transition was in- voluntary; that many people have been forced off the farm only into an economic and social limbo in rural towns and urban ghettos. The overall purpose of this paper is to pro- vide a means whereby the broad social costs of technological innovation can be mapped into the framework of economic analysis. It focuses specifically on a recent technological change affecting agriculture— the mechanical tomato harvester. Development of the Tomato Harvester The history of the development of the to- mato harvester is a subject of interest in itself. It is an outstanding instance of the parallel de- velopment of innovations dovetailing into a viable system. As Rasmussen [26, pp. 532-533] states, The invention of the mechanical tomato harvester contrasted decidedly with the de- velopment of the cotton picker. The tomato harvester resulted from the "system approach." A team made up of an engineering group and a 569 844 570 / Andrew Schmitz and David Seckler horticultural group, with advice and assistance from agronomists and irrigation specialists, developed suitable plants and an efficient harvester at the same time. The necessary changes in planting, cultivation, and irrigating were developed concurrently. . . . The systems approach was also followed in the development phase of the harvester. Manu- facturers, scientists, and extension personnel worked closely with farmers, first in growing the new tomato varieties, then in getting the tomatoes harvested. Processors subsidized the first crops by lowering their purchasing standards on the new tomatoes and by adjusting their production techniques to accommodate the changed inputs. In the opinion of E. Black- welder of the Blackwelder Manufacturing Com- pany, which produced one of the first harvest- ers, it would have been virtually impossible to develop the harvester without an industry- wide integration of efforts. Thus, the harvester represents a social as well as a scientific and engineering success. Through coordinated ef- forts on many fronts, the industry was able to achieve results not economically available to any individual member. The first 25 harvesters were used in Califor- nia in 1961. By 1964, 75 were in use; a year later, 250. The number increased to 1,000 m 196?' [16], when approximately 80 percent of the California acreage was harvested by ma- chines. However, in other tomato-producmg states the harvester was adopted after this period. Purpose and Framework of Analysis Like the cotton harvester, the mechanical tomato harvester has created important pro- duction economies but has also undermined the livelihood of numerous agricultural laborer In this paper we attempt to appraise both tl heightened production efficiency and its eSe on the welfare of workers. The pioneerii work of Schultz [31] and Griliches [8] is carri( one step further— into an appraisal of impc tant social costs as well as social benefits. Both gross and net social rates of return the tomato harvester are computed; the d f erence is the wage loss of the displaced worke To compute the gross social rate of return, employ as a basis the framework used Griliches [8] and Peterson [24] who estimati respectively, the benefit to society from 1 introduction of hybrid com and from poull research. Using the concepts of consumer's and p ducer's surplus, Griliches analyzed two pc cases. In Figure 1(a) supply is complet elastic and the original supply curve is 5'; af the development of hybrid corn, the new sup curve is S. Since supply is completely elas producer surplus does not exist and the gain, E-\-F, represents the addition to c sumer surplus. In Figure 1(b) supply is i fectly inelastic; with the introduction of brid corn, supply shifts from S' to S. The g in consumer surplus is A -{-B; the gain in i ducer surplus is -^ + I>; and the net gair society is A+B+{-A + D) = B+D, fi which is calculated the gross social rate of turn. Peterson, on the other hand, used the between case of a positive sloping supply cu Thus, as demonstrated in Figure 2, the benefit to society is G-\-F^n-\-I, that is area between the two supply curves and demand curve, as in Figure 1(b). This j since the net gain in consumer and prod Quantity Figure 1(a) Quantity Figure 1(b) 845 Mechanized Agriculture and Social Welfare / 571 plus is E+G^-F+{-E+H+I). As pre- usly, the gross social rate of return is cal- ited from the area remaining after account- for the changes in surpluses, 'arious attempts at estimating the elastici- of demand and supply of processing to- toes have met with little success.^ Therefore, :omputing the gross social returns from the vester, we take the total production after new equilibrium is achieved and multiply by the ensuing cost savings per ton of :atoes harvested. Thus, we are essentially .suring area EGFK in Figure 2, where Qi is equilibrium level of tomato production r to the implementation of the harvester Qi is the equilibrium level of production n the harvester is in use. Therefore, we Jd overestimate consumer surplus, and :e the gross social gain to society, by iT if demand for tomatoes were DD and supply i perfectly elastic. However, if the suppiv ■e for tomatoes is not perfectly elastic, our ulations underestimate the gross social s of return if the true demand and supply tions for tomatoes are approximatelv those esented by DD and 5o' (compare EGFK and 3 compute the net social rate of return from development of the harvester, we explicitly into account its eflfect on farm workers. i_reference to Figure 3, prior to mechaniza- jr consxuner tomato demand, Babb et al. [1] estimated nee elasticity to be -.76, but this was statistically iificant. They attributed their difficulty in estimation ta problems. For supply response of planted tomato ?e, they estimated the short- and long-run price elas- to be 2.18 and 4.49 in Indiana; 1.05 and 2.65 in Ohio, ther configurations for supply could lead to an over- ate of the gross social rates of return. Figure 3 tion the demand for tomato workers is Do and the supply is So, but subsequent to the har- vester the demand becomes A- As one extreme, we computed W^ ((Jj-Qi)— the unemployment caused by the harvester— assuming no 'alter- native employment possibilities and assuming that the remaining employed workers receive wages at least as high as those obtained prior to the implementation of the harvester. In addi- tion, we calculated the net social rate of return assuming different levels of employment for farm workers in nonagricultural industries. Gross Social Rate of Return Gross social returns We use "gross social returns" (GSR) to mean the value of the reduced costs of harvest- ing tomatoes by the mechanical harvester.* These returns differ from "net social returns" by the value of the costs incurred by workers displaced by the harvester. Only for California have definitive studies been made of the comparative costs of hand and mechanical tomato harvesting methods [23, 36], and these data are used here for other tomato-producing states as well. According to the California studies, mechanical har\'esting reduces costs by S5.41 to S7.47 per ton,* in- * Some benefits of the harvester have been omitted from our estimates. We neglect benefits accruing to foreign coun- tries (Germany, the U.S.S.R., and Israel, for example) that have imported these machines. Manufacturers' profits from the sale of the machines were not independently estimated, but enter our analysis as a cost of the machines. Royalties received by the University of California, which holds a patent on the most commonly used machines, were not in- cluded in our estimate of benefits: these amounted to $224,782 by 1969. « These cost savings are not given explicitly in the stud- ies; they were computed from Zobel's and Parsons' work (23, 36, 37]. Detailed calculations are available on request from the authors, as are the detailed calculations under- l>-ing the remainder of this p^er. 846 572 / Andrew Schmitz and David Seckler Table 1. Rate of adoption of the tomato harvester, United States, 1965-1973" Table 2. Gross social returns to the torn harvester Year Percent of tomatoes harvested by machines California Other states Total U.S. acreage of tomatoes harvested by machines 1965 1966 1967 1968 1969 1970 1971 1972 1973 25 60 80 85 90 95 95 95 95 48,302 112,704 144,905 161,005 193,206 209,307 225,405 241,508 257,608 Estimated cost reduction a Returns $5.41 per ton $7.47 per ton 1. 2. 3. 4 Cumulated GSR, 1965-1973 Annual value of cumulated GSR, 1973 Annual GSR, 1973 ToUl, 2 and 3 dollars 199,124,897 274,792,8 11,947,494 16,487,.? 30,660,524 42,335,2 42,608,018 58,822,« • The rate of adoption was negligible before 1965 and is assumed to be zero for estimation puiTK)ses. Sources: Adoption rates prior to 1968 were taken from Lvnch [161; succeeding adoption rates are the authors projections (see footnote 7 of text) Estimated tomato acreage harvested by machine for 1965-1968 was derived by applying the above percentage rates of adoption to the acreage figures reported by the U. S. Department of Agri- culture [33]. The equilibrium acreage in PFo<^essmg toma- toes was estimated to be 332,010, of which 257,608 are mechanically harvested. eluding amortization and interest charges at 6 percent on the machine costs. The data apply only to tomatoes for processing since tomatoes for nonprocessing are still handpicked. In order to estimate GSR from the harvester for the United States as a whole, it is necessary to estimate its rate of adoption. These esti- mates, presented in Table 1, are based on a total U. S. acreage of tomatoes for processing of 322,010, the average for 1966-1969.« We esti- mate that California will harvest 95 percent of its acreage by machine in 1973 and that the maximum rate of adoption by other states will be 60 percent. Webb [34, pp. 1-5] has esti- mated the total U. S. average rate of adoption to be 80 percent.^ Given these data and an estimated average yield of 22 tons of tomatoes per acre, we can now compute the GSR to the harvester for the « Since this study was completed before 1969 acreage figures were available, total 1969 acreage was estimated to be 80 percent of the 1968 figure. ^ Accurate estimates on the current rate of adoption do not exist. It appears, however, that for California at least 90 percent of the acreage is now mechanically harvested and could easily reach 95 percent by 1973. On the other hand, several people have expressed the opinion that our 60 per- cent adoption figure by 1973 for other states is too high. It may well be, however, that more processing tomatoes may be grown in California than the 55 percent of the acreage figure used. Therefore, we feel that the total acreage of 257,608 mechanically harvested of a possible estimated 322,010 acres is a conservative estimate. United States. All estimates have been cai to the year 1973 when, by assumption, toi] acreage attains a constant amount. Thus, annual GSR for each year, 1965-1973, calculated at 6 percent interest to 1973 then converted to an annual perpetual S' This, together with the annual GSR in and thereafter, constitutes the annual vah GSR to the harvester. The results are shov Table 2. Research and development costs of the tomato harvester Several universities and private firms tributed to research and development (R D) of the tomato harvester. Reasonably information is available on the costs mci by two of the major parties to this inventi the University of California at Davis Blackwelder Manufacturing Company oi Vista, California. The University of Mich the University of Florida, and the Univi of Maryland also have engaged in researcl development; and some other firms, incl H. D. Hume Company, Food Manufact Corporation, Massey-Ferguson, and B Manufacturing Company, have incurre( nificant R and D costs in the developm( tomato harvesters. Estimates of costs mc by these universities and firms represent an educated guess based on interviews knowledgeable persons. Total R and D mates compounded to 1967 are given m 3.« 8 We cannot predict the ultimate impact of the 1 er on wages, prices, and output; so, unless otherwise we have assumed these to remain the same as m 196 » Estimates include only direct R and D costs o oping the harvester. Costs to farmers and proce transition to the new technique are not included, noi effects of the harvester on processing costs. R^ be California Canners and Growers Association mdicai 847 ble 3. Research and development expendi- tures on the tomato harvester Expenditures" varsities (to 1967) niversity of California, •avis Non-Extension activities Extension and related £Xtivities ther universities (including I tension) Mechanized Agriculture and Social Welfare / 573 $ 588,000 100,000 600,000 otal universities ate firms (to 1967) lackwelder Manufacturing ompany ther firms Dtal firms )tal 1967 value J R and D costs: 1973 value imulated at 6 percent) $1,288,000 $ 491,000 1.473.000 $1,964,000 $3,252,000 $4,585,320 ■igures rounded to the nearest thousand. B of return iven the above data on benefits accruing 1 the tomato harvester and the R and D s to make the harvester a reality, it is pos- ; to calculate the gross social rate of return RR) to R and D costs as follows: this assumption is relaxed and the costs in- curred by workers due to adoption of the tomato harvester are explicitly taken into account; but first we discuss welfare criteria relevant to this expanded view.i" Welfare Criteria The concept of Pareto optimality implies that one cannot recommend a change from a state "A" to a state "B" unless everyone is better off in B than in ^— that is, no one is worse off in 5 and at least one person is better off than in A. A major problem arising is that Pareto optimality favors the status quo. But almost every conceivable change leaves someone worse off. Consequently, making recommenda- tions on grounds other than "whatever is, is right" involves the inextricable difficulties' of interpersonal comparisons of utility. If, for example, one is willing to recommend a change that will leave someone worse off than before, he is implying that he can cardinally evaluate the increase in welfare of the beneficiaries, subtract the decrease in welfare of the losers^ and find a net increment in welfare. This is indeed a heroic presumption. As a kind of halfway house between these extremes, the following "compensation" test GSRR = total annual val ue of gross social returns research and development costs (100). s, assuming the low-cost saving of $5.41 ton. GSRR $42,608,018 (Ta ble 2) $4,585,320 (Table 3) (100) = 929 percent. larly, for the cost saving of $7.47 per ton, GSRR is 1,282 percent ($58,822,867 ,585,320). Hence, the gross social rate of rn may vary from 929 to 1,282 percent. J this point we have followed traditional ysis to calculate the rates of return from an vation in which the distributional effects issumed to be zero. In the next section, J^tremely difficult to determine whether the net effect Kessmg costs is positive or negative. Finally, we have itered the discussion as to whether the new tomato ' tor mechamcal harvesting is of inferior quality than rrown pnor to mechanizatioif. If the new variety is >r, which IS debatable, then the costs incurred because inor quaUty are not accounted for. has been proposed by Kaldor and Hicks. It is a necessary condition to recommending a change that the gainers shall be able to compensate the losers and still be better off. If the benefits of the change are not sufficient to pay its or- dinary costs and compensation, it cannot be considered socially desirable. It should be noted, however, that it is not sufficient that compensation could be paid— it must actually be paid if a change from the status quo is to be recommended. Otherwise, the problem of inter- personal^ comparisons of utility still remains. »» We cannot go into all the complexities of welfare theory here. The interested reader is referred to Little [14] and Mishan [19]. 848 574 / Andrew Schmitz and David Seckler The implications of this general analysis to the specific problem of the tomato harvester are clear. In order to determine the value of the harvester, we have to determine whether the gainers (producers, consumers, etc.) could com- pensate the losers (workers) and still be better off than before." Net Social Rate of Return The tomato harvester displaced roughly 91 man-hours per acre of tomatoes harvested [23, pp. 1-9].^^ Using the acreage and adoption rates of Table 1, 478,637 man-hours were displaced in 1965; in 1973 and every year thereafter, 19,477,227 (see Appendix for calculations) .'^ The average wage of harvest labor in California was approximately $1.65 per hour in 1967 [23]. With these figures, we computed the net social rate of return (NSRR) under varying assump- tions of alternative employment opportunities and hence, the amount of compensation (C) needed to offset the impact of technological change. The formula used is: NSRR -^^(100). R andD The results are given in Table 4. For the low- cost savings estimate of $5.47 per ton, NSRR ' "The main losers from this particular technological change are farm workers. Undoubtedly there are other people who also lose, but these are not discussed in this paper. Furthermore, it becomes clear that cost-benefit studies must consider both allocative and distributional problems (see, for example, Prest and Turvey [25], Mus- grave [21] and Knetch et al. [13]). Compensation is a neces- sary but not a sufficient condition for appraising an un- provement. See Little [14, ch. 6] for a discussion of the Scitovsky reversal problem. , ■ , i. 12 The amount of the labor saved by the mechanical har- vester is given in Parsons [23, p. 8]. The man-hours saved per acre vary from 29 for excellent workers to 178 for poor workers The figure used, 91 man-hours, while substantially above that for poor workers, is only slightly below the man- hours displaced for good workers. However, it should be pointed out that Parsons' calculations are based on the specific type of harvester available in 1966 when approxi- mately 20 good workers were needed per machine. A new tomato harvester will soon be made available which will require substantially less labor to operate; the use of an electronic sorting device can reduce the requirement to less than 8 workers per machine. In view of these recent de- velopments, our estimates of labor displacement resulting from the harvester are probably conservative. "When calculating the displacement by the tomato harvester, the analysis would become extremely complex if one attempted to distinguish between domestic workers and temporarily admitted aliens. In our analysis, we have as- sumed that had the tomato harvester not been invented the total workers employed would be the same as in the early 1960's. Table 4. Net rates of social return to R a D on the tomato harvester Percent of displaced Annual 1973 wage bill paid amount of in compensation compensation Net rate of sod return to R and Estimated cos savings at $5.47 $7. per ton per t dollars percent 929 1,2 25 50 75 100 10,746,610 21,493,262 32,239,892 42,987,523 694 1,0 460 8 226 5 - 8 3 varies between 929 and -8 percent as amount of compensation changes from to percent of the estimated displaced wage For 100 percent compensation, it is assu that displaced tomato workers have no a native employment opportunities. For the savings of $7.51 per ton, NSRR varies bet^ 1,288 and 345 percent. We have not attempted to estimate actual amount of unemployment created b; harvester, since this would require known displaced workers' future employments." estimated wage loss from 1965 through has been compounded forward to 1973 and converted to an annual flow. Thus, assum wage of $1.65 per hour, the cost to the wo is overestimated because, while the conve to an annual flow makes it possible to calc the NSRR, this assumes an infinite life f( displaced labor. This assumption is unte unless one believes that there is a lasting on the workers' families in denied educa opportunities and the like resulting from i ployment caused by technological change. Actual Payment of Compensation We have shown that the rates of reti R and D expenditures on the tomato har were highly attractive when measured " As Robinson [28, p. 2] points out, "Nearly four workers were employed in 1957 in industnes which exist or hardly e.xisted in 1900. If we had been loa jobs for those workers in 1900, we should never ha seen the present number of workers m the motor i and motor transport, in the making of gramophon( less or television sets, in electricity, or aviation moment it is hard to foresee how those workers mately be absorbed, for whose services in their loi cupations there is likely to be less demand. 849 Mechanized Agriculture and Social Welfare / 575 ventional way. More important, the rates of im remain attractive after deducting reason- e amounts of compensation for costs incurred displaced workers. However, since compensa- 1 has not actually been paid, it cannot be eluded that society as a whole has bene- d from the tomato harvester. )ur analysis has focused on unorganized Kers confronted with technological displace- it. Compensation was not paid because they led the organization to compel it. Contrast situtaion with one in which workers were rerfully organized — the International Long- remen's and Warehousemen's Union. Under leadership of Harry Bridges, this union able to mitigate the impact of technology worker displacement through "featherbed- f provisions in its contracts, which it pro- ;d for many years. In the late 1950's, how- -, it became apparent that the momentum of mological development, particularly in the tamerization of freight, would eventual- overpower employment-preserving rules, iges recognized this in 1957 [9, p. 145]: svould say that we have resisted the impact of bor-saving machinery, mechanization, auto- ation, whatever you want to call it, possibly th greater success than any other organiza- )n. It has been a combination of ways and eans of going things and it has involved rikes, slow-downs, and what-not. However, ; have reached the point possibly, and some the demands that you are putting in (take is resolution, for example) and some other oposals for changes reflect the feeUng that u have reached the point, where the battle ainst the machine for us has become a losing e. And we can continue to fight a losing battle, d we will lose in more ways than one, and ally after we have thrown away a lot of energy d a lot of bargaining power we will put on a owdow.-i, last-stand fight, and we will lose at one, too. nder Bridges' leadership, the union entered 'tiations to trade its featherbedding pre- tives for job and income security and won a ement of $5 million per year for 1961 ugh 1965; this, together with previous pay- ts, totaled $29 million [9, p. 176]. In the n's view, $18 million of this, or approxi- ^ly $3 million per year, was compensation echnological change or, as they put it, "the 's share of the machine" [9, p. 180]. le essence of the contract for the union was prmciple of "sharing the machine." As •man [9, p. 344] says, In the longshore experience, the older workers won a great deal; the retirement bonus was the equivalent of more than a year's pay. The younger workers were offered less but their prospects for promotion were enhanced by ac- celerated withdrawal of the older men. Further, they believed that the principle of 'sharing in the machine' had been estabhshed and would provide benefits to them in the years to come. The longshoremen achieved a share in the machine of approximately $3 million per year on an estimated annual industry net savings (in 1965) of no more than and probably consider- ably less than $59.4 million [9, p. 332]. Thus, the settlement was certainly no less than 5 percent and probably no more than 10 percent of in- dustry's benefits. While the two cases are per- haps noncomparable, it is interesting to observe that, had the tomato workers received a similar share in the machine, their compensation would have been between $2 and $4 million per year. On this basis, the conservatively estimated net social return to the harvester would still have exceeded 700 percent. Concluding Observations Our study of the development of the mechan- ical tomato harvester provides a microscopic look at a general social dilemma. The talents of science and industry combine to create enor- mously productive innovations, but the very success of these sectors of society creates con- sequences which bear unfavorably, as Fuller [7] has pointed out, on less organized and there- fore more vulnerable sectors. In order to illustrate this fact, we briefly examined the contrasting impacts of technolog- ical change on tomato workers and longshore- men. But labor unions are not the only means of protecting vulnerable sectors of society. Indeed, as Schultz [29] has stressed, it is the social scientist's task to devise a variety of institu- tional structures appropriate to the problems with which society is afflicted. Thus, for compensation purposes, an alter- native to unionization may be a form of state intervention in which a tax is imposed on units of output. The proceeds from this tax w^ould then be used to finance retraining, relocative, and retirement programs. This solution is theoretically sound, but if extended through all sectors of the economy that are subject to tech- nological displacement, it would be an organ- izational monstrosity. Before embarking on programs of this type, it would be wise to seek :i 9-133 O - 72 pt. 3A 850 / Andrew Schmitz and David Seckler 576 more general solutions to this general class of problems.!'* Specifically, we might explore whether there are any possibilities that general social programs could significantly reduce the need for compensation itself. We believe there are. , • , , The process of adjustment is particularly painful for displaced tomato workers because they are highly immobile, mainly because of limited occupational versatility. If a fraction of the great economies generated by such tech- » See, for example, H. G. Johnson [12]. nological innovations as the harvester could t allocated out of general taxes and applied 1 destroying the "vicious cycles of poverty" th; afflict society, immobilities — and thus the soci costs accompanying such innovations as tl tomato harvester— would be substantially r duced. Interventions of this sort would alio social costs and benefits to fall more or le randomly on the population as a whole ai thus, in a sense, cancel each other. If this we to occur, "everyone" would be better off wi technological change. That is, to us, the moi of the tomato harvester. Appendix Total Man-Hour Displacement by tiie Tomato Harvester The base acreage used prior to 1965 (that is, prior to the year when the harvester was used substantially) is 297,289, the average from 1958 to 1964. The base acreage used subsequently is 322,010, the average from 1966 to 1969. Cali- fornia is assumed to harvest approximately 55 percent of the processing tomatoes grown in the United States. Using the computations of Par- sons [23], 163 man-hours were employed per acre prior to the harvester; with the harvester, this was cut to 72 man-hours. Thus, prior to the harvester, 48,458,127 man- hours were employed (297,289X163). After 1 harvester was adopted, in 1965 for example, 1 number of man-hours employed dropped 47,979,490, computed as follows: 322,( [(163X.85) + (72X.15)]. This represents a ( placement of 478,637 man-hours (48,458,: -47,979,490). It is estimated that in 1973 only 28,980,' man-hours will be employed, computed follows: 322,010[(163X.20) + (72X.80)]. T( displacement wiU then be 19,477,227 man-he (48,458,127-28,980,900). References [1] Babb, E. M., S. a. Belden, and C. R. Saathoff, "An Analysis of Cooperative Bargaining in the Processing Tomato Industry," Am. J. Agr. Econ. 51:13-25, Feb. 1969. . „ [2] Becket, J. W., "Labor Efficiency and UtilizaUon, California Cilrograph 52:318-327, June 1967. [3] BoNNEN, James T., "The Absence of Knowledge of Distributional Impacts: An Obstacle to Effective Program Analysis and Decisions," in U. S. Congress, Joint Economic Committee, The Analysis and Evalua- tion of Public Expenditures: The PPB System, 91st Cong., 1st Sess., 1969, vol. 1, pp. 419-449. [4] BowEN, H. R., and G. L. Mangxim, Automation and Economic Progress, Englewood Cliffs, New Jersey, Prentice-Hall, Inc., 1966. [5] DiEHL, W. D., "Farm-Nonfarm Migration in the Southeast: A Costs-Returns Analysis," /. Farm Econ. 48:1-11, Feb. 1966. [6] Eckstein, Otto, Water-Resource Development, Cam- bridge, Harvard University Press, 1961. [7] Fuller, Varden, "Political Pressures and Income Distribution in Agriculture," in Agricultural Policy in an Affluent Society, ed. V. W. Ruttan, A. D. Waldo, and J. P. Houck, New York, W. W. Norton & Com- pany, Inc., pp. 255-263. [8] Griliches, Zvi, "Research Costs and Social Returns: Hybrid Com and Related Innovations," /. Pol. Econ. 66:419^31, Oct. 1958. [9] Hartman, Paul Theodore, "Work Rules and Produc- tivity in the Pacific Coast Longshore Industry," published Ph.D. thesis, University of California, 1 [10] Heringer, Lester, "Need for Mechanization I Evident," The California Tomato Grower, 7:1-11, 1964. ^ . [11] HiGGiNS, F. Hal, "John M. Homer and the velopment of the Combined Harvester," Agr. 32:14-24, Jan. 1958. [12] Johnson, H. G., "The Social Policy of an Op Society," in Money, Trade, and Economic Growth, < bridge, Harvard University Press, 1962, pp. 180- [13] Knt:tch, J. L., R. H. Haveman, C. H. Howe, Krutilla, and M. F. Brewer, Federal Naiura sources Development: Basic Issues in Benefit ana Measurement, Natural Resources Policy Center George Washington University, 1969. [14] Little, I. M. D., A Critique of Welfare Economic ford, Clarendon Press, 1950. [15] LORENZEN, C, and R. B. Fridley, "Mecha Specialized Crops," Agr. Engineering 47:33( June 1966. . , [16] Lynch, Duke, "The Revolution of Califorma . toes," Canner/ Packer, Western Edition, 137(4) lOF, AprU 1968. [17] Mangum, G. L., "Contributions and Costs ot power Development and Training," Policy Pa; Human Resources and Industrial Relations No Institute of Labor and Industrial Relations, L sity of Michigan, 1967. 851 Mechanized Agriculture and Social Welfare / 577 'Meij, J. L., Mechanization in Agriculture, Amsterdam, XorUi-Holland Publishing Company, 1960. MiSHAN, E. J., "A Sur\'ey of Welfare Economics, 1939-1959," Econ. J. 70:197-264, June 1960. , Welfare Economics: Ten Introductory Essays, 2d ed., New York, Random House, Inc., 1969. McsGRAVE, R. A., "Cost-Benefit Analysis and the Theorv' of Public Finance," /. Econ. Lit. 7:797-806, SepL 1969. Fadfield, HARLA>rD, and William E. Martin', Farmers, Workers and Machines, Tucson, University of .\rizona Press, 1%5. Parsons, Philip S., Costs of Mechanical Tomato Ear- Testing Compared to Hand Hanesting, California Agricultural Extension Service AXT-224, May 1966. Ptteeson, Willis, "Return to Poultr>- Research in the United States," /. Farm Econ. 49:656-669, Aug 1967. Prist, A. R., and R. Turvxy, "Cost-Benefit Analj-sis: .\ Sur\-ey," Econ. J. 75:683-736, Dec. 1965. Rassicssex, Wayn-e D., "Advances in American Agri- nJture: The Mechanical Tomato Harvester as a Case Study," Technology and Culture 9:531-543, Oct. 1968. s. A, "Economic Expansion and Persisting Un- nnplo>-ment: An Overview," in Prosperity and Un- '.mployment, ed. R. A. Gordon and M. S. Gordon, New Jfork, John WUey and Sons, Inc , 1966, pp. 327-349. [28] Robes-son E. A. G., The Structure of Competitive In- dustry, Chicago, University of Chicago Press, 1958. [29] ScHXJLTz, T. W., "A Policy to Redistribute Losses from Economic Progress," J. Farm Econ. 43:554r-565. Aug 1961. ^ [30] , "Institutions and the Rising Value of Man," Am. J. Agr. Econ. 50:1113-1122, Dec. 1968. [31] , The Economic Organization of Agriculture, New York, McGraw-Hill Book Company, 1953. [32] S].\.\ST.M), L. A., "The Costs and Returns of Human Migra tion, " /. Pol. Econ . 70 : 80-93 , Oc t. 1 962 . [33] U. S. Department of Agriculture, Statistical Report- ing Service, Vegetables Processing— Annual Summary: Acreage, Production, and Value of Principal Commer- cial Crops by States with Comparisons, 1961-1968. [34] Webb, Raymon E., and W. M. Brcce, "Redesigning the Tomato for Mechanized Production," in Yearbook of Agriculture, 1968: Science for Better Liiing, Wash- ington, U. S. Department of Agriculture, po. 103-107. [35] YE.4GER, L. B., and D. C. Titerck, Trade Policy and the Price System. Scranton, Pennsylvania, Interna- tional Te.xtbook Company, 1969. [36] ZoBEL, Melvtn p., and Philip S. Parsons, "Tomato Costs, 1965: Hand Harvest, Yolo County," California Agricultural Extension Sernce, 1965, mimeo. [•5"] , "Tomato Costs of Production: Yolo Count>— 1969," California Agricultural Extension Service, 1969, mimeo. 852 Senator Stevenson. Our next witness is Mr. Robert T.ong, vie. president of the Bank of America. „u„^.^, ^ We have had to shift the order of appearance of some witnesses Dr Friedland, and Mr. Henning will follow Mr. Long. Thank you very much, Mr. Long, for accepting our invitation t. testify. STATEMENT OF ROBERT LONG, VICE PRESIDENT, BANK O", AMERICA, SAN FRANCISCO, CALIF. Mr. Long. Thank you, Mr. Chairman. -j * ^ ^v t!„„ I am Robert Long, and I am a senior vice president of the Ban of America in charge of its agricultural lending Prof fi"- I would like to alk you, Senator, I have a short statement, I ca read it if you would like, or I can file it with you. Senator Stevenson. I think, in the interest of saving time, if is all the same to you, I would like you to summarize it. We will enter the full statement m the record at the conclusic "^MrLoNa'we^have attempted to, in our statement, separate tl areas' of issue that seem to be a part of your examination. Senate from the standpoint of the business of agriculture as ^e would Cc it, as one question certainly before you, and the other which mig involve the human and social environment m rural America^ The principal thrust of our statement will relate to the busin aspects of agriculture where we loan substantial funds and whe we are primarily involved. , It has been noted here that we make a large amount of cre( available to California farmers and related industry, something excess of a billion dollars for farmers themselves and maybe ah. billion in the area of farm cooperatives and immediately relat If you would compound that with indirect services for agricultu it would be two or three times that amount. . We deal with the important trends that are taking p ace m U fornia agriculture which should be set forth, and I will note tn ^i^t's^been frequently referred to today about the number of f ai or farming units that operate today in California Ten years i there was something over 100,000 and today we are down to, depe ing upon which of the statistics you care to follow, somewhere the neighborhood of 56,000. We feel that this dramatic change primarily associated with the pressures of rising cost of produc taxes, labor and equipment of all kinds, which are incurred with commensurate increases in the return on the sale ot products Also we note that farms must expand as farmers seek to keep }■ with the trends in agriculture. Higher cost of purchase ot supy and services means that the farmer needs a much broader base to to maintain a competitive unit of cost. Therefore, the requiren is larp-ely a factor of new technology requiring larger operati and, consequently, we are coming up with fewer farming units. 853 lAnother factor that is important in this situation is the need for .^reased capitalization of our farms here in California. Unofficial 'imates — and there are no precise figures on this that I am fully lare of — place the average investment per farm in California at lOut $400,000. Xet income, which was reported by the U.S.D.A. their recent census taken in 1970, about 816,000 per farm, which >uld be about 4 percent on their investment. [ personally think, from my own experience, this might be a little irher in California at this time. We further note that some three-fourths of this increase in total estment in the 1960*s was attributable to the appreciation of real ate in the farming community. With the supply of farm land istantly decreasing, there is a clear trend. Increasingly, too, non- ricultural uses encroach upon agricultural land. In" addition the operty tax provides the basis of local government finance in Cali- •nia. as it does in other communities in the United States, and this reases the heavy pressures on agricultural operations. Another factor is the incorporation by farmers. Of the incorpo- led farms in California, about 83 percent are exclusively in farm- l and 90 percent had 10 or fewer stockholders. Farmers incorporate i about the same reasons that other small businesses do: specific ■ mples would be inheritance taxes, liquidity, management con- uity, limited liability, and other factors related to corporations il their value as a business entity. !)f the incorporated farms in California, about 56 percent are ^t we would call family farms or run bv families. Familv farm- 1 incorporate basically in self-defense. 'Recognizing these trends, farmers have naturally tended to spe- ize. shifted toward higher valued crops. Thev also have been •^d with more sophisticated marketing systems and more sophis- ited consumers. The relatively low price paid for farm products ects the competitiveness in the industry which is basically a free- iM-pnse system, probably one of the best illustrations of its use Dur I .S. economy. Ill your letter to me you asked about the impact of these trends 1 he lives of California farm families. I think it might be helpful, = ator, if I gave you a few specific examples which come from statewide loan files of the bank. lake the case of a farm in California's Central Valley. This farm .pens to grow cotton and Thompson seedless grapes.' The grapes luce aj30ut S55 a ton on the current market. He produces this on 13() acres. His annual gross income is expected to be, in this '•ent period, about SoO.OOO. He hopes to net about S9,000 in annual |me before personal income taxes. Seasonally his crop line of Mt from us amounts to about $45,000. The total investment in farm happens to be $270,000. His annual net income represents It ^i percent of his investment. We have financed this farmer for 's; he IS a good farmer: we want his business and. of course. t hi m to continue in business. we l&t me give you another case where the results were somewhat u' \ -i^^-^^^re farm in the San Joaquin Valley, this farmer about $0^000 m lines of credit from us to irrow cotton, alfalfa 854 grapes, corn, and some pasturage. Total investment in his fan Amounted to about $380,000. He had a gross income of about $59,00. Xch yielded him about $2,300 in net income, a net return on mvasi ment of less than 1 percent annually. Twill give you one more example of a farm of 250 acres gromn neaches and grapes. His investment m this farm is about $400,00- Ked a line o^f credit from us of about $120,000. His gross sah were $160,000 and yielded about $40,000. In this case he had a annual return of about 10 percent on his investment, which woul be reasonably good by most standards. . In contrast, a farm with a similar investment, m this case amoun ing to about $430,000, used a line of ciedit of $84,000 from us a generated sales of $85,000. His net income on 255 acres of alf alf cotton, and tree fruit was less than $10,000, which is an annual retui of less than 21/2 percent. . n . ^ ^ I have some other examples here m the statement. We see this situation as a confrontation which creates speci; and difficult credit problems and, in our concern about this mcreasii trend, we have undertaken a careful examination of certain speci areas within California. In the Sacramento Valley, there are ma: peach and prune growers, among others who are confronted wi some real difficulties. I will give you quickly some of the trends i volved in our examination. jr.--. • „^^: There was a growing trend toward operating deficits triggeri a decline in value of the land and hence a depletion m their bar able equity. There was excessive production combined with a pc market and price situation. There was rapidly rising debt and d( service obligation in the face of declining ability to service ad tional debt. ^ ^ n • i -4.:^,. These conditions combined to weaken the financial position growers in these two industries. Many of them have fallen bel desirable and sound credit standards. Our analysis substantiates our reason for concern, because found the ratio of debt to equity in a level of about 60 percent, most instances, this is too high for agricultural People to carry. Appraisals by our own people, confirmed ^y tlie UhDA, slim this particular area to have a value per acre of $2,000 m l^b^ 1971 the average value of the same acreage was $1,200. Our study was limited, but we find that conditions like this various parts of the State of California are not unreahstic. ihi; the kind of trend that many farmers are experiencing where profits prevail. ^ ^^, „ . ., ,,„ Frequently there are terms used such as "large' and small so forth. We would like to emphasize in our testimony that s applications have meaning only in relation to specific crops. ^< acres of a well-sustained, well-established farm raising a variety grapes in the Napa Valley might be quite satisfactory as inc( but a peach grower with about the same investment m the ha mento Valley, with the same acreage, would be m a very ditti position today. The Bank of America supplies about 40 percent ot the crop duction loans in the State of California. We would like to be 855 increase it because most farmers throughout the State need addi- nal capital to operate their farms. As you can see from some of se situations, it is becoming increasingly difficult for all financial titutions, including ourselves, to meet the credit requirements h the conditions that exist today. smaller farming operations find it difficult to achieve the economies their neighbors, sometimes only twice their size, and this is the 1 impact in California in terms of what is happening to the size farms and the number of farms. 'nmistakably, one of the problems they face is their ability to rket their production. The farmer is up against a highly sophisti- 3d farm-to-market mechanism and he is also faced with a price- scious consumer in today's family shopper. There are numerous m-marketing cooperatives in California, probably the best devel- d marketing system of its kind anywhere in the world. They are narily designed to assist the small or medium sized farmer in '•iently packaging and selling their production. To some degree ^- have assisted this size operation in continuing in business, re have extended substantial lines of credit to these cooperatives r long periods of years. 'he bank supports a desirable goal to have a healthy and pros- pus farm community. In addition to extending banking credit wide range of farms of all sizes and farming interests, we spon- a wide variety of programs designed to serve rural California, the emphasis in this program is upon youth. 1 1971 the bank paid about S2,300,000 to young people for ani- s which they raised, and we undertook to collect the purchase •e from the ultimate buyers, which, in effect, guaranteed their ket and provided them 'an opportunity to get involved in the ness of agriculture in a meaningful way. bme $116,000 went into various farm youth grants, scholarships, I awards. Nearly $50,000 went to farm youth auctions: $356,000 need 1.300 junior agricultural projects, and there are more sirai- programs. 1 finalizing my comments, I am particularly concerned about feeling many have that financial institutions, 'including our own 'alifornia, only finance the large operations. I went out to the Joaquin Valley and talked with our manager at the Fowler iich. "We have a branch system which provides a total lending 't of the bank to every branch within the system, and there is hortage of credits or loanable funds available to agriculture in forma. I found, in looking: over his portfolio of loans, it ranged he way from Sl,000 to $300,000, and something in excess of 100 ndual credits extended in a year. It does not necessarilv tell ne size of the farm, but it does indicate the majority of 'these "probably small to medium size. Fowler is a reasonably typical *^ing community in the San Joaquin Vallev of California. siunmarize, we would like to sav that our bank and manv finan- ' institutions within the State of California have a large stake ?nculture. VTe are concerned about it and we share in that stake lany ^ays. We are their partners in a financial sense, so we are erned about the size of their debt, which is growing, and their 856 ability to service it. We are also concerned over their inability to geSe sv'fficient capital from their --- X^f^^clvJ^S Z increased requirements for operating successfully m (.alitornia Kul we do have faith in California's agriculture and the future of th< State's n.ral population. We are there and we expect to remam then and we expect the community itself to grow and prosper. I ^vish to^make one final comment on unit efficiency. I firmly believ, that there are efficient levels, depending upon the crops prown an. he mix of these crops, in which a medium and even a smaller farme. can compete quite effectively and be very efficient in terms of all eco nomLXdaV with any size farm up to several hundred thousan. """Their problem is the problem of economics of the business, whic is no different than in any other part of the United States excep it may be more intense here in California. So our mam concern, on maTn effort, and our main involvement is trying to help find waj rheirt°>ese people to be more viable and more able to remain profi ably in business and in a healthy condition. In summary, Senator Stevenson, this is the substance of our stat ment which l-e have provided to your committee and we hope will be helpful in your examination. i t .i i Senator Stevenson. It is very helpful, Mr. Long, and I thank yc ^""you say the Bank of America has a stake in agriculture; clear it does, all of the people of California do. It is the No. 1 industry ^ Cai^you tell us what percentage of the bank's total outstandii credit is in agriculture now? , ,. ^. • ,n ^ Ua.^ Mr Long. Frankly we do not separate our statistics m the bar agriculture as opposed to another commercial entity. Me consicl africulture part of the commercial loan portfolio. I -ould gi^ss you would allow me that, that is it less than 10 percent of the tol outstanding portfolio of the bank. -i^ .i . ^^^.a..fn. Senator Stevenson. Would you guess or know if that percenta has increased in the last 10 years or decreased^ . . , i Uo Mr Long. No. It would have decreased m relation to total ba. lending because, as you probably realize m a bank ot our size, ; are in all types of lending. We also have what we call a ^^ holes: aspect of the bank in which very large sums of money are invo v here in the United States and other parts of the world and tlK would be no way for any one commercial activity to maintain a €■ , stant ratio in relation to that kind of growth. There, I think, wo be a declining relationship in all industrial and commercial actn. against this total. Agriculture would be no exception. Senator Stevenson. That being the case, do you believe that t credit facilities in California are adequate to the needs ot agri.i ture, including the small farmer? -r i ,. i i ^^ . I apologize for using that word, small, but I don't know how draw the line. Mr. Long. Smaller, at least. ^ , , i 4.^r.r^ Senator, I can respond in this sense. It has been a long-stanc policy of the bank and continues so today, to never restrict n^ 857 agricultural borrowers. We have on occasion restricted other areas lien we have been in tight money situations, which occurred, as ^u may know, in the sixties a couple of times. It has never been le for agriculture. What I am trying to say, is that the difficulty we face today with )r agricultural borrowers is their inability to support the credit •juirements which are increasing, and they cannot, on normal credit iplication standards, really support that increased requirement. [lis is the problem. Senator Stevenson. That is what I am getting at. What I am mdering is whether additional credit facilities, perhaps publicly pported, to assist family farmers with public guarantees of credit, i'n't needed in order to help the family farmer acquire the land |i the equipment that he needs in order to compete in agriculture? iVlr. Long. Yes, I think so. We supported and welcomed the increase < a more liberal lending capability of the Farm Credit System, for :imple, and mainly because we see a broad and growing need. We irt service it all ourselves, we know that. Present policies prob- ly should be strengthened in this area. Ye would further hope that the ability of the Farm Credit Sys- ?ji would not be diluted into other activities, away from agricul- lal needs, needs of the farmers and growers. If public policy can port this, we certainly would agree with it. More funds are needed, (j less. Senator Stevenson. Would you say, in addition to the funds tided for farmers, that assistance and managerial skills, particu- L|y for family farmers and cooperatives in order to make them ire attractive borrowers from your bank, is needed? Ir. Long. Yes, this is a subtle but important area. Most of our ners today are, by standards of production alone, very efficient pie. They wouldn't be in business today if they were not. Those ) are not efficient probably have gone out of farming some years I. But they do have to develop stronger skills in financial manage- it, m general management, in anticipation, in being able to fore- i the trends in their industry and their own operation within that 'nework. I'lie program which we have in the process and will be available Li year is a new system to provide for farmers assistance in devel- ^jig better cash flow, better profit and loss statements, better finan- ^ statements, all of those things which are basic financial tools J will assist m their operations. It will actually help the smaller ^I'ations more because those are the ones who don't have available '! sophisticated computerized systems of todav. This system will nade available statewide this year. imator Stea;enson. I asked that partly because I noticed through >r enumeration of services to people in agriculture, you did not inerate managerial help. But I take it that is because vou regard '! as a different form of service? ^r. Long. It is an important contribution to their needs. I think ^,iave lived and worked long enough with them to imderstand |e these needs are, and of course, there is an acceptance require- ^|t on the part of producers, too, that they feel the need for this J city. 858 Let me add one thing in your earlier question about cre^dit ava abmtv I would like to go back to a previous pomt that I am a cernedwil. which is the present levels of earnings in agncult, and tt farmer's ability to service credit. They do have to repay ( ^° "senator SrF.vKxsoN. You are not too concerned about the al,ility Tenneco and other so-called corpoiate farms, to repay; XliNG. No. These services they don't need; they have that al ity now^A personal opinion, I think it would help, ye , I ^o hope whatever we did! we would do it through the existing ere svstem, both public and private, in some form. irator Stevenson. As part of the existing system, we do h the Small Business Administration program-guaranteed loans small business. I am not sure we have anything quite comparable "^Mr^L^NG. Agriculture does not qualify in that area: it is spe. cally excluded. , otj » Senator Stevenson. From the bUA, yes. S^enat^ST^NSON. Let me just make sure I understand so thhTrthat you™ Am I to uiiderstand that the Bank doesn 1 1 Sfakdow'n of your outstanding loans, large and small, for exa„ by aggregate amount, or by number of loans to, say, tarmers ^ an affraie of 160 acres, as opposed to other farmers? You d ' MrTori a'Sry we don't. I would imagine it would be us information for ourselves as well as others if we did know As I pointed out earlier, that is not a consideration as far as t fintncia? relationship with us, and so our statistics are not geare ^'^lenirk'rZN. Would you have any such WMow^^^^ on gross income of the borrowers as «PPOf ^\*° ^^f | 'i^JS; Mr Long. No; although I think maybe the LSDA does have . information on the subjfct I have read reports wh.ch they he out The Federal census has already provided some separate X real farmer, as opposed to someone part-time farming or o ';is"andTave them^c^rically di^vided. There may be more i. mation in the most recent census. We are looking forvsard to TenatJrSxEVENSON. The USDA wouldn't have figures on outstanding loans to farmers of $10,000 in income or less, that '^^Mr.'L^NG. No, they don't, and I don't think anyone has that of information. Senator, at this time. Senator Stevenson. In your statement you say the busine agriculture and human and social environment |" ™ral Ain are separate issues. Could you explain a little %v^iat you men that* Why are they separate issues for you as a banlcer. Mr. Long. Yes. is we see it, our concern, the primary co at the present time, as a lender, is with fe t'^™^'". ^"f J^'^^f J Senator Stevenson. Without regard to the social impact c activity ? im 859 Senator Loxg. Not necessarily. We see them as two separate issues, d our testimony here this morning is primarily, as you can tell, ated to the business aspects of agriculture in California, senator Stevexson. Mr. Long, I was interested, among your exam- 's of borrowers, in the disparity in return on investment. How you explain that? Does this depend upon the crop, or is it the nagerial skill, the industry of the farmer? ^Ir. LoxG. Managerial skill would enter into it. I think the biggest tor is in the variation in the crops. In other words, there are a le range of crops produced in California, as you know, and most •mers and most farms have more than one of these crops. Each of m can have an entirely different economic cycle in which they operating in any given year, ^or example, peaches and prunes, which I noted in one of the istrations, returns are below production costs right now for most )dncers. In contrast, varietal grapes have gone from an average nings of soniething over $100 per ton to as high as $600 per ton. Bre are relatively few in number in this category who can't make te a handsome living. h you have tremendous extremes in conditions. I have tried to ke the point that it doesn't always matter how many acres are olved — the most important thing 'is what is on it. Senator Ste^^ensox These examples would also, I suppose, make [uite clear you do know something about the income of your bor- ers and I should think, as a matter of prudent banking, you lid have to follow rather closely the financial ups and downs of r borrowers, including their income from year to year, 'hat being the case, wouldn't it be possible to break out the figure the bank's total outstanding credit to farmers with income^ of, , less than $50,000? Ir. LoxG. I think that in the next few years we might be able fj^u ^^^^ ^^^^ ^^^^ "^^^ ^^® ^^^^^^ todav, except to do it by hand, lid be by gomg through branch by branch, account bv account, ilmg It m that way. It would be a very expensive and a'verv slow cess, and we have had no economic reason to do it. enator Stevexsox. Would it help for mo to Qive you a reason, a request for breaking that figure out ? Would it be something could do for us? Ir. LoxG. We will have information of this kind as we convert 1 that we have in our branches to the computer, which we are he process of doing. When we have that, most of it will be pro- ved m such a way that we Avill be able to determine a wider ?e of information that we don't noAv have, even for our own man- ment information. ^^e are hopeful that this will not only be useful knowledge to us, ^Mll help m assisting our customers on forecasting, givino- them er hnancial counseling in terms of their need. It is^likelv t1) hap- as a result of the information we have. We Avill make' it avail- I to the borrower. I don't know whether it would be possible 'pt with months of work to produce the information along the 'inc lines Avhich you just suggested. enator Ste\t:xsox. If it is possible, we would welcome it. If it is FokT .1 ' we would be very glad to get it when it does become ^aoie through your computerization. 860 I^t me iust raise another issue which has been raised before i our hearings and, if not in testimony this mornin? I th nk ,t la been in soml of the materials that have been submitted durmg tl, course of the hearing this mornmg. . rharffes and compla nts are made periodically about so-eallefl n terlocS dh-ectorates, the members of your board or of agri-bus nesses^^lo serve on the boards of both corporations as well as manv other corporations, with the suggestion being hat the re at.o, ^itp gets cozy and that a corporation and agricultural memter < its bofrd on \he board of the Bank of America gets preferenti %" you iust care to comment at all on this whole issue? Mr Ix.NO I would make this one comment, and it is strictly terms of the Bank of America's policy, and I won t comment abo anvTody e se's the Bank of America's management group, from . president on down, may not be, in my understanding, a member Sher board duri^ng the course of their active management respo sSles with the bank. To the best of my knowledge, none of tl„ """l did hear the reference to Mr. Peterson this morning in rega to the various boards that he is on today, and, «* .'=o"f «'/.\l °|,' mrt cipation took place after he retired as a president of the bai ^Senator Ste^nsL. Let me just make sure I understand, ^o me 'V/ EoxSoyTdidn't say the board; I said the --«?—, thfbank. I am saying the management of the bank, the presicl ^leiS S™S:. maTis the policy with respect to interlock f] 1 TPctomtGS Mr Long'. I don't know; I have no knowledge. Senator Stevenson. One other question, Mr. L^ng. I used to be a lawyer for a large bank. I think 1 can appreu the business problems^hat you are faced with ^}^^^.^^ the little farmer also penalized, when it comes to requiring ere by higher interest rates? He is apt not to be as good a risk, I supp so therefore he gets charged with a higher rate of interest. He doe get the prime rate, does he? . ^ ,. _ . n • „ „„„ si7P Mr Long. No farmer does in California, all sizes, any size Senator Stevenson. By farmer, do you mclude co"glome^^t;^ Mr Long. We have a few of them in California. It depends o ousfy on their financial strength if they are able to borrow at best rate and anyone may, whet^her he be a very small farmer ' large corporation, if they qualify under those terms, ^ ould ge prime rate or our best rate. This relates to the deposs tbey 1 with the bank. It relates to all their relationships, the abilit, repay. I think you are familiar with those general requirement could apply to the very small farmer. A^^^r^H Senator Levenson. Yes, it could apply. It probably doesnt often. SenatOT Stevenson. Would a system of guarantees, PV^j^ g";| tees, for loans to the small farmer eliminate that rate difterenti. 861 r. Long. I think it would reduce it. I would be speculating now gnus of my own opinion as to the nature of the guarantee and so h, but I would assume that if the full faith and credit of govern- t ^yere behind a particular guarantee program, one kind or an- ■r, it would have an effect on the rate. matoT Stevenson. It would have an effect on the rate, but it Idn't eliminate it, I suppose, for among other reasons the little ler doesn't have compensating balances, does he? r. Long. No, we don't require balances from the farmers. This 16 reason his rate is slightly higher, but no liigher than other imercial borrowers in any business. We have what we call a pre- ng rate m California for our commercial borrowers at all levels it IS generally higher. It is the prime rate level plus whatever -est rate relates to that particular borrower. 16 farmer actually, if you pencil it out, and include the fact that lo not require balances as we require them from corporate bor- ers who receive the prime rate, their actual cost of the funds is greater than to the corporate borrower. This is because of the ^ensating balances and other financial features under which they qualify to get the prime rate. So actually farmers do verv rate-wise m California, nator Stevenson. The family farmer? r. Long. Yes. nator Stevenson. Vis-a-vis the corporate farmer because of the )ensating values required of him. e must move along to other witnesses. Thank you very much i^ong. VVe appreciate your appearance here this morning he prepared statement of Mr. Long and the following letter li was hand delivered to Senator Adlai E. Stevenson III, chair- ot tJie subcommittee, during the afternoon session of the hear- on January 11, 1972, follows:) :i 862 STATEMENT TO SUBCOMMITTEE ON MIGRATORY LABOR OF THE SENATE LABOR AND PUBLIC WELFARE COMMITTEE BY ROBERT W. LONG, SENIOR VICE PRESIDENT-LOANS BANK OF AMERICA N.T. & S.A. JANUARY 11, 1972 Mr. Chairman, Senator Taft, my name is Robert W. Long, and I am a senior vice president of the Bank of America and responsible for agricultural 1< I am impressed with the complexity of your inquiry outlined in your h to me last month. The bank's staff has worked hard to assist me in developing < meaningful response concerning the bank's role in California's diversified agriculture. Your letter covered these vast areas: * You talked of trends in agricultural development, including the ownership, use and distribution of land. * You showed a concern with the effect these trends have upon the li of farmers, farm workers and others. * You expressed a desire to learn firsthand of the impact of governn policies and programs upon the persons in rural America. * And specifically you asked to hear about the way in which a Bank £ as the Bank of America has been able to help promote agricultural development i manner which benefits farmers, farm workers and consumers. First, the Bank of America has a record of service second to none in rural communities and to the agriculture of this state. Bank .of America in 19 had lines of credit to the agricultural production and processing community in of 1.5 billion dollars. Our total commitment to interests closely allied to agriculture may well be three time's this total. Tsa 4«J( 863 -2- Agricultural credit always has been a first line responsibility at of America. Since we operate a statewide branch banking system, the entire irces of the Bank are available within our legal lending limit to all branches. The Bank of America, in times of short money supply, has occasionally ricted the dollars available in some areas of conmercial lending. Agricultural t has never been restricted. From the very beginning, the Bank of America - perhaps more than any financial institution in California - has consistently and effectively rted agriculture in California. Because we are so deeply involved in the agricultural production within omia, we know its strengths and its weaknesses. We are aware of the economic s. niis knowledge also forces us to concern ourselves with the direction in the various segments of the industry are moving. Before we examine economic trends - and the points which your letter i - let me clarify one point. In my opinion, there are two distinct con- ations which are before you today. First there is the question of the business :iculture. Second, there is the human and social environment in rural America, are separate issues, even though agriculture forms a vital part of rural From the economic standpoint, a healthy agricultural production serves the 'eing of rural America. But farmers alone cannot resolve the social conditions al America. Nor can government alone solve these social issues only through Itural policy. It probably will require a partnership between the public and e sectors. 864 -3- Clearly the current statistical definition applied by the federal govermnent defines rural America as cc«nmunities of 2,500 persons or less. In California many persons engaged in agricultural production - if not the trtajority -- live in communities of more than 2,500. By the same token a sub- division of 50 homes and possibly 200 people outside the boundaries of a small town may be classified as rural while there is little likelihood of anyone within that subdivision who makes a living from farming. More indicative is the fact that the rural population remained at rough 54 million persons over the last decade, while the farm population as a proportio of that population declined steadily. In 1920 farm people made up three-fifths o rural America; in 1970 farm people made up only one-fifth of rural America. Many factors contributed, but agricultural ch mges represented only a part of the hist Another illustration, equally dramatic, comes from the California 4-H Club movement. Among the membership, 65 per cent are urban dwellers. The trends in California agriculture - including the patterns of land use -- are reflected in these four key indicators: First, the number of farms has fallen sharply from 104,000 ten years a to some 56,000 farms today. This reflects the pressures associated with rising of production and of land, taxes, labor and equipment without commensurate incre in the returns from the sale of crops. Second, farms must expand as farmers seek to keep pace with the trends agriculture. Higher costs of purchased supplies and services mean that a farme: needs a broader base to maintain competitive unit costs. Therefore, it is the requirement of new technology which forces larger and fewer farms. larjD 865 Third, farms require increasing capitalization. Unofficial estimates place total average investment per California farm at about $400,000. With net income in 1970 reported by the U.S. Department of Agriculture at some $16,000 per farm, net return on investment would be about 4 per cent. Some three-fourths of this increase in total investment during the 1960 's ^fas attributable to appreciation of real estate values. With the supply of land :onstant and the population increasing the trend is clear. Increasingly, too, ion-agricultural uses encroach upon agricultural land. In addition, the property :ax provides the basis of local government finance in California. Thus, increasing lemands upon local government weigh heavily upon the farmer. Fourth, many farmers are incorporating. Of incorporated farms in :alifomia 83 per cent are exclusively in farming. Ninety per cent had 10 or iewer stockholders. Farmers incorporate for the same reasons as do small merchants ind professional men and women. Specific reasons include inheritance taxes, liquidity, management continuity and limited liability. Of the incorporated farms in California •6 per cent are family farms. Family farmers incorporate in self defense as our ociety grows more complex. We do not keep our records from the standpoint of the size of the borrower, ut in an effort to give you some idea of the scope of the Bank's lending program, ^ went to our branch manager in the San Joaquin Valley farming community of Fowler, n Fowler all our credit lines range from $1,000 to more than $300,000 with the ajority being less than $20,000. Obviously they are nearly all small or medium ize operations. ■133 O - 72 - pt. 3A 866 -5- In the face of today's trends, farmers have specialized and have shifted toward higher valued crops. They have faced increasingly more sophisticate consumers. The relatively low prices for farm products also reflect the competitiveness of the industry as well as the relatively weak market bargaining position of the farmers generally. You asked about the impact of these trends on the lives of California farm families. Let me cite specific examples from the statewide loan files of Bar of America. Take the case of a family farm in California's Central Valley. This farmer grows cotton and Thompson seedless grapes (the $55 a ton variety) on 130 acres. His annual gross income for 1972 is expected to run about $50,000 and he hopes to net about $9,000 in annual income before personal income taxes. Seasona his crop line of credit amounts to nearly $45,000 and the total investment in his farm is valued at more than $270,000. Thus, his annual net income represents a return on investment of only 3 per cent. We have financed this farmer for years. He is a good farmer. We want his business and we want him to continue in busines Now let's look at another case, where the results were different. On this 250 acre farm, the farmer used $57,000 line of credit to grow cotton, alfalf grapes, corn and pasture. The total investment in his farm amounts to $380,000. He had a gross income of about $59,000, which yielded him only $2,300 in net incc a net return on investment of less than one per cent annually. Another family farm growing peaches and grapes on 250 acres had total investment of $400,000 and used a line of credit of nearly $120,000. Gross sale: of $160,000 yielded net income of about $40,000 to this farmer -- an annual retui of 10 per cent on investment. 86: In contrast, a farm with a similar total investment (amounting to 430,000) used a line of credit of $8/^,000 and generated gross sales of $85,000. et income on this 255 acre alfalfa, cotton and tree fruit farm was less than 10,000. This is an annual net return of less than 2% per cent. A grape grower with 220 acres had an investment of $570,000, a line of redit of $140,000 and gross sales of $150,000. His $9,000 net income gives him net return of less than 2 per cent - with nothing for his labor and management. We have similar examples numbering in the thousands, but my point here U Lrst, that there is a wide range of income performance on farms of similar size Id investment, depending on location, types of crops grown and managerial ability; ^cond, that farms with investments ranging up to (and beyond) one-half million .liars provide incomes barely, if at all, that qualify in the range of "middle . 1 comes." Confronted by increasing credit problans in two specific industries, unes and cling peaches in the Sacramento Valley, Bank of America undertook a udy of the financial and economic conditions underlying this problem. The findings showed that the farmers were confronted with (1) a trend ward operating deficits; (2) a decline in the value of land; (3) a depletion bankable equity; (4) excessive production combined with a poor market and price tuation; and (5) rapidly rising debt and debt service obligations in the face of declining ability to service additional debt. These conditions had greatly akened the financial position of growers in these two industries. Many of them ve fallen below desirable and sound credit standards. Our analysis substantiated our reasons for concern. The ratio of total ^t to equity for these growers was nearly 60 per cent. This is a relatively high :io of debt by most business standards, especially in view of a net return on 'estment of only 4% per annum. 868 -7- Recent appraisals by qualified bank personnel show a substantial drop in the value of good quality producing orchards from $2000 per acre in 1967 to about $1200 in 1971. This is corroborated by data recently published by the U.S.D.A. and documents the weakening of the growers equity position, further compounding his financial problems. While our sample in this study was limited, the findings are characteristic of economic problems in many farming areas of the state. The difficulties these farmers are experiencing are due to unfavorable economic and market conditions within the industry. Many of these farms are simply approaching the limits of the debt burden their farms can carry. As I noted earlier in the examples of farming operations in California, the terms "small" and "large" when applied to farms have meaning only in relation to specific crops. Forty acres may well sustain a family farmer raising varietal grapes which can bring more than $300 a ton. But a peach grower with 40 acres requiring a similar investment may be in bad shape. The only reason that Bank of America -- which provides nearly 40 per ce of all non-real estate agricultural loans in California -- cannot substantially increase its credit commitment to farmers is because of these deepening economic pressures which we have discussed earlier. The smaller farmer whose operation is unable to achieve the same or bet economies of his neighbors, no matter x^at size, will not be able to continue in present economic circumstances. To try to perpetuate the minimal operation woulc no kindness to the farmer and probably would result in rising losses for the banl Well managed, efficient units, no matter what size the operation, can and will survive. 869 Unmistakably, when it comes to marketing, the farmer is up against a ighly sophisticated farm-to-market mechanism as well as a highly price-conscious onsumer in today's family shopper. The numerous marketing cooperatives in California re designed to assist small farmers in efficiently packaging and selling their reduction. They have proven to be highly successful. We have for years extended abstantial credit lines to these cooperatives. As I stated earlier our Bank supports the desirable goal of a healthy Id prosperous farm community. In addition to extending banking credit to a wide mge of farm and farming interests, we sponsor a variety of programs designed to irve rural California with particular emphasis upon its youth. In 1971, for example, the Bank of America paid $2,325,000 to young people ir animals which they raised, and the Bank then undertook to collect the purchase ice from the various buyers. This guarantees the market for the youthful producer. Some $116,000 went into farm youth grants, scholarships and awards; arly $50,000 went into farm youth awards and auctions; $356,000 financed some 00 junior agricultural projects; and some 400 awards were given by the Bank at rious 4-H field days alone last year. "^ Bank of America supports every major livestock show in the state of lifomia and co-sponsors with the California Department of Agriculture and the vestock industry the well known "California Livestock Symposium" in Fresno. We ^nsor young farmer programs. Farm Bureau youth programs, all 4-H and Future Farmers America regional field days, scholarships for graduate work by agriculture ichers, and all in all some 100 different programs to better California. 870 -9- To benefit present farm customers we are in the process of developing an agricultural business planning service -- a service which should benefit farmers large and small. This system is designed to assist in setting more responsive lending policies, helping officers make individual credit decisions and serve as a planning tool for the individual farmer too. If anything, the system will be oriented toward the small farmer who today lacks access to sophisticated budgeting procedures and advanced computer technology. We in California have a big stake in agriculture. We in Bank of America share in that stake. We want viable, self-reliant customers. We have faith in California agriculture and in the future of the state's rural communities. We are there, and we expect to remain there in a financial capacity. 871 The following communication was received from Mr. Long on the afternoon of January 11, 1972) BANKOF AMERICA ROBERT W. LONG Senior Vice President January 11, 1972 Subcommittee on Migratory Labor c/o Senator Allan Cranston 450 Golden Gate Avenue San Francisco, CA Dear Senator Stevenson: After returning to ray office following ray testimony this morning, I found that my response to one of your questions was inaccurate. You asked me to comment concerning the ex- tent of interlocking directorates in our bank. I stated that I had no comment or particular knowlcd^jcof the other directorships held by our own board members. I wont on to say that our bank had a policy against having its active officers holding directorships in other business corpora- tions. It has been pointed out to me that there are limited exceptions to that policy. Some officers have been permitted to retain existing directorships when they are hired by the bank, and quite recently v/e have permitted \v ,.(riO(i»'n (t» «,>t>r>|.{ tnvl i (il liMirt I.. )..|,, ImuimIo mT xHrovUMti Vvfh.Mi llu'V ili.n wIllHii ;i yo.ii; or I w.» .it i <> I h ••....'ii/ . 'I'luMV asic amenities as running water and indoor -rs. iiie children of migratory laborers receive, at best, inadequate 874 schooling and, in many cases, practically no schooling and. whe there art jobs available in this highly seasonal industry domest farmworkers in California and many other States find hemse v, competing with the illegal aliens who drive down already low wag, and provide a reservoir of strikebreakers. The Bank of America, incidentally, was one of the great leadir forces calling for the continuance of the bracero program whu involved the exploitation of impoverished Mexicans to the erid th wages were depressed by their presence in California. Fortunatel that practice no longer prevails, but not because of the assistance b rather in spite of the opposition, of such forces m the Bank In short, the situation facing farmworkers in California ai throuirhout the Nation is a scandal. . i .• • At S basic minimum, the following congressional action is reqmr """"Extension of the National Labor Relations Act to farmworke If necessary, I would submit that we return to some of the petitic of the Wagner Act that were not continued under the later amer ments that became known as the Taft-Hartley, Landrum-Griffin la. Second, the requirement that all States provide unemployment surance and workmen's compensation coverage for farmworkers. Third, extension of Federal minimum wage coverage to all tar ^^ Fourth, ending illegal alien entrance to California's farm lal market and insistence on the Immigration Service enforcing existi laws on aliens, a practice that might be rather embarrassing to i present Treasurer of the ITnited States. Fifth, provisions for expanding the housing programs tor ru Americans in order to insure that all farmworkers have adeqii shelter. Those of us who have gone through the agricultural he will agree there is some excellent barrack housing, some fair ho ing, and some housing that is a disgrace to a nation that calls it^ f*i vil 1 zed Sixth,* development of federally funded educational programs provide a decent education for the children of migratory f armwork Beyond this and on the focus issue of the hearing on the matter land ownership and water distribution, I wont read trom l^r as Paul Taylor cited the essential of this observation and spoke the great disparity between immense land holdings and property workers. . , • +1^ in But I would get to the relationship of our organization with la ownership and water usage. The California Labor Federation founded in 1901 as a State AFL organization. Today, you will not it embraces 1,600,000 AFL-CIO members. There has been a co nuity all through the years from the enactment of the reclamai law 'in 1902, under Teddy Roosevelt. We have always stood tor reclamation law with its 160-acre provision. . Labor in CJalifornia has long called for economically and soci responsible policies of landownership and water usage. In 1.^)^ .^ irress acknowledged tlie issue by writing reforms into the JNati- Reclamation Act in the form of a IGO-acre limitation on tedei subsidized water deliveries to individual landowners, ihe U.r?. 875 me Court upheld this law in 1958, in a case involving the Federal itral Valley project, and said of the acreage limitation : he project was designed to benefit people, not land. It is a reasonable sification to limit the amount of project water available to each individ- in order that benefits may be distributed in accordance with the greatest i to the greatest number of individuals. The limitation insures that this •mous expenditure will not go in disproportionate share to a few individ- ; with large land holdings. Moreover, it prevents the use of the Federal :amation Service for speculative purpose. note with some interest that, among the chief opponents of this -acre provision has been the Bank of America. :Mr. Eobert Long, ) has testified here this morning, refers to the limitation as petty political, and just as the Bank of America led the fight to con- le the importation of braceros, it is in the lead among those who lid destroy the acreage limitation and thereby liquidate small lings in California's agriculture. he viability of acreage limitation is even recognized from time to ? by grower publications. The Ca,lifornia farmer is not noted for jympathy either to the 160-acre limitation or to the union labor, arried m its September 18. 1971, issue, the following description alifornia farming under the title, "Is This a Xew Era in Cali- lia Agriculture?*": hat happens I am quoting, 1 irrigation water is introduced into an arid area? Does the 160-acre ation help or hinder? What does farming become under imposed condi- !.' * In short, farming in southeast Tulare Countv has taken on a glamor under the 160-acre limitation rule, or so it would seem This been done even in the face of the accusation that the limitation was tlmg, rather than helping agriculture. * * * e quality of living, too. in this new water area is good and has become able to many people. * * * this operation, efiiciencies, usually attributed to large acreage, can be met perhaps surpassed for an owner of less than 160 acres, while the aualitv 'mg IS increased. e barren land of southeast Tulare County is fast becoming a profitable in with high-quality living. ?ss than 2 months ago. Senator, the validity of the 160-acre limi- m was strongly affirmed by your colleague! Senator Fred Harris )kiahoma. when he introduced a bill strongly supported bv our forma Labor Federation. AFL-CIO, bv the National AFI^CIO, by others interested in the preservation of small farming activi- and quality living, to carry out the congressional intent re'o-ardino- excess lands, a provision of the 1902 act. "" "^ ^Tj v!^'^^'^ ^^^^^ numerous references to the Senator's arguments. >ulcl like to read from one. f^ ^5^1^°^^^^^^ ^^^ ^^^^^^ ^^^^^ ^^^^ holders could receive federallv sub- x^ water for farms of 160 acres of less, or 320 acres in the case of *a man itw ^^I? .o!.^.''^^ ^^^^ ^^""^ ^"- ^^ ^^^^ n^'^r ^l^f^ir ^^^^- In 1926, Congress ^nened the 1902 act by providing that any federally irrigated holdings in .fj^J • 1^0-'^<^'re limitation had to be sold within ten vears at pre- luon prices. ' iforcement of tliis law meant the end of one of the most tena- ^ antiJabor growers in California, the DiGiorgio Farms, which been obliged to sell their excess land. :i 876 We are supporting the legislation that Dr. Taylor referred that allows the Federal Government to purchase those excess lands the 10-year limitation time, and the revenue from the ultimate si of those lands by the Federal Government to be used for social pi ^^We urc-e that a generous share of the revenues from resale or lei of land for those purchases be assigned to public purposes, partly larly to education, and to the National Land and Water Conservat Fund We urge creation of a public authority with the power sufficr to plan land use effectively in reclamation areas so to create an vironmental quality. This we held with Senator Harris, who has b the principal advocate of our legislation. As Senator Harris correctly noted : because of the government's outrageous record of non-enforcement of reclamation act, more than half of the irrigated acreage in the Imperial Va (irc^UforniaVis held by owners of more than 160 acres and two-thirds c by absentees. We submit that is in violation of the law. We are now financ what we regard as the people's effort to stop this We are, m p contributing to the maintenance of the higher court tests that are volved in this case, tests to which Dr. Taylor referred. Continuing, Senator Harris said: Agribusiness giants such as Purex, United Fruit, and the Irvine Land whiS owis1o,000 acres in the valley, are reaping huge profits because o water subsidy Federally subsidized water is also being delivered to land Calfforn^a owned by Tenneco, Getty Oil, Standprd Oil of California, and Southern Pacific Railroad. The monopolization of land and water rights by huge agribusi: has a direct bearing on the crisis in our cities and on our severe employment and welfare problems. . Senator, in summation, it is our view that there is a critical i to correct the imbalance of values existing m rural Caiitornia an much of the Nation. . . , ^, , i ^o' >.; First, there must be Federal recognition of the farmworkers ri to organize into unions and to bargain with employers. We would welcome the assistance of all who have an mteres agricultural life. . n f^ ^ Second, social and economic legislation relating generally to w ers must be extended to farm labor. . . I am talking about unemployment insurance, minimum ^^ workmen's compensation. l^hird, recognition of the unique nature of farm employment, ticularly legislation needed in the areas of housing and educ^ and meaningful curbs must be placed on the employment ot ii Fourth, Federal reclamation law must be enforced and the should be amended to provide for Federal purchase and resai excess lands for the social and economic benefit of all, whicli vi mean recreational and educational facilities and services, indee( tending beyond the immediate agricultural areas. , , . i , Senator Stevenson. Thank you, Mr. Henning, for a helptul . ment. 877 lS you know, there are efforts under wav in Congress and also 5ome cases at the State level, to accomplish the goals which vou out in your very strong statement. was particularly interested, though, in your reference to the im- :ration and naturalization laws. As you know, under Federal law 3 a crime to harbor an illegal entrant, someone who has entered country illegally. You can keep him in the woodshed and be Ity of violating the law. But it is not unlawful to hire him. That kes me as an anomaly in the law that is not only strange, but very lificant. understand California has recently adopted a law which would :e It illegal for employers to knowingly hire an illegal entrant, rou know, it IS estimated, nobody really'knows, that there may be and a half million, maybe more, persons illegally in the United :es. Many of them are from Mexico, working here and displacing . citizens from jobs. Have you enough experience in California ave any opinion at this point about the effectiveness of the Cali- iia law? h¥^.^'^'^^'?- Senator, it was just adopted and won't be effective 1 90 days after the adoption. ?nator Ste\-exsox. It has not been effective vet, you say ? r. Hexxixg. Xo, but it will be in effect this\'eaf. ?nator Ste\t:xsox. How effective will it be. do you think? r. Hexxixg. It forbids the employer from knowingly liirino- an •al entrant. I presume we will have to take the employer to^'the orities to prove that he knowingly hired. It has been called, if will forgive me, a kind of a Mickey :Mouse law. It lacks the kind 3mprehension and rigidity we like to see in it, but it is a beo-in- ■• Ue thmk we can make it effective by having our unfons ?e it. * ^ might say in this respect the United Farm Workers Organiza- is strongly for this law and strongly opposed to the appointment pan^ielos, because her premises of business operation was six s raided by the Immigration authorities. It is a rather classical It :s very hard, apparently, to prove she is as guilty as our a representatives think. But I would be pleased to submit a ment, after a reasonable period of experience in the California Ue supported the legislation, which passed, I might say. throuo-h rtisan support. t^ . ^ nator Ste^-exsox. There is a good prospect of getting a similar idment adopted to the Federal immigration laws. We! of course, working on it. ^e continuing migration of people from rural America to our ' nas an impact on the urban labor market. Do you have any nents you would like to make about the impacts of that migratioh nemployment m the cities? ^'r.^^^^-^-^' ^^/ Taylor in his paper noted the contrast between ^ommunities of Dmuba and Arvin. the theory being that the I tarm operations made farm life, rural life, something realistic. r ^Ltr^^f i^ ^^^^ ??^^ ^^^ S^^^^ numbers of people who are now , aisplaced by agribusiness. We argue with that. 878 We also, however, would be obliged to acknowledge that mecha zation is moving people from the land, and not only in Califon in the United States, but in every industrialized nation m the woi The increase in productivity rates during the last decade m a^ric ture, was runnincr about 9 percent a year as against ?> percent as average in industry overall. If that kind of thin^^ continues, I afraid reo-ardless of what we do in terms of making the land e nomically attractive, there will be a continuing movement of ( placed workers from areas of no employment to the hope areas urban life. , , Senator Stevexsox. How do you feel about cooperatives as a me of providing job opportunities in rural America? ^, . , ^, Mr Henxixg. If they are genuine cooperatives, we think they quite ffood. I happen to have had some experience with cooperat m other countries. I know in Israel, where I had the opportui to study and observe rather closely the moshav, which is the coopi tive farm, that common purchase of equipment and gram, comi sale practices were viable and successful. I think, surely, it is an i that has to be encouraged and, where such study is needed Senator Stevexsox. You mentioned a disparity between the 1 eral minimum wage rates for the farmworkers and for other w- ers. AVhy does that disparity exist? Mr Hexxixg. We have to go back to one of the few tailure miffht say, Senator, the few failures of the New Deal. Fran Roosevelt and the New Deal powers accepted a compromise with farm bloc and did not extend any of the social insurance ben of the New Deal lesislation to agricultural workers. He lett t out of unemployment insurance, out of social security, out ot minimum wage, and out of the Wagner Act. Now, times have changed, but the farm bloc still prevails, couldn't get a proper measure through the Senate, if I may say i Senator, respectfully. . Senator Stevexsox. I have tried a couple of times. Mr Hexxixg. The farm powers are quite strenuous m this ma Senator Stevexsox. I do think the attitudes are changing ii] Senate. I think just the fact that these hearings have attractec terest is in itself significant and suggests a growing public awar( of the plight of people in rural America and the way we have criminated against them. The farmworker, the migrant m partic doesn't get the benefit of unemployment compensation, ot all ol social and worker benefits that most of us take for granted, i never understood the reasons for the apparent discrimination. ]\rr. Hexxixg. Wc have the richest State m the Union; we the richest agriculutural community in the Nation, and still we erate the social disadvantages that are imposed on farm worke can say, from more than 25 years of experience, that^it comes ( to one thing, that there are powers in California and m the JN: who argue that anything may be done in the name of economic p Senator Stevexsox. It is more complex than that, too. I^or e pie, with all of the concern in the country about the alleged b down of the work ethic, of the concern about the rise m we costs, we have a group in America, the migrant, who traveli »^ 879 itry, he follows the crops, he spends his life putting down roots here, but travels everywhere searching for work. He, more than other group m our society, is discriminated against. He is left Ihat 1 hnd ver}^ difficult to accept or understand liank you agam, Mr. Henning. Your testimony has been very tul. Ihank you very much for appearing here this morning rhe prepared statement of Mr. Henning follows:) 880 CALIFORNIA LABOR FEDERATION, k^L'^li JOHN F. HENNING SrtTeurv-Treaiura ALBTN T. GIUH^? 995 MARKET STREET. SUITE 311 SAN FRANCISCO, CALIFORNI 41S 986-3583 GENERAL VICE PRESIDENT M«nnel P«« VICE PRESIDENTS €>eoa'nDl)teal Mar T. 0"'o Di'trift Nn 7 Hiv S. Vendor? AntVnnv T- BoclanowicT Inhn T.. DaW T'^lin A. Ciroiirmani Tovrh H -Srvmnnr Uav M. Wilwin ni'trict Mo 4 n, A. McOinorfi Wlhiir Fillinpini Di":tnrt No ^ H. D. UcVct Di'tricf No. 7 C. A.Green District No S Thoma"! A. Small Dittrict No. 9 Morris Wei<;bfrECT To^enh R. Garcia Chri<; AmaHio Wm. G. Dowd District No. 10 Richard K. Groulu Paul L. Jones District No. 1 1 Howard Reed District No. 12 Stanlev Lathen District No. 13 Harr>' Finks District No. 14 Leonard Cahill District No. 15 Marvin Adair VICE PRESIDENTS At Large loseph Ai.gelo Richard W Hackler Edward T. Shrdlock SiRmund Arywitz Jerome Posner (oseph P. Mazzola E.P.O'Mallev Fred D. Fletcher G. J. Conway Statement before the U.S. Senate Subcommittee on Migratory Labor of the Committee on Labor and Public Welfare by John F. Henning, Executive Secretary-Treasure California Labor Federation, AFL-CIO San Francisco January 11, 1972 j^fUwm 881 My name is John F. Henning. I am the Executive Secretary easurer of the California Labor Federation, AFL-CIO. Our ganization represents more than 1.6 million union members California. We welcome this Subcommittee to California, for in this ate farm workers and their families have long suffered the :ial and economic hardships of seasonal employment and jration. The farm labor tragedy is inconsistent with professed :ional ideals, and has been so recognized throughout all this century. Since 1901 a long series of Commissions, federal and ite, has studied, reported and recommended v/hat to do to itect migratory seasonal workers and bring them closer to national ideal. A partial list of federal commissions ludes the Immigration Commission of 1911; the Industrial ations Commission of 1916; the LaFollette Subcommittee the Education and Labor Committee to investigate "violations free speech and assembly and interference with the right of or to organize and bargain collectively" in the late 19 30 's; Tolan Committee on Interstate Migration of Destitute izens; President Truman's Commission on Migratory Labor American Agriculture; and now the Senate Subcommittee on catory Labor. 59-133 O - 72 - pt. 3A - 15 882 2 - Only a few of the recommendations from the past have been adopted. Old age insurance has been extended, and to a very limited degree the federal minimum wage law. Farm workers rem.ain, however, basically deprived, except where they have become union members . In the final analysis the only way farm workers can achieve an adequate standard of living is through unioniz We need something like the great union organizing drives the 1930 's which lifted millions of unskilled industrial workers out of poverty. The United Farm' Workers Organizing Committee, AFL-CI has been notably successful in its efforts, despite the relentless opposition of powerful agricultural interests, here in California and elsewhere. The struggles of the UFWOC can only be described as heroic, as its leadership £ membership have traveled to the far corners of the natior developing and sustaining a massive program of economic l The UFWOC has grown from its fledgling status of sis years ago to a position where it represents thousands of farm workers having contracts with major growers. It is basic to the development of a reasonable balance between growers and farm workers that the growth of the UFWOC coi We in the California labor movement and fellow AFL-CIO u: throughout the nation will do our part to insure this gr 883 - 3 - In the 1930 's the nation, speaking through Franklin Roosevelt and the Congress, said that the grov/th of unions was in the national interest. This has been nowhere more true than in agriculture. Yet the Congress as a v;hole has failed to recognize this elementary fact. Nationally, farm workers are still denied the basic liberties granted to industrial workers in the 1930 's. Farm workers still do not have the federally recognized and protected freedom to organize unions and to bargain with growers over terms and conditions of employment. Unemployment compensation, one of the nation's basic social insurance programs, is practically non-existent in agriculture. In California farm workers are covered by workmen's compensation. Only 12 other states and Puerto Rico provide such coverage. More than two- thirds of the states provide no workmen's compensation coverage for farm workers despite the fact it is a highly hazardous occupation. Effective February 1, 1967, Congress, for the first time, extended the Fair Labor Standards Act's minimum wage protections to farm workers, but at reduced levels. While the federal minimum wage is $1.60 for most covered workers, it is now only $1.30 for farm workers. Moreover, only about one-third of the nation's farm workers receive even this inadequate protection. 884 - 4 Farm workers continue to 15.ve, in most cases, in inad housing, often v/ithout such basic amenities as running wat indoor toilets. The children of migratory workers receive best inadequate schooling, and in many cases, as a practic matter, receive no schooling at all. And when there are j available in this highly seasonal industry, domestic farm in California and many other states, find themselves compe with illegal aliens v/ho drive down already low wage rates and provide growers with a ready reservoir of strike In short, the situation facing farm workers in Calif c and throughout the nation is a scandal. At a basic minim.um the following Congressional actioi needed nov; : 1. Extension of the National Labor Relations Act to farm workers. 2. Requirement that all states provide unemploym.ent insurance and workmen's compensation coverage for farm wo 3. Extension of federal minimum wage coverage to al farm workers. 4. Ending illegal alien entrance to California's fa labor market and insistence that the Immigration Service enforce existing laws on aliens. 5. Provision for expanded housing programs for rura America in order to insure that all farm workers have ade shelter, as measured by the standards of 1971, not 1901. 885 5 - 6. Development of federally-funded educational programs to provide a decent education for the children of migratory farm workers. Beyond these immediate protections for farm workers, it is imperative that Congress face the issues of land ownership md water distribution. Here we are concerned with the relationship between those 'ho labor on the land and the massing of the poor and unemployed n the cities. The relationship has prevailed for decades, argely because private speculation has determined the use nd distribution of our land and water resources. More than 70 years ago the distinguished foreign observer, ames Bryce, noted the essentials of the California land and abor crisis. In his monumental American Commonwealth , Lnrr^ cyce wrote: "When California was ceded to the United States land speculators bought up large tracts under SpanisA t^es acquLerg^efrior^"" h'^' ^""'"^ prosperity, subseau:ntly wavs wMr^h h -^ domains by purchase, either from the "rail- ways -which had received land grants, or directly from th^ government. Some of these speculators, by holdLg their lands for a rise, made it difficult for iWigrants to arowJh' rf' f^^-holds, and in som.e casercheckel the ?o farmers whnVn''^^""^^ '"' ^^^^^ ^^^^ °- short leases conditTon^'J^ ^""^ ''t''^ ^"^° ^ comparatively precarious Se soi^ .°^,^?J' established enormous f arms, ^ in which arp ^? \ cultivated by hired labourers, many of whom thi Uni?edltf tf \'\" ^^""^^' -- ^ phenomenon rare in moLr^io? States which is elsewhere a country of ?hus the f^n^ ^^,^^^^J ^^'^" ^^^- their children's hands. peculiar and In^'""^"^ ""^ California presents features both Peritie^ and dangerous , a contrast between great pros- and the somPt?^ appearing to conflict with the general weal, a mass of un^P^^? hard pressed small farmer, together with ?owns a? n.^? 5 labour, thrown without work into the ^owns at certain times of the year." ^^^ycQ, American Commonwealth ," II . 427. (1913 2d.) 886 - 6 Organized labor recognized this problem promptly as i emerged, but for too long our counsel has gone unheeded. In May, 1878, the platform of the V7orkingmen' s Party of California declared that "the public lands are the heritag of the people, and should be donated to actual settlers ir limited quantities," that "no land or other subsidies shoulc be granted to any corporations," that "land grabbing must stopped," and "land monopoly must be restricted and in fu1 prohibited." (Quoted in J.C. Stedman and R.A. Leonard, The Workinqmen's Party of California . ) Labor in California has long called for economically socially responsible policies of landownership and water In 1902 Congress acknowledged the issue by writing reform the National Reclamation Act in the form of the 160-acre limitation on federally subsidized water deliveries to in landowners. When the United States Supreme Court upheld in 19 58 in a case involving the Federal Central Valley Pr it said of the acreage limitation: "The project was designed to benefit people, not lar is a reasonable classf ication to limit the am.ount of pro; water available to each individual in order that benefits the be distributed in accordance with/ greatest good to the g] number of individuals. The limitation insures that this expenditure will not go in disproportionate share to a f< individuals with large land holdings. Moreover, it prev( the use of the Federal Reclamation Service for speculatr (Ivanhoe vs. McCracken, 357 U.S. at 297.) 887 - 7 - The viability of acreage limitation is even recognized ^m time to time by grower publications. The California [mer, not noted for its friendliness to either the 160- :e limitation or to organized labor, carried in its )tember 18, 19 71 issue the following description of -ifornia farming under the title: "is This a New Era California Agriculture?": "What happens when irrigation water is introduced into an arid area? Does the 160-acre limitation help or hinder? What does farming become under imposed conditions? ... In short, farming in southeast Tulare County has taken on a new gJamor under the 160-acre limitation rule, or so it would seem. This has been done even in the face of the accusation that the limitation was throttling, rather than helping agriculture .... "The quality of living, too, in this new water area IS good and has become available to many people . . . "In this operation, efficiencies usually attributed to large acreage can be m.et and perhaps' surpassed for an owner of less than 160 acres, while the ouality of living is increased. "The barren land of southeast Tulare Countv is fas^- becommg a profitable garden with high quality living." Less than two m.onths ago the validity of the 160 acre -tation was strongly affirmed by your colleague Senator ' Harris of Oklahoma when he introduced a bill strongly 'crted by the California Labor Federation, AFL-CIO , and National AFL^CIO fs. 2863) which would establish a I 888 Reclamation Lands Authority to carry out the congrcssionc intent regarding the excess lands provisions of the 1902 Reclamation Act. On introducing the bill on November 16 1971, Senator Harris observed: ••Our predecessors in Congress, recognizing that irrigation is essential to American agriculture, wisely chose to make a public investment in irrigation v/hen they passed this historic 1902 act. Just as wisely, they sought to assure that the benefits of federal irrigation pro^eccs -- which would literally transform desert wastelands in the West to the richest agricultural areas in the world — would accrue to small homesteaders rather than land speculators or monopolists. "The reclamation act stated that land holders could receive federally subsidized water for farms-of 160 acres or less, or 320 acres in the case of a man and wife, provided that they live on, or very near ?heir l^nd. In 1926, Congress strengthened tt 1902 act by providing that any federally -^rrigated holdings in excess of the ^^O'^-^^^ ^^^^^^f i"^e« to be sold within 10 years at pre-irrigation price. "Critics of the acreage limitation provision, both 19^2 and today, insists thathuge farms are necess< for their efficiency. That is a ^Y^^', .^l^f ,,^'-?^^^ aqribusir.esses are efficient only m stifling farm competition and in tapping the f^^-^^^^f ^^^Hand subsidies. 160 acres of priiP.e ^^^^igated farm land or 320 acres in the case of man ana f f^f ' ^^^^^^ than enough to support a P^°^P^^^^% ^f^^'^^^^iee (Congressional Record November 16, 1971, Page bi«o senator Harris went on to point out that the men w championed the Federal Reclamation Act of 1902 were "vi Americans" in that they understood that land and water boundless and must be protected from the few who would monopolize their use. 889 9 - But, he observed: "Today, nearly two centuries after Jefferson and 70 years :ter the passage of the Federal Reclamation Act, agrarian :nocracy exists only as a myth. America's land, once publicly med, and the federally financed water used to irrigate m.uch : it, are illegally in the control of large land interests." Noting that these large land interests have always opposed iforcement of the reclamation act's anti-monopoly provisions :d have used various devices to get around the 160-acre limitation, nator Karris said: "What is surprising is the federal government's acquiescence V7hat amounts to a giant land steal and a raid on the public easury . " Our California Labor Federation had this in mind at its 70 biennial convention when delegates adopted a policy statement natural resources which heartily concurred in the reconuaendation the National AFL-CIO "that the government purchase excess ^d at the prewater price set by present law, taking note of s estimate that in California alone, there are 900,000 acres led in excess of the legal limit. 890 10 "We urge that a generous share of the revenues from : or lease of land so purchased be assigned to public purpo; particularly to education and to the National Land and Wa Conservation Fund. We urge creation of a public authorit with the power sufficient to plan land use effectively in reclamation areas and so to create an environment of aual the statement said. As Senator Harris pointed out, federal reclamation proj have resulted in delivery of v/ater to eight million acres an annual crop value of $1.7 billion. Moreover, Congress has appropriated or authorized si $10 billion on reclamation projects and "it has been estir that the amount of subsidy to western landowners for irrj ranges from $600 to $2,000 per acre. At present this huge public investment is channelin< millions of acre feet of water to hundreds of thousands < acres of land owned by giant corporations instead of to growing number of independent family farmers as the law i^^ 891 - 11 - As Senator Harris correctly noted, "because of the government's outrageous record of non-enforcement of the reclamation act, more than half of the irrigated acreage in the Imperial Valley (in California) is held by owners Df more than 160 acres and two-thirds of it by absentees. Agribusiness giants such as Purex, United Fruit, and the [rvine Land Company, which owns 10,000 acres in the valley, ire reaping huge profits because of the water subsidy, 'ederally subsidized water is also being delivered to lands .n California owned by Tenneco, Getty Oil, Standard Oil of :alifornia and the Southern Pacific Railroad," he pointed out. The monopolization of land and water rights by huge gribusiness interests has a direct bearing on the crisis n our cities and on our severe unemployment and welfare problems. The Reclamation Lands Authority Act introduced by Senator arris and co-authored by Senator Alan Cranston of California s strongly supported by the California AFL-CIO because it ould serve as a beginning of a national rural policy that ould give the independent family farmer, our veterans and " -onomically disadvantaged citizens as well as the general axpayer an opportunity to reap some return . from the vast Jblic investment in reclamation projects. Under the proposed Reclamation Lands Authority Act, 70 percent f the revenues derived from it would be earm.arked as grants ^r public education. Another 10 percent would go into the Lready existing Land and Water Conservation Fund and the ^maining 20 percent would be used to develop public facilities 892 - 12 - servicing project areas and to promote economic opportuniti for veterans and persons living in substandard conditions. Similar legislation has been introduced in the House of Representatives and six of the seven sponsors of the House bill are California Congressm.en . We trust that Senate hearings will soon be held on thi legislation. Adoption of such a bill can mean opportunity the land for many, including farm workers, and it can reta. the flow of landless, jobless and destitute persons int( our cities. Theodore Roosevelt, as President, insisted upon inclus of acreage limitation provisions in the original reclamatio law that he signed in 1902. Nine years later, speaking at the Commonwealth Club in San Francisco, he justified the limitation in words going far beyond questions of either "efficiency" or the equity of preserving opportunity on the land for those who work upon it. He said: "Now I have struck the crux of my appeal (for the exce land law) . I wish to save the very wealthy men of th country and their advocates and upholders from the ru. that they would bring upon them.selves if they were permitted to have their way. It ^^^ecause l^^ /^^^ devolution; it is because I am against the doctrines < the Extremists, of the Socialists; it is because I wi, to see this country of ours continued as a genuine dem.ocracy; it is because I distrust violence and dis believe in it; it is because I wish to -^^-^f.^^^f^ot country against ever; seeing a time when the have not shall rise against the 'haves'; it is because I wish secure for our children and our 9^^^^^^^^^^^^, ,^°^.f ^ children's children the same freedom of °PP^^^^^^^f Y; same peace and order and justice that we have had in the past." (7 Transactions of the Commonv/ealth Club 108 a9-'L2-13.) 893 - 13 In summary it is our view that there is a critical leed to correct the imbalance of values existing in rural :alifornia and much of the nation. First, there must be federal recognition of the farm workers' rights to organize .nto unions and bargain with employers. Second, social and economic legislation relating generally to workers must be extended to farm labor. Third, in recognition of the unique nature of farm mployment, particular legislation is needed in the areas of ousing and education and meaningful curbs must be placed on he employment of illegal aliens. Fourth, federal reclamation law must be enforced and he law should be amended to provide for federal purchase nd resale of excess lands for the social and economic benefit f all. B94 Senator Stevenson. Our next witness will be Dr. William Frie land, University of California at Santa Cruz. ^ Dr Isao Fujimoto is not able to be with us today. f Dr. Friedland, you may proceed with your statement. STATEMENT OF DR. WILLIAM EEIEDLAND, PROFESSOR OF COMM NITY STUDIES AND SOCIOLOGY, ADLAI E. STEVENSON COLLEG UNIVERSITY OF CALIFORNIA AT SANTA CRUZ, CALIF. Dr Friedland. Senator, Professor Fujimoto has asked that I c( vey his apologies for his absence. He has been mvo ved m a pro]( activity at Davis that makes it impossible for him to attend. I will enter my statement in the record with your permission. Senator Stevenson. It will be accepted and inserted followi ^^Dr.^FRffiD^^ND. I would like to summarize some points from i ^f"ntpment • • Mv involvement in the issue raised in your letter of mvitation participate in these hearings is focused on the question of whether not our Government policies and programs are meetmg and ser^ the needs of all the people in rural America. . r^ vt ■ My work has not been primarily in the State of California^ began in New York State when I was a member of the faculty Cornell University. I was at that time struck by the conditions migratory farmworkers in the State of New York m the area rounding Cornell University. "When I began my study I fou among other things, that Cornell University was itself an emplo of miarratorv farmworkers. , ,. , As I stud'ied migratory labor with my students, we discovered interesting fact: that the system of migratory l^bor in_New Y State, far from being effective and productive, was just the oppo- It was ineffective and unproductive; it was wastefully managed wastefullv organized. , ^- j : I pondered on the problem as to why this system continued i was so wasteful, especially since many farmers I had talked to themselves condemned the system of migratory labor, a system has been exposed many times in previous hearings of this subcom tee. As we spent more time studying this system, I came to thej elusion that one of the agencies of the U.S. Government is a prin institutional support of the migratory labor system m the i.ast is the Farm Labor Service of the U.S. Department of Labor, found that farmers depended upon this service, and this service turn, depended upon and supported the crew leader system m eas migratory labor. It is the crew leader system that is pnmarily sponsible for the unproductiveness and inefficiency as wel as tor exploitation which exists of migratory farmworkers m the Jiasi After working on this subject in the East for some time, i the opportunity to spend a year in California During this ye discovered that the Farm Labor Service, far from being a w admired and respected agency of government in the Statelet fornia, was considered rather negatively not only by farmvo but, indeed, by some growers. I again puzzled on that issue, ai 895 quite clear to me that the institutional networks of a ^ - i t That knowledge industry is an institution ot which I am a One of its major embodiments is the university. The know ledc dustry which' affects American agriculture was initiated n Morrill Act. This act gave rise to the land grant colleges and i quently to what I will call the agricultural research estabhshm( the U'S Department of Agriculture and the agricultural exper *»« 897 itioiis and agricultural extension services in the States. This insti- tional network serves three basic functions of producing knowl- ge, people who will use this knowledge, and the diffusion of this owledge. This network, in my opinion, has contributed, to a considerable uld be possible, and I w^ould like the opportunity, despite the fact at I am a sociologist not an agricultural economist, to conduct such study. Unless something happens in the next few years, there will little rural social structure left. Senator Stevenson. If that is an invitation, I think we might nvey that to the Bank of America. Referring for a moment to the crew leader system. Dr. Friedland, understand that in the Gomez case, a Federal court recently ruled :ainst a crew leader who transported and reduced farmworkers in e East. The case involved charges that the crew leader held workers involuntary servitude. There are black crew leaders, there are lite crew leaders. Are there also racial overtones to the crew leader stem? Dr. Friedland. Race is one of the key institutional supports of the Bw leader system in the East. I do not have exact data with me, it, if memory serves me correctly, well over 50 percent of the migra- ry \yorkers in the East are black. Race becomes a key factor in e migrant labor system because there has to be a gatekeeper, a oker, between the world of the white grower and the white agricul- ral community and the black agricultural workers. The black agri- Itural worker, on the Avhole, knows little about functioning in white Tthern society. All the experiences my students had in agricultural mps in the East demonstrated this fact over and over again. In 'ect, the crew is surviving in what can be defined as a hostile vironment. Basically, there is one person who knows how to func- m in that environment, the crew leader. This gives him his great •wer, not only over the crew members in their daily activity, but exploit those workers. Senator Stevenson. The suggestion has been made repeatedly in r hearings tliat the publicly supported land-grant colleges have bias toward agribusiness and against the small farmer. In fact, it's en estimated that one machine developed by one college will dis- ace 50,000 farmers in just one State in the"^ very near future, the ate of Xorth Carolina. The machine is the tobacco harvester. You said that 95 percent of the agricultural work of the University California goes into technology, much of it into machines. Maybe percent is put into the social needs of the people in rural America, hy is that? We were talking a little earlier about interlocking directorates. Is e same thing at work in land grant college policies? Are they pendent on agribusiness for much of their financial support, is that Lrt of it ? Are there interlocking directorates here, too, board mem- rs of the University of California or other colleges who also serve ^ agribusiness corporations, w^ho tend to influence the policies of e colleges ? 900 Dr. Friedland. There are some interloeks, Senator, but I rea don't regard myself as very expert on this question. It seems to : that the interlocking is, in a sense, more informal and less dire The interlock takes place, it seems to me, through the extensive n work of informal relations that exist between, let us say, facu members in the colleges of agriculture who conduct research on th questions, agricultural extension agents, and growers. In my experience— and this experience is limited— agricultu extension agents have contacts primarily with larger-scale rati than smaller-scale growers, and the problems of large-scale grow get built into the research network. I would point out that many developments that have taken pi: have been geared to deal with special problems existing m the lal force. In California, for example, the tomato harvester was develo] at the University of California at Davis ; that tomato harvester j sat around until 1964. In 1964 the percentage of machine harvest of tomatoes began to increase dramatically, such that, withm 3 o years, roughly 75 to 85 percent of the tomato harvest had b mechanized. ^ ^^ , n .i j What happened in the magic year 1964? 1964 marked the end the bracero program. Now, it is not simply the development of tomato harvester which was a major breakthrough m technology variety of other kinds of research was necessary. The geneticist, example, had to breed tomatoes with a tougher skm. Senator Stevenson. We politicians are getting scared to go and stump any more. If somebody throws a tomato at us, we mi get seriously injured. Dr. Friedland. If somebody throws one of those new tomat you might get badly injured. The geneticists have not only been working on skms but n revised the shape of the tomato. Instead of being round therei more subject to breaking up, they have become ovular, pear sha] The result is that they don't break up in the mechanical harve as much. ^ . , t These trends on the whole have benefited the large grower rai than the small one. The tomato harvester is an expensive piece equipment. I don't know the extent to which the Bank of Ame has extended lines of credit to small tomato growers, but my imp sion is that this particular phenomenon has had a significant eJ mainly towards large growers. , , • i • Let me make an additional point. Technological mnova changes social structure. I do not have details in this because I have not been able to com research, but I believe what happened in tomato harvesting in C fornia was to cause a shift from single males to housewives. Ho wives entered the labor force for a relatively short harvest sea That might be a good thing or a bad thing. I have no idea, does not know, what the results or the consequences were tor s( structure of this particular innovation. But it certainly would hance our knowledge of rural social structure if we did know. 901 Take, for example, an issue discussed earlier today, that family rms are now incorporating at an increasing rate. While I am not agricukural economist, I suspect that this is happening because u get better tax breaks as a result of Federal and State Policies. Whatever the cause may be, it is a fact that family farms are :orporatmg more and more. ^Yliat are the consequences on rural ual structure as more family farms incorporate? I haven't the guest idea, nor, to my knowledge, does anybody else. If we in- ^porate the family farm and pop becomes the chairman of the •ird and junior becomes the manager, when pop becomes economi- ly mactive but is still the chairman of the board, will this affect nily relations, will it affect the kinship group? I have no idea, t don't you think. Senator, if we are ever to understand rural ;ial structure, that we had better understand the consequences of [ policies on incorporation and on the rural family? It seems to that that is rather important. I know of no research going along )se lines and it seems to me that that is a relatively dangerous area get into. It seems to me that we would learn a great "deal about ^al social structure if, instead of the agricultural economists study- ^ the relative cost of efficiency of packing a crop with this piece of chmery as against that piece of machinery or this technique as imst that technique, those agricultural economists would spend le time doing a study of how the Bank of America extends its dit, where credit goes, how land is owned, and the effects of farm orporation. Werican rural sociologists know more about land reform in coun- ts outside of the United States than inside the United States. 5enator Ste\^nson. I think that is a primary question that we •uld be concerned with, the incorporation of the family farm and possible effects on the family unit and on rural society and trv look into it. '^ Ye are running out of time, so let me ask you one more question, u have talked about the impact of technology in rural America. II you tell us anything about the impact of agricultural technology the consumer, the nutritional value and the taste of vegetables ;eloped, like the tomato to be picked and perhaps not to be" eaten? )r. Friedlaxd. I am afraid I can answer that more as a practi- ler, not as an expert, although I do follow some of these matters, lat has happened, it seems to me, is that the quality of life in this pect has declined. In dealing with mass production, with large rregates where production units have to produce on fixed sched- 3, we do not get the efficiency of small-scale operation that Mr. 'ge Bulbuhan testified to earlier. We get large-scale production ts which produce crops that must ripen on the way to market ler than on the vine. It seems to me that this has produced a line m the quality of life. ly wife and I had an unusual experience the other day when we iived a Christmas package of pears. This was the first time we e eaten pears that we felt to be edible in roughly 3 or 4 years, m dealing with subjective factors here. Senator, and I am not 902 trying to put this forward as an objective study, but I honestly mm say I had not eaten a decent pear in years, this is the first time in long time. I puzzled about how, in effect, one group of growers could do thi and I don't know the answer to that question, but it is apparent! possible. Senator Stevenson. Wliat has happened to the farmers' market That used to be a great institution for the farmer and the housewif didn't it? Dr. Friedland. The farmers' market, at least, m my experience i California, has been converted to a flea market where you can pic up all kinds of junk. I have not seen a genuine farmers' market i a long time. What used to be called "truck farming*' when I gre up has practically disappeared. This is a small unit producing for local market where you get roughly a day or two between the harve and the consumption of the crop. Senator Stevenson. Thank you. Dr. Friedland. Your remarl have been most enlightening, helpful, and challenging. I apprecia the effort and thought you have put into these vital issues. (The prepared statement of Dr. Friedland follows:) 903 UTE; ENT TO THE SEWATE SUBCO; '^.ITTEE ON f IGRATOl^Y LABOR January 11, 1972 IVillian ;•. Friedland Professor of Community Studies and Sociology Adlai E. Stevenson College University of California ' Santa Cruz, California 95060 904 My interest in addressing this Subcommittee originates in a study that was conducted for over three years while I was a nember of tlie faculty of Cornell University. Tliis was a study of migratory labor in .'ew YorV; and New Jersey and its outcome convinced me, in terms of the purposes of these hcarincs, that •'our government's policies and programs'' were nojt^ meeting and serving the needs of all the people of rural America.'' If I can summarize the findings of this project, I would state them as follows: *Migratory agricultural labor in the northeast is inefficient and unproductive; it is wastefully managed and incredibly exploited. *T;ie basis for this system rests on the dependence that most growers Iiave developed on the Farm Labor Service, an agency of the United States Employment Service. *Tiie Farm Labor Service, concerned primarily with pro- viding adequate labor for growers, supports and sustains the crew leader system. *The crew leader system is the primary cause of inefficiency, lack of productivity, and exploitation. lly point is to indicate that an apency of the United States Government has become a major institutional support of a discredited system that even growers consider wasteful and unproductive, No one seems to know how to change this system; indeed, the prevailing view in the east was that the problem would be resolved by the system ultimately witherii away. The prevailing view was that the present system could not be changed through any conscious deliberate rational act. Tiiis attitude was taken scause most people involved believed it was impossible to change the federal and state bureau- cracies involved and that tiie institutional supports provided to these bureaucracies tiirough tiie political interests of organized farmers were too strong to be overcome. V/hile I did not study how research is conducted in agriculture it is impossible to study what we did without learning a great deal about organized research in agriculture, most of which is supported through public funds -- federal and state. Agricultural knowledge is .landled through three inter-linked structures: t.xe colleges of agriculture, the agricultural experiment stations, and agricultural extension. Over the past hundred years, this iias emerged as an effective and powerful set of institutions geared at developing new knowledge, training experts in that knowledge, and extending that knowledge to farmers--the traditional functions of research, teaching and service. '.'hile these institutions arc most impressive, I would contend that: • 905 Government policies and programs have contributed significantly to encourapinr rural -to -uruan mipration. '.''lile rural -urban migration is a worlc*- wide plienomenon and is due to a con)lox set of causes, povernrient policies in agriculture have exacerbated and encourafred these trends. Government policies and programs have not served all of the people of rural America. They certainly i\ave not served those that wished to remain in agriculture but ./lio have had to leave agriculture and the rural sector. Government policies and programs have served primarily privileged sectors within apri culture- -whetlier those sectors were rural or urban. Policy has neither strenptliened the rural community nor obtained a better distribution of income within agriculture. Our policies have resulted in the increase in size of pro- duction units, the requirements for larger capital investment, the creation of highly stratified and differentiated production units, and vertical inte- gration between production, packing, and distribution of agricultural products. la word, government policy l;as contributed to agglomeration I concentration, and tliereby contributed to a weakened lal social structure in the United States. tj us consider how government policies have produced these csequences . The bulk of research, current and past, is toted to studies of technology- -wliat might be called the ^rd" scientific approach. Relatively little has been int or is being spent on the so-called "'softer' side--the lan and social elements of agricultural and rural life and, fliaps even T.ore important, the consequences of technological rovation . rjthe University of California system, which I believe to be >ical of the agricultural research establishment in the rted States, in 1971, of a budget of over $21 million for lanized research, less than 5% will probably be devoted to tan-social questions; indeed, this percentage will probably esignificantly lower. i> issue of the imbalance between technological versus iium.in- cLal is raised because the agricultural research est.ablish- 'et--if I nay use a sociologically descriptive term--has ei institutionally disinterested in the consequr,nr.es of •iLr work for rural social structure. Through the develop- ■e^ of a iiost of biological, che'^ical and engineering '^Jurces, the agricultural research es t ab 1 isl:ment ►i.-ris I 906 -3- effectively served the privileged sectors of apri either irinorinp tlie less privilej^ed or, -.n nany c actually doing dar^age to these sectors. relative 'las been done, for exarcnle, to deal v/ita tlie low- sector of rural society. If we consider the supp in 1970 by the united States Department of Labor- relatively concerned about agricultural labor--to and the rural areas, ' ue find that only five proj KhiCii two supported my v;ork at Cornell) had polic intended for farn v;orkers as farm v;or^ers . T!;is c 13 projects devoted to various phases of settling out of agriculture. TiC major beneficiaries of 2 jects were reared toward groups other than farm w have not iiad an opportunity to study the situatio States Department of Agriculture but my opinion i have Deen much less concerned than the United Sta of Labor about rural farm workers . cult ases ly 1 inco ort -an ' fa ects y in: om.pa far 6 ot orke n in s t)i tes ure , ittL mc repo agen rm w (of p 1 i c red m wo iier rs . t'.ie at t Depa rted cy orke at io to r): e r pro- I •Jn i iiey rtpe It is supno knows Unite opini produ in th conte socie also probl it ha and e than ent s a pecul sedly CO far mor d States on, but ced . Ru e c o 1 1 e g nd, only ty and c develope ems ; but s focuse f f icienc on polic ectors w iar fac ncerned e about than i a produ ral soc es of a by its ommunit d consi u'liere d on is ies of y issue ithin a t that about land r nside . ct of h iology gricult learni y in Ayr. derable there h sues CO dif feri s of th gricult Uni rur efo Til ow has ure ng cri em as nee np e d ted n al so rm in is is knov;l occu ; it to ig ca . nhasi been rned teciin istri tates rural cial struct countries not accide edge and in pied a mar:' has been to no re the de Agricultura s on non-Un work in the with the re iques or in bution of i socio ure--p outsid ntal , format inal s lerate mise o 1 e c o n ited S Jnite 1 ati ve novat i ncome logy-- robably e of the in my ion gets tatus wit d, I woul f rural omics has tates d States costs ons rathe to differ, but wnere has researc]i--and implementation through agricultui extension--been with reSj.ect to rural social structure, and, in particular, with respect to how change has affected the bottom social levels within agriculture? Tlie answer to this question is epitomized in V/alter Gold- sciufiidt's now- classical study of Arvin and Jinuba conducted i" in the 1940 's, a study that showed that agricultural practice in situations of smaller landholding produced more satisfacto social structures than did large 1 andholdings . As a result of nis -jork, Professor Goldschmidt was harassed by tlie agri- cultural establishment and learned that it was far less traumatic to engage in more traditional anthropological re- search. (Anyone wis'ning to learn hov/ a scholar is traumat:izf" by powerful institutional interests would do well to consult Hi chard 5. Kirkendall, Social Science in tiie Central Valley of California, California llistorical Society ('uartcrly, Vol. XI, I FT (1-^^,4), pp. 195-218.) The lesson has no': been los 907 -4- 1 r;ost scholars and only a fc- have been sufficiently )tivated to enfage in a di f f i cul t--indecd , almost hopeless-- isk of seeking researcli fiinHs , let alone to confrontinp the )werful esta*jlishment in apriculture. >iave focused on the research because this is tiie area where aave had the greatest experience. It should be pointed out at this is but a small part of tlie way in which governmental >iicies liave encoura;;cd increase in size and agglomeration ither than in supporting and sustaining rural social structure ,e can point, for example, to the policies on taxation and ibsidization in agriculture wiicre the primary beneficiaries ive been the largest rro':ers. ''e seem, in agriculture, to • following a pattern already est ab lislied in industry of ;gloinerat ion and conglomerate corporate organization. e corp iken a oily f at a u timate ited S pears iture :ch inc ;tion, rncrete :licy p :r« but iraily s (termin sructur efects orati new t arn-- nited s tha tates tliat becau orpor no on kind roduc we k truct e if e? of po z at ion of Ame urn as a resu a process v.'hi States riepar t two- thirds are now inco incorporation se of tax adv ation will be e at present of problem o es a thrust t now little or ure . Should tlvey will str r should we c licy upon soc rican agricult It of t!;e inco ch has nov? tak tment of Agric of the farm co rporated famil is a better w ant ages . "hat for rural fam seems to kno'.' . f government p ov;ard incorpor nothing about not such polic engthen or wea ontinue to blu ial structure? ure appears to l^iave rporation of the en hold to tlie extent ulture publication rporations in the y businesses . It ay to survive in agri- the consequences of ily and kinsliip organi iere then is a olicy: government ation of the family the effects on rural ies be examined to ken rural family nder about with tlie T? consequences of our policies in agri a'3arent to this committee if it travels sies of the San Joaquin Valley. Mere o sj tiie differences between relatively s ariculture. On the east side of the va t'ns, human settlements, a rural societ Wire water •>. i 1 1 no\' be provided via the Pi'ject and communication facilitated th t|-re will be relatively little social d C'-porate liousing of large-scale grov;ers c led in the old days 'company towns"-- "c are concrete results of policies of Sported by federal and state funds, po f" large landov.ners primarily. culture can be visually the east and west ne can graphically mall- and large-scale Hey, you will see y. On the west side, California V.'ater rough Interstate 5, evelopment . The --what would have been are quite apparent . economic development licies that will bene- 908 Little research is necessary to kn«>w this ^nA we hardly require sophisticated batteries of research techniques to understand' how federal dollars ^ave benefited larne-scalc aj^riculture . If something is to be done in the near future, it will be necessary for action to be taken .'ith disnatcii to help sustain what is left of rural social organization. I would emphasize what I v/ould regard as the liopelessness of attempting to do this witiiin tlie establisiied apencies of the federal government, tiirough tl;e i.nited States Department of Agriculture and tlie network of agencies created to serve apriculture. '/hile the model of agricultural research-teach- inp-extension is a good one, tl.e existing structures are so linked to established large-scale agricultural interests, ti.at I see no hope of obtaining change through tliese agencies. If change is to take place, it will be necessary to use the model but to create new agencies with distinctive sources of funds. Otherwise, I fear t'.iat any efforts to produce change will produce what has existed in tlie pas t- -eitr.er ignoring tlie situation or occasional staging an insignificant effort that can be reported to the Congress or the public as representing attempts to produce change. 909 ienator Ste\^nson. We will recess the hearing now for 20 min- 3 for lunch, instead of half an hour, and we will reconvene at Wliereupon, the subcommittee recessed at 1 :10 p.m., to reconvene :30 p.m.) AFTERNOON SESSION enator Stevenson. The hearing of the subcommittee will come irder. ;, Mr. Jerry Fielder, the secretary of agriculture for the State of ifornia, m the hearing room? N'o response.) enator Stei^enson. If not, our first witnesses will be Mr. :\fike .losky, executive director of the Sierra Club; Mr. Keith Roberts ttorney for California Action ; and Gerald Meral, of the Environ- tal Defense Fund. hese gentlemen will form a panel to discuss the ecological and ronmental implications of present and projected landownership use patterns. ^ hank you, gentlemen, for joining us. 'ATEMENT OF DANIEL R. ROSENBERG, THE SIERRA CLUB OF CALIFORNIA \,'^f^^^^^^'}^Y' Chairman, my name is Daniel Rosenberg. McClosky could not be here today. I am here todav on behalf 3,000 members of the Sierra Club who reside in California We ome your committee to this State and thank vou for this oppor- 7 to appear before the committee. Mr. McClosky has been un- itably detained m Washington and cannot be here todav would hope that the committee will allow me the preroc?ative iverting slightly from the main thrust of your investigation the impact of land use, ownership patterns, and distribution arms and farmworkers, as I wish to discuss a matter of ^reat ^rn to the Sierra Club and many thousands of Californians, the tornia water plan, and some of the projects to be constructed operated under it, and some of the possible effects of that plan le tuture environment of California, and especially the future of svild rivers to the north of San Francisco, the California water plan an outline for the logical future tn ot this btate or for the environmental degradation of it? ^erra Club and many thousands of Californians believe that smentation of the remaining elements of the plan would result e degradation of much of the quality of life that makes Cali- ^a living, both rural and urban, uniquely worthwhile. This plan w seen to threaten the drowning of the few remaining wild and mnHn'p7i^^' f north coastal California, threaten the com- . n.o T 1^ systems of San Francisco Bay and the delta, to ;^^^ development of unneeded agricultural production on mar- lands and to provide the stimulation for expanded urban mm the already overcrowded San Francisco Bay and Los iles regions. Is this what we all want^^ > c a i.os 910 The California water plan is the overall plan under which development of California's water resources is expected to take i over the next several decades. It would supply the projected ^^ needs of the State primarily by draining the wild divers of north coast. These rivers, the Eel, the Trinity, the Klamath, Mad, and the Van Duzen, are the only remaining large, unta rivei^ in the State. The impoundment of their waters will des forever their value as free-flowing rivers of great beauty and re( tional value, flood existing agricultural lands, and destroy vah fish and wildlife resources. These magnificent river courses ar readv a maior scenic and recreational resource enjoyed by mil as they visit the redwood region. Their value for people escaping pressures of urban living can only increase m the future Yet intangible values have been ignored m planning the destructic these rivers under the plan because it is impossible to assign a nui cal value to them. Nevertheless, their values are real and thei struction must not be tolerated in an age that espouses conceri the environment. . . ^^.^^ ^ The delta of the Sacramento- San Joaquin Kivers is a water t of meandering channels with more than a thousand miles ot s line The San Francisco Bay-Delta estuarine system supports a and* diverse fish and wildlife population that is a major part ( recreational attraction. The anadromous striped bass, salmon shad are vitally dependent on water quality m the delta, partici to water quality parameters of dissolved oxygen, dissolved salts water temperature. So are the members of the food chains that port them Similarly, ducks in the Suisun March are depende delta water salinity because of the growth requirements of the i upon which they feed. . ^ -^f Today, it is widely recognized that diversions o^ /^ter int components of the plan, the Delta-Mendota Canal and the CaliJ Aquaduct, at the southern end of the delta, are presently ca serious problems in the delta, as, most certainly, are the disci of vast quantities of poorly treated municipal, industrial, and cultural waste waters. These water quality problems can or increased by further diversions resulting from the expansion « Central Valley project and the completion of the State water pi Pumping for these projects, and others contemplated under the fornia water plan, would eliminate essential flushing flows th the delta and the bay. In addition to water quality problen creased pumping will also have direct adverse effects on the fishery because of the creation of unnatural currents m the channels and the intake of eggs and larval fish at the pumpir tions. Thus, the rich and diverse life of the bay-delta estuarir tem could be seriously endangered. The resulting loss of the and San Francisco Bay as recreational resources would be enoi It is also recognized that, with proper operation and reles the delta, the proposed Peripheral Canal could mitigate so these problems, but, without proper releases, it could f>e a a to the delta. The Sierra Club lias stressed the necessity of obt enforceable guarantees that the canal will, m fact, be opera protect and enhance the delta environment. We have yet s( 911 liable guarantees of the releases needed to protect the delta, yh the canal continues to be advanced as the solution to the 's problems. ssible future implementation of the water plan would supply [• for expanded agriculture, primarily in the Central Valley e the State water project is expected to bring 600,000 acres of igricultural land mto production on the west side of the Valley, miction of the plan will also expand urban growth in the San Cisco and Los Angeles areas. These developments seem neither sary nor desirable considering many of the drawbacks past, un- led growth has brought to these areas in the form of severe ^stion, critical levels of air contamination and unsightly urban d. At the same time, we appear to be approaching a period of ised agricultural surpluses, both in California and nationwide. s State to supply more water for agriculture while the Federal rnment increases payments, out of our tax dollars, to buy up ised agricultural surpluses and to take land out of production here m the nation? And what is more needed in the Los Angeles .increased supplies of water to foster further population li^^ ^^n-^^®^ ^^PP^^ ^^ ^^^^^ ^^^- ^^^ ^00 frequently growth 5elt-tulhllmg prophesy m that planning and preparations to imodate growth often stimulate growth itself, an illustration, consider that the State water project will pro- ^-ater to irrigate new cotton fields in the southern San Joaquin F, particularly m Kern County. With project water can we cpect that only larger surpluses of cotton will result, with the ►ility that the livelihood of many of our poorer, rural southern rs will suffer at the marketplace? * proposed East Side Division of the Federal Central Valley ;t, another component of the California water plan, is a further )le of muddled thinking in California water planning. The t would take water needed to protect the environmental in- Y of the delta, plus additional water from the north coast . It would irrigate marginal farmlands on the east side of m Joaquin Valley and the foothills of the Sierra for the pro- n ol low- value crops, such as forage. Only the large subsidy h iiureau of Eeclamation projects makes the price of the water lough for such use. But nowhere in Bureau economics relating sts to benefits of project water is there a consideration of the 3Sts to our wild rivers. lew farmlands are brought under cultivation by project water >, will come the need for new towns for the farmworkers who iltivate, harvest, process and transport agricultural products, nat steps have been taken in the area of statewide land plan- ensure that our farmworkers will find suitable housing, ade- eaucational opportunities, and medical care facilities in newlv zed areas? *^ lern agricultural practice brings with it the dependence upon applicatiOTis of nitrate-based fertilizers and a host of persis- ^sticides. To the credit of the Bureau of Reclamation, Federal projects under the California water plan carry the require- ror the removal and treatment of agricultural drain waters 912 which are laced with high concentrations of nitrates. These sar trates, for which there is no requirement for removal under water projects, have and will increasingly cause the contamii of drinking water, new, major public health problems in the C And to the credit of our State Department of Agriculture, fornia is quickly and, we think, positively, requiring the redu in the use of DDT on our farmlands. We would only ask wh; same department, with the assistance of the Department of Health, has not begun a long-range investigation of the p( public health hazards which may result from the use ot do^ other pesticides which are rapidly building up m soi columns th our farmlands? It appears probable that such buildup may 1 saturation and eventual release of harmful bioactive chemica ground water and surface water systems, possibly creating a health hazard to both rural dwellers and downstream urban users. The California water plan was last revised 14 years ago. it sents mainly engineering thinking of the 1920's and 1930 s- crete and cast iron pipe" thinking. As a result, the plan nc fails to take into account modern concerns for the quality environment, but it also fails to take into account much of r water technology. If it is assumed that there will be continued j in California, there is no denying the supplies of water w found. We question, however, the simple idea that such si must come from tapping the wild rivers of California. Waste reclamation, systematic groundwater management, and the up of excess agricultural water supplies all offer economic a tive sources of water for municipal uses, and seawater de should be economical in the next decade. Such new sources o can now yield modest quantities of water at costs comparabJ the costs of transporting water 500 miles or more. But the p build more dams and aquaducts continue. Because of these deficiencies in the California water pli Sierra Club and others have called for a complete reexam of the Plan and its environmental impact, including a re-eva of its underlying assumptions and value judgments. We have in our attempts to achieve protection for many scenic and tional resources threatened by the implementation of the plf we believe that only such a reexamination can provide the knc leading to proper protection. If a reexamination is to be meaningful, it should consider native ways of completing various projects to be implementec the plan. It is for this reason that the Sierra Club has ad a temporary halt in the awarding of construction on plan ] for the duration of a reexamination. Particularly affected by moratorium would be the Peripheral Canal, the East Side iJ and the high dam at Dos Rios on the Eel River— projects have yet to receive congressional approval. I wouhl like to report to you the result of just two questioi ;i r)oll on the subject of California water which was recent ducted by the Commonwealth Club of San Francisco. Its m 913 .erally considered as a group of conservative business leaders, 'e asked : ' ;irst, should the next major development for the State ^Yater ject be deferred until plans are in effect to develop maximum lomic quantities of Avater from renovations or reclamation of te water or desalination of sea water? ^he result: 1,781 yes; and 752 no. 'he second question, with regard to water project development of thern coastal streams, should environmental factors take prece- ce over economic factors? he result: 1,813 yes; and 679 no. icreased awareness of environmental pollution has stimulated posals and secured passage in California of a $250-million-bond '5^T^''^ 1 construction of many new wastewater treatment Its. A\e feel however, that in arid lands found in this State, is would be better spent for the construction of facilities to re- n wastewater for reuse. The technologv for this is far enough meed that construction of facilities could start immediatelv ited, reclaimed wastewaters are too valuable a resource to discard' uch ot the proposed dam construction in the California water is to assure adequate supplies of water in dry years. An attrac- alternative to this is a proposal to store surplus and reclaimed T m ground water tables during years of excess runoff, and to his supply m dry years. This scheme would eliminate the al- 1 need lor such dams as the Dos Eios Dam. lere can be no doubt that a reexamination of the entire California r plan, and the expected redirecting of engineering efforts, will all of us some money. So does any worthwhile measure designed rotect the environment, and the cost of not conducting su?h a y may be much greater in the long mn. The idea tliat a qualitv ^onment can be maintained for nothing is a mvth that should been abandoned long ago. Tlie Sierra Club believes the reexami- n ot the California water plan to be so urgent that we must lUing to pay an immediate price. Not to do so mav cost us the ot our quality of life in California, ie California water plan is founded on a narrow concept of and water use and is unresponsive to the new goals and values ^y is last adopting to insure its own phvsical and emotional val. Implementation of the plan will irretrievably destrov the in ng natiiral north coast water courses, therein the integrity e bay-delta estaurine systems, force unwise and permanent pat- ot use^on the land, needlessly stimulate the growth of alreadv .rlp'f^'''^ ''^^^''' and foreclose the right of future generations ercise their own value judgments. lator Stevexson. Thank you, Mr. Rosenberg. he' nJnn '^^ IT ^ntir^statement at this point in the record, he prepared statement of Mr. Eosenberg follows-) 133 O - 72 - pt. 3A - 17 914 statement: of the Sierra Club before the MIGRATORY LABOR COI^ITTEE of the UNITED STATES SENATE COMMITTEE ON LABOR AND PUBLIC WELFARE Presented By Daniel R. Rosenberg January 11, 1972 Mr. Chairman and members of the Committee, my name is Daniel R Rosenberg. I am here today on behalf of the 80,000 members of the Sierra Club who reside in California. We welcome your committee to this state ar thank you for this opportunity to appear before the Committee. I would he that the Committee will allow me the perogative of diverting slightly fror the main thrust of your investigation into the impact of land use, owner- ship patterns, and distribution on farmers and farmworkers, as I wish to < cuss a matter of great concern to the Sierra Club and many thousands of O fornians - the California Water Plan and some of the projects to be cons ed and operated under it - and some of the possible effects of that Plan the future environment of California and especially the future of our wil rivers to the north of San Francisco. Is the California Water Plan an outline for the logical futur growth of this state or for the environmental degradation of it? The Sie Club and many thousands of Californians believe that imple..entation of tV maining elements of the Plan would result in the degradation of much of t quality of life that makes California living, both rural and urban, uniqt worth while. This Plan is now seen to threaten the drowning of the few i ing wild and scenic river valleys of north coastal California, threaten complex marine life systems of San Francisco Bay and the Delta, to hurry development of unneeded agricultural production on marginal lands, and t vide the stimulation for expanded urban growth in the already overcrowded Francisco Bay and Los Angeles regions. Is this what we all want? 91, -2- The California Water Plan is the overall plan under which the )pment of California's water resources is expected to take place over ;xt several decades. It would supply the projected water needs of the primarily by draining the wild rivers of our North Coast. These ;, the Eel, the Trinity, the Klamath, the Mad, and the Van Duzen, are ly remaining large untamed rivers in the state. The impoundment of waters will destroy forever their value as free-flowing rivers of great and recreational value, flood existing agricultural lands, and destroy le fish and wildlife resources. These magnificent river courses are y a major scenic and recreational resource enjoyed by millions as they the Redwood Region. Their value for people escaping the pressures of living can only increase in the future. Yet, these intangible values aen ignored in planning the destruction of these rivers under the Plan 2 it is impossible to assign a numerical value to them. Nevertheless, /alues are real and their destruction must not be tolerated in an age spouses concern for the environment. The Delta of the Sacramento-San Joaquin Rivers is a water world idering channels with more than a thousand miles of shore line. The mcisco Bay-Delta estuarine system supports a rich and diverse fish and e population that is a major part of its recreational attraction. The lous striped bass, salmon, and shad are vitally dependent on water ' in the Delta, particularly to water quality parameters of dissolved dissolved salts and water temperature. So are the members of the food that support them. Similarly, ducks in the Suisun Marsh are dependent a water salinity because of the growth requirements of the plants upon hey feed. Today, it is widely recognized that diversions of water into two nts of the Plan, the Delta-Mendota Canal and the California Aquaduct, at 916 the southern end of the Delta, are presently causing serious problems in t Delta, as, most certainly, are the discharges of vast quantities of poorly treated municipal, industrial and agricultural waste waters. These water quality problems can only be increased by further diversions resulting froi the expansion of the Central Valley Project and the completion of the Stat. Water Project. Pumping for these projects, and others contemplated under California Water Plan, would eliminate essential flushing flows through th Delta and the Bay. In addition to water quality problems, increased pumpi will also have direct adverse effects on the Delta fishery because of the creation of unnatural currents in the Delta channels and the intake of egg and larval fish at the pumping stations. Thus, the rich and diverse life the Bay-Delta estuarine system could be seriously endangered. The result! loss of the Delta and San Francisco Bay as recreational resources would U enormous . It is also recognized that with proper operation and releases the Delta, the proposed Peripheral Canal could mitigate some of these prol but without proper releases, it could be a disaster to the Delta. The Si. Club has stressed the necessity of obtaining enforcable guarantees that tl Canal will, in fact, be operated to protect and enhance the Delta environ We have yet seen no believable guarantees of the releases needed to prote Delta, though the Canal continues to be advanced as the solution to the D problems. Possible future implementation of the Water Plan would suppl water for expanded agriculture, primarily in the Central Valley where the Water Project is expected to bring 600,000 acres of new agricultural land production on the west side of the Valley. Completetion of the Plan will expand urban growth in the San Francisco and Los Angeles areas. These d. ments seem neither necessary nor desirable considering many of the drawbc past, unplanned growth has brought to these areas in the form of severe c tion, critical levels of air contamination and unsightly urban sprawl, i >im 917 aw tijie, we appear to be approaching a period of increased agricultural .ses, both in California and nationwide. Is this state to supply more for agriculture while the federal govermnent increases pa>Tiients, cut of IX dollars, to buy up increased agricultural surpluses and to take land : production elsewhere in the nation? And what is more needed in the Los iS Basin, increased supplies of water to foster further population growth setter supply of clean air? All too frequently growth is a self-fulfilling sj in that planning and preparations to accommodate growth often stir.ulate itself. As an illustration, consider that the State Water Project will pro- ater to irrigate new cotton fields in the southern San Joaquin Valley, ularly in Kern County. With Project water can we not expect that only surpluses of cotton will result with the possibility that the livelihood y of cur pocrer, rural Southern farmers will suffer at the market place? The proposed East Side Division of the federal Central Valley Pro- mother component of the California Water Plan, is a further example of i thinking in California water planning. The project would take water to protect the environmental integrity of the Delta, plus additional ■rorn the north coast rivers. It would irrigate marginal farm lands on :t side of the San Joaquin Valley and the foothills of the Sierra for the :ion of low value crops such as forage. Only the large subsidy in such of Reclamation projects makes the price of the water low enough for such tut nowhere in Bureau economics relating the costs to benefits of project s there a consideration of the true costs to our wild rivers. As new farm lands are brought under cultivation by project water so 1 come the need for new to-.^s for the farm workers who will cultivate, . process and transport agricultural products. But what steps have been n the area of state-wide land planning to insure that our farmworkers will 018 find suitable housing, adequate educational opportunities and medical care facilities in newly urbanized areas? Modern agricultural practice brings with it the dependence upor broad applications of nitrate-based fertilizers and a host of persistent pesticides. To the credit of the Bureau of Reclamation, federal water pro- jects under the California Water Plan carry the requirement for the remova! and treatment of agricultural drain waters which are laced with high conce, trations of nitrates. These same nitrates for which there is no requireme for removal under State Water projects have and will increasingly cause th contamination of drinking water - new, major public health problems in th Central Valley. And to the credit of our State Department of Agriculture, Cali fornia is quickly and, we think, positively, requiring the reductions in t use of DDT on our farmlands. We would only ask why that same department, with the assistance of the Department of Public Health, has not begun a Ic range investigation of the possible public health hazards which may resuK from the use of dozens of other pesticides which are rapidly building up ; soil columns through our farmlands? It appears probable that such buildu may lead to saturation and eventual release of harmful bioactive chemical into ground water and surface water systems, possibly creating another he hazard to both rural dwellers and downstrean urban water users. The California Water Plan was last revised 14 years ago. It represents mainly engineering thinking of the 1920's and 1930's -- "concr and cast iron pipe" thinking. As a result, the Plan not only fails to ta into account modern concerns for the quality of our environment, but it z fails to take into account much of modern water technology. If it is asf that there: will be continued growth in California there is no denying th( supplies of water must be found. We question, however, the simple idea 1 919 -6- supplies must come from tapping the rivers of California. Waste-water [nation, systematic ground-water management, and the buying up of excess .Itural water supplies all offer economic alternative sources of water inicipal uses, and sea-water desalting should be economical in the next 5. Such new sources of water can now yield modest quantities of water ;ts comparable with the costs of transporting water 500 miles or more, le plans to build more dams and aquaducts continue. Because of these deficiencies in the California water Plan, the L Club and others have called for a complete re-examination of the Plan ;s environmental impact, including a re-evaluation of its underlying tions and value judgments. We have failed in our attempts to achieve tion for many scenic and recreational resources threatened by the im- tation of the Plan, and we believe that only such a re-examination can e the knowledge leading to proper protection. If a re-examination is to be meaningful, it should consider alter- ways of completing various projects to be implemented under the Plan, cor this reason that the Sierra Club has advocated a temporary halt in irding of construction on Plan projects for the duration of a re-exam- 1. Particularly affected by such a moratorium would be the Peripheral the East Side Division and the high dam at Dos Rios on the Eel River — :s wb.-ch have yet to receive Congressional approval. Increased awareness of environmental pollution has stimulated lis and secured passage in California of a $250 million bond package ■■ construction of many new waste water treatment plants. We feel, , that in arid lands found in this state, funds would be better spent construction of facilities to reclaim waste water for reuse, The ogy for this is far enough advanced that construction of facilities tart immediately. Treated, reclaimed, waste waters are too valuable a e to discard. 920 -1- 1 would like to report to you the results of just two questions fro. a poll on the subject of California water which was recently conducted by the Co«nwealth Club of San Francisco. Its .e.bers, generally consider- ed as a group of conservative business leaders, were asked: (1) Should the next major development for the State Water Project be deferred until plans are in effect to develop n^aximum economic quantities of water from renovations (reclamation) of waste water or desalination of sea water? The result: 1,781 yes and 752 no. (2) With regard to water project development of northern coastal streams, should environmental factors take pre- cedence over economic factors? The result: 1,813 yes and 679 no. Much of the proposed dam construction in the California Water Plan is to assure adequate supplies of water in dry years. An attractive alternative to this is a proposal to store surplus and reclaimed water in ground water tables during years of excess runoff, and to tap this supply dry years. This scheme would eliminate the alleged need for such dams as Dos Rios dam. There can be no doubt that a re-examination of the entire Call fornia Water Plan, and the expected redirecting of engineering efforts wil cost all of us some money. So does any worthwhile measure designed to pre tect the environment, and the cost of not conducting such a study may be r greater in the long run. The idea that a quality environment can be main- tained for nothing is a myth that should have been abandoned long ago. Tl Sierra Club believes the re-examination of the California Water Plan to b. so urgent that we must be willing to pay an .a.mnediate price. Not to do s^ may cost us the price of quality of life in California. mis 921 The California Water Plan is founded on a narrow concept of and water use and is unresponsive to the new goals and values society St adopting to insure its own physical and emotional survival. Im- atation of the Plan will irretrievably destroy the remaining natural Coast water courses, therein the integrity of the Bay-Delta estuarine o-s, force unwise and permanent patterns of use on the land, needlessly .ate the growth of already crowded urban centers, and foreclose the of future generations to exercise their own value judgments. 922 Senator Stevenson. Mr. Roberts, would you like to proceed. STATEMENT OF KEITH ROBERTS, ATTORNEY, CALIFORNIA ACTION, SAN FRANCISCO, CALIF. ^ Mr. Roberts. Thank you, Senator Stevenson. I am not going to read my prepared text because I don t like read what I have written. . • ,i Senator Stevenson. We will read it. It will be entered m the recc following your testimony. By all means, summarize if you prefer Mr* R0BEP.TS. I would like to start with a kind of statement t] may be somewhat repetitious, but, having come relatively recen from the East, I think it was important to me to understand ^ water was such an important thing to everybody out here. In the East it rains, you know, all too often, and it is no probL But here it only rains up in the mountains and where the pec are, it doesn't usually rain. Without water, land is generally not v valuable. You can't farm it and people can't live and you can t bi factories there. So in California and the Western United States, v of the Rockies, you have to build systems to carry the ^vater ti where it flows to the land where you want it, and which land , choose to bring it to becomes a land which appreciates m va ue. other words, water is very much the method by which the land vf is allocated in the American West. It is a source of wealth tor m people and, therefore, is something that is highly controversial po pn 1 1"\7 I came across water when I participated in the Nader Task F( study of land and power in California. I was assigned to study wi development as a subject, that is, the construction of these syst for delivering water and why they were constructed. 1 tound talking about that study, that I should make it very clear at beo-inning what I think is good and what I think is bad, what criteria for judgment are, in hope that you can agree with them In the first place, since water is primarily an economic common in the West now, the purpose of water development is economi think that you have to have an economic justification tor builclii water project. It can be argued that even a project^ which wont for itself would have other benefits, social benefits and so oi haven't found that to be true on the project that I studied, but conceivable. But, even if such benefits occur, I would suggest more consistent with the idea of legislative control, the ider democracy, to confer those benefits directly rather than through indirect mechanism of a project to be built basically for econ( reasons. . • n • 4-fia A second criterion, even if a project is economically justine would argue that you have to look at who gets the benefits and pays the cost. p:conomic justification is a very gross way ot loo at something. If you simply add up all the benefits, regardles who gets them, and all the costs, regardless of who pays them, ai the benefits are greater, that is economic justification. I think n l)enefits are accruing mainly to a small group of people who 923 iady wealthy, and the costs are being borne by the mass of not- vealthy people, then there is serious question about the value of I a project. vaiuc ui .airVmrbad!"' ' '^'*"" ^'^''^' distributes benefits and costs litfif'lfonl?v'T?'.™°'' importantly among my criteria, is the hty ot honesty That wasn t a criterion when I began this study, , as I got into tins and looked at justification and what was hap- mg, I came to reahze more and more how important that simply al virtue is for very practical reasons ' ' he practical reason is that in considering water projects, other or public works projects, and, indeed, most environmental 'ro- ils which are based on scientific reasoning, most legislatoi-s. most ,ens. dont have the faintest idea or the faintest possibiltv of jrstanding for themselves the implications ' OT example. If we have as a criterion the economic justification water project, I submit it is impossible for you, even if you ^rstand the economics, with your busy schedule to fi^nire out ther a given project is going to be justifiable or not. You have to on your experts to tell you that, and the same is true if you are mg on legisation concerning DDT. You really rely on sc-ienti^[s II you whether DDT has harmful effects or not. therefore he eiitary integrity with which the professionals come before you es fy, IS very important. Because, if there is a public decision 5 by legislators and by the general public at large, if these'-nivs be trusted, if you doirt know whether it is tn,; or not w^ at are saymg, I think that the possibility of rational decision- ng m our society is almost totally destroyed night add that I donx think the adversary -sysiem helps, because all you get is a bunch of scientists screaming at each o her and ib.hy to sort that out is like our ability "to jud■ ^" ■""'^^ -^-^i" L ^^T ' '^"" T-"'S Division, which was tlie most recently r cte,l w.ater projects in the State. I think I discovered three thmgs which I will elaborate briefly on. I hope fh\TVT^' ^■^P"^^"'.'^ "ncl disruptive these projects are. For pie, the State waer project cost $8.9 billion. The San Luis proj- 5^4 bi Hon If \-"/'r'- "'"^ P'''""P"1' ^"'1 '-•«sf something ;l.J4 bilhon. The distribution system for this water bein? con" eni f^olfr ' -"if "'''■' ^'''^ -^Metropolitan Water District in em California, will cost several billion additional dollars just e.t. t,o these are serious projects, and there is a lot of money ondly, these projects have the effect of drastically and radically 'f o "T,,r^'!'\"\|'"-^ ^"'\'- Redistribution of \yealth i.sual l- •ound Til ^';\ "? poor but unfortunately, this is the other ivbe Jf T ' "'"*■'''' ^'T'' ^y °"'' e«lful«tions will benefit- 'y benefit I mean give substantially more water or water at 924 a substantially lower price— approximately a thousand people in tl ^ Let me elaborate on that just briefly. Kern County, will rem- half of all of the water between now and I'J'JO, .U percent ot the lai in Kern County which is eligible to receive State water, is owned Ij four ranches, and a handful of oil companies. An additional ..8 pq cent is owned by the Federal Government, whicli has about o perce. of it and owners of between one and live tliousand acres. Ihe remai, ing land in Kern County eligible to receive the slate water is owa largely by cities and counties and used tor roads and tilings like ths *° Almost "In' of the rest of the water will go to southern Calif om and in southern California the water will not be used or will i benefit ordinary residents or citizens. I would explain a ittle lal how that comes to be, but the beneficiaries of water in southern Cb, fornia will be, again, a relative handful of companies and mdividua, OK, those are the beneficiaries, but who pays i The people w| pay'are, by and large, State taxpayers, those people who pay ta? in the State of California, and people who pay property taxes , the water agencies which are buying water. Their taxes are not bas on how much they used, their taxes are based on other criteria s^ as the value of their land, and, in the very nature of things, therefQ the people who pay are not the people who beneht, necessarily, c tainly not in direct proportion to the benefit. - It was impossible for us in the time of our study to work t, out precisely, but it seemed quite obvious, given the nature of , distribution of benefits and the nature of the tax burden, that; people who pay will not be, by and large, beneficiaries of he pro]^ The San Luis project is very similar, although the people who p the taxpayers of the United States, are a little more widely tributed However, the San Luis project, ^^hi'^^ '^ ^, f til „| construction work, will go exclusively to the benefit, right now, of < West Lands Water District m Fresno County. The West i>a^ Water District has about 550,000 acres; 200,000 of these acres owned by 18 farmers. Incidentally, these 18 farmers received c $71/2 million in 1969 in Federal crop subsidy payments, so tliey not amateurs of this game. . , , -r j:^„. The rest of the beneficiaries in San Luis, approximately ob Uvn own most of the rest of the land-I am sorry, 58-so you have landowners receiving almost all of the water from a $480 mil ■^ Th^effecTof this kind of distribution on individuals is substan ' In the first place, it's been calculated by a professor of the Univei of California at Davis, a scientist, that west lands and the State ^^ proiect works will bring enormous amounts of new acreage production. The effect of this will be to drive the price down n i crops which are being overproduced. These are, by and laige^ high-priced crops such as grapes almonds, and ^yf'nits, a»«;„^^ of that nature. The obvious simple result will be that small f a 1^ who have to make their living from selling these crops, are goin go out of business because they can't tolerate losses for several > ' in a row. So (hat is one very serious effect. 925 L second effect is the environmental costs of these proiects, which . Rosenberg for the Sierra Club outlined in some lenAh ^^^uld like to point out simply one factor which may be over- ked. Once you build a pipeline like the State water proiect it omes economically cheaper perhaps to add to that project than •esort to other methods of developing water, such as desalinization 3refore once you have the basic thing, you have more or less ^ed the State economically into a juggernaut, and ongoinir opera- i will consume the northern rivers and probably end up taking Df the water up to Amchitka, if it is still there that is the basic theme of the expense and disruptiveness of ;e projects. ^ econdly, something that intrigues me as a lawyer and a reader letective novels, is how well hidden the distribution of cost and 3hts of this project are, from the general public. There is a point .e made here a rather serious point, to find where the cost and ^tits are really going, you have to look at the details of the law you have to look at the fine lines in the accounting and finance' ive found it very difficult to present that type of material in any aon which will prevent people's eyes from glazing over and •es from coming up quickly; yet, that is where it happens, that .actly where these things go astray. Of course people wlio can rd to hire lawyers and accountants who won't fall asleep are the )le who can use these details to tlieir own advantacre will just give you a few examples, liowever, beca'iise they are rst of all, the State has declared-I will read it. This comes 1 a document by the Department of Water Resources, Bulletin )Pr 7o/«'t^ ^^'/^^^'' ^r^'^^' ^'P^^^''^ published in Sep- er 1968. This is typical, and there are lots of others, the state- , tliat capital cost of the State water project will exceed ^2,800 x)n. 1 rojeot customers will repay about 90 percent of the total xt cost. Ihat makes it sound verv much like water users will epaying 90 percent of the cost, which wouldn't be bad. But ct customers are not water users, you see; project customers are ater agencies, and these water agencies repay that monev onlv irtue of assessing property taxes on all of the residents of their whether they use water or not. So the statement is incrediblv 'admg and it turns out that, until 1 came along and had several hs of free time to spend fully looking into the water project, ot the critics of the project had caught that little piece of decep- because it is perfectly true that project customers will repay ot It, but the customers are not the water users and that is tlie implication of the sentence is. lT!^^'TJ'' "'"^"^^ ''.'.^^ ^y ^^'^ department in response to the Tn.lll ^'^^^P'^^^if*^ ''^'^^ P^y f«r tl^e water. They say, oh, no, ,ct customers will repay 90 percent of the cost, and neglect to IS that the project customers are our taxpayers IrWf . Pi'oblem is whether State taxpayers pay anything, department has consistently denied State taxpayers will pay y and, directly, they don't. It would be impossible to find out ^^rate taxpayers pay money unless we look at where all the j:i 926 moiipv is comins from. If you make a financial statement of t\ proTect, you find^that about $1.1 billion will be loaned to the proje, Cthe State. Of course the department will tell you very quick! it^isbein- repaid. What they don't tell you is that it isnt teir repaid instantly, it is being repaid over a 65-year period dunr Xch time that $1.1 billionT if invested in bonds at present intere rates would earn about $2 billion of interest. Where is that $2 billion going? You have to look very carefu You have to look at the repayment priorities which are listed on t bottom of indentures and in other legal documents in the Departme of Water Kesources and, when you get finished reading it and go. half blind, what you find out is that the interest gets repaid to t department, by the project customers; that water agencies do rep ?he int^rest'to^the department, but the department. never pays it ba to the State. The department keeps it, puts it m a special vval account and then uses it for additions and changes and correct.c to the California State water resources program. I might add, by the way, that when I make this en icism, J GianTlf the director of the water resources, and Mr. Ra ph Bro, of We Lands Water District, and others, reply very q^ck y, oh the proiect customers repay that interest, and then hey stop Y see, they don't go on to sa'y they only repay it to the departme they don't repay it to the State, which is the key point. One final example about this. One thing I couldn t figure out fo long time is why the Central Valley large landowners ^vanted S wati, because the State water which is delivered by contract . end up costing them about $35 an acre foot, which, even for tv L too much mVey. So I nosed around .^/it, and, m an old b^^^^^ Cary McWilliaras about southern California I got the clue. clue^is something called surplus water. It turns out 1 at the S water project will deliver more water than what it ha| c^on "-ac to deliver.' The contractual amount^ is 4.2 million acre feet, but canals are big enough to deliver 8 million a « do is meet their contractual obligation and "ot one diop more any other year than this driest year they would be able o del more water, and that is what they call surplus water, that e.x "^They are going to deliver that water mainly to Kern County they are going to charge for that water merely the cost ot t pornng \t: Th"it water pays none of the cost of construct on, !,f the^cost of operating the project none of the cost^of mam^'^ or repair. As a result, the water will cost '^»,^^e'^»£« f ^^'^"^^^^^ acre foot in Kern County. The figure may have been revised I looked at it last. 927 rn County is slated by contract to receive 25 percent of the ct water. I told you earlier that it will receive half of the ct water; the rest of it is coming through the surplus water. ' 'l^PPf"s. then, ,s that the average cost of water to Kern County 'fn «?i «T^' "'' '•'? '^°''^ ^^^ "'^ t'^^ books, and brings it to $14 or $15 an acre foot, which is just about what they can 7hll H " Kr- ?° ^^""^ Y' ^ P'^"y "'^iq"'' little device. I t^A T ^^ ^t^n- ^f^r"'' ''^•^" *""y informed about surplus , and I don't think the people of California know they are m Count °°"^^™°''°" "^"^t t° clel'ver a lot of surplus water > third major theme is tliis point about honesty. I have already ,ted a couple of instances where the State Department of Water rces has not been fully candid with the public ,mk m my prepared statement I have a few more cases. What Id Ike to submit for the record is a copy of the Nader report g with water development in California, in which there will n turther examples. me briefly mention a couple of points. As I said, the dishonesty dishonesty by politicians. In the first place, some people mi,16;>. It a sum statement were made for the water project, the cash price would $2 8 billion and the finance could be about $(> billion i think I have made the basic points I wanted to make, and 1 tha you for the opportunity of testifying. (The prepared statement of Mr. Roberts along with other matei follows:) 929 TESTIMONY OF KEITH ROBERTS BEFORE THE SENAT^ MIGRATORY LABOR SUBCOMMITTEE, TUESDAY, JAN. Il,''l972 Greetings, My name is Keith Roberts; I am a lawyer practicing in tu, db Second, a study of recent water projects in California reveals rns of conduct which anyone making decisions about oublic works I Vn I'tl^. ^^ ^°"' '^°^^^ understand. In my presentation todly, importance?'' ^"'^"'^ '^"'^ °^ ^^^ pitfalls involved, and to eiplain In making Judgments about the behavior of others, as we do in the "Inroad" ^%n"'?°j:^^"^^^^^ ^^;y ^^^^^ ^^°^^ ^hat one means by in^^oJ ? .% ? V ""! 5®^^" "^y discussion of California water by Lng some criteria for Judgment. "^ genomic Justification rhe basic function of water development is to confer economic valup- ces land productive, or pemits its development. We have Tong ^ r^! J r ''T'' '^l^^'' development was needed to permit subsistence Great American Desert, and thus could be regarded as necessarv fe?%conom?"T'' ""AT'll' "'"^^ ^^^ ^^^^ °^ -^^-' development's hese Senpr^^. rf ^^^^?^ ^"^^^^^ "^^"^^^^ requirement should be Justification °''^''^^^^ ^^^ ^^^^^^^ T^is is a requirement of eco- ^rguably some projects may have such outstanding social, political S most'lnlian!;:? '^"' '^"^ fl?"^'^ ^" ^^^^^ ^^^P^^^ ^ "^^ ^'°nomlc t-f^/ f^u^^.^^^"°^^' however, it is clearer, simpler, and more onal bin^r.'f Principle of legislative control to cinfer sCch ^aS?ca?ireco'nomL^^^^o1ect!''^^ ''^" ^^^°^^^ ^^^ ^"^^^^^^^ ^^^-^ 930 - 2 - Conversely, when a project with bad social or environmental ef: lacks even a crude economic Justification, it clearly should not be built. This is true of the California projects I studied. 2. Fair Distribution of Costs and Benefits An economically Justified project may still be undesirable if has a greater impact by distributing costs and benefits unfairly. Whenever the costs fall on people who don't receive the benefits, s a prolect redistributes wealth. If such an effect is desirable, th legislature should accomplish it directly and consciously, rather t through indirect and subtle mechanisms which neither it nor the pub may understand. I consider redistribution particularly unfair when the benefit KO to the rich, and the costs go to everyone else, IVhile the reaso for such a view are complex, few people except possibly Governor Re and his pals seem to disagree. Nevertheless, the single most impor achievement of the projects I studied is an enormous reallocation c wealth from ordinary taxpayers to wealthy users of large amounts of 3. Integrity of Experts Honesty is a moral virtue, but in areas requiring technical e> tise, like water development, it is also a practical necessity. De ions about large public works like water projects, or police measui like pollution control laws, depend on expert evaluation. The ordJ legislator or citizen cannot possibly know whether a project v/ill I economically beneficial or not. He depends on economists and engir to make the calculations which will tell him. Likewise, the avera^ citizen has no idea whether DDT is harmful or not; he relies on sc: tists. And if the experts prove dishonest, he cannot sort out the for himself. Even an adversary procedure only puts the ordinary p« in the position, as it were, of trying to decide a debate conductec entirely in Ugaritic. I will return to this problem later, for I < der it one of the greatest obstacles to rational decision-making. Water development in California is so extensive that I limitej my focus to four specific projects. I chose the California State 1 Project because of its size and controversial nature; the San Luis of the Central Valley Project as the most recent Federal project ii State; the Metropolitan Water District of Southern California as t] important "local" water agency; and the Kern County Water Agency ai most important agricultural purchaser. Since your interests are r I won't go into the MWD unless you ask me to. The California State Water Project This project is the first step of the massive State Water Pla: transporting most of the water in California's northern rivers to ■ of the State which lie south of San Francisco Bay. The State Wate Ject is both a physical system and the contractual obligations dep on it. These contracts require the State's Department of Water Re to deliver a maximum of 4.2 million acre feet per year to 32 local agencies, which In turn distribute it to users or, in some cases. 'f*s^ 931 - 3 .ler water agencies. 4.2 maf, by the way, equals thirteen trillion, lundred billion gallons. ;conomlc Justification There have been several economic evaluations of this project. The 'tment of Water Resources supplied the basic Justification In Its :tln 78 (1958). Owing In part to questions raised about that ■tin. It hired the Charles T. Main Company In i960 to review the ct's economic feasibility. In addition, at least two thorough, lendent economic reviews have been published. One, by a team from became the basis for a vote of opposition to the Project by the rn Sconomics Association, the professional association for western mists. The other, by Professors Joe Bain, Richard Caves, and Margolis, Northern California's V/ater Industry (196O), proved ly critical, and concluded that the Project, Instead of a 2:1 It-cost ratio, would barely return 50/ on the dollar. When I raised the criticisms to Harvey Banks, who directed the DWR e time Bulletin 78 v/as written, he snorted and said, "You tell me benefit-cost ratio you want, and I'll get it for you, without ning my conscience either". He meant that benefit-cost evaluation Is many subjective Judgments, about which men of integrity can ree. Nevertheless, professional Integrity does impose limits, ulte clearly^ Bulletin 78 — and, in another way, the Charles T. report -- transgressed these limits. As Bain, Caves and Margolis Some rather bizarre expedients were employed to arrive at esti- of benefits high enough to 'Justify' the project on economic ds" — op.cit., pp. 720-21. The most Important was use of a discount rate* approximately 1 1/2^ than the lowest conceivably Justifiable rate at the time -- a prac- which Inflated benefits by over a billion dollars. Various other ices beyond the pale of professional integrity are discussed in dix B. In addition, of course. Bulletin 78 resolved every point gitlmate professional dispute in favor of the project. Considering Tiportance of these factors, perhaps the most surprising aspect of tin 78 was its resort to actual dishonesty. The Charles T. Main report was deceptive in another way. Main was to evaluate the economic Justification for the Project. The body s report did so quite well, and in unquotable Jargon concluded that roject was a disaster. In the clearly written Introduction and ry, however. Main postualated on unheard of definition of economic bility, totally inconsistent with the study directions. (It defined nlc feasibility as a question of ability to pay. As one economist , by this definition it would be "feasible" for the State to dump iion silver dollars in San Francisco Bay, If It could raise the . ; using this definition. Main pronounced the Project feasible in discount rate Is used to discount future benefits to present Je The lower the rate, the higher will be the present value future benefits. 932 4 - language widely quoted thereafter by Project supporters Main's per- formance, unfortunately, follows a common pattern for the Project's independent consultants - there were six different teams over the ye Thev first state, in straightforward, quotable language, what the emi wants to hear; and then qualify the statement to closer conformity w; the technical truth in the jargonized body of the report. I also examined directly the claim that Southern California wou! need State water by 1990. Bulletin 78 reached this conclusion, only ignoring its own caluclations about the amount of v;aste water that w be reclaimed; by assuming that the far higher cost of State water woi not affect use; and by overlooking the availability of cheap water p: sently used for agriculture. Since the Nader report was released, however, former Governor B has claimed that the need arose from a Supreme Court decision reduci California's share of Colorado River water. But the Project was beg in i960, three years before the decision. Further, the decision wil have no practical effect on California's water supply until 19o5, if then since Arizona needs the Federal Central Arizona Project to tak its full share. Finally, the economic calculations of Project benef which show it to be so small, take the Colorado decision into accoun The question, after all, is not only how much water is available, bu how much water is desired. B. Distribution of Costs Project boosters say that It will cost $2.8 billion, and Projec customers will pay 90^ of this cost, the rest coming in flood contrc and recreation payments. Unfortunately, both these statements are completely false. 1. Amount of Cost Cost ordinarily means the amount paid for something, the outlay According to Dl\fR bulletins, the outlay for construction will not be $2.8 billion, but $8.9 billion. The difference between the DW's pi statements and actual calcualtions represents the interest the State pays for the capital used in the Project. As with any large constn tion project, the cost of capital is the largest single cost (althoi the State Project, for reasons peculiar to Itself, has particularly heavy interest payments). Mr. Glanelll has replied that omitting the interest was entire! proper because no one ever includes interest in a cost statement, from the llloglc of that comment — practice doesn't make perfect, to speak ~ Mr. Glanelll overlooks truth in lending laws. These la were enacted on the theory that for expensive items, failure to sta the cumulative interest is a fraud on the buyer. Thus, a purchase for a $2>>900 house at Boise Cascade's Lake Wildwood development sn^ principal of $22,^00, and interest of $3,06 under the terms of tn^ contract. I submit a photograph of such a form for the record, taK from CLEAR CREEK magazine. In any event, by referring to ordinary practice In the case of 933 r bonds, Mr. Gianelli mixes apples and oranges. One of the major 3ition arguments to the Project in I96O v;as that water users v/ould c pay for it, leaving taxpayers to assume the burden. The question ne, therefore, how much of a burden v;ould that be? The relevant ;.re of the burden is not the $2.8 billion cost of labor and material ;he total obligation of the State, the full $9 billion. This is question people v/ere asking about the Project, and in the face of question to assert a $2.8 billion cost seems deceptive. The total cost of a local bond, however, has far less relevance to voter's concern. The local bond voter is not concerned about his late ODligation, because the bond imposes an immediate obligation 16 form of higher taxes. His question is how much v/ill the bond ; his taxes, and he generally gets an ansv/er. But in the case of .tate v;ater bonds, his question v;as about the total cost, and he ved a deceptive answer. Nor do Bureau of Reclamation practices Justify the State's omission terest charges. V/hile the Bureau states the cost of its projects ut interest, that statement accurately reflects v;hat Bureau bene- ries must pay, since the Federal government absorbs the interest one involved is acutely aware of this, because the interest repre- the subsiay inherent in Bureau projects. Furthermore, Federal projects pass through a sophisticated review ss involving the Office of Management and Budget, the Reclama- subcommittees of Congress, and the Appropriations committees — all cm lully understand the specialized use of "cost" involved By ast, the State Project was submitted to the voters at large few om had any inkling that "cost" did not include the largest cost tie Pays? rhe Department states that Project customers pay 90^ of the costs .ponse to the complaint that taxpayers are paying for the Project. l.ltrt r S^f^^Jive response for a long time because no one 2es that technically Project "customers" are NOT water users, but J2 contracting agencies, plus power compaies who but/ Prolect- ovL^°'''®j'. ^5^2^ agencies actually derive much of ?heir income thp'T^Sfr,^?/?S^^^^^v-^®''\^°''"^y '-"^^^^^ ^Sency was formed expressly ^ the Bakersfleld tax base to subsidize purchase of State waters le surrounding farms. !^°^!J^^^J^®2^^"^ Department assertion is that State taxpayers pay 'L^Ll tJ^'^'^t^'l' ^ avoiding any mention of interest, the Depart- .an make this statement seem true. But my curiosity about Project ^M. S^""! "t^ °"^ °^' ^^^ cleverest and subtlest subsidies built .nis Project, a subsidy direct from State taxpayers. ^hP^^.^^'l^^mJ^^n'^^^^'^^y ^^°^' ^^^ Project will borrow $1.1 billion wnnid J Tidelands Oil and Gas Revenues. To learn when this would be repaid, I looked at the DWR's schedule of repayment •ties. Here I found that, although the principal - the $1.1 >n - would be repaid in due course, the $2 billion in Interest 034 - 6 would go into a special fund to finance additional aspects of the I This did not appear explicitly, of course, but can be determined fi leeal language of the repayment priorities. State taxpayers thus £ sidize the Project in precisely the way Federal taxpayers subsidize projects -- by absorbing the interest. The twist that makes this subsidy particularly subtle comes fi the fact tha Project customers — those 32 water agencies -- DO rej both the principal and the interest. But they repay' it to the Dv/R, the DVIR doesn't turn that interest back to the State, as if does w: the principal. Both Mr. Gianelli, and Mr. Bottorff in his "definitive rebutt? which I submitted earlier, attack me on this point. They both ass\ my charge to be directed against Project customers, and, revealing, both indignantly assert that customers repay the interest in full • without saying more. Yet, both know very v/ell the distinction bet Project customers repaying the DV/R, and the DVm repaying the State They know, and I know, and now you know, that these are not the sai thing. But to the uninitiated, they seem to be, ana the assertion customers repay the interest becomes a thoroughly deceptive appare: denial that the State contributes interest. If one adds up the State contribution in the form of that int local taxpayer contributions in the form of tribute to their water agencies, and various other State and Federal payments,^ it turns o that taxpayers will foot between 48 and 65^ of the Project bill, d ding on future taxing policies of the agencies involved — not the inplied by the mm. The lesson which emerges from this most clearly is not so muc unfortunate saddling of taxpayers with costs they never expected, happens often, although not usually in this magnitude. Nor is it deliberate dishonesty of the Project proponents, at least those el to the legal and economic technicalities, for that lesson pervades whole discussion. Instead, the discussion shows how the truly eno frauds under discussion reside in the minutiae of financial accoun for this Project, and in the densest thickets of legal prose. TM means, unfortunately, that detection requires time and staff — mc most legislators permit themselves. C. Who Benefits? A similar story leads to an understanding of who benefits frc Project. Thanks to the painstaking work of a Central Valley group by George Ballis, who took the Project service area and pieced tog from hundreds of surveyors' maps the land ovmership in this area, know that 31^ of the eligible land in Kern County (which receives nearly all of the Central Valley's allocation of State water) belc to four ranches and a few oil companies. Another 38^ belongs to t Federal government and private owners of one to five thousand acre Most of the rest belongs to local government for use as schools ar roads, or private owners in residential areas already supplied wit 935 - 7 The fact that the benefit goes to these huge landholders In Itself es social misfortune. According to a widely cited study by UC Davis ssors Dean and King, the Project v;ill bring hundreds of thousands w acreage under cultivation. Travel Route 32 nov; and you can see TO-.ving seedlings. Because the v/ater is expensive, the nev; acreage be planted to presently high value crops -- the ones which sustain famers north of Kern County. IVhen the new crops come to market, will be a period of at least several years of low orices, requiring tion at or near a loss. If the recipients of State' water v/ere farmers who had to live on yearly profits, they couldn't afford ma wouldn't be planting. But the ovmers are huge firms v/ith out- Lncome against vmich to offset these losses for a tax deduction. iy plant, and soon the present small farmers v/ill be squeezed off ind by the period of low prices. Phe price of State vrater in Kern County, by the way, won't be quite -h as it v7ould seem. Kern County pays an average $21 per acre foot Iter delivered under the contract. Add to this distribution charges, 18 price is an astronomical (for farms) $35 an acre foot. But the has designed its contracts for minimal obligation. In fact, it silver far more water than the contract reouires. These extra iries of so-called "surplus" v;ater come, of course, in the off-season, I an interru.ptible basis. But if the recipient has a place to store iter, such as a groundwater basin, it's as good as any other v;ater. ling to D'.'.Tl records, so much of this "surplus" vrater will b^ deliver-ed •n County by I990 that Kern will receive fully half of all Project iries through that year, although its contract share Is 25^. fhat makes "surplus" water so valuable is that the State sells it le out of pocket cost of delivery. It bears no share of the con- ■ion cost^^ nor of the regular operation, maintenance and repair Thus, surplus costs Kern about $3 per acre foot, v/hich sub- ally reduces the average charge. By this device, the major recl- of State water pay far less than their fair share of the costs, f we disregard the 48 to 65^ paid by property taxes. Department ais almost never refer publicly to this "surplus" water device. ^rplus v;ater is important for tv;o reasons. First, it explains ntral Valley landowners were so eager for a State project that ed to deliver prohibitively expensive water ($35 v;ater would m.ake tP value crops out of the question). Through surplus water, the though still high, approaches that of other projects in the Central econd, it explains who benefits in Southern California. As I noted r. Southern California doesn't need State vrater, at least not for all of the eligible land will receive the water, but the D\VR does aaKe availaole the ownership records of land which actually does ive state delivery. So otv-nership of eligible land must serve as ide to ownership of actually benefitted land. 936 so long a time that other sources, such as desalinization, seem a possSility first. If so, the delivery of State water to Souther California creates no benefit, except to landovmers in the path v; may thereby capture development which might otherwise have occurr ^•^^ !. ..! "^ ,.rv.^-.^ 4-v.^.c. 1 ar.Ar.ysr.^r'r^ . such as the Chandlers of the elsewhere. While these landovmers, Anseles Times, undoubtedly had ii -^ , . m Southern-T^Tifornia suggested other beneficiaries as well. Angeles Times , undoubtedly had influence, the level of support fr It turns out that the very lack of need in Southern Californ creates the other beneficiaries. The 11\iderable. Harry Horton, general counsel for a competing area sLTeT^Tll ^^ '^' ^'t'J''^ '^°"S^' ^^^ Imperial Irrigation Sis- stated m hearings on the San Luis bill that this ten year holding; louJh Sh^f i nn^n" ^""t ^^^^'""' desirable to Westlands owners? ^ ue^of land h^^inn^^ ^° ^^^^ thereafter. If the water increases •r Uke |^?vMi^h?2 ?S ^i""^' ^ reasonable estimate for Westlands, lion ?of ten years. """^ ^''^"^ ^^^^ '^"^"' 2^^°°° ^°^^^' °^ mert^nf ^^^^'^^^ °^ Westlands have a better deal than that. The ion T-^i^ ^^ prewater prices is the key to the whole 160 acre a?'annt^.^? J'^^'' ""J" realize the added value to his land by ' cnn?™!S S 1^°^^""^^^^ prices, he in effect reaps all of the s to ^;..^ !u°^ °°''''^^ defeats an aim of the I60 acre limit, s to spread the unearned gain caused by the Project as broadly amatfon no??^ Westlands - and, apparently, by national Bureau T^relu^lillJ''^'^':^^^''^ " ^^^ "^^th°^ °^ assessment guarantees at^ va?'? version of pre-water price includes most of that t •^as^in^ f?'' ^^?"^Pl^> o^e piece of Westlands land priced under do?Lf Sr "^^^ ^^^Y^"^ ^^ °"ly ^25 an acre less than the several dollar per acre market value. At this price, any sensible owner 938 10 - would be delighted to sell and take his capital gam. But in fact. TAle deters Lyers. And in the absence of buyers the original o; continue to farm the land and reap the benefits, which is the pres* o??,,Sinn In Westlands To date, there has been only one Bureau o; Reclamation sale ofexcess land in California, although possibly t] have been others since I last checked. The Bureau's assessment procedure involves looking at the sal of nearby land which does not receive Federal water, and taking th as rep?eLntStive of the pre-water price, as it would presently st I? is hard to see where this would make sense, but it seems partic imoroner in V/estlands. Prior to the Federal project, V/estlands ha irrigated ?rom a groundwater supply which, in the late fifties wa dwindling drastically under the demands of overpumping. Pump leve were dropping ten feet or more per year, and most of the land woul clearly have been turned to desert in a short time without outs.de The availability of Federal water to some land relieved the demand Ir^undwatlr, thus conferring nearly equal benefit^ on all land in area In taking land which did not directly receive Federal water ^tfi^easSre of pre-water prices, the Bureau overlooked this underg DiDelinf as it were, and thus came up with its ridiculous price. ?he B^^Iau's caluclation, a Federal subsidy of nearly $2000 an aci produced a gain of value of only $25. This brief review of San Luis reinforces the comments about 1 State water project. Mr. Brody's indignant defense of the distri( the groSndtha?' the land is under contract amounts, in the circurn to the kind of deceptive half truth which water experts seem to f The B^reaS's assessment practice shows again how the mechanism fo: enormous improorleties, involving hundreds of millions of dollars^ ?o be a minute" technicality, a seemingly inconsequential thread ii pattern of the whole. unlike the State project, San Luis amounts ^^ J.f °J;^^^°; °J. lished law. Indeed, the history of the 160 acre limit mCalllor. makeran interesting story of how to destroy a law. The San Luis arises Sn?helevel^f the administrative rule; the administrator themselves, I found, seemed quite diligent and hardworking, altho showed no inkling that a Washington interpretation had reduced th zealous enforcement to meaninglessness. Another }^l^^ .""J ^f^^f' has worked well for the Imperial Irrigation District, ^^ at the p itcr^l internretation The I.I.D. obtained an interpretation from PrKident Dover's Sitgoing secretary of the Interior which effec exemp?ef i? ?rom the llw u^til 1964, when Secretary Udall reverse ruling And of course you are probably aware of the most direcr r^tempimrto exempt particular projects from the law, or repeal! law altogether. 939 E Califorxl^ Water Project as a Cure for Drought. Famine I NEMPLOYMEXT, AXD THE 160-ACRE LIMITATION BlUE8 (By Keith Roberts) d [/rd(f], n., I (a) deceit; trickery; cheating, (b) in laic, intentional do ro cause a person to give up property or some latcful right. — Webster's New World Dictionary hundred dollars for every man, woman, and child buys California a -n?ef "1^ scheme to transfer fresh water from San Francisco Bay and hr fif^^^'^^/ ^^ ^^^^^ ^^"^^^- '^^"^ scheme, the California State Water 'nl^rl ^ corporate farms in the San Joaquin Vallev, a handful .in!!!o''',''?f''"i?^'''''^' developers, and water-using industries in Southern mofif i Project builders. Economists who have analvzed the Proi- "enrs and costs claim it will return barely fiftv cents "in benefit for 940 each dollar of cost. And that counts economic cost alone ; the Project threat to destroy the San Francisco Bay Delta estuary— the largest in Cahforriia j one of the most important spawning and feeding grounds for hsh and towl the West Coast— and may destroy the wild nature of California s last t tlowing rivers. , ,^ . ^, Fortunately, the decisions which would trigger the Project s severest ei ronmental damage have yet to be made. But already, the Project has cost people of California billions of unnecessary dollars and has set in moi forces which are driving thousands of small farmers from the land. The history of the State Water Project illustrates a far-reaching problen modern American society. The Project is typical of vast, technical under ings by governmental and corporate interests (such as the ABM, the \ leti War the highway system, dams and powerplants, the SST, etc.)— proj whose impact, only the experts and technicians can predict. Decisions al these projects depend completely on expert advice ; yet, as the making and i ing of the State Water Project shows, the idea of "objective expertise myth Indeed, the systematic prostitution of engineering to venality and venience is the major cause of the Project's existence. Fortunately, to un stand how water experts have fallen to their state of easy virtue is to perc some important steps toward rehabilitation, both for water experts, and their brethren who sell other wonders of the technological age. Californians never voted for the present Project. The Burns-Porter which the legislature passed and Governor Brown signed in 19oJ, did not thorize it. The $1.75 billion general obligation water bond which the voter^ proved in 1960 was not meant to finance it. And the voters who, in June ] agreed to raise the permissible interest rate so the rest of the loan coiili obtained on today's market did not vote for this Project. What Califorii (lid authorize and approve was something quite different. The approved project has the same physical characteristics as the one tually being built : a dam at OroviUe to stop the frequent floods on Feather River and impound a million acre-feet^ which would otherwise out to sea each year ; the Delta Pumping Works, to pump fresh water : the San Francisco Bay Delta into the California Aqueduct; the Aqueduc self, a concrete-lined ditch running from Tracy, in the Delta, along the Joaquin Valley's West Side to the Tehachapi Mountains 200 mi es south: San Luis reservoir on the W^est Side near Los Banos ; Tehachapi Pmn Plant to pump the water 2000 feet up and over those mountains ; a net' of canals feeding all this water into various areas and cities en route- oma and Napa County north of the Bay ; Alameda and Santa C lara Cou south of it; Santa Barbara; Los Angeles; San Diego; and the Mojave L> southeast to Barstow— and a drain, to take waste water from the San .loa Valley back to the Bay and out to sea. These physical works deliveT . water, which has flowed down the Sacramento River and its tributaries t( Delta,' to 32 local water agencies which have contracts to buy it. (\iliforniaiis thought they were buying a $2 billion project, but the real as the experts knew, will be closer to $10 billion. The Project would Southern California from a rapidly approaching water famine, accordir the experts; but in fact no shortage of cheaper, local sources was m pro until at least 1990, bv which time desalinization would very likely pro\e tical The experts also claimed that the Project would cost taxpayers virt nothing. In reality, however, they will pay about half its cost as power and as Federal, State, and local property tax payers---without countin cost of generally higher bond interest rates owing to the I'y^ject s erosi C^ilifornia's credit.^ The experts proved equally deceptive about other i lant aspects of the Project— about irs benefits and about its costs; about would benefit, and about who would pay. This is what they did : 'An arro-foot, tho nmcmt of water nocMlod to coje^ one acre one foot doe^^ :;2.-.,S.-,l gallons. A flow of ono cubic foot per second (cfs) equals 1 98 acre feet pe ■^AcrordinK' 1o A. Alan I'ost. the State's I^eRislative Analyst California ^^^ m..telv V,% more interest on its borrowings because of the Water Pi^oject—a < m mountlnl' o hundreds of millions of dollars for tho towns cities schood^strk^^^ .,fher Kovernmental units tlnit rely heavily on bond issues. The Project also maj totally i)revented some areas from selling bonds. 941 THE COST SHELL GAME agency which created, promoted, and now constructs the Water Project rnia's Department of Water Resources, claimed in 1960 that the Project cost $2 billion, a figure presently adjusted to $2.8 billion. One reason for lim was that, when Governor Edmund G. Brown took office in January his finely-honed political instincts told him the voters of California Q't accept anything costing more than $2 billion. According to his Special Assistant, Ralph Brody, the Governor therefore told the Department of Resources to present a specific project at that cost. As an analyst for mate Water Committee later pointed out, however, the Project submitted DWR actually cost more than $2 billion. It was trimmed to an accepta- ure only by ignoring the quarter of a billion dollars which the DWR had ited for inflation. Harvey Banks, Director of the DWR at the time that this omission was by Governor Brown's orders. ther omission which slims down the Project's apparent cost is the pro- Eel River Development, which the DWR presently estimates will cost iillion of State money. Since the costs of other projected but as-yet un- •ized units arc included, there is no justification for the Eel River omis- these omissions amount to peanuts next to the main item which the blandly neglects in its "cost" estimates— interest. It is axiomatic that 'gest expense in any major construction project is neither the labor nor iterials, but the cost of the money needed to finance it. That is why, for le, housing construction drops when interest rates rise, and vice-versa me holds true for the State Water Project. By the DWR's own calcula- it will be paying $2.7 billion in interest on the $1.75 billion it had to ' to construct the Project. On that basis, it would pay an additional $2 for the money California intends to loan the Project— except that Cali- wiU make the loan interest-free (so that the cost of the loan is charged State, not the Project). But nowhere in the DWR's public statements the Project's costs do those figures appear! The engineers have simply 1 them. According to Harvey Banks, the reason is that there is an "engi- definition" of cost — quite standard among engineers— which ignores in- But regardless of what engineers think cost is, the interpretation of Inch the Governor, the Legislature, and the public acted upon was ob- quite different— cost as what the State would ultimately pay for this :. And that amounts to anything from $8 billion on up.3 THE WATER FAMINE HOAX )04, some San Fernando Valley landowners, together with Los Angeles' supply '"experts," created public consternation by predicting an imminent famine," and thereby obtained money to build the Owens River Aque- ince the actual need for that water didn't materialize until several dec- ter Los Angeles couldn't sell its new supply, and had to virtuallv give y— to the San Fernando Valley landowners, as it turned out. In 1928, igelenos and their neighbors again learned that a "water famine" was lie solution, their experts said, was Colorado River water, and the ex- this time the Metropolitan Water District (MWD) of Southern Califor- >sured the public that they would be using 400 cubic feet per second in •y 1969, the original members of the MWD had just about reached that . level— but meanwhile, they had subsidized the development of San md the Irvine Ranch's Orange County. t worked twice worked again in 1959, only this time the flim-flam came tie Department of Water Resources, and this time the experts should nown better. The fault lies less with their population estimates, which irnea out to be grossly overstated, than with their disregard for avail- cernatives. In addition, of course, the rhetoric somewhat distorted even K s absurd estimates. 'rolVlriZ.^i «^^«nonii<^ally sophisticated, and talk about "oportunity costs," the roioft nn.f K„„^n,eg several billion higher. It works this way : once you have you will spend for the Project, you ask yourself whether you ^5 the nmonnt ,^''' '^r'^^ ^'"i^'' \^^^^^- " ^^'^^'^^ ^his way : once you have vest thU^nni ^7 ""'i." ''P^?^ for the Project, you ask yourself whether ..^". \^.^.s J?ioney elsewhere at a higher rate of return. The difference is the "op- i retnrn ^r?"" ^'^^^"Ple. If the Water Project merely breaks even, providing no he simp hV^""" "'''"?; economists think it actually loses, in terras of benefits), on vour mnn.v^'''' ""T^"^ 'T'^^^ ""^ ^^'^ interest, your opportunity cost is the 5% on jour money— a staggering amount over the Project's 50 year repayment period. 942 Key elem«nti in the $»»»• Water Projett tn. (1) the »r Eel River development, an Army Engineer* project ttill unapproved by Congreti; (2) the pro- jected Upper Feather River development; (3) Orovilla Dam and reservoir, keystone of the project; (4) Sac- ramento; (5) the North Bay Aqueduct; (6) San Fran- cisco; (7) the Delta facilities including peripheral canal and pumping plants; (8) the South Bay Aque- duct; (9) the disputed San Joaquin Drain; (10) San luis Reservoir; (1 1) the California Aqueduct; (13) the Coastal Branch of the Aqueduct; (13) the West Branch and Tehachapi pumping and power plants; (14) Butles Dam and related pumping and power plants; (15) Cedar Springs lake; (16) Perris Dam and reservoir and the Santa Ana Valley pipeline with Devil Canyon power plant, and (17) loi Angeles. The Department approached the problem from two ends. It calculate water available to Southern California, and it calculated the area s ' n ments." But in calculating the water available, the Department took abs( no account of various existing sources-recycled wastewater estimated time to be worth 200,000 acre-feet a year (and now admitted by the l>\ self to be worth C00,000 acre-feet!) ; groundwater reserves beyond the a replenished each year (100 million acre-feet, by latest estimate) ; more e. eanals— a Bureau of Reclamation spokesman estimated that lining ju canal in Southern California would save 300,000 acre-feet per year on tli chase of water being used for agriculture-an omission which according Bain Caves and Margolis economic study of J^orthern California s Wm dustru "resulted at the extreme in valuing Project-supplies urban wate desert area at $150 per acre-foot . . . when abundant irrigation water area could be transferred to urban use at . . . cost of no more than J acre-foot without significantly affecting the supply of irrigation viter did the Department consider that desalinization would very likely De a^ at tolerable cost l)y 11)00. _ ^ ,, ^.;,„^fo« Probably the h^ast excusable problem with the Departments estimate, ever, sfen'is from what ec(momists know sardonically as ^^^e requ re philosophy, the Departments method of predicting the demand for vv ate .hilo.sophv determines how much water will be needed without r fer pricf. Nineteen-ninety -re(,uirements" are calculated by r^o^^ct f 1 ni.n.bers of users and amounts of use to 1000, even though ^vat^er i • cost much more and people will presumably buy less. But the >e I'H 'ne ports assume tbat the same pattern of use will prevail— that p( opK >vi' just as much $00 water as they now want $20 water. As ano h(>r (O Professor Jack Ilersl.leifer of VChA, comments, "There is 'J •;;•;;''•<: ^^. . Cadillacs at a price of $500, except that the desires for ^ 'i/^^^' \^ ' '' not dignified by the term 'needs' or 're(piirements Even ^l\e Hpam^^ self in a suppressi'd VM\H report, has admitted that price will sigmflcai 943 'inand— so much so, that by including price in the caluculation the own report concludes the project was started at least ten years too ut they knew that in 1960, too. of the DWR"s truly astounding dec-eptions has been its frequent claim •roject customers will repay about 90 percent of the total project costs " itement is false as it stands, and false in its implications. As it stands tement ignores the fact that State taxpayers will pay a large portion of •jecfs cost. They do so by making an interest-free loan to the Project of lion from the Tidelands oil and gas revenues. Since the Project doesn't erest on the loan, the taxpayers do. The Tidelands money and the in- t could earn, is diverted to the Project from schools and other social as. To make up that diversion the State must raise the money else- It present market rates, this costs substantially more than $2 billion, on the DWR's own terms, its statement that -Project customers will bout 90 percent of the total project costs" is grossly misleading. To the ed eye, "Project customers'" reads like "water users," especially since 'R uses the statement to rebut charges that taxpayers will pav for the But in fact, Project "customers" are not water users: they are pur- of electric power, who will pay about 10% of the costs, and 32 water s, many of which are supported by local property taxes. The Metropoli- ter District of Southern California, which will buy about half the Proj- iter, presently pays more than half its water costs from property taxe«? m County Water Agency, which will buy about a third of the 'Project was formed expressly to let its agricultural water users draw on the leld tax base, and it expects to meet one third of its payments property taxes. All told, taxpayers and power users will pav between es^r of Project co.sts, depending on the future taxing policies of local gencies— not quite what is suggested when the DWR savs Proiect cus- yill pay 90% of the costs. Department of Water Resources Table lys: t: $2.8 billion. :e pays: S280 million. er taxpayers pay: $74 million ^'ederal flood control). efits: $2 per $1 of cost. ironmental effects: Improve- lent of water quality, more ^creation. DWR data says: $8 to $11 'billion. $2.38 billion. $3 billion. $0.59 per $1 of cost. Disaster for San Francisco and north coast. Bay COXSULTAXT SPEAK WITH FORKED TONGUE the project was being formulated and considered, the DWR used a )vey of "independent consultants" to check its work and convince the • But on examination, these consultants prove nearly as dishonest as artment. Xearly all. deep within the bowels of their jargon-laden re- sapprove the Project : but with the bright exception of one member of n of consultants. Professor Adolph Ackerman, the consultants kept nervations quiet, and allowed the public to gain from their reports the pression that they approved. The most remarkable example of such gery was supplied by the Charles T. Main Co., an eastern engineering H ^^*^^^"^'^" •'^ objections raised concern, the Dpartment hired Main to the Projects "economic feasibility"— meaning, whether its benefits Jtweigh the costs. Main released its report just before the public voted roject in 1960. Tlie Los Angeles Times, a Project promoter, headlined i^ets Sound Rating: the San Francisco Chronicle, an opponent, said M k'.,, 1^^' ^""^^^^ Pl'^^^i Called Impossible. What happened was that la Doth. The firm's report declared, in clear and forthright terms, that Dasis of the previously cited definition of economic feasibility, the • . could pay back all costs. . ." The LA Times, the DWR, and the • otiier .supporters seized upon that statement. But Main had also de- onomic feasibility" in a very strange way. to mean whether or not the urn rai.se the money. By this definition, it might l)e "economically fea- riirow a billion silver dollars into San Francisco Bay— but that isn't nn was asked, and that isn't what everyone understood by "economic 944 i feasibility" when the report was issued. Furthermore, the rest of Main gon-itifested report goes on to say, in effect, that anyone would l)e en build such a Project. But, of course, reporters, politicians, and the genera lie don't usually wade through sucli fine print. (Charles T. Main, Inc., Report, "General Evaluation of the Proposed Program for Financing am structing the State Water Resources Development System," October There are several reasons why supposedly reputable professionals eng this type of conduct. Each practice, fallacious, misleading, or unjustifiabl is, fails within an area of generally accepted professional principles. Wl asked the DWR's 1959 Director, Harvey Banks, why the statement o: omitted interest, he explained that engineers always defined "cost" in tlii The omission of $250,000,000 inflation cost from the original cost estima explained, was at Governor Brown's request, and was done merely by costs in terms of 1959 dollarfi. The Department's failure to consider a tives other than the State Water Project in studying the need for wj Southern California was "justified" by the fact that such alternatives c< assumed (by whom?) politically unfeasible — the farmers would complair people taking their water, people wouldn't want to drink waste wati Banks noted that the "requirements" approach, mistakenly, assumin price would not affect demand, was assuming a "standard" engineerin tice sanctioned in several textbooks, and by general usage, 35% "interes for costs, rather than the higher one all economists agree should be us( justified on two grounds: the US Bureau of Reclamation was using tli low rate, and anyway, the economists can't agree on any one rate that be used. The statements about "Project customers," of course, are tecl accurate if one defines cost as the engineers do: the engineers can't he people think "Project customers" means "water users," can they? As consultants, Mr. Banks did concede that they had been pretty deceptive. noted that Charles T. Main, Inc. had never done a water project he perhaps epitomizes the state of engineering standards that Mr. Bank say, when we asked him why the DWR thought benefits of the Projec outweight costs, "You tell me what benefit-cost ratio you want, and I'l for you. without straining my conscience." THE RICH GET WATER AND THE POOR GET SOAKED Legally, the Project is a scheme for selling water. The State sells local water agencies, who in turn retail it to users like farmers, residei tories, hotels, etc., or sell it to yet smaller water agencies. While man: ultimately receive this water, the only ones who actually benefit fi State Water Project are those who receive substantially more or subst cheaper water than they would get without the Project. This leaves average resident in Southern California. He u.ses, at most, one-fiftl acre-foot of w\ater per year — a high rate, but still too little for the Pi affect. As already noted, he would be assured of water for the foresee ture without the Project, But even assuming that his only supply na desalinized water costing $150 an acre-foot, the extra cost over the I $00 per acre-foot water would be only $18 per year. If the smaller user $10,000 house, he pays that in taxes to the Metropolitan Water Distr way. So the Project does not really benefit the average Southern Californ But the Project does benefit two classes which use large amounts o1 large landowners, and water-using businesses. For one thing, they wi ceiving most of the water the Project delivers; for another, tlie through an extremely subtle and clever trick, makes this water ava them for much less than they would otherwise have to pay. While certain large landowners in Southern California, such as th Kanch (S0,000 acres), Tejon Ranch (10,000 acres, partly owned by tl dlers, wlio own the T.os Angeles Times), Xewhall Ranch (48,000 acr Rancbo California (50,000 acres, jointly owned by Kaiser and Penn-( will obviously profit by the Water" Project, the major beneficiaries are porate farms of the San .loacpiin Valley. More than half of all the wnt <'red by the Project between 1970 and 1990 will go to the San Joatpni The lands in the Valley which will receive Project water have been ini tlie Califr)rnia Labor Federation and the Young Democrats. According 1959 survey, CH^of these lands are owned by about 100 persons! 0: riKiining land within the Project service area, a substantial amount bel locnl governments. 945 Ii61 1I11JV/3I331I3 SV313 046 LAND OWNERSHIP IN THE SAN JOAQUIN VALLEY AREAS SERVED BY THE STATE WATER PROJr^' Owner Acreage Percent ol 348, 026. 46 218,485.48 264,678.64 201.851.75 168,531.07 37,555.58 1.238,228.98 1.323,821.57 2, 562, 050. 55 192,762.13 1,240.648.24 105 Congressional Record pt 6, p. 7677 Tenneco, Inc. (Kern County Land Co.) Standard Oil of California. . Other oil companies Southern Pacific RR .- . .- Tejon Ranch ' Boston Ranch (J. G. Boswell).. Total owned by approximately 15 firms. Other private holdings over 1,000 acres/person ... Owner°s^oflSrthanY,000 'acres/person, including city, county, and State 1 Does not include acreage owned by Tejon Ranch in southern California, Source: Table from Ballis, "Land Ownership in theSan Joaquin Valley,' In Kern Tonnty. which will recoiv<> by far tho htrsost share j'f ^;;;/ •[;«' Valley water; 7S% of the land to actually receive State water heloiij^'s to ers of more than lOO acres. i.,.nf.fir.i These larjie landowners are the single most important elass of heneh( i fron the srate Water Project. Indeed, they hatched the ^vlH;le idea fo Proiect and provided the major lobbying mnsele which pushed it tlir. Mu-r.f their land, prior to the Project, lay fallow: the huge federal Ce Va lev Protct supplies farms to the north and east of them, but did not , tlie SutlSern secti()n of the San Joaquin Valley. Moreover, what grouri ter the ad was rapidly ivceding due to overuse. To f^irm or otherw s veop heir and, these landowners had to import water. The most logical native of course, was to extend the (Vntral ^ alley Project, llus ro ide water and. in addition, the huge Federal -^"['f ^>/»^^^ , -^^^^.^^o^ rean of Reclamathm irrigation projects. ^^^^;!l!''''^''^^/'''\ll^^^ However, reclamation water comes with a condition attached based o a St mding Federal policy of encouraging small farms and ^''^^^}^J^'^^''Z irrigation subsidy any one farmer may rece ve. This ^-^''^^''^^l^] \}^ mitation. reciuires anyone receiving reclamation water <>^V"^«J%V " 1.,.^ to sell that -excess-' land within ten years at pre-water prices. J 1h> laige o vners wonld have none of that, of course, and ^^^!^' ^\^'^^ ^::^^' tbo lo-islature repeal the limitati(m. the ccmrts nullify it. oi the 1> uau f ^ naUonVi^o^rit. Acvording to most observers it -- ^^Hf- :^-^7-^^ anv of these objectives which finally made them turn to the St.ite. ( alit of course has no l()()-acre limitation policies. ,_.;„, So the Water Proiect brings tlu^m much-needed water, witlmut imposin: ditions on its use. But it also supplies the watcn- with a considerable su Take Kern County as an example. ,,,iiiimi -icrc-fe Kern (V)unty has contractcnl to buy a maximnm "^ .I'ViVJ • iTra t wa vear from th(> State. The State has set the price of ;i»i\y""^^'^V; cover alCosts of constructing the system and delivering the water t. ' untv-that is, all costs allocated to -water users". Presentl>. the .,r^s Kern County an average of $21 per acre-foot. But -^ j; i;"!^-^ include" costs borne by thos(« who buy eU>ctric power from the Pio.ie , n-al but unstat<.l costs assumed by the State ^'^1^''!^.'^'^'^;^^ th(. Project. It probably costs California closer to .$3;j an I'^^^'-^^^y ' WMt(M- to Kern J'ounty. so right tluMV th(^ landowners receive a .$14 ].( . foot subsidy. ,, ^, , „r .,„. v.ronfv wi Kern Countv has also established the Kern (Nmnty ^V^^'V^^-^".'-'".^; sc,e fnction of buying the water and selling it to '-^''-^^-f ;':^ dist t intermediarv exists for (me purpose: to help pay tor the ^^'»J! ; ''.' "i idy-wide-pn.perty tax. Taxes in Kern (^,unty now ^^ ^^^^(;^''^^i WMHls every aciv-foot the Agency ''".vs. nusing the ot 1 d ect^ m contract water going to Kern ('(mntys landowners to ^2i) an a(ie-toor. i"^M 947 nt between now and 19f)0. Kern County expects to receive more water than las firmly con racted for. Tlie additional water is known Is -sun los- er the .State char.i^es merely the cost of transi,ortation-S4 an acre foot in n CountyOhviously. whatever "surplus" water Kern Countv can obta n .unts to a tremendous windfall. If, as now predicted, it receives nearlv as 1. -surplus water as contract water, the average price of itTxv^tlrJu 1 ^red fn.m .^21 per acre-foot to .i;i2.r,() per acre-foot " ^' lie DWR .lustifies its give-away rates for surplus water on the ground that .ery is unrehah e. since it cannot guarantee the water's availahil tv af er contmctual obligations have been met in a drought veai- Tlu t make^ e. until one no ices that the Project's contractual obligations are J(^» low plentiful -surplus' water will be available in any yea^except one as diw lie driest year ever recorded in California, which came after a seven vtir gh . Lven then, -surplus" should be available until the vear's suppliei h their maximum ccmtractual level— 11)90 .^t^ais supplies addition to the tax and "surplus- water subsidies, large landowners re ; yet another bonus from tlie State Water Project: increases In land vilue' alifornia, land without water is worthless; water gives i? value Indeed' ■r can raise prices $1()()() an acre or more. A studv in lOfk before at(^^ Aer .$100 an acre in assessed Aaluation, merely in anticipation f water iigo nearby acreage. Should the Water Project ultimate^M "^^se la m ^s in the Service Area by .$300 an acre-a conservative guess-thei^ )wners will have received a capital gain (taxal>le at a lowei !,Te t nii r'' ry income, such as wages) of S7S0.()00 000 *^" ''" 948 Incidentallv, it is interesting to note that the fanners ha^'«in« these hi snhsh ies feed the trough of puhlic welfare elsewhere JG Boswe 1 owner tl e hu^^^^ BOS on I^ neh, received ever .$5 niiUion in 1970 fron. the federal ( Tnment incvov subsidies. Boswell is the nation's leader in mcome for N tr wing crops, but the other State Water Project beneihcares are right There with him. Both Tenneco and the Tejon Ranch, for example, received . eral hundred thousand dollars too. SOUTHERN CALIFORNIA I SUCKING OUT THE SURPLUS At lirst glance, Southern California's eagerness for the State Water Pro seems hard to understand. Its agriculture does not need ^'^^^J^'^u^.w dents do not need State water. Even the real estate interests-the build ea erfand si^cm nothing from State Water since cheaper 1 som-ceVwm Sain anv foreseeable demand for development. Despite ^ews of soiUconservat onists, Southern ralifornia's population growth is onstAblvTnXte^ to the State Water Project. Another explanation Cuern (\alforrU^ eagerness-its reputed desire to secure lejal rigliti Northern water before others did, since in California rights go to those first use thrwater also seems doubtful. With adequate local water for a nmcant period of time, Southern California's best strategy would be to fofdesauSion which in time will surely be cheaper than water impo fJonrthrNorth. 'tIius, Southern California has no pressing need to se ^^^S a ^^- ^l^il^^-l^yieMs explanations for the southland's mule. f 1 In i,oi,nlf nf thp water proioct. First, and not to he under-rated, is aertlwat "os S,mthern Canforn,::„s, hu-IudinR niost .milders, develo,K«. -ss,:;r s;sr^r ><:;r''to'-"Xr!!^ 'L ....,,.„ Si£:^™-.rsLS^!r;rir.;a,"r^o^^ mrkecl on a billion dollar building program of its own to ^ -^ri^mte H^ ml consenuentlv has a very solid self-interest in seeing the Pioject cor fruit (?rMr^^^^^^ the agency's history, and the recent remarks of its len l,een mentioned; l>.v I'.K!!). tl.e original niem >ers "'/''% "7"^^ i;"''i]"| readied tlie level of use wliicl, the MWI) had Pr^l'^^'J '"/ ^^f "„ J''^,,^^ reeent General JIanaser and present diief advisor. Robert fekinner si owf ero.ie Itself has had to do with the Colorado River Aqueduct ^'''^"''"' '^"^^ ^'^*^ ^re IS an upper limit to how much water most users will take even if ,et It free. Thus the only real customers for the MWD's "surplus-^ water ater dis ric s with a storage capacity-primarily those overlv'ng depleted dwater basm.s-known as Water Replenishment Districts. W^fereas the intends to sell State water for $60 an acre-foot to agencies which suddIv ater directly to their customers, it will sell "replenishmen" water for ^0 an acre-foot. The people living within a Water ReplenishmenT District )e receiving their water for $30 an acre-foot, plus the no inal cist of ng It out of the ground again. The people living within T^egular water !' s"^l^ ^l^^^^'^^ served by the Los Angeles Dept. of Water and Power '^^^'f,%f^.^'\^^-^^'i<^ot plus substantial additional fees for distr?bu: )srs— all told, in Los Angeles, about .^120 per acre-foot aistriou ^ are the lucky people living in Water Replenishment Districts'^ Quite . the largest water users in Southern California aside from big landown arious pnvate water companies, and the biggest inO^tr^ ^ ^^n^l s based on a survey of two Replenishment Districts in Los Alleles The V^^^'.T^ V'""'"'' '''";'''' ''" '''' difference (about $80 per fere foot ) V Onlv hf ^'"I'.^-f.-I ^Z ^^'''' ^^'-^t^^- '^"^1 ^^-^'^^^ the rest of Los Ange- hL? H % ''i^'«il«'^l'!litv of Project water to supplv their groundwater iv Th^^bl-r ^7>^f -y.^l-l'leting it and turning to" direct cieli e^T^ fo f'thilt fi. • ^^^^^"^'-^.t^^n rtoes XOT include another verv real subsidv ■trio meet iniVltrw^r"^^ '"' \'''^'' '''''''''' ''''' '^^''^y- Presenth' To the Pvt^n L «^''' P^^.vments through funds raised from proper v io the^ extent that a firm uses a larger share of tlie water than it pav's atcatego';;"'"' ' ''" '"^^'^^y-'-^ --^t heavy water users woulVf'^11 950 THE CALIFORNIA LAND USE STUDY : AN INTERVIEW WITH ROBERT FELLMETH "We're not seeking to impose a foreign ideology on anyone. We say, tal yovr laws your rules, yonr ideals, and i)ut them into effect. The Americj system if 'implemented properly, would really work. We look for key change which if made, would reverherate through the entire structure." In the summer of 1970, Robert Fellmeth led a BO-member team which stu ied the full scope of human relationship to land in California. This team w selected from over 4,()()0 applicants, and included lawyers, biologists, ecor mists, journalists, and urban planners. Fellmeth and associates are produc-i a volume titled Power and Land in California. The whole study cost .$18,0( These professionals are clearly fueled by something besides money. Ihey a associates of the Center for Study of Responsive Law, a group well known Ralph Nader's Raiders. . "The book title does not refer to electrical poicer' Fellmeth smiled. It the first maior survey, with depth studies in key areas, of all agencies a most laws currentlv affecting land use in California." No longer smiling. 1< meth added "It's a game plan for follow-up. We want detailed investigation each area, 'extensive litigation— for law change and to disclose suppress reports— lobbying, and perhaps even political action and demonstration. ^^ What if this Nader group achieved all its goals? "In an ideal world, Si Fellmeth, "it would mean the resignation of the governor, half the legislati] and half the executive branch. Two, new elections would be held, under n ground rules. Three, new laws regulating land use in California would ^'"""Nothing of this sort will happen," Fellmeth assured with sardonic gi "Most likely we'll create a necessity for more vigorous public relations a naigns ' We hope, at least, to change the ground rules on conflicts of inter campaign, contributions, and regulation of the legislative process. Wliv was California chosen for a land use study? "Naders philosphy is take the biggest, or best, or both, and see how it functions. California is s posed to be^f model in many areas. It's legislature was chosen nuinbercm^ a national poll. Land use (piestions are not yet moot m California, as they in some eastern states. ^^listakes of the east have not yet been made. At same time! there's an influx of people, land values are inflated, and spe interests have a particular profit stake in California land What is the political philosophy of the Nader Raiders? "The approach of Cerate?," explained Fellmeth, "is extreme pragmatism. It is f-evance-orien problem-oriented. This generation tends to be ^«^f if «^^f^^^^: ^,^;;;; 'Z dangerous: it leads to the worship of a set of symbols, which is "Y>;-e Pr^' tfve^)f emotions than anything else. We believe ^^^^^^^^^^ f 'J"^! ^/^^^ down into the dirt, work with the empirical evidence. I myself I'^^H^^^^:^"^^ s moving toward the corporate state, in which the means of produc ion . und control the government. I favor a balance between industry and m ment the two forces capable of mass enslavement, with government movin: to regulate industry when necessary." unUt^rt^ wl The article on the California Water Project by lawyer Keith Roberts, jl appears in this issue of Clear Creek, is part of the land "«e stiul.| It o on the corruption of expert information sources by a nexus of land bai greedv corporations, and power-driven bureaucrats. Felimetl took mild issue with the conclusions of eam member Rob. "Refcrming the experts will not solve the problem." he ^Vr,?^'!"^';, ..^pl^ CO Id have^toppedVhe California Water Project, if o^l^^^* l^^^ Jl^ ^S innde th(>m independent. Rather than being the cause of reform, puhUci, sponsible experts would result from reform somewhere else. •'The kev principle we are seeking to implement is tl"«_ ^ 1^^" /^" nx-eives a 'benefit from public money, he should pay according to tl e co. that b(>nefit. If this principle was followed. California taxes would he cii ''''^Th'en glancing at his watch, Ro])ert Fellmeth was off to pursue rearm ment of the laws linking man to land in (\ilifornia ^^„fni mibsi The industries do not receive the full benefit ^^.hesephen mental ubs Long before they would have to pay an extra 'l^l^^'^^^ .'^ •\^:^,;;^ ,"," i water, they would convert to recycling processes consuming vastl.^ loss 951 —processes available to virtnally all the industries cited The «?;^fiq qfin ly to Standard Oil merely saves Standard the cost of 4c h cInveSon-a 11.^ T '^^'-^^^'^ ^^^'- ^i^^^"-^- ^l^ese subsidies are no? on'v outra y larjje. they are ontrajreonsly inefficient. The same holds true' for the les being sTipphed through the Water Project to the farmers n the San in Galley. The total actual benefit those farmers receive can be meVmrrP^ I ?rsntp'nt ''"i '""''T'^ ^" value-perhaps .^80 mmi "n "Buf he the State of supplying that benefit, the amount of subsidv it provide^ king up the difference between the real cost and the actual prcemkiS 1 tunes $780 million. There are other con..equences Tpr o"^^ idfng e^ ous siib..idies. First the big farmers are prime customers of tl e worUrs t bank, the Bank of America. Insofar as the State subsidv enables the n .nd their business, they borrow more money (for crops and equipment he iKink. and extend the bank's near-monopoly hold over CaliforZ ag^^^^ e .^et further. Second, even with the huge subsidies. State wate^ is so nve tlmt the on y profitable crops these farmers can gro'v are prc.entlv rrced "specialty crops-fruits, nuts. etc. But the farmers w^o now g^^^^^^ rops are mostly small farmers, who must gain enough incoine f^om 160 support themselves. When the San Joaquin agribusinesses weTgh in lieir crop.s in the next few years, prices will plummet, ami t?s resent v EKl tha thousands of these small farmers will be driven from the iand as nothing to do with their efficiency, which rivals tha? of agr lis neJs SL^s^i!^^?;;;!^^- --^^ --^^ ^-- -- -^-- -"-^i- SUBSIDIES TO SOME LOS ANGELES AREA WATER USERS Water pumped n peryear(acre-feet Water project X$80=) subsidy/year Corp. of America I Paper Products Co ----- 1323 5105,840 rire&Rubber -- 1.521 121,680 1,536 122.880 [esSteel. 2.567 200.560 ' 1.791 143,280 ilCorp 1.795 143,600 4,428 354,240 )o 4,516 361,280 "" 2,670 213,600 ilCo.. 3,432 274,560 ^^ 4,542 363,360 alifornians never voted for the present project. anuards. Appoint a committee to create siicli standards (such is u-li^V ount ra e sliould be,, and set regulations fixing .adherence. * "' ^"'" •f Prnf . " T '"^.^'""'tf- l-i"« .igainst conflicts of interest, such as Mr slK,u:d trvT e"f ''"''•/•''^'' ■■'^ «'«"'<-"<' f" rel.v on the DWR's word int firt In'lePentlent con.sultants. who must please their clients if mt turther con.sultmg work, aren't much good, as Charles T "lain 952 _:ai — ■ THE FUTURE : PERIPHERAL CANAL OR PUBLIC VICTORY The Proiect'H past is a story of gross in.iustice and special interest fa ism, of ontrageoiis costs and slim benefits. But the ^^^'^^'^^.^^^^'^f ^J, "«,^' "!,f; he completed-Oroville Dam, San Luis reservoir pumpmg facilities e fornia Aqueduct, and trunk canals-has had little adverse affect m the ronment (save possibly destruction of the salmon run up the Feather R 1^ future plans, however, threaten environmental disas er. Conserva who remained siient in 1J)60. have since become the leaders m oppositi '""Thelmure at present consists of four related Federal and State proi none of which have yet been authorized or funded all of^hic lai should be stopped. All relate to the central mechanism ^y ^^;^nch hot the Water Proiect and the Central Valley Project operate— the Delta pool water flowrdown the Sacramento River to the Delta, from winch bo DWR and the Federal Bureau of Reclamation pump it into their lesr canals for transport further south. ^^ projects 'relate to each other as follows : the ^S Bur^^^^^^^^^^^ tion's proect, termed the East Side Division of the ^^^^^^ J-^^^^^J^^ ^ would use up present Sac-ramento River supplies to ^^^^^ f, ^f^/^^JJ, ; the San Joacpiin Valley. That makes it necessary to agument the Sacrju flow by diverting into it the nearest as-yet untapped river, the Ef"-; enny wild river flowing through redwood ^^^^^^^/^.^lY^^f'^^.f "^tion sons the San Joaduin Valley wants to much water is ^^\^^'JJ'f^^^^^^^ salts and eventuallv ruins the soil (e.g. :\Iesopotamia) unless farmers out'" the salts with even more water. The Valley ^^^^^^f ^;:^^-. ^^^^ ' "flushed" salts, pesticides, and other assorted poisons. f|f ^i^^f/.^/^^-;;"; As presentlv planned, however, this drain will dump its ^/^«te into t lie 1 ui polluting the verv source of San Joaquin Valley irrigation v^ater bout the drain, however, engineers have found tl^at the pumps fotu and Federal irrigation plans will be so powerful that «^^^S_lfJ«I,;/\^J^^ full capacitv they will be sucking up saline water from the ^ay. For tne s ns, the Bureau and the DWR propose to l>^>il^V\^r'"^Y'; thov need 1 vent the Delta altogether and take all the ""l^^^^^f ^.;^'^, :^[,,^\^^ Zt^^ fron. the Sacramento River. Without such a canal. >t ™^1^ ^>y »l'^^j build the East Side Division, and unnecessary to '^^|^[^\;j^^^..,Ver unt (•anal, the <.ngineers can suck up ever-nicreasing '"""""J^^^^*^, ^'^^^ ,i ,"l have drained the Eel, the Klamath, the Trinity, and even the Colun> tliat matter. 953 •hese projects also threaten the Delta and San Francisco Bav itself The : and Delta form one of the major estuary ecosystems on the We. fc oast porting millions of transient and resident birds and providing si awm^i/or unng ground for innumerable fish and other water beasts The demands fresh ^ater now flowing into this estuary, facilitated bv the PerXral fiZT'l ^^T^'"^^^ ^^^^^^^^ ^1^^ inflow. Ecologists present'conflicfing vew. rhe effects, depending on who pays them (ecologists, too. are ••experts'^ .e'cicerr '""' '' '"' "^'^^ '' '''' ^"^^'^^ slow' anything o^h^than DECISIOXS YET TO BE MADE lie Peripheral Canal cannot proceed unless three bodies decide in favor of the Governor is already on record as favoring it. The State Water 3urces Control Board, which decides who has a legal right to tlie ffesh ?r, IS completing lengthy hearings to determine how mucl water the Delfa a right to -use. and how much the developers can take. Since the Board^ nn ees are mostly old water-developers themselves, its staff come, la rgelv 1 the Department of Water Resources, and the law does not fa^o!^™ufe erva ion as a -use" for fresh water, a decision adverse to tLcaiaT .fem^ t unlikely. The decision-maker most subject to present nfluence is the ed States Congress, which must authorize the Canal and approve funds It. Congressman Jerome Waldie of Contra Costa Countv has been iead?n' a!!y\=Si^teT^'^^- ''' ''' ^^"^^ ^ '-'' ^' '^'^'^^^^ ^^^^ —^ ; approval. In fact, important California water figures, <^ucirrsSecreHiw' resources .Norman Livermore and former Director of tl^e DWR Harvev .s have expressed opposition to it. so there remains a substantial cl a nee Governor Reagan will veto it. Should he approve, the pro o^al wo dd e Eel River decision has an interesting history. In 1068 the Armv Corps iigineers proposed a dam on the Eel at Dos Rios. The dam ™[d have minor flood control function-the basis for the Armvrinteie t-but 954 would serve mainly to collect the Eel's water so it could be tunnelled thro Z mountTinTto the Sacramento. The Corps phms found some anj,'ry con vation^st w.aUinff They didn't like turning one of California's last wild rij ^'f^n .^^ J nnl turbid like destroying one of the few remaining salmon and st i/v?ms i^ ifs ate dnn^^^^^ valley, and displacing its Im T . tnnt. Vviolatio^^ of their treaty. The Corps compounded its difficulty irresentL^^^ "eyaluation" in support of rm^^^^^^^^^^ '»' Harrison Brown and other econorr ^^^^finf^^^i V thP conservationists The Corps also showed remarkable call Telf to he 'ind'arp^^^^^^ trade them worthless mountainside 1: rntni wh ch they could tend tourists, for their Round Valley farms. As if niT were no enou^^^ the Department of Water Resources o^^nm^ ^^ ] ^ome transparently dishonest estimates of water "requirements" in Soutl cTfornla S it used to justify the development. Of course, tlie es im nroved^^^^^^^ dishonest only because the conservationists had ol.ta nsmlissef report prepared two months earlier by the Department s So errCaUf^^rnia s aff^^ which showed requirements far lower than the Dei nLnt was asserting. Although the Department attempted to discredit rTport (and reprimanded its authors), it obviously played a role in Gove Reagan's decision to call for additional studies. M 'h(i! nidn anJi^tHihihiyhiifed Wl,il<. thos.. a,imti„nal studios; completed in 1969 by «f,,"^ Kg^«|^% „„.„,l,..l I)„s Uios, tl.e Deimrtnient 1ms since issued its B'lUe ti 100 .^'. i„« and pnKlietinK all of California's water demands '^"'^ ^''^^'f^^." fifty vears. While si ill full of i)robleiiis, tins document is vastl^ supu 955 ng the Department has previously concluded. Most importantly for Dos It draws upon revised population estimates and the more sophisticated IS of the suppressed 1968 document to conclude that Southern California need any more water for at least ten more years. This in effect pushes '1 River decision back several years, and relieves at least the immediate re for development. The report's conclusion may, have a similar effect on ■npheral Canal, though the DWR and the Bureau of Reclamation won't that. Tmie is probably working against them, and if thev don't get the eral Canal soon, it may never come. Drain, once also a hot issue, has subsided for the present because tarmers appear unwilling to pay for it until their land becomes more si.y polluted. Some sort of drain eventually will be needed, but the solu- 3 that problem will probably be to remove the salts and poisons in a ent plant before returning the water to the Delta. The legislature and )VGrnor will make the primary decisions about the Drain, although the ! water pollution standards, and their enforcement by the Water •ces Control Board, may become important as well. The Peripheral Canal time and place to stop the State Water Project. To destrov our environ- 956 ment to enlarge such a con game for already-bloated special interests is ml) ic bscenity. The cost of additional works will be huge. 1 he I W R .xi,e ost of Umt cost to be met, not from Project revenues or bond issues, I from the public treasury, by way of a $080 million interest-free loan, now pr Tc^eVfor use on Dos Rios. By stopping the Project now. he State can k^ itself he nterest on that money-an amount well over a bi ion dollars. 1 StTte'sVresent financial squeeze seems to be due largeb' to the Project What of Southern California's water ''needs 'V They shouh^ at the |. least be recalculated with sound economic technidues. I^'nUetin 100-<() ,^ start All locations presently suggest that "needs" can be met through av able "^^ter in the South, at an economic cost comparable to that of Dos B nr othpr State Water Project increments. , iTconclusfon^ U^ prospects for stopping the State Water Project seem ex len iCpSieral Canal, the East Side Division, and Dos Rios or its equ: ent must all receive Congressional approval, and (^ongress has shown it: ncreas"nglv reTponsive to environmental considerations. Congressman Jen \"HTdirhas sS^^ positive legislation to give the Eel, Trinity and Klam Sivers WUc'r ver status. Should Waldie's bill pass, the Project could Saruponh^r waters and would be effectively blocked. In addition, van people a?e trying to stop the Project through lawsuits. Perhaps one will PPPd Efforts on the State level, while more dubious, may have a better cha once ^he facts his Project penetrate the smog of deception ^vnch DWR pours forth. Most politicians who favor the Project sincerely believ is good ; some, at least, can be persuaded otherwise. As this studv should make clear, the chief losers from the 1 roject Sotthem Califoniians, who must pay for it. Efforts by the Project's oppori to make this a North versus South battle only obscure that po mt, anc coursfplace a inajoritv of the State" voters firmly on the Projects side [f the Proiect doesn't stop now. its continuation will have not only misU reg mial ?acho alism on its side, but economics as well For once the pipeline from North to South exists, it may well prove cheaper to meet a 957 demands by damming another river, instead of initiating a whole new supply system sucli as desalinization. The State has full plans for ?his ^r growth outlined in a document entitled the California Water Plan It ake all the remaining rivers of the North Cost-the Klamath, the Trin- lie Ban I uzen the Mad, and the rest of the Eel-with unforeseeaWe 5 on the climate, the beaches, the redwoods, the fish, and the other A^ld^ )s individuals can take : !?the Ee'r"''''' ^^''^''" opposing the East Side Division, and any develop- V nte your congressman and Senators in favor of Wild River status for M. Klamath, and Trinity Rivers, and in opposition to the East Side Di'i- ny Eel River projects, and the Peripheral Canal alifornians. and indeed people in any State, should support legislation ^ed to divest public works agencies, like the Department of Water rces, of their planning and evaluation functions, and to place these func- tor all kinds of public works, in one agency especially designed to do oin or support organizations working against the State Water Proiect on ate. Congressional, and Executive levels. The individual hasn't a chance uencing. say. the Department of Budgetary Analysis, but organizations )orted can hire the lawyers and staff who can. These include the Sierra inenas of the Earth, the Committee of 2 Million to Save the Eel the hfornia Planning and Conservation League. Nader Team Is Playixg Nasty Games (By Allen Bottorff) lifo;^nH' S^fn?f wo^"^ ^"^ associates demand the complete abandonment of Ufornia State A\ ater Project— the completed features— those under con- on-and still others on the drawing boards it is necessarv for his Farm I publication to offer an appropriate response * :'Ould do not better than to open the columns of the Farm News to the 110 served as chairman of the Kern County Farm Bureau WaTer Prob department from 1953 to 1961-Mr. Allen Bottorff. We preseniherewi h .e consider to be a definitive document prepared by the Calif ornianbes 'd to undertake such a task. lMin't7pr.'n%''fh''''''''\^-\''r^''^f ^^ ""^ '^ "^'"^ ^''^^^^ ^i^'-^lifi^d ^O discuss II matters as they relate to water development. He is trained and expe- in accounting and business and operates his own 600-acre farm in' the ^' l/'p''^''' ;^ Kern County. He has been closely identified with le ^ ter Project since 1052. was the first president and for 8 vears a r of the Board of Directors of tlie Kern (^ountv Water Ageiicv \t pres- serves as consultant and authorized representative of the Agencv on fie c'';innam "''''■''"' ^'"'^' (V.mmiftee. of which he was fo? .several ftlT'^. U^n '''' ^^''^ f ^^'^'^ Chamber of Commerce Water Resources PP. A?I ;• T'^''''^ •'■'''''■•^ ^'^^'^ '' ^^'^^^1' "^ ^^>^' (^alifornia Water oimtv ''''" ''''' "^^•«n)orator of the Water Association of QH%f,t^\v\"'''i'"'? availabh^ this carefully prepared document on the inrare Water Project. THE NADER TEAM IS PLAYING NASTY GAMES— WITH THE CALIFORNIA STATE WATER PROJECT"" •fte^'ln^l'^fnl" ^'"'f-^ ^l""- ^r?''^ ^^'^ ^^'"•^" t««- ^^^^^ devotees r>f this popular 'o tl P orP " f'vT''''\ ^ ' '''^'''''^^'' ^'^^^ ^^^^ ^^^'^^'^ ''f ««"^^ people to PrLl T^ "l.^-''-^^^';/^ "'-'^"^ ^" l^^^^t is the great California State iroject. Even this ambitious endeavor-carefullv planned bv the engi- 11 arTrr""''~^'''-f '^ '''''' "^ ^^^^ '^^'^^^ Legislature-ai7ed fullv In 'd bv f ^fr^f ^^ide exposure to the people of the state-and then ^} a Aote of tlie citizenry— has not escaped the hazard of the "sec- 958 ond-guessers". At this late date, after 1)8% of the initial construction feat a?e completed or well under way. the detractors are sending in their 1 string "second-guessers" admittedly to scuttle the entire Project Just as the benefits of this great undertaking are heginning to be felt- as mderground w-ater tables are beginning to feel its beneficial impact- as the desert is becoming green and fruitful with the application of ^^ which if unharnessed and unused would run out to the sea-in come t wo say that the whole Project is a fraud, a deception, a flim-flam, a wm. for the wealthy, and a congame. They point out how the Project cai stopped, and louhly claim that it should be, and that the ehances of stor '^ o7 coufs^ th^ -second-guessers' of this hatchet squad haye one pos minor adyaitage-the adyantage of hindsight-a luxury not enjoyed by 1 Xonsible in the first place for planning, authorizing and implenientinj pS-and they have not lived with or built any part of the Project. nSi they haye gained some public attention by rushing nito he a screSingT^ a high decibel leyel-they do haye the disadyantage of being Wffheir purpose were to be helpful rather than destructiye their Suggestions would' rate some consideration and use to the extent yet found ""'^This recognizes that, admittedly, no such project is perfect ; and that prSect migft be improved. It also rightfully assumes that such criticism based on fair and honest appraisals of all facts concerning the undert And it assumes further that the suggestions are not the result of conti di^forted inaccurate or incomplete information, or based on mistaken ass Hons and that they are not induced by motives geared primarily to the i *!ition'of stomnng the project or impairing its usefulness. "'uiZtuSely' a new ^grand-scale team ^^^^^^j-^^^^^^J^^/^ mike and imblish malor and serious charges against the State water ir Judged l^y the rhetoric already previewed P^^l^^^^' ^^^"^f ^^'^^l^^V^^f,^ the methods employed do not add up to a serious effort to be construe n forerunner of this team effort is an article called Ihe ( alifornia State ProTecr^mUiored by a team member, Keith Roberts, a young San Frai attorney hVs blast at the efforts of California to «^>lve its water pro appealed in a San Francisco publication called Clear Creek TJie Roberts ce wis next reprinted in full in the Congressional Record at the requ. Congressman Jerome R. Waldie of California's 14th District. The introductory remarks of the Contra Costa County Congressman, a appear hi the congressional Record, hail and warmly embrace teR. ArHcle Waldie reveals the article to be a part of a larger Ralph Repo t,* 'Power and Land in California". At this writing the report lia been released by Nader's Center For Study of Responsive Law. WHO BENEFITS— WHO PAYS? The entry in the Congressional Record places Roberts in the role of | researcher and master auditor. One is given the \"^l>^f '?^^V finnueini fill study has been given by Roberts to all of the Project s financial a. ThesrwotdriS fiscal and other relation.ships with local water ''"^^"^^r^^^t:^. casts him in the role of expert enti. of the ^ po cies of the State, the Agencies, and the ^'^^'''^'' '^^T^^a '^^^^^^ uid taxing programs. The entire Project and many people and a, oicie nectcKl with it are roundly attacked after the ^\"\l;«\j;^^.V^^^\,;J; „ since referred to as the '"rather profuse publications of the Departni Water Resources". . nmUpri ronven As we have since learned, Roberts engaged in only f^ ^ed conver with informed oflicials concerning the Project. It stands to l^:^^^^^^^^^^ ornuH.ntal departmc.it charged with the responsibility ()flanim^^^ structing so huge an undertaking as the California State Water Iro a of necessity, .»<■ obliged to prc,>are and issue vo uiiniious rep rt^ U^^^^^^ <.ategorically said that no one in a few short ^^'^'^'l^;^. ; "^/^' ^. 1 ^hc ' ground of years of day-to-day experience and f;^"'^^^'/^ ^/i,^!^ c^ in hope to absorb and pass judgement on the reports ^ "^\ ^ /'^^f 'Jh- ramincafions. V<.t this very feat Roberts would ha%e us accomplished. 959 Ills writing It IS not known what the full thrust or impact of the com- sader Report will he. hnt we do have hefore lis the Roherts section now has hecome an important part. To get the feel of Roberts report nS look at his conclusion as found in the first sentence of its closing para- tL' S^r' vft '''^"^^7' '". "^"^^ "^ ^"^^l^'^^^ organizations wo Sg the State AJater Project. . .- The organizations named as deserving il,port are: The Sierra ChiD. Friends of the Earth. The Committee of ^illion to Save the Eel, and the California Planning and Con.servation indeed disconcerting to contemplate the probability that manv present -s of these organizations may have been induced to ioin these efforts on rAHnrVp"''!"''''"!''"" ""1^ brainwashing as is found in the Roberts s. Man> present members probably joined years ago because the organi- ippealed to their love of Xature-a love shared by manv of u.s who Ire nbers ^ow they find themselves saddled with policies with vhid thev = won d not agree if given the full facts. AVhieh leads to the f urtlier tion that this latest blast adds no new lustre to the Xader repi atio ahhe. m introducing the Roberts article in the Congressfonal Record hZ' who .'" i" "'"^ '•''• ""'''''' ^^^l^nnnU. chief co'Tordinator fr^ t^" >tud3. uho said concerning it: -The key principle we are seeking to mt IS this: when someone receives a benefit from public ironev he .ay according to the benefif. The implication is clear that the N^.der .uld^have us believe that the State Water Project clearly fails to meet le reflection however, will establish that the application of this princi- ?^;7r^t^the%u"'w\"^p' '"' ''' ''"^'"''^ ^^-" ''^ c^mmi^:::^. in nnv Ltl "^ ^^''^'^'* ^''"-^^^^ "^"^^ ^^'^^1>' exemplifies this prin- geprograii^ government program, with the possible e^^-eption of .some iiotable that the arguments advanced by Roberts have as their central Imt the Proiec i.s rife with -.special interest favoritism'- and -subsich landholder', that -outrageous costs and slim benefits" mark the Proi elopment and future: and that it does a gross injustice to the Califor myer. Plausible cause, indeed, for scuttling the State%^^.ter Pro ecr" ^e^Tunl^J? '''' ""^^^^ ^'^^^^^^^-^^ --• Fortunately ^uch ^a^ the record straight will be the primary purpose of this article It will oh member Roberts and the Xader Team, as well as the ' <4nera •o icermng some of the facts overlooked in the Robeit.s articfe am the errors and incorrect assumptions it contains. In what wavs the ^ t at;:m;^^;l\'' established through point-by-poin 'ai^al^s o? .Lv^ attempt will be made, however, to respond to them alf Other ^ llla.^ have an interest and some responsibility in this matter. THE LABEL AXD THE CONTEXTS !!Ll""^'^^^''^ Roberts charge that the State Water Project as it is aZ;^ ^' something -quite different.- from what the legislature ad the people voted upcm. Frankly, nothing in this article teHs lis 'proved bvTf "'"'7 '1 ''''''' "^^^ '^''''^^'>' authorized by the regfsla- State'wn.pr ^'"'''^^ M ns inform him: They authorized and voted ^tate Water Resources Development System for the State of Califor- "^ ^lel^ion''^ T^T'''\ ^i^^, answer: -The State Water Facilities hP .nH ??^^ ^'^^ ''"'^ ''"^'^^ addilional facilities as mav now or be u horized by the Legislature as a part of (1) the Central Valiev as Ue enUt,nln';''i ''"''" '^^"" ''^"^^ including such other aMifional hnf ,w f 1 '^'^'^'^''"'•'' nece.ssary and desirable to meet local need'. the S-u ' nf' r'l'^' 't" ^''""'^ ^""^^^*^' ^^^^^^ t'' ^^^""^^nt the suppHes of anno thelct-! '" '''^" ^'^''' '""'^ ^^'' '''''''' ^"^^^'^ ""'^ appropri- sori'i,ls'irr".!'pnpr.n''^' ^'. ^^'^"'^"■'' '^ ^^o^"ni^nt of ten closely-printed Mc Tt a luT^fp^ T^ V'^ '"i '""'^ '^^^''^^^ ^^^^ ^^^'^^^ ^"^^^^^ development mantenarr '^■' '^''''''\ "-^^ ''''^'' ^^" ^^^ construction, opera- uiaintenance and for its correlation with the State Central Valiev 960 Proiect which was authorized by the Legislature and passed by a vote c neX nearly four decades ago. This latter act had been a part of the la^ vears-unused because no market existed for the bonds it authorized d the depression years of the early Thirties. , ^ T Estate Water Resources Development Bond Act is a big order On. three quarter billion dollars of general obligation bonds were ^^^^"thonz ''assist'' con^^ of the system, of which the State Water tacihtir but the inmal unit. The State Central Valley Project Bond Act provide Revem^e Bonds, but it has been of assistance to the financing pro ObvioulTly, such a broad authorization can have different meanings for . "^""However the very broadness of the concept denies anyone the rig charge that the State Water Project, as it is being developed is soni. "nuite different" from what was intended. - r. i-* At tl e ime this Bond Act was voted upon by the people of raliforn State WateT Facilities were necessarily described in general terms, refl U f accompUshments expected of the Project rather than specifying d S Lrfhat time the original outline has been judiously filled in with mm cmc plans and specifications. Additional capital funds have been approp, raised fo? provided through the early State CVP Bond Act or other legis IS contemphited in the 1960 Water Bond Act. The genius and f ores i those ^Sco^^^^^^^^^ and planned the Project can be attested to by the 1 necessity fo? major changes during the 11 years since passage of the '"' Changes made were dictated largely by changing circumstances over tl: decade None were made willy-nilly or to deceive: neither were they ^^ithout the benefit of public hearings; nor were changes made except '. vided bv existing law or new legislation. . ^ . ,. -^ u* Thus M us dispose of all argument that the Project is "quite difi from ^mt sold le'^public. Its variations from any early norm were ex and T)r wixled for either in the Act. or by new legislation, duly approved^ L'e-comer Roberts is wrong in saying otherwise. Second-guessing r fun : it may be easy, but it can and did lead to false conclusions ! HOW MUCH WILL THE PROJECT COST? In his related complaint Roberts says the Project will cost close to i lion dJ^lars, instead if the two billion the People though they we^^^^^^ He further asserts that the people were not told about interest cosr. ridiculous! Any reasonable assumption would be just the f^^^^^'^^, ^1 The public was not then, and is not ^o^' ,^o^^^«^^, J^^,\^/\^^; '^f^s cost of the Project should be expressed as the sum total of ;^^1 P^^^ future costs-including capital costs, operating, power, maintenance j ment'and'hiterest cosfs from 10(50 to date -^^/^-^/^^^^-^^l^.^^f^J'^'i authority Roberts should know this to ^^^^^f . f J^^^.^^.^.^' figure B( Mil Of these costs when he mentions his ten billion dollar figure iv^ u ie s lows that he is the one confused. It can well be mentionec here tl uring that 65-year period, with cool heads prevailing, more tMn 200 ere feet of water will have been conserved and ^^/^^P^f ^i^/^ ^ " ,' long the C^ilifornia Aqueduct. Not a bad accomplishment foi ten bill lars-or whatever the exact final all-inclusive cos m^)-V^;^, . ,^, As we continue to review the questions ^^l^^^'l^'^.^^^^' \^^^^^^ matters of costs and their propriety, ^^ . ^^V^^^^ |^;]'^ "f ' /^eexrre mel charge-out of these costs along with certain ^'^^^ors that are extr^^^^^^^^^ nent. First, it should be known that for many years wenditures m. u State for ccmstruction and operation of the f^ate Water r^^l^^^ '^ under reivew bv internationally recognized, independent cenineu r^nintlilg firms hired under contract by -^her a sir^e a^cy m b> of Mgencies tiiat have contracted for water supplies from the 1 jojta- )uring these years of investigaticm both the amounts and he met di tribuUon of costs among the contractors for pro ec h-J-^;- .^ l\ lariv examined and reported upon to the P^'^^icipatii g mU.^^^^^ known of any effort on the part of Roberts or any other ^adei t( m N "nsult with the agenc-ies involved in these a^dit pro^J^nms <>r . > of tlM.se Muditing firms to assist his review of ^>« ?' ^^^ ^/rM^,^^^ Ib.d Rob(;rts done so, he might have written a far different aituK, none at all. 961 1 any case, had they contacted persons in the contracting agencies involved he audit programs, their understanding of the Project might liave been ^rantially enhanced. second important factor is tlie Water Service Contracts executed bv the ^ ?,"'^"V%.J r^^e^^^.i^f «r Districts engaged in receiving and distributing e Project ^\ater^ Under these contracts these governmental entities are mi ted to pay ALL capital costs of the Project allocated, in accordance .the Act and other particulars of law, to the water supply functions of Project. Presently this is estimated to be about 00% of all capital costs interest. We refer to all capital costs to date, and such future capital costs re projected toge her with interest at the project interest rate-from the incurred until paid in full, plus all related operating, power, maintenance replacement costs, payable as thev are incurred it-name lite clearly these water service contractors and their constituents have a^^ale of this obligation including the interest payment requirement for ..nes about through the contracts, all of which necessarily were approved ul.hc bodies and several of which had to be further approved bv the peo Further the Districts Securities Commission and its successor, the Dis- s Securities Division, State Treasurer's office, which review the financial lis of such agencies prior to their going to the market with their own rities to finance their own construction programs, is fully informed, concern his commitment to pay such interest as is the public through their hearings ' 0^ V FromThp'pP l'" ""'T. ^'^^ ''' ""'' ^^^^^^^ ^'^^^s. What about tie 10%^^ Irom the C-P.A. s audit reports, as well as from State Department ater Resources publications, it may be learned that Project costs allocated ticipated to be allocated to others than the water service cont mJtors an l.ursed by them will amount to about 2i/,%. Costs allocatecWo non reii^i^i^^ ^able functions such as recreation, fish and wildlife enhancenrent mav nt to about .y,% of the total project capital costs and related opera tiY trFTT^"'' r^l replacement costs during the 75-year pedod S et the ILLL cost of mitigating any damages from the Project to fish or le IS en irely at the expense of the water service contract('rs. Onlv en- r rp nf ,f ' ?'^ "^^ reimbursable by the contractors. Everv step \n the chire of allocating costs to non-reimbursable functions is controlled 1 1 w accompanied by public hearings. ^.u^iuiieu o.^ la\^ lat about the costs of these non-reimbur.seable functions, who pavs them-^ hosrwlt"^' ''f '■''''''' "' '"'^" ''-''' ''^^ ^"^^^ ^'^^ts. Tins puimc also in: s those Mo reside m areas served by State Project water— the same neo- pie of the. uho benefit shall pay according to the l)enefit received" is nably complied with in this situation t it^teiNeu is ieTonle"n^"cnl-t^""''^"^ ?'''' providing benefits that redound to tnte s t .vnnvl;« ^^' ;''T^ therefore are quite properly recovered from h ch IvlZ^T, .i"" 'V^'^-^TT^^^ "^^ exception of the costs of flood con- Ti Lo ^ ^^ ^^'"^ ^""'^^'^ ^^'^^^•'^ Government as a matter of national • These monies are collected from taxpayers nationwide. XO INTEREST OX THE TIDELAXDS FUNDS ? d 'to nfp" p' -""'^V^^' ^^'^ ''^^"^^'' Roberts' charge that State monev ad- frle "^^,/^^J^^/; ^"^»^ a« Tidelands Oil and Gas Funds are provided in- innivTn'r''f V^V^'^^^"'"^^"" ^^ ''''^' ^""^^' ^^"^^- ^1^^ interest charges ac- •ipply, and what thev accomplish JMiiVcSl^'n^P^'-'^f ' ^'?^ T ^^ Tidelands Oil and Gas Funds for of Proippf f/r ^ ? construction was both contemplated in the earlv n of H^i^^ li'*'"^"^'^^^^" '"^."^^ provided by legislative action. Actuallv. a "hen t le ^ n p ^^"'-^^/^^'-^ined away by subsequent legislative action at a vevJlr -t ^"'^^"^^ "^^^^'^ ^^^^1^- ^^'^''^ ^'i^^^^' ^l^i« action as a violation ^e^ lous commitment of such funds to the Pro ject ^'rivi'rfrlnl'T^^/f ^^'^^ '™^'^'^ ^^'"^'^ "^'-^^^^ "" '^'^ ^^'^^^y "^••^t a reve- t to ,2 "i" ^V'''^^ non-replenishing resource, such as oil and gas, could ■PiT,ie? A r l>.v investment in a premanent asset such as the State vever hi ^^'^'''''i'^ll'' "'^'^ ^^^^^-^ '"^^^ unknown to Mr. Roberts. •uVce of P^"^ . '^'""^ ^^^ ''^'^^^^ ^^^'^^^^ contacts are written, neither urce of Project construction funds, or any particular legislative require- 962 use on bonds sol ments concerning their repayment, really controls the charges to the water sup ply contractors with respect to interest. This is due to the fact, as pointed on: earlier, under the water service contracts, interest charges begin to run or costs and are charged to the contractors immediately when such costs arc in curred for Project construction. Thus one of the important puri)Os<'s of the in dependent C.P.A. audits of the State records is to precisely determine the dati and the amounts in which such costs are incurred. Now that we know the water service contracting agencies must pay sucl project costs WITH INTEREST, it may he asked, whatis done with the inter est earned— what becomes of the repaid funds? To respond, briefly, it is nece^ sary again to refer to the California Water Resources Development Bond Ac which, paraphrased, says that such revenues, together with any net revenu derived from power shall be deposited in a spe<'ial account or accounts in th California Water Resources Developmcmt Bond Fund. Then they may b( for the following purposes only, and only in the following order : Priority No. 1. — Maintenance, operation and replacement costs Priority No. 2.— Annual payment of principal and interest under the Act ; ^ -, ^ • x Priority No 3.— Transfer to the California Water Fund money to reunbur.^ funds utilized from this fund for construction of the State Water Resource Development System. Priority No. 4.— Anv surplus revenues not required for the above purpo.se and not required to repay the General Fund for State advances for paymeni on Bond principal and interest ; shall be re-deposited in a special account ar such funds are then appropriated, and available for future construction of fi cilities of the continuing State Water Resources Development System. All of these revenues constitute a trust fund pledged for the above purpos( and uses and further pledged as security to the owners and holders of the i sued bonds. . , , ,, ,, ^.^^ All fiscal operations of the State Water Project are required to follow the: priorities and rules. Thus, expended Project funds return to the Project m fii circle augmented by extra interest earned along the way. DWR Bulletins the 132 series fully describe this process, both on a historical and project* basis extending through the period from the year 1960 to the year 2035. These bulletins have several purposes, among which is the technical suppo of the charges regularlv billed to the water service contractors. Auditors f the contractors closely review the bulletins and comment on their contents thev relate to the propriety of such charges. , Both the text and tabulations of series 132 bulletins tell many mterestii things about the State Waaler Project, particularly when they are correctly ) terpreted. Bulletin 132-71 issued by the Department in May «f IJ ' ^ t"^^^^^ the grand total of the Project net revenues, or surplus at about }^2.5b<.uuu.u for this 75-year period. Of this amount about $1,067,000,000 (the amount of i advances), "will be returned to the California Water Fund in accordance wi Bond Act priority No. 3 requirements. This fund may be again drawn upon l future Project facility construction or, as an alternative, it may be approp ated by the State Legislature for other purposes entirely, in which event would no longer be available to the Project. ^ . , The remaining .surplus, projected at about $1,500,000,000, will be retained Project funds in accordance with Bond Act priority No. 4 requirements. Mi funds may be drawn upon for construction of additional facilities f>r the Mi Water Resources Development System in future years. The need f^i' ^^ftitioi Project Ccmstruction is now estimated to materialize beginning about IJ.H). It is particularly worthy of note that when, in the future, money from n ther priority 3 or 4 sources is expended on later Project facilities, inter again begins to accrue on the amounts allocable to the water supply functi and chargeable to the water service contractors. Thus the refunding and i revenue circle begins again. • . ,„;ctnV One item of record, which may be related to the Nader team s m stat theorv that the Project's cost is ten Billiaon, instead of two Billion dolais, found in P.ulletin 132-71. It indicates that Project gross yevf>""f J«/ ^^l^, riod 1060 to 2035 are anticipated to toal about ten billion dollars! Note, pan ularly however-, that this is i-ev(>nue— gross income— not costs. ^^^ ^^^^,_ ..„„ , This l)ulletin also pi'ojects total operating costs at about $3,135 000.000 n iiiK the period; projects bond service principal repayment at alx «-.•« 963 72.(^)0.000: and projects bond service interest at about 5^2.649 000 000 ThP ainder. projected at a little more than $2,500,000,000 constitutes' the proiect's revenue or surplus mentioned above. I'l^jeci j, le^ anticipated Project gross revenues are derived from the following BCt^d Reimbursements To Be Largely Derived From Pavments bv Agencies Contractmg for State Water Service ' ' a water charges (capital costs reimbursement, including a water charges (operafing'cosTs'rVim'bursement)" ^^' 450 977 oon sportation charges (capital cost sreimbursement," 'including erest) ^ sportation charges (operating "costs 'reimbuVsem"ent)7/_ "_ "_ "_ "_ 2, 496, 554, 000 Total reimbursements to the State by the contractors. __ 9,393,089,000 Other Revenues as Projected s-Grunsky loan repayments e-o 7^0 nnn D^oval) ^'^ ^"""^ ''''^'^^'^'' enhancement (subjecVto legislative ' 3d Stat^sTSan Luis"share"of ope'rationY/. I26 560 000 :Uaneous income, including interest earned 'and" Or oVille ^«' ^^^' ^"^ power revenues after year 2018 319,599,000 Total projected revenues 10,011,964,000 may be noted that the terms anticipated and projected are emphasized nZZfV ^'^''- ^-^r^^^i^'^ ^« ^l^e fact that all future values Lre shown stuSLs TLr'f 'r '^' '"'^^ '' Department of Water Resource ' studies. The r assumptions may vary somewhat during the next 64 • however, their estimates have been pretty good so far. The d/r full v ins the assumptions it uses in the development of these proiectLns ' Wo ;"" S '^^^'''^'' '^''''"^' '^^ ^"^^-^ reviewed here. Suffice it to say that pu^'osT ' P^^J^^^^^"^ ^"^ ^^li^-^^i ^o be reasonable and adequate for THE DELTA POOL EXPLAINED this point a question may be raised concerning the proprietv of accumu- iotl?hf 'n"r/n''^"' ''. '''''''''' ^'''^''''' ''^^^ operat'lons of the P^o^- le h nroi!!;?'??? ^"^ '"'"^ ""^^'^^^^-^ ^^' "^^ procedures which make 1 im iV f I '""i ^'^^'«^^"^' «r surplus, arise from the Delta Pool Con- 4ich thi .'m •"'" '^ '*'"^ '"'"^ ^'^^^ ^""'^'^^ Resources Developmen? Bond nallv ^^1^^^^^^ approved in 1960 and the State Water Service Contracts avail, le ZtT^tT'l'^'T' '^'' ''''''''^'' '''^'- '^'''^'^ '^'^ supply of a^To; nl T.^^ S ate ^^ater Project at the Delta of the Sacramento Proi-ec w..^^^^^ •' diminished below the entitlement levels called fo? r.ro..*' T ^l^"" ^^'■''''^^ contracts (primarily anticipated because of possi- ^.rv^V'^'"'''"^""' "' ^"^^'^ "^'^^ additional facilities shall be constr cLd S-^'r.'^^'^^^^ ^^^^ available a new supply of water arthe Delt^ ' sufficient to make up the shortage ^tiei ai tne ueitc. iN^'l'nnbV^fi''^ ^?!i' ^r '"PP^-"' '^ ^^'^" ^l^^^^d in ^'i«^ the Delta charge roS hlhern^^ result for all State Service Contractors that^a -e CO./ it^t- ' ^'^ •'''''^^'' ^^''''■^^ becomes effective, based on this new dev^opt IIITIV'''' if late-comers desire to use a portion of anv grelter^rit fnr .n ^' T^^'^' Provided by the system, they can do so fer earliPr rnn^.o . ''^'''^^- '^'''^^^ "^'^^ ^^^^^ ^^^^^^^^^ "^"«t then be paid bv ler earlier contractors receiving water from the Delta. ^^lv S'^Jlir/;.""',?.^ ^r^"^ ".""^*^^" ^« ^^^^ contractors that, though thev •ncem oti'f ''T «^,?"^^^^^ increased Delta water costs under tTni n i!* , ^""^ ^''''^^ ^'^^^ "" ^'""^^ for the shut-down of the entire wl^o .v/ ?^^^f ^^ ''■'""^ ^^ ^^^^^^ JiJ^e ^'^^der. Roberts and Waldie and trthe;;wn wn^' '' utterly impossible for them to fulfill their commU cneir own water users— or the late-comers. 964 The provision of the Act and the water supply contracts which require 1 accumulation of funds for future Project facilities in this manner to augnw the supply of water upstream and in the Delta, together with the averaging both early and late costs among the early contractors and newcomers, iriai] upstream, are the practical means provided for the fulfillment of the I)e ^STd the Nader Team writer consulted with the Project's auditors or w knowledgeable officials of the Department of Water Resources, or the ^ya service agencies involved in the program, or had more thoroughly studied documents related to the Project, possibly many of these matters would hi been clear ; and he might not have felt compelled to charge "gross injusti and "special interest favoritism" in the construction and operation of tlie pi ect From the beginning of Project planning it was generally recognized t costs to the areas of water use would be high, particularly ])ecause th would be no way for them to avoid the interest costs of the program. M( over an important natural water resource would need to l)e conserved at gr expense, transported long distances, lifted for service to some areas as m as 4000 feet. , ^ ^ , , , The objective agreed upon by the water supply contractors was that State would develop and deliver this water at the lowest cost possible and contractors would pay properly allocated costs consistent with a policy of f ness to all ; and by all was meant the entire State of California. It is true that construction costs have risen across the nation in the past years Increases in the projected interest rate also have occurred. On the ot hand some savings have been achieved in Projection operational costs, v the end result that unit values per acre foot have been containd within ceptable limits. t. i <- « This was the objective of the California Water Resources Development . tern from the beginning. The record this far has been an excellent one, in s of such charges as the Nader report puts forth. Perhaps many of Roberts' compalints against both the Project and aga thosp who have participated in its development, will fall of their own d weight with this better understanding of the Project and its future. WHO PAYS FOR THE POWER? The argument Nader's team member Roberts offers that purchasers of < trie power will pay 100% of the costs thereof is of no great moment- should do so. Actually, from the Bulletin 132 series we learn there maj some extra revenue to the Project from power, particularly during the l years, but such revenues would not have been possible had there not be( Project and the vast participation of the water service contractors, ^^rt more vastly greater amounts of Power are required for operation of the i ect than it will produce. Always it was expected that the power prodi could be transmitted and used for project pumping or the value thereot c l»e converted to dollars— particularly when higher peaking values could he i i55ed— tlien used for purchasing of other more conveniently located or U costs, off-peak power. . .„ His arguments that local taxpayers in the Project service area jmU taxes to support their Agencies' water service contract program is doul) true in varying degrees— but why should there be any complaint about this. Where sucli agencies will supply water for municipal and industrial poses, their billings from the State are on a type of advance repayment sc ule Many of the agencies pay va.st sums to the State under their contract, fore receiving a drop of State Project water. Consequently they miisi: taxes to do so. These advance payments, however, effectively reduce the interest costs they must pay on their proportionate share of all ffiiy-'^i J allocated to water supi)ly and ultimately this will reduce water costs ^^ *''"on'nI("oVher hand, the tax base of water agencies serving agricultural v users from the Project is generally insufficient to permit such adyance ment- therefore, their contracts with the State have been geared to a i< payment program. The effect of this deferment is an increase in ultimart 1„ 11, e agricultural areas served, because of the longer repayment period. 965 ;eqnently thej must pay greater interest charges with higher total water s over this period. ^wtai »aLer sperienee does indicate, however, that some taxes will be levied bv aeen serving agriculture to assist their porgrams for providing and distribudng ^r. Their taxing policies appear properly to be matters of local determ na subject to the general or specific laws governing such agencies. ZOXES OF BE>""EFIT i^rnn^n^wT^^' ^'^^""^l "^^^^^ ^^'^ ridiculous off-haud Charge that the County Water Agency plans to collect a third or more of the State bill Project water service by levying ad valorem taxes. It is true theTgencv levy some ad valorem taxes but only in accordance with certain ^.pecial ations and hearings provided by the Kern County water Agencvlcf de- ed below in more detail. However, the Agency's present projecdons indl that not more than 13 to 157. of funds required to meet State obligations ^nv7rn^'p'r '? ' r.^^\^^ i-^ Pl^i^ to see that these projectionf d ^^ rally from Roberts claim that one-third or more will be collected in this .w does the Kern County Water Agency proceed under its Agencv \cf> . certain steps must publicly be taken: and certain conditions mu.'t ^xi't '"uTZr"^^ T' -'" ^'"^^ ^^^ '''' P^^P^-^^ ^^f making any payment to the under the Agency contract for water service. Prior to anv such tax levv .gency must hold public hearings. " ^ ' ' ese hearings, must be held by the Agency Board of Directors, and ^upple- al hearings may be held by the Kern County Board of Supervisor, ^i. a of such hearings and public participation, zones af benefit mav be eftab 1 and ad valorem taxes may be levied within such zones for the puri X >isting in payment for State Project water service Purpo.^e vnirj; f ^•^t/''''''^ ?',"'^ ^'^ '''^"^^ '^^^^^'^ «^ ^^^iiefits to be received from ro ect. In the establishment of the zones of benefit within whrd taxe^ be levied, there mt^.f be taken into account the following requirements Improvement in the underground water supplv t^iuiremenr.-. . ■nny'of thelgency. '" '"'" ^^^erground water .Supply made available inde- ^The adequacy of the water supply made available independently of the The prospective need for a water supply Extractions from the underground water supply in excess of contribu- The economic impact resulting from the water supplv made available s inlv'nr''''-"' ^^^^^^^^•^•'^^ /^^->'-'^^^^^ ff^^'t areas .o/ receiving a surface ■hotL\ i"il>/^»vement in the underground water supplv bv reasons Ji_comract or contracts shall not ^ assessed pursuant tothis partfoiTar e^lxion'll^T'^'^^^^^^^ ""^ '^'^''^ stringent requirements should lead to PP« i\ , ^ /^"^" ^^^c^^i^nation of the Kern Countv Water AgencVs ^'c^^e^'l^^lr^'^'T '"'^''^'^ ^^f ""'"'^^^ ^^^^ completely nonsensical' is ts charge that the Agency was formed expresslv to let it. agricultural as wi';hin''! Bakersfield tax base. Possibly Uie City arel cvmrrieter- nrL2 ' ?"''• '''■ ^'^'^^^ ^^ '*^^^^fit established through the above out- V reLtTt^b^P^T"^. 1^ '' '''' '''' ^"^'^'^'^^ '^-'^ Lvied'-oud Per\^ith nf.? T, ' f ^l^i^-^nients : however, certainly there is nothing n frvorr^'rh Ai'"^ ''T''' '^PlJ^'^^^f^ this procedure long ago when thev ir^rior Court later when, in a lawsuit protesting a tax levv it .ustainpd he Agency -s procedures and the Act. sustained BENEFIT OR BOONDOGGLE ': l^di'^aimo^^^^^^^ matters as the determination of Project benefits, it is izem nv f tf "" f^^f -^.^^^^^ team member Roberts* complete failure to er's t^V '' valuable benefits tliat flow from the Projec-t. rhe Pro^.f^'f H ?^' acknowledges no general-type economic benefits Project, and no benefits to agri-businesses and their emplovees from 966 a strong agricultural economy sustained l)y Project water ; he admits to sr benefits for water users, but only those received by the larger landholders, i ticularly the larger corporate landholders, the special interest water user8, the land speculators; he acknowledges none of the benefits that may accru. the smaller, mill-run type landowner, or farm operator. Nader's knalyst Roberts seems also to be totally unaware of any ber from the Project received by recreationists, or achieved through I roject ei ancement of fish and wildlife. ^ ^. ti • 4- i -i/ While he acknowledges some benefit may be received by the Project build he makes no reference to the millions of man hours for which good wi were paid to thousands of people employed in this endeavor. ,, . , . Neither does Roberts recognize any possible benefits from the Project in wav of flood control or salinity repulsion. , ,v, f. His super-failure, however, is his rmiission of any reference to the trei dous'benefits received by the puUic at large from farm production made p( ble by State Project water in the San Joaquin Valley or elsewhere when use may be feasible despite its higher level of cost. In the valley, becaus This water, farms, large and small-corporate, individual, or partnershj ownership-now contribute substantial amounts, and later promise to pro greater amounts of food and fibre essential to human life and elemental m economic prosperity of county, state and nation. USERS — LARGE AND SMALL The farming industry is not static— great changes constantly occur ; ar these, the loss of farmland to urban and industrial use, P^rks, highways airports, to name a few. Changes occur, too, in the capacity of land o duce, whether from cropping patterns, pests, weed intrusion, air pollntioi '^ WUhout defending or criticizing the rights of the larger, or the smaller^ operators or the right of corporations to participate in this changing pat ofthe rfght of any farmer to share in the production of farm produce ne to make up some part of the deficiencies arising because of these changes out fear of contradiction, it may be said that the farm products resulting this activitv give greater strength to our state and nation. Proiect water is really needed by many farms that have been m produ for a long thne; and it is essential to any additional agricultural growt wm when received, overcome increasing groundwater deficiencies that beeA developing for years, threatening thousands of P^^.^^^^^.^X^f/rLrese As one well-informed Kern agriculturalist analyzed it: ^^ '^/^^f. ^^P^^'^^ b-isic resource necessary not only to develop new acreage but also to su ac eage? in Kern County. It is known that the native aquifer is dec inin nually both in depth and quality and can now be P^.^J^f,^^^^,,^^, '^/^\^if„ ble unuseability as well as economic limits for ^S'}^''^^^'^'''^^^^^^ that without project water to supplement our native supply— agricultii "tpeaMnrtoThe'general question of new land development as well as . ned'"tion on^older la'nds, and, further, to the ^^esUon of 1^^^^^^^ farm operations, he added: "The development of new afi^^^^ur^^^^^^^^^^^ often associated with 'oversupply' in terms of ^^''^f^'^^,^''^^^^^^^^ term 'oversupply' connotes that waste will be associated ^^i^h increasea pi tier and thatVupply is actually greater than demand in a physica sen. tuallv. supply will equal demand at a certain price. Oversupply also ne factors of quality and implies that all agricultural products are th^ sa an increased supply means somewhat lower prices to the farmer, the im benefactor will be the consumer. The ^f^lopment of agriculture in ^^^ with new production methods means better availability and higi^^^^^ products for C3alifornia and the rest of the nation. Further, the statemen small farmers will be driven out of agriculture 'by the tho^^^^^s i sm ing. Som<. of the less efficient producers will no be ^^'J^.l'^ '"^^^^y^^^^^^^^^ tion or quality standards and will leave agriculture. Th s type of proce. \Z in existence throughout the history -^J^.^\'^'^'^lTnn^''^^^^^^ meant that the general public is better oft in terms of quantity, pm quality of goods produced." (end of quote). fif^ from ' The closest Nader's Mr. Roberts comes to adm ting ^nyj^enefits f oin ect water is when he says, in his Clear Creek article: "While many peo] 967 itely receive this water, the only ones who benefit are those who receive ;Uin lally more or substantially cheaper water than they would get wfthout Project Admittedly, under such circumstances, when thev exist a benefi Id be established: but such circumstances fail to account* for many o?her fits to many others that accrue within the Project service area another point in this article he says: "The Project does not reallv benefit average Southern Californian. But the Project' does benefit two^la^se^^ ll'^%l'^;^% ^^"^«"nts of water: Large landholders and water-us?ng bus^ s. ^Miile he acknowledges some of these beneficiaries are in Southern orma^ Ins choicest barbs are thrown at the San Joaquin Vallev wSere he the major beneficiaries are the corporate farms." Accepting data Dre d by others in 1959 /,e ffatly lut falsely deelares the total a^elge of fuch orate farms served ly the State Water Project is more than T/^ million ithout intention at this moment of either defending or condemning the T corporate farms-but simply because I detest exaggeration and false . I would say right here is a good place to draw the line-the place to re, as General Anthony McAuliffe once declared at Bastogne "NUTS'' ^ time for Roberts' credibility to be examined: (1) because he fails "to no jbvious benefits available now, and increasingly\o bec^e ivaHaMe from >roject,- and (b) because he blandly accepts and brashlv reports irresDZ computations by others that 2^A million acres of corporatfheld acreal rved by the Project. This is drastically more acreage than the sum totl^ acreage to receive such service in the San Joaquin Vollev 'f«V\-wf ^^ acknowledged, without prejudice, that larger corporate farms f\ '\^^'^ l^^^^l ^^'^ «iey do include considerable acreage that ma ve d by Project water now, and later. They emplov a substantial number of e. generally at good wages. Some of these corporate farms are Targ^^^ of them relaively small. Also, there are many other farms in the val^ eceive or will receive, Project service that are not corporate-owned lone Bse are large-some are small. They, too, employ many people general v )d wages. They are all a part of the economy of the vallev generally Z Prn""- ^f^""^ yter supply to be provided in the San Joaquin Vallev mfp v' bVsed'o;' f "^'^'"^ '" ''''' ""'''''' ^^^'^^0 ^^ 600,000\cres witii supply— based on a maximum use of about 2i/o acre feet Der acre— i ZerZrTr''''' '""^f^" ^'^'^^'" Properties, wl/ether owned bvlargt^r operators, however, will not receive a full supply : therefore it mav be vT/JvTjf"^ "'"i "" maximum of 700,000 to 800,000 acres maT ultt r be served to some degree bv the Project that is not all. 'e exact information on this question is available from the Kern Countv )Utf about 80^" TT^'' f""'^^ T'' '^"^ i-P-vement cUstTicts' w[i^^ )ute about 80% of all San Joaquin Valley delivered Project water This lnZT''.l^^''\\^' '^'^^ ^^11 I'-^^^^r corporate landholdings to brierved bv oTcrLloZ of 'tbi.'""'" "^''''^^ ^^^^^^^ ''' ^'' --^ thfn aboS nnh o!' { ^^''^ acreage will receive little, if any, Project water- ^uch acreage perhaps a full supplv. cST>S^'prfJrl^'"^'/" 'v"' ^^^^ '^""^"^^ ^'^"^-^ ^^'''' ^1^^" those in 1 subsMnt ni 1' ^^' '''^^'^' f^istricts receiving State Project, water, al- e th^n thnf j;^..^'''T' ^^^?^^^ ^^^ ^'^^ 1^«« Project-served corporate Accorriini^v n^^ '"^ J^^'1 County-perhaps as much as 100,000 acres in ate St'wJr ''^Vr^' l^ all larger corporate landholdings receiv- in the ToLt'^ ^'- t""^ ^-"^'^.^^n ^'^ ««"^^thing in the order of 325,000 acres Rlirf..! J^aqum Valley service area-far less than the 21/2 1 acres Roberts claims would be supplied. Z^eNn^^V^"^"^ "''^'''^•?' ^^^^'^' ^' ^"^Ity of irresponsible reporting on s hP t T.^- i^^^Ponsible, however, than with respect to manv other « he leveled in his Clear Creek article and now used in the ?s^ader re Iderfserved hv^n'^'^P concerning the actual acreage of larger corporate g-manv hnvp'^rln^ T""^' ^^"^i"edly these corporations do engage in f to imLpnt nf f. ^ ^T TS^ ^^^'^^^"- ^^'^^ ^^^^'^ committed their re- payment of the cost of Project water with interest in accordance 968 with the water pricing policies and taxing policies of the respective ag or districts serving them. ,,.1.1 , In view of these facts. Nader's team member Iloberts, however, lays a when he charges these corporate landholders receive great subsidies and unearned benefits. To respond to the Roberts charge that Kern County agricultural water abnormally benefit from a subsidy of .$20.00 or more per acre foot tt \gency or State malfeasance, reciuires stating again that, neither und State Water Service Contracts, nor under the KCWA-member unit contra there any prospect of any such subsidy. Additional proof that no subsi ists could be demonstrated by further analysis of the pricing and taxin cies of each Kern County Water Agency member unit district, but tli hardly be undertaken here. , It is sufficient at this time to indicate that basic policies by which member unit water districts are guided are essentially the same as which control the Kern County Water Agency itself and many other wat tricts in California. Essentially, this policy calls for payment of all pi allocated costs by those who receive the benefit— the "Fellmuth pnncii you will. SURPLUS SUBSIDY .-• However, the charge Nader team member Roberts tries to establish c( ing an alleged State impropriety and a vast subsidy to users m State d of Project surplus water at a reduced charge of about $4 an acre foot n attention. His claim that Project surplus water is not surplus in reality firm water instead, worth full price, calls for answer. His basic conten that water labeled surplus water by the State is not actually surplus I it would always be available except in an extremely dry year. Why this is incorrect, and why surplus water has greatly reduced vali the considerations that must be taken into account when considering its availability, will be explained here : First, it should be pointed out thai charged for, at so much per acre foot, is not the way the water hills fi State to the agencies read. . , . . ^ ^ Instead, each contracting agency is billed in full, with interest, for ] portionate share of costs of conserving the water, and its proportionat« of the costs of transporting it to the takeout points serving the Agency ice area • t ^ Thus 'the capital costs of the Project, with interest, which are paid f( deferred basis, and the operating costs of the Project, which are paid f semiannual or monthly basis, are fully paid by such agencies, each to tent it is required to share in such costs under its contract, and regarc the exact amount of water actually received. , . , . In effect, as Prudential would say, each agency is buying a piece rock", or as the younger generation might say, "a piece of the actioi fact that no title to this capacity is conveyed by the State to the Agen not diminish the fact that, when an agency assumes such an obligatioi its contract with the State, it becomes entitled to use of a specific shar« capacity of the project transportation facilities as specified by the c while it also assumes, and must pay the capital costs with interest and lated fixed operating costs, regardless of whether its water entitlement ^^Tf^Pi-oject firm water is short of meeting a contractor's entitlement, t able transportation costs (large power costs) would not be charged. Whv then, under such circumstances, should not facilities and servi paid for be used to provide surplus water when available? As this que examined, it should be pointed out that many physical or regulatory some of which are unknown in advance, can have a bearing on the an surplus water availabl(> at the Delta. ,,,wv « One physical factor is, thnt the State Water Project is not a glaMt.^ s instead it depends on massive pumps and electrical energy to delnei The pumps may fnil, or the electric energy may not be available or r (.(»ntrMcts n.Mv"iu.t jtermit the supplying of power for puminng surplu even though the water is available at the Delta, even when aqueduct ^ 10 move the water is available. t, ....„w.^e We can remind ourselves that rulings of the State Water Resources _ -I..! :i:4-„ -^y^, also Kn( {oard, or otlicr agencies, may ffect water availability 969 T the State \\ater Service Contracts, the agricultural water siipplv must T the first deficiencies as compared to municipal and industrial supplv in ?vent of drought and water shortage. This reduction is without benefit of reduction in the fixed charges to the contractors for related capital costs aeration costs of the Project. Those that would like to use surplu'^ Proiect r must consider these hazards and these unrewarded costs Thev cannot ? that surplus water is dependable. While they plan to make use' of some lus water, when available particularly in early vears of the Project when distributi(m costs, too. are burdensome: and while thev hope surplus r will be available later, they also must hedge, by maintaining' costlv . and pumps, to provide the dependability needed, even though thev maV ise them. Obviously, too. surplus water will onlv be provided l)v the State I it is amply available. All of this speaks eloquently for making surplus r availabwe to users at lowest cost whenever all circumstances permit its author's xote e Nader Report released August 21st damning the State Water Proiect ■conceivable way— along with almost everything else in California as well 'faming just about everyone having anything to do with the Proiect. had >een released at the time of the writing of this article, now re-titled bv aithor to read: "Now The Xader Team Is Playing Xastu Games-Witii :ahfornia State Water Project." e luithor was verbally advised, however, on August 6th. that release of ■ ader Report was anticipated "the latter part of the Month.- He was also .hrough that .same phone call to the Wasliington. r).(\ otfice of the Center tudy of Responsive Law. when talking witli Robert Fellmuth. the Xader rts chief co-ordinator. that Keith Roberts* Clear Creek article in.serted in ongressional Record May 24. 1071. by Contra Costa County Congresman Qe R. \\ aldie, had been fully accepted as the basic thesis for the Xader rts section on the California State Water Project. Xecessarilv. however p time of the preparing of this article for publication August 27th in the' .News it could only be written under certain restraint-^, because the r report was n.s vet unDublished. but tlie Roberts article was in full view rn the current flood of releases and press conferences fullv reflectin- the onship between Xader and team member Roberts, readers of this response now rationally interchange the name Xader with Roberts, and vice-versa ?y insider what is said here. It is now abundantiv clear that the views th Nader and Roberts, and the pseude-facts and distortions presented n!i'^ Y^"" ^T"""^ ''""'^ ^^'^ Roberts article are identical. This thought Fhi^. Vr ^'"1^^''' '''' ^^'^ fire-storm set off by the Xader Report bums Hie game they play is with matclies.- nl. is yet another overriding consideration— the economic preservation of ural resource— groundwater. Considering the fact that the recoverv and v-io?" T; '^'* involves substantial cost for pumping and. at times, costlv >enaice there are good and substantial reasons for providing surplus at the lowest possible cost— both for direct replenishment of groundwa- n lir"" T ^il'l!^^^'''^^i^" ^>f -^"t-li ^vater to permit less pumping than otherwise be required. •so doing, tlie groundwater resources of the State, as the\ exist in the nuZ'T '^^^i^^of /^^^ Project, can be conserved and. in the course of time, I hlic benefited. In the meantime, no harm is done to anvone : no new ■ire inipo.sed on any except those who may benefit. And those who benefit fo ..,am m. more than they should all tilings considered. Wliy then, com- STOP THE STATE PROJECT? ler's author Roberts has made it abundantly clear through his Clear Creek Hp int '^ 7"t*\"-^i'>Ji-^ 'ire based on certain prejudices, and certain objec- to rehLr t '^'■'''>\ "'''^ ^i^-" "'^'^^''^ i-*^ ^0 "^^op the State Water Project. He e-comrut. . "i^ of water from the Delta, even though the water nffof til p' r'' ^;!^^'^ ^^'^ ''^^^ ^'' conserve it. Among his methods, the dPfpnri .1 ^^i'^Pf^^^-'^l Canal is considered by him to be a key necessitv. f th^. K ,^^^!P^^^^'^1 <=^'^nal concept point-by-point will not be an objec- Inoti.o J,V.r ,^"^"-,^ ^""^ "^"^^^ ^^''^^'^ ^^'<^^^1^^ l*^ required and the readers "or be further burdened at this time. 970 However, one observation may be in order, namely, this: Tlie State Wate Rescmrcls Development Bond Aet and tbe System it contemplates will tak ^xre of the problems of the Peripheral f'anal, ''^."1 indeed there may be som. in a way that will be fair to everyone. Roberts is foolish in trying to f^)n en oUierwise just as many of his other complaints about he Project are foo is pXps we should not blame him too much for his misconceptions 11) State Water Project, is indeed, a complex and massive undertakmjj. Perhai its work ngs are not readily apparent to the casual student. But perhaps whr lias be^n written here will serve to accomplish in a small way a needed pa, of the understanding that is desirable. THE PROJECT — BANE OR BLESSING? Personally, I think we can be very proud of the State Water Project-proi of the water pioneers, the engineers whose early studies led to its coiicer and the Engineers and ofiicials, and all persons involved in its construction ar o erat^Ton to this day. We can also be proud of legislators who approved tl Bond Act in 1959 and have steadfastly kept the Project on course loo we « be proud of the voters who approved this measure in 19G0, and who later ha^ been called upon to ward off measures that would have crippled the Sta Wfltpr Resources Development System. . C^ntinuTng. I think we should appreciate and be grateful for the Project capadty to serve so many people throughout so much of the State, noNv and the future We should recognize with appreciation the important part play by the water agencies and districts in this program, many of which have heir prTmary purpose the serving of State Project water to their areas. Lil w\se we can be prcmd of the officials of these agencies for their unselfish wo L bkialf of their constituents. Credit is due the great state of California 1 '^ B^'uTthe caps^onron this huge structure consists of the many people tlirou^ oulthe service area who have accepted responsibility for repayment of large a share of the cost of the California State Water Project. Ihis report through the courtesy of the Water Association of Kern C our and the California Water Resources Association California Action, Inc., San Francisco, Calif., Septcmhcr 2/f, 1911 Mr. Alan Bottorff, The Farm Ncivs, Kern County Farm Bureau, Bakers field, Calif. Dear Mr. Bottorff: To try in a few brief pages to rebut all of the misc ceptions, distortions, deceptions and falsehoods in your att^^k on my rep would be futile. I would like, however, to touch "P^^^/^e h igh gh ts^^ as Kern County Farm Bureau maintains, you have written the (\^fi^\^tne re ar to ny report on the State Water Project, my criticisms stand c.. firn for you have not made one accurate, proper or meaningful criticism of that ''""to begin with, the lead headline "Nader Seeks to Sack P^^f^^^"' f^^^^^ ing. I do not advocate sacking the State Water Project. I do not a(hoc iefving the present pipes to rust in the desert. What I do advocate is not ^"vr^ham^S'i^^-rSures by mistakenly assuming that^ I included^ nting costs In Uie c'Listructhm costs of the Project. Mr^ ^^^T l Hved 't ev able since May a detailed appendix showing exact y how I ^ J"^,f^f 'f ', figure I use on the State Water Project. He has not found it V^^^^'^^^ l^J n. objcMction to thesc^ figures, and one reason is that I ^1;> "ot make such numtarv (-rrors as confusing construction costs with operating ^o^^.s. 1^ r rVst, you se(.n to agre(^ that the Proj(>ct will cost ^^.^^l^^l^^^^^^J;; ;^^l than to $2.8 billion. Your excuses for constantly reciting the lattei figure the cost have little merit. , . , • i ,...„.... fiw. witor ai In the first place, you say that nobody is d(H-eived because^ 1 e •' ^ ^^ « c-ics with their battalions of experts know the true cost < V J ^^, ^ "^^^^^^^^ but few people are familiar with water agencies and ^^l'^ V w u • t nv: sav The people deceived are not the hundreds who might know uh.it 971 ■ies are doing, but the millions who know onlv what the Department of r Resource's propaganda proclaims. the second place, you. together with Mr. Cianelli of the Department of r Resources, claim that because cars, refrigerators and houses have been vithout stating the sum of the interest to be paid, it is proper to sell the Water Project in the same way. Neither of you seems familiar with re- rends of law. however, since the Federal Truth in Lending Act and laws nous other states have now outlawed precisely this practice on the d that It IS deceptive, misleading, and fraudulent to the prospective .If you will examine the sales of houses in California vou will notice he price of sales in interstate commerce includes a statement of the ag- re interest— precisely the statement lacking for the State Water Proiect .niLSsion of the interest charges on large construction projects is even deceptive. \\ hen buying a car or a house the aggregate interest does not It to as much as the basic sales price. When buying a huge construction t with interest to be repaid over a period of 60 years or more, however St of labor and material is almost insignificant in comparison to the co<^t Ictor '^ ^^" ^^ ^^^^^ construction projects capital is the largest single ? convenient for the Department of Water Resources to neglect interest l»ecause the omission diverts attention from the huge State subsidv I'.v .nnnrnTtf ^Jf ,^^?^-^- ^'«" ^^^ ^^'^t ^^^^ter Projcct customers will repaV mint of the state loan with interest, and suggest that therefore the loan interest free. But to whom is that money repaid? It is not repaid to the IJTL''''"-'-''l''' l^'^ Tidelands Oil and Gas Revenue Fund which the loan originally. As you yourself show, repayment either directlv existing ^^ater Project obligations or goes into a fund for future ad li- uid extensions to the Water Project. Thus, while the water contLc ors e interest back to the Department of Water Resources, the Department ter Resources is not required to pay it back to the State and to the ; taxpayers who made the loan in the first place. And that is whv it ts to an interest free loan. • ' nnit! ^v'' """"T- \'^'^'^'"' ^^'""^ taxpayers will pay between half and a5% costs. \ou do not .seriou.sly deny this allegation. You .simplv ask. so -and deny that this amounts to a subsidy to large water user^ Let me lese points in order because they are distinguishable ral general objections can be made to taxpayers paying for the Water ^JrLTV'^'f''' '1 "^'"^"^ '^"'^•^^- ^^^^^ r)epartment of AVater Resources fnrH ^ eaders have constantly suggested that the public was not for the Water Project. This falsehood now stands exposed tl; ^l^^ ''?^^''^^ removes freedom of choice and distorts the true demand llthp j!fj '^ "" ^'^''■^''l i^^'oluntarily paying half his actual water costs n hfr) .?'/''' '"^ ^^"tl^^rn California, perceives his water charge as m\} ha f the true cost. He tlieref<.re uses more than he would if the PP fn^lnL^'^f^'^ '^^i^ \'^ f .'^'''^' "^^'^ ^*^ ^'^^^^ ^^'^"^ ^'^ "light if he had as created b.^ the amount of water people are willing to buv when it is rr^rnVr ,^?^^;"^« nuist substitute their bureaucratic judgment. In rn California this has proved disastrous •ountv^Wnfl/^''?"''^ % ^^'"^ ''^^ '"^•■'^'^■^ ^^"^^^■'^ ^" ^1^^ practices of the ^ounty Water Agency, lou manage to convey a thoroughlv erroneous im- n^l ^T "'•" '''■^'''^'' actually says. Although I am generallv critical of th! V f "^^^^^-P^fticularly large water user.s-I said in mv article fiii^ '^iT '■^^'•''^ ^^'""^ ^^'^ citizens of Kern Countv. and parVicularlv R u- ^^,"1^'^^"''^^^^ ^^^^^ ^^ '''^'^'''^'' surrounding farmers. In o?her Bakersfield can make a resonable decision to sul)sidize its farmers But ' tie r^tZ%'' ;^.^^f'^^f-.«"^-l^ -- Southern California, cannot-simplv the return for their subsidy is neglible and indirect. In Kern Countv tim Jn'''r-"-'' ^''^''^^"■'^^•^ depends on the well being of the local farms (li/l t I r'"v ^^'i'"^^^ ^l^/^^I^ ^^'^^^^i-- tlie citizens can rationally decide topnH.J ''''^'^"'^ ''"'^^f ^''' ^^^^ ^'^^^ ^'^""^-^ Land Companv s equiv- acceptmg lower wages. Local citizens can decide to do either. mL?r '■•■'''"•'? -" ^^^^I^"^^ ^'^y ^-lai"! that the Kern Countv Water Agencv iser Tl^TZt'V'''7A'- ""^'^^''^''^ ''^- ^^^^ to subsidize the large 1 tonl n 1 V^^*^¥^^^l'^« to be a matter of dispute. It was openlv fl to me. and as I said above, not necessarily a bad thing. The subsidy 972 arises in the following way: Bakersfield will use approximately 10% ol Kern County Water Agency water. It is taxed on its property base, how at the same rate as all but one of the other water districts witlun he County Water Agency. Consequently, it pays 30 to 40% of^the total taxe sorbed by the water agency. This amounts to subsidy. By my calcnlal based on Kern County Water Agency figures, the total tax l>ay";ents tr agency in 1970 amounted to $6.90 for every acre foot of water that 1. aj deceives from the State. The agency pays ^^ ^^^^^f //"^o^;! ^^ ^' /^ $21.00 an acre foot for this water. Thus, my statement that 33% of the ^ '" Trather "^resent your attempting to distort my comments abcmt the County Water Agency in an article for publication in the Kern County Journal In fact I had some rather nice words to say about the Agency me emote the conclusion to the Task Force Appendix on the Agency : . 'Task Fo?ce finds little fault with the Kern County Water Agencrs^int onerations There are some questions about the extent to which Kern C yoL?s were aware when they adopted the Agency in 1961 that its purpos. o subsidize Kern County landowners or how wealthy the major reci, would be On the other hand, if there was deception it amounted at m( obyuscation rather than outright dishonesty, and the voters have end( wilh a wa^er operation which may be of benefit to them all. Aside froD iTossiWe prow the Agency deserves praise for its intelligent structur fair oDeraHon O^ course whether Kern County should be receiving these fits at"^ all or' as many as it does receive, is another question discussed ''^^One' final point about use of the tax subsidy. You attempt to justify the long-since discredited ground that a tax ^^^sidy is necesw^^ in tl e vpars to T)ermit a long term project, such as the State A^ ater 1 roject. built Have you never heard of revenue bonds? Economists-at least ind. eni ec^nomis?s-claim uniformly, so far as I know, that an econon worthwhile Droiect should be able to finance itselt. Fur h^^^^^^^ statement that advanced payment on these projects thrtaxpaers' money is absolutely outrageous. For what you say is pr( e opposite of the truth. While advanced payments through taxes reto ret interest costs, they increase taxpayers^ costs. Consider: the Projecl abour4% luteins on its tax exempt bonds. Prepayment 10 ye.-^rs before use thus saves 4% over 10 years. But the taxpayer who is paying this ior 10 years must borrow at 8% or more to make up for what he is i '"r'^on'fhf detail list all of the project 1-nefits which you claim that not consider but which in fact I did consider. Suffice it to say that i ( ered eve 7^^^^ you have named except one. This one benefit you desci the construction benefit. In economic terms, /^«-;^:;f '.^IfJ^/^.J^^i^.te The reason is quite simple. The cost of construction is ^^"^^^.^^ the be brings. Consequently, construction cost always balances "enefit^ Mo em construction benefit would be the same if the '^'^^^^^J^'^^^^l l^ State Water Proiect, a bridge to China, a pipeline to India, or any f)the oct When I speak of benefits and costs, I am using the economic erm a using it to measure the value of this project to the general public. In n'asu ement construction benefits, as you put them, l-;^ye no i^ace-sim cause the same expenditure on some other project would have equal ben- perhaps even greater ones. -i,,^^" s^ fhp s One other Ixmefit you claim I neglected-my "super failure -is he . tural benefit. Perhaps my use of economic terms rather than Ciambei o nercc blurbs misled you. For indeed I /^^l^^^^/^f f,, ^l^;!^^^ eii calculations. Actually, the calculations are not mine T^^y a re^ 1 e calCT of Bain. Daves and Margolis, three extremely reputable econom^^^^^^ icd California's water probhMus intensively, and also the *''\\7^^^^^^^^^^^^ sors Iliishh-iger, Milliman and Dellaven who are located in Southern ( nia and have likewise studied California's water ^^^^^^^^^ J^^^;^^;;,''^-'; .,„ I cannot resist adding, however, that these benefits teiultle^ overstated because they do not take into account the enoimo s 1 ssts will result from the State Water Project. I am speaking -^l'^'^'^^'. ' " to small farmers. Th(. State Water Project will irrigate l>'-nnar hiw of land owned l)y corporate giants such as Tenneco, Standard OH, Lin 973 ern Pacific Land Company. These tracts, many of which presently stand 1 will he planted to high value crops. The high value crops will drive It prices through the floor. When the price falls, small farmers without le income lose their farms while the large corporations can use their out- ncome to sustain them during this time, and later find them^elve^ with ;ive control of the almond, grape, nut or other high value tvpe of croo 'f^nri ^-^ ?!A^^ ^^^''^'^'" P^'^Jet't- according to Professors* Deane and )t LC Davis, will be extremely costly indeed. have also distorted my land ownership point. I never claimed that everv n the 2 million acre State Water Service Area would receive State Water 't water. Indeed, the proposition is ridiculous on its face. I did claim and laintain that the concentrated nature of land ownership in the State Project Service Area is a clear reflection of the concentration of land ?hip in the areas which will actually receive the water. Indeed Kern r ^^ater Agency s figures confirm what I say. Out of 418170 acres in ^r^ti ^l^a^"^ ^"^ receive State Water, 73% of the land is held bv owners nVstnfP wnf'f •■ ^""^ ^^'^ ^"""^'^^ y^^^"^^ ^' "" ^'^^^1^' '^'^^^ of the land .. n fhl^S..^ IS excess acreage. It is a fair assumption that in Kern .as in the State A\ a ter Service Area as a whole. 6 enterprises, counting ip of 5 or 6 oil companies as 1 enterprise, own i^ or more of the land will receive this water. lly. we come to the surplus water argument. To me, surplus water is .St subtle and outrageous subsidy in the entire program. Here vour main ilnf w^fp^'r u /"« f '"'^.? each agency is entitled to a proportionate share 1 th! . ; I ?v ^^'''\ ""^^ ^'^^ proportionately for the costs of con- 7 nlV^ffZ M ^^^'"'7. "''^^ '"'^'^"" ^^'^^^^- ^^^^^i^'l^ '^ ^ike saying that a cL^^T^^'^ f ''"^"^ ^''^•'' ^^^^^'^ ^^ ^^" Francisco for maintaining Gate Park since he is entitled to use it as much as anv San Franci^- ) quote you: "in effect, as Prudential would say. each . .' . is buving 'a »f the rock, or as the younger generation might say. "a piece 'of tlie '■tric^7hnvp'ti'' ^^ ''''^!"^^ ^^. ^^'^'' '^^^"^ «^ ^^^Pl"« ^'^'^' ^"t onlv a \^u^l V ^ c^ipacity to absorb it. As a result, if you count surplus low and 'i?c^r ^r""'^ ^l'' '''''^' '/^ ^' ^^^ ^'^'^ ^^^^^^ deliveries be- rl0^^ and 1990; whereas it pays only 25i/o of the Project's construction vZfl%:i"r 'T'^'''' ''^''''''- ""'' '' "^ ^^^^idy it this extent us- } the fact that surplus water need not be delivered and need not be de- ^Tt^''^ i^'^'T''' l""'"' '""''^ '''^^''' ''^'^^ some reduction fn im iv nt^ToT^^f '; '^''^ '^'- T '"^^"'^ ^^'^' ^^^^ St^t^ deliver the dimply at co.st— winch is precisely what it is doing. In anv event vou exaggerate the possibility that surplus water may not be availalTe The has been planned so that surplus water will be unavailable on v if we .reappearance of the driest draught year ever recorded fl'r the State l?ipf"t?f ^ 7^1 V"^ ^'''' "" challenge, Mr. Bottorff. You have joined lief ^ater de^•elopers in this State, men like William Gianelli Ralph h! J^?r^"7 ^'°'''" ''' attempting to refute my arguinents. Ymi have ow. tb,P fn; f''-''-'' ^""^" ""r^' ^'^'^^^' ^'^^^"^ ^^"-^ audience, in any forum r nm I f f" .^T'"^"^^"^ '^"d reply. If you prove me wrong or mis- -,flr jT^^'i^' ^ ■'''^} ^'''^'^''^'' ""'^'"''^ '^- ^f ^^"«" t'o^ld -^li^^ me that the 'fstaklThl-n'- "\^r:'-i^ ^r^ P^-^'J^^-^- ^ ^^-''^^Id 1>^ ^'^^y l^aiw: for mv lincerelv ''' " ""P^rtant than the State's lass. Keith Roberts. tor STE^Txsox. Mv. :Meral, would you like to proceed next. MENT OF GERALD H. MERAI, ENVIRONMENTAL DEFENSE FUND, BERKELEY, CALIF. ^Ieral. Thank you. Mr. Chairman. fo?the Teconf '^''''^ ""'' remarks and submit a copy of my tes- 974 1 Senator Stevenson. It \vi 1)0 entered in the record fofk your testimony. ^ Mr. Mekal. The Environmental Defense hund is a irroup of 1 tists and lawyers concerned about the detenoratm^ quality o environment. We are very much concerned about tlie a^^ncu overdevelopment. We have recently joined a ^roup support m national leoal enforcement of the IfiO-acre limitation California is the Nation's leadincr agricultural State and t that happen here often presa^re developments that will happen where I will try to discuss three facets of California agricu The environmental effect of small versus large farms; the nee further irrigated agriculture; and the environmental eltects o: structing more irrigation projects. Human resources are among the most valuable we have. A ni of witnesses have discussed the Arvm and Dmuba study s would like to reemphasize the imi)ortance of that study and ur, committee to fund further studies of this nature, riiis study i ting quite old now. I know of no updating of it and 1 thm quite vital that this study be updated not only m California other parts of the country. ^ . n Concerning the natural environment I would like to talk three things briefly. ^^ i j First, when there is a pattern of small farms on the lancL cially in the Midwest, not perhaps so much m California, ti more habitat for local wildlife and other animals since the hedges, fences and outbuildings to provide cover. Second, in com]:)aring small versus large farms, there is creasing rate of fertilizer used as farm sizes increase. I ha eluded this data in table 1 of my text. This is quite important Central Valley, because as more fertilizer is used the higher 1 trification of the soil becomes. The disease methemaglobanei blood disease which particularly affects infants is prevalent wl trogen levels in the drinking water become high. Another point with regard to small versus large larms is t of pesticides. I will attempt to persuade Prof. Richard IS or who was to testify on the importance of the use of pesticides Central Valley, to submit some testimony. Let me turn to something that is perhaps more relevant. i>J senberg discussed the over-all water problems m the State Mi erts discussed past water problems. I would like to talk abou is going to be happening in the future. _ In general the state of agriculture in California is not p larly good. This is shown by data on income, land value, and My first chart shows total California farm income, adjusted 1 dollars. Despite the fact that we have had a very rapid mcr irrigation and other types of agriculture in the State, we steady decline in farm income between 1950 and 1970, and it be noted this decline is increasing rapidly. The last two hgu projections for 1972 and 197:^ done by the Bank of America. 975 (■ only is farm income decreasing, but so is the value of farm which I consider an indicator of health of farming economy, second figure shows the value of the farm land adjusted to 1968 'S (deflated by a price index). It shows a luimber of different of farm land over the entire State, orchard and groves, truck (rial farming, cotton and peaches and so on, barley and other ^ and, finally, pasturage. There is a steadv decline in the value igated land, between 10 and 20 percent over the last 4 years, you might know, there has been a land boom in California subdivisions and so on. This farm land value is in direct con- o this other trend of increasing land value in the State. Te is a final sign to ill health in the State's agricultural econ- This was discussed by :\Ir. Long. I am not too sure where he IS figures this morning, but he said they were generally una- 1g. I find that they are published by the State Department of luture. average investment of a California farmer is about $260,000 you consider the cost of his labor and management, his re- is Mr. Long pointed out this morning, is about 8 to 4 percent is a verv low figure for a high-risk, high-fixed-cost business s agriculture. ing recent trends into account, I would like to look to the fu- t agriculture m California. :h Roberts pointed out that there have been an increasing r of studies at the University of California at Davis showing ^ taced with an excess of irrigated agriculture in the State. t this depends on how many people actually live in the State past 2 or 8 years there has been a very marked decline in the r ot births and m the number of marriages in California, de- ne tact the postwar babies are now^ coming into the sudpos- l)roductive state. For ZPCx enthusiasts this is fine, but for the ' tins may not be so good, because if he is planning to open ^duction the market just mav not be there at all. Uerald Dean from the Fniversity of California at Davis (in a iblication) states by the year 2000 we may have between 1 and on excess acres of irrigated land in the State of California. ' an enormous excess acreage, and the competition for small b Who do not receive any Government subsidies for crop sup- water IS going to be tremendous. of the causes of excess acreage, as Keith pointed out, is the ^ater Project. But I don't think we can do much about that nkl like to look at the next step, which will be undertaken by lean ot Keclamation, that is, the proposed east side division, Lrvn? i"^^s rated on a map of California. This consists of cl f] r?/''''^ ^^'"^ ^'^'''^'^^^ ^y^^^'^- Tl^^ reservoirs are the little a the delivery system is a very long canal running down the aho^.f f n • '^^"'T' ^\^ ^"'*'^^^^ ^^ Reclamation is reticent, I about talking about how this water will be used, but, having 976 dill- back in the 1958 report which they merely summarized ar not submit to Con-rcss, I found that they proposed to use thi water for cotton, oranges, alfalfa, and irr^rated pastures It has often been pointed out that many of these crops recei most support in the Department of Agriculture subsidy pre and, indeed, the total subsidy cost in California for cotton j and feed grains in 1970 was over $100 million In addition were 200,000 acres removed from production and another (),5 acres of potentially producing land put in the conserving base Given these facts, do we need more irrigated land m Calit The Bureau of Reclamation argues that rather than cotton specialized crops should be grown. :Mr. Roberts m his report tioned that the high-priced specialty crops, walnuts and so o: face serious excess problems. As a matter of fact, excess probl California agriculture are getting so bad that this past year tJ islature for the first time enacted a strong peach marketing which was vetoed by the Governor. Nevertheless, expectant cling peach farmers are pressing hard for some restriction to this new acreage. Facing th( course, is the Bureau of Reclamation pressing quite hard. I would also like to submit along with my testimony some ters from the recent Nader report on the Bureau ot Kecla called "Damming the West," which outlines these problems ii greater detail. . . (The material referred to appears m the ^PPfi^^^^^-) . Finally, I want to briefly mention technical problems. Ihe of Reclamation has told me 90 percent of this new devel( water will go to replacing groundwater supplies which are pr overdrawn. However, examining their own data and that US.G.S., I find there is a rapidly decreasing problem with to overdrawing groundwater. Groundwater m California has very critical problem because in some places there's been a de. a rate up to 100 feet a year in the groundwater table. This problem seems to be coming to an end partially clue i professional groundwater practices and also due to new serv supplies. I think the giant East Side Division will not be reqi solve the groundwater problems of the state. I have tried to illustrate at least the reasons why there is i for new major irrigation projects in the Central Valley at th despite proposed legislation by Congressman feisk to aiitho] East Side Division. . i ^ . -p ..o Let me just briefly mention the environmenta eltects ot ne ects The first problem is in the south end of the San Joaqu ley, which the East Side Division would service. This is the ] of soil salinity. Soil is quite saline down there and, it there of water and* no drainage provided, the soil becomes unht kind of agriculture at all. Perhaps it would only be ht tor . sions around Bakersfield. ^. -. -r^- • • llie second problem is that the East Side Division is un( stniction, although not authorized. That is, the two reserve m£f, 977 and New Melones, are under construction and are authorized to ly water to the East Side Division. If these reservoirs are ructed, another 55 miles of wild river in California will be forever. e most crucial problem environmentally is that of the San Joa- and .Sacramento Delta, where the Sacramento and San Joaquin md flow out into the bay. Mr. Kerrv Mulligan, who is the head e State water resources control board, has in recent speeches It eminently clear if the East Side Division is constructed, es- ily the East Side Canal, it will be absolutely impossible to pre- Jo r'?^^^- ^^}^H^' without creating new^dams on the north ot e alitornia. This is proposed legislation in the House which I preserve these wild rivers in northern California. If the de- inent ot these new irrigation projects are necessary, I contend 1 make it impossible to preserve the last remaining wild rivers ' state. ^ ally, let me talk about the effect of irrigation developments on rs and farm workers. I have already discussed the present ot the decline of farm income and land prices. Due to trends chanization, which we have heard a lot about today, we have taced with a steady decrease in farm employment. In 1966 employment was 401,000; in 1969 it was down to 384,000, de- lie increased farm acreage. This decline was all in the' class of rs and seasonal farmworkers. Permanent farm worker is not a ing class of employment. As the number of farmers declines, it es increasing y more difficult for a farmworker to become a t himself if that is, indeed, his goal. I believe that one of the that has been discussed many times today is this inability of the orker to gam land upon which they can grow crops is the non- ement of the 160-acre limitation. The Environmental Defense nitends to press quite strongly for enforcement of this law ^ are pursuing this effort in court right now ine close with two suggestions for your subcommittee, t, until farm prices and income stabilize and begin to increase, w irrigation projects in California should be rejected. n.L .1 ^^5^?^ Government wishes to aid the farmer and ent nfH''\^n '''''' r '"''^''^'^ ^^^ 1'^^^^^^ P^^i^i^s of nonen- nrnfo f 160-acre limitation, of continuing to increase irri- vZ f ""} "" subsidizing crops produced by these projects, ^^rongly favoring the environmentally unsound lar^e farm •e more manageable small farm. ^ tor Stev-exsox. Thank you, Mr. Meral. 'r in iV'w^^l'" Roberts who acknowledged the vital importance m'Vc!iV\ 'j7^''' ''?^ ^^^-'^ ^^^" ^'^™^"^^ ^^"* '^^^^ ^«^^ the urban T'li '''^\![: }^.Y'''y ^ ^^''^'^ the cost and benefits of the water '<^e unf"'f if^'r'"^"'^-^^ acknowledge a need for water. How ffet ^^ ater ? Desalinization is a long way off. ildTn^f^^h '^f/' '^''''. T ''^'''^ ^^^^^^^- I^ the first ^e^a is not absolute; people do not consume 160 gallons a year '2 - pt. 3A - 21 978 \ re-ardless of anything else. The price of water has something t. Wirt, it and, if you charge a price for water which reflects a i Tor delivTri^g it^ it turns out that the need for water in Califo would decline markedly. u t ;„^„=fr;e« in thf I will give you an example. A number of industries m the Angek a^rea use enormous amounts of ^^ater hundreds of mil of gallons per year. It would cost them relatively ittle mone confer! to systems which don't use much water at all For exar Kaiser Sted has a plant at Fontana near Los Ange es which very little water, yet United Steel consumes several thousand , felt a year The cost of the conversion is nowhere near the c« JuppWing them with all of that water and, if they had to paj fun cost of all of that water, they would rapidly convert. Th ^°Th?second point is that there are many sources of water, have not been tapped. One example, the Bureau of Reclam official said, if you just line the irrigation «aials m the Coac Vallev, which is way down south there, you would save •« acre feet a year, which is something like 900 million gallons a Third, the pr'esent law in California is such that water gets extremely wastefully. I don't know if this has been discussed b here but^nder the'^law the first person to use ^ater gets to < tially own that water as long as he uses it, regardless of wh uses it for. Therefore, a guy '^ "^mg water which may only h value of $1 an acre-foot for him, but has to keep that water though another guy may be willing to pay $10 an acre-foot, a, can't sell that right. Those are problems Looking to the future, I personally don't like to look more about 30 fears to the future because it is so hard to predic w going on and reducing present ca culations of what the ^^ues^ tivities are at that time is a meaningless exercise really^ but it vious from the type of experiments p™g "".t^^^^i.^f^ ^ *'^, good possibility. Of course you must emphasize very httle dm being spent on this very good Possibility. The State Depart™ Water Resources has spent less than a million dollars on this * SenatofsTEVENSON. My impression is, and I am not sure it ribly important at this point, that manj; people are spending sums of money trying to Perfect feasible means of desalt water. The work is being done m other countries. Some of th niques contemplate use of nuclear power, which might create ^ThTeffS rulSf o^ement of the 160-acre limitation h, the rate of water consumption m California, if any « Mr. Roberts. It is a question I haven't given a great a thought to. I don't oifhand see why there--there is not a great on... can detect except in this sense. The enforcement of the lav by the way, that means enforcement, effective enforcement, obviously split up the large land holdings. Smaller users, aco to Mi-. Meral and other studies, tend to be more efficient. 979 e aspect of the efficiency of the farm is the way you irrigate. If irrigate one way, you can probably use half of'' the water you use by irrigating another, and it seems more likely that the er farmers might be more efficient. But I would have to check I don't know whether I could make that statement. lator Ste\tnson. I certainly don't know, but I think it might the opposite effect, it might increase the consumption. . Roberts. Why would it do that? lator STE^^:xsox. By helping reverse the outmigration trend, ng people on the land and in the small towns, and increasing if le agricultural consumption, the other forms of consumption. Egberts. In California I think 88 percent of all water is used ^riculture, so you could increase that all you want and it would ave much effect. ator Stevexsox. Perhaps so, if your assumption about the ef- ly of the little farmer as a water user is a fair one. as very interested in your figures on land values. These figures variance with all the experience and information we have re- about the land values in the other parts of the country. Else- it appears, almost universally, land values are rising very y, partly, it appears, as a result of the advent of corporate vners not just farming, but the advent of corporations in rural Lca, whether it is for farming or for recreation or timber or ploitation of minerals. Are the declining values in California t due to a general economic condition and in part perhaps also > the fact that this particular land does not have alternative ' speculative value that land elsewhere might have? ]\Ieral. That is a very difficult question to answer. I only 1 ot this data myself a few weeks ago. I might add the source s the Farm Real Estate IMarket Development of the USDA Ins last August. I think both of those factors are, to some ex- problein. Speculative land in California is found mostly in ?rra toothills and around cities where the climate is somewhat menable. Land m the valleys is extremely hot during the sum- id not much good for recreation during the winter, so there lite the speculative use in most areas. -ever, I think the principal cause of this decline is simply a 3 ot irrigated acreage in California as I discussed earlier, and cline seems to be accelerating at least in some crops, although s a fair amount of variation. I think this is going to continue ^as new acres come into production, and, I might add, we are ^ith a certainty of about half a million new acres being put 'oduction withm the next 10 to 15 years due to already con- cl projects. This doesn't take into account the possibility of iction of new projects such as the East Side Division. tron^^If'"''''';!^'' ^TJV:^ ^^y ^^"^^^ «^ ^^^ rate of land tion m the valleys of California by the corporations? Thev 2!rf ^i'"'''^^^ *^'^ ''^'^' ^^'""^ ^^^ apparently pretty significant amg^ rhe return on investment is not high. You are subject ^l^H/fln"' '".V"'^'"]'^'"^ ^^ ^^'^^S "^^^^y' a^d other risks ^ little fellow can't afford to take. What is happening « 980 Mr Meral. I just don't think I am competent to answer that tion Perhaps Keith, having worked with the Nader team, can '' M^r'^Ro™: I don't have data on how, truthfully large coi tions are buying up land in the valleys, but I think I can ej something of what is happening in terms of why they might f 'Thf raic Reason, I think, resides in the tax laws. Dnlik, types of business, if you make a capital investment m agnc. that is, you plant trees or you buy equipment you can deduc as an ordinary expense item aga nst your other income ; like neco, if you have other income, it is nice to make that dedi TheA when the capital item has blossomed into use, you could retically sell it and you could reap a gain that would be taxe, much lower rate than ordinary income is taxed; it is taxed capital gain rate. For that reason, even though you operated a TXsioi $10,000, let's say, if you lost $10,000 on your opera I will give you a money examp e-and your taxes on ordma come are 50 percent, that loss then amounts to only $5,000 real money because you deduct it against your ordmary inco now you have lost $5,000, by the operation, but you have im) your land by an amount of $10,000. Let's say you sell it f o $10,000 increase, you are only taxed on the increase 25 per« taxes $2,500. So I think the figure comes out to be that you with a $2,500 gain, even though you have had that big a 1 vour land; and that is profitable if you have lots of acres. I that is one of the major factors that are at work. I think another probability here which is that there is an ef some companies, Tenneco, as an example to develop a vertic gration control of an item from the soil to the housewife, as i and I think that may be a long-range strategy of some corpoi although I don't have access to their deliberations. Senator Stevenson. Thank you very much, gentlemen ^o contributed to a very important aspect of the Problem under .ration by the subcommittee, and the issues you have raised cai overlooked by those who share a real concern about what is B ing in rural America. ,-.,,, -4.1, „fUo^ „ (The prepared statement of Mr. Meral along with other n follows:) 981 statement of Gerald H. Meral - Staff Scientist Environmental Defense Fund 2728 Durant Berkeley, California qHjo^ ^tirnony Delivered Befor'^ th--^ Tim- t-^n oi- ^ January 11, 1972 San Francisco, California 982 1 My -air:e is Gerold H. Meral . I am Staff Scientist for^ the EnvironuFintal !>. fen so Fund of Kact Setauket, New York; Berkeley, California; and Washington, D.C. I wish to thank the committee for extending an invitation to present J:est1in on current trends in Western Agricultural development. The Environmental Defense Fund (EDP) is a non-profit, public-be membership corporation organized under the laws of the Stat of New York, with principal offices in New York, Washingtor D.C. and California. SDF is vitally concerned with agricultural developmeni since it affects so many important human and natural resou; As an indication of our involvement, we recently joined a i supporting the legal enforcement of the l60 acre limitatio: Califor-'a "s the nation's leading agricultural state and developments here often presage developments in the re of the country. My testirrony will discuss three facets of California agriculture: the environmental effect of small versus large farms; the need for further Irrigated agricul and the environm.ental effects of constructing more irrigat projects . 983 ?tliriony o^ Gv:rald H. Moral pa f^e 2 Ih^_3l}yJj'SJ}}j}§I}^AL^^^cAs or Srral.1 Versu-._ I^go_Pp_rnn. . Human resources are anong the most valuable we have. >ious witnesses have discussed the implications of Gold- midt's landmark study of the sociology of Arvin and Dinuba ish to re-emphasize the Importance of the main finding: munities of self-employed farmers are far more stable and vide a higher quality of life than communities of workers large agribusiness corporations. The latter have higher ventages of migrancy, fewer locally controlled businesses, are generally less desirable. I urge the committee to 5ider some means of having more such studies undertaken, ^cially since the percentage of corporate agriculture is ■ ■•easing. In terms of the natural environment, I wish to mention e points. First, when small farms are the pattern on land, there is more habitat for local wildlife, since es, fences, outbuildings, and so on provide more cover. Second, the rate of fertilizer use increases as farm increases (Table l). Fertilizer use in the Central sy is the prime cause of increasing nitrification of nd water supplies. Increased ground water nitrates causes imagiobanemla, a blood disease particularly affecting 984 Testimony of Gerald H. Meral page 3 small children. So called "organic farming", which de-empbas tho us« of fertilizers and pesticld.-s, v-ould relieve this . situation to some extent. But this, type of faming seems onl to be practiced on small farms. Third, a similar situation seems to prevail «lth-^he use of pesticides, whose public health and environmental effects are increasingly well toown. More data Is needed on this problem, but as other witnesses have and will testify, pestl are usually used more carefully on srrall than on large farms to a large extent due to more personal Involvement of the small farmer with his workers. I need hardly point out that t.he best way to preserve the amenities of the small farm_ is through enforcement of the l60 acre limitation as required by the Reclamation Act of 1902. This act is now being flagi violated throughout California and the West. II. T. There a Need for Further Irrigated Agriculture^tL^ I wish to discuss this topic generally, and specifical with respect to the proposed Sast Side Division of the Bure, of Reclamation. . The present status of California agriculture is not 985 eny of Gerald H. I'l-ral parge H ularly favcraole . This is shovm by data on incorno, alues, and ra turn on equity. igure 1 shows the realized net farm income of the State's Lture industry. This is during a period of great agri- 11 expansion, mainly due to the opening of Federal irri- prcjects. Net incorr.e has actually shown a steady decline, gently is declining even faster. While this is in part declining farm prices and increased costs, it may also to increased production driving dovm prices. In any t seems reasonable to conclude that farmers would do keep new land our of production until total income zes or begins to increase. t only is farm Income decreasing, but so is the actual r farm land, another indicator of the health of the econom.y. Figure 2 shows the value of irrigated farm ^ the major crops in California over the past four A decline of about 10 to 20 percent is noted, although ^d prices in the State have risen markedly. If new are paying less for irrigated land, we may again con- at farm.ers would be well advised to keep new land out ction until land prices stabilize. inal sign of the ill health of the State's agricultural 986 To;;tU,iony !)f Gjr-al*JiJ5 989 stiiiiony of Gerald H. Meral page 8 be used for irrigation of new lands on the East Side now .1 be used to supplement present supplies, because there is ;erious overdraft of groundwater in the San Joaquin Valley. this supposed overdraft is not as serious as the Bureau tes. In the proposed Sast Side service area there has been arked decline in the rate of groundwater depletion. This caused in part by new surface supplies, and in part by a bilization of the demand and supply of groundwater. This rease in the rate of decline in groundwater can readily be ri in two studies by the Bureau of Reclamation entitled isralized Change in Water Levels Spring 19^J to Spring 1957" "Generalized Change in V/ater Levels Spring i960 to Spring )". A similar decrease in the rate of groundwater depletion be seen in the service areas of the Auburn Folsom South (ect, part of the East Side Division, where groundwater ■ined about 2 feet per year until 1963, but now is declining ' • 5 feet per year. (Auburn Folsom South Service Area: ;hted average Spring Depth to water. Bureau of Reclamation.) e there has been continued subsidence in som.e of the lem areas of the State, most of these are now to be served he State Project water or local developments, obviating -esd for the East Side Division. I have shown that there is little need to construct a 990 Ter.tinr'-T.y oT Gerald H. Mc-ral par,e 9 new rrajor irrigation project in the Central Valley at this time, despite the present plans of the Bureau of Reclar^ati let me now turn to my final topic. III. The Environmental Effects of New Irrip;ation Project The major ongoing and presently scheduled irrigation jects in California are those which would supply water to East Side Division. The first environmental problem caus such projects is increased salinization of the soil in th closed basin of Tulare and Buena Vista T^kes in the soutf Joaquin Valley. The Corps of Engineers recognized this i in their Environmental Impact Statement on the Meloncs Pi which will supply water to the area via the East Side Cai Unless agricultural wastewater is removed, the amount of permanently removed from production in the valley will mi increase . The second problem is that to supply water to the E Side Division there must be construction of new storage facilities. Two such facilities, the New Melones Projec the Stanislaus River and the Auburn Project on the Ameri River are now under construction. Their completion will tho loss of anotter 55 miles of wild rivers, at a time v. 991 Lir.cny of 03r€.2 6 H. Mf^ra.l. pag"^ 3 r recreation is becoming increaoinsly popular. Th^ scenic biotic values of the river canyons will of course also be The third, and perhaps most crucial probler. is that of the roanuin-Sacrainento I>^lta. Presently the State and Bureau :clamation remove much of their water directly from the L, but propose to construct a Peripheral Canal to bypass )elta. If the East Side Division is constructed, another 1,000 acre feet of water would be removed from the Delta, recent speech, Kerry Mulligan, head of the State V.'ater roes Control Board, made it clear that the Board's recent ion regarding Delta ./ater quality cannot be met without development of the North Coast Rivers unless the East Side ion is not constructed. So development of major new ition projects in the San Joaquin Valley must surely :o development of the last major free flowing rivers in -ate, those of the North Coast ^££ect.of New Irrigation npv elopment on Farm Workers . 'ir^ally, let me turn to the effect of new Irrigation pments on farmers, farm workers, and others. I have y discussed the present trend of farm income and land 992 Toctimor.y of Gerald H. Meral pa^^.o 3 1 prices. Due to these trends, along v;ith an tncreariir.g de of farm mechanization, most notable on large corporate f< there has been a steady decrease in farm employment in California over the past years. Total employment was ^0 in 1966 but only 38^,000 in 1969, despite increased farm acreage. Almost all of this decline was in farmers and seasonal farm workers. As the numbers of farmers declin so does the opportunity for a farm worker to be employed become a farmer himself. One of the main reasons for tt cline of the farm family is the non-enforcement of the 3 acre limitation, a topic which is ably discussed by Prol Paul Taylor. I wish only to note that a recent favorab! decision may open the way for farms receiving Federal vn be family owned and operated. Let me close with two suggestions for committee ac First, until farm prices and income stabilize and begin increase, any new irrigation projects in California sho rejected. Second, if the Federal Government wishes to the farmer and farm worker, then it should reverse the policies of non-enforcement of the l60 acre limitation, continuing to increase irrigation projects while subsid crops produced by these projects, and of wrongly favor:! environm.ental3y unsound large farm over the more manage fjmall farm. 993 Table 1 FERTILIZER USED BY UNITED STATES AGRICULTURE size of farin gross sales in 100,000 of $ re fertilized all farms 1-2 2-5 5-10 10+ (1+) 306 370 HkQ 561 689 (^460 i: 196^ Census of Agriculture / 3-133 O - 72 - pt. 3A - 22 994 Table 2 PliOPOr.ED USK OF LAND IN tA2T SIDE DIVISION SERVICE AREA Crop acres in 1958 acres in ultimate development increase Oranges lh,76i\ 77,662 63,00f Olives 2,6i^5 9,282 6,60( Deciduous Fruit ^^4,368 73,717 29,40( Grapes 133,801 163,330 30,00( Potatoes 6,896 9,850 3,00 Misc. Vegetables 6,773 16,582 10,00 Field Corn, Milo ^8,972 88,392 40,00 Irrigated Grain 100,993 87,219 -13,00 Alfalfa 116,076 186,456 70,00 Irrigated Pasture 58,il80 109,526 51,00 Cotton 185,066 227,725 42,00 Misc. Field Crops 23,568 28,400 5,00 Idle 39,075 18,755 -21,00 Non-bearing Fruit 17,331 - -17,00 Integrated Crops 7,875 - - 8,00 Double Crops - 3,931 -49,559 -(46,00 811,232 1,049,312 238,000 995 Table 3 CROP SUBSIDY PROGRAM IN CALIFOWJIA Subsidy Acres Set Aside ton t 89,752,779 at $ 6,067,679 i Grains $ 10,366,087 10i|,173 80,585 ^0,075 mtlally productive conserving base: Acres removed from iuctlon 6,35i|,000. •ce: California Agricultural Stabilization and Conservation Servl( 996 Figure 1 I ICO 1606 7CO SOO MOO sec California Realized Net Farm Income (3 Yr. Average \'ilars 8 o i-' 8 O VJ1 O o UJ 8 : o "^ c c o c ' -i zr o ro -T ' CO > r -i Q 5 ■- 1 ) (1 roves m Real Es 1 » 4 a ct c ' ' 1 a> o ro ra o "1 CO -i M ca M vq 1 V M o £u a > 3 M ".(BO- co::^ ^ 1 5> 4 cr -s O Oq (D o I:: ? s - M C 3 2 '" ^ a u "^ CT cr QJ a J "• cr a ft) O o ^ 00 998 FIGURif; 3 EAST SIDE DIVISION, INITIAL PHASE: STORAGE Ai^D DELIVERY FACILITIES ,/ w— -~v- ;.i '\ '■/ KARYSVILLE RESERVOIR ' 'i \ / • ^-- i ; if- AUBUR>I RESERVOIR ; ■ ^ -- / W •' N \ A NEW MELONES Rr JERVOIR ^*i \ \ i EAST SIDE CANAL 'T -x-^- v\. %Jf 999 Senator Stevenson. Is Mr. Jerry Fielder here? Mr. Fielder is the Secretary of Agriculture of the State of Califor- %. I thank you, Mr. Fielder, for joining us this afternoon. I apolo- 56 tor any confusion about the precise time of your appearance If u have a statement, we would be glad to hear it, or vou may enter m the record if you prefer just to summarize. ATEMENT OF JERRY W. FIELDER, SECRETARY OF AGRICUL- TURE, STATE OF CALIFORNIA ^Ir. Fielder. Thank you, Mr. Chairman. [ do have a prepared statement. Much of it would be redundant er all you have heard thus far today. I will skim through and rh light some areas that I think are of significance and try to add ttle to the record. Senator STE^TNS0N. Your prepared statement will be inserted at end ot your testimonv. ^r. Fielder. It has 'been pointed out, of course, that California •iculture IS Its ^o. 1 industry, and certainlv, as such, represents a y important impact on California's economy n the area of world trade-nothing has been said about that ay— the United States represents about 20 percent of foreign icultural trade throughout the world and of that, California's par- pation IS about 10 percent of the approximatelv $48 billion of aucts, that California will have produced in 19*71. Over half a ion dollars of those products are exported out of the State, prin- illy to foreign countries in offshore markets, here has been some alluding to the fact that net profit has Ti^'n^'nt ^Qf^'^^ ^^''^ ^^^^^^ represent a reduction II about ^966 million m 1970, as compared to $1,045,700,000 in y. It IS anticipated that the net income of California agriculture . remain about level with 1970 for the current vear ^ahfornia is unique in that it produces more commercial crops 1 any other State, representing over 200 commercial crops. Cattle calves are the State's leading farm products. These are followed dairy products grapes, hay, and eggs. Of the 20 leading farm inodities, we have such crops as tomatoes, lettuce, oranges, ^hes almonds and strawberries. Most people associate these as -icular types of California crops. onUnl^^'' is the most critical and costly input into California ^cultural production. California farm emplovers and closelv ted agricultural services report the amount of over $1 billion in trU^^^''' - ."^ ""^ ^^^"^ increasing and is expected to be signifi- ly higher m the records of 1970. 1000 Wages paid to California farmworkers have continued to incre and are among the highest in the Nation. The annual average cc posite hourly rate in 1970 was $1.87. This was 9 cents, or 5.1 perce higher than the $1.78 per hour average for 1969. The 1970 Calii nia rate was also 45 cents, or 32 percent, above the national aver: of $1.42. r ' ^ The seasonal or temporary farm labor force is made up ot b local and nonlocal, or migratory, employees, who live in and out the State. We have had a trend which might be of interest to > For the migratory laborers who live in California, there has bee decline, but for rnigratory workers coming from other parts of United States into California, there has been an increase. 1 might have some significant impact in your deliberations as you looking at the picture across the country. There has been some talk about the corporate structure am think that has been pretty well worked over today. It has t brought out particularly that the corporate structures m Califoi also include— and I think it is an important point— many fj family operations, which have grown from small to sizable op( tions or have remained small and are incorporated. There has been considerable comment as to the efficiency of small operator, and I would like to comment on that. This has l alluded to and I certainly concur with it, why are the smaller op tors in California, the good-managed operations, able to comp with the larger sized structures? I think it is probably due to unique character of the commodities grown in California, especi the type of commodities that California grows, and that person ^ is the entrepreneur and so closely associated with the operation give it a more intense, sophisticated attention than maybe the lai corporate structure. There has been a considerable amount of fear and concern a the competitive position of the larger conglomerates, so-called « glomerates, and the smaller farmers, and I think there is ei reason to be concerned in this area, but I submit that the comj tiveness is not so much from the size but from some of the advantages that have been alluded to. We have taken a serious ir est in this particular aspect and we do look with some conceri the ability of some organizations, some structures, to take advan of tax benefits that others are not able to take the benefit ot, thus exercise a more competitive position as a result of that. However, I would like to point out that it is quite possible even the conglomerates are not going to continue to take over ( fornia agriculture. As an example, two very sizable ones, one has been mentioned quite frequently today, have sort of stuck t toe in the water and tested the temperature and have backed oi 1001 fornia's agricultural production, one being the S. S. Pierce Co , the other one being Tenneco. ' echanization, of course, has been a very important feature in the ilopment of the farm labor picture in California. I point to the that It probably has increased the number of stable year-round ^ers or has been one of the major contributors to this, because, ?ricultural production has become more sophisticated and use of lanization has become a very important feature in California cultural production, this has required a more highly skilled cer and development of skills which, in turn, a worker is able to in upon as he develops these skills in demanding a higher ^n for his efforts. my report I allude to the fact that one of the most dramatic iples ot this kind of development was in the case of a tomato ester which now picks all of the California canning crop of toes Another crop which has become highly mechanized, almost jletely mechanized, is the production of sugar beets. However, levelopment of the tomato harvester hasn't displaced the total :ers as it has been pointed out as doing, because mechanization Lbsorbed about half the number involved in the harvest now in form of domestics, mechanics, machine operators, part-time ers who work on the tomato harvesters, and it hasn't affected irge number of work force as anticipated. e returns to California agriculture, for both small and large ers, ot course, have been alluded to as being affected by the ^rice ratio. One of the areas of considerable concern to us is the ;r percentage of support through property taxation that agri- re is contributing to the economy, for the 'cost of operating the -nment. The Williamson Land Act attempted to alleviate this omehow today, m reference to it, it was alluded to as providing chaiiism whereby agriculture is not carrying its fair share of )st 01 Cjovernment. ^ould like to speak to that for a moment and say that, true, the amson Land Act has given some relief and some very much d rohet to California agriculture, both large and small, but I I like to also point to the fact that in spite of that, I think ^rma agriculture is still carrying far more of its share of the t iTOvernment support than I think it should. r ri?/^ ^*^"^^^ ^^^^^^ ^^'^^ developed in Ventura County, and I I had this. [might submit it and send it to you later as part of the record, la hke to do so. ' Lator Stevenson. You may do that, le information subsequently supplied follows:) 1002 THE ECONOMICS I CONSERVING AGRICOLTUI IN VENTORA CODNl 1003 fHE VEMTUftA COUWrv 80A«D OF SUPfUVlSOJli ^ 5br. T. Co'iian. Chairman . F, RObtnvvn N. ApplettHi lomas E. Laubachcr ucn W. Enoch, Coiuity Exectftive Secooit District Ffrit District Third District fourth Qi stiict R^ District THE VENTURA COUim PtANNfhlG COMMfSSfON Hn Rush, Chaiitnan 'n8lGlJL.;T»«iomley otly Harris mfey Bunce nK>r E. Houston Second District Fourth D'Stnct First District ■i' ThfttJ DiifTJci fifth District orge H. Alien, Pldnntn^ Director 1004 ACKNOWIEDBEMENTS This study w:is iiddcrtjken so that you might havo a bettt^r understanding of sorr economic implications of conservinq agricultural land in Ventura County This report, dea the economic impact of agriculture, represents one part of an Interim Open Space Policy. The behind this aspect of the Interim Policy is to ascertain whether agriculture can be as prof commerce or industry when all the economic benefits are presented as well as the cost an accruing to loidl government The study is general in nature and should be read and used v an understanding The Ventura County Planning Department is indebted to William W Wood, of the Uni\ California. Agricultural Extension Service, for his aid and advice in this undertaking, contributed of his tim(; generously in creating and developing the framework of this study, should also he expressed to the Ventura County Farm Bureau, Agricultural Commissioners and Agricultural Extension Service, as well as Moorpark College While recognizing t individuals and agencies contributed to this study, the staff of the Planning Department \ responsibility for its content This study was conducted by Ronald Poitras, Project Manager, and written by Johi under the supervision of Victor R Husbands. 1005 TABLE OF CONTENTS MARY EIISIII8 tCRICUlIURU lUDS mm I PflESlNI IREIDS IHROUCH 1980 MSOEl II 11 UTERIIIIIIE eROWIH PIIIERI MOOEUII lOm BEIEIOPMENI CULTURE IN VENTURA COUNTY PliE fCONOMlCS OF AGRICOLTURE IMPUI IF URICyiiyRE ox IHE lOCU ECOXOMI PRESEII IREIOSIHROVSK 1900 il UIERimilE GROIII PmURI lOlU DEfELOPMEII ILUSION 16 17 18 1006 SDMMARY Thib repu'i atten [ ' . U; li^Tnonbtratc \\u- importance of agriculture m Ventura County. ently, ;Kjri<,uhure is thr l»',idinq industry m Ventura County and also contributes greatly economu: soiveii. y of .,overnmental services This study then illustrates the economic si of acjricultiirn Th.. Piinniiuj Department crjnducted a cost-benefit analysis study seeking to den impart of altf-niti v.; qrowtP p.itterns m our agricultural land through 1980. Th.> hoiiomu s of Agriculture portion of this study has been divided into four section: fust section rocoqni/es the economic importance of agriculture on the local economy and th( and revenues derived from an acre of agricultural land in Ventura County Section two, tht four m.hisure the economic impact of residential, commercial, industrial and governmental gro the local economy and the cost and revenue from an acre of developed land These section: in that each model repiesents a different degree of growth and density in the 100.000 acre Section twu illustrates pro)ected land use growth to the year 1980 based on present Section three represents a different degree of density of growth to 1980 and Section four she area as beinq completely developed The followimi four tables indicate the economic impact of various land uses plus tl and revenue of each land use In each instance, agriculture has less economic impact than c land USPS. 8ut in terms of costs and revenues derived from an acre of land, agriculture is an asset to local governments than the other land uses. EiisiiNe teRicyiiuRU luiibs ECONOMIC IMPACT Agriculture Total Value $170,693,200 With the Muliqilier** 536,260,252 GOVERNMENT COSTS AND REVENUES PER ACRE Type of Land Use Total Costs Total Revenues Net Government Revenues Agriculture $4.74 $125.00 $120 26 .SOURCt VENTURA COUNTY PLANNING DEPARTMENT 1970 Thi . •>'■■• n" oofls to cultivated .u-reaye m Ventut i C.ountv t.pliM, ^.M 1007 PflESEKI mm IHR0U6H 1911 ECOIMOMIC IMPACT Residential Toiol P''fsorial Income With the Multiplier Industrial Tninl Sales With the Multiplier Commercial Total Sales With the Multiplier Agriculture Total Sales With the Multiplier Government Total Expenditures With the Multiplier $ 758,402,117 2 328 294 500 660,450 560 1,543,400,309 729,005.000 1,277,208,432 114,879,600 355,858 677 110,154,111 432,905,656 Type of Land Use TOTAL GOVERMVIENT COSTS AND REVENUES Total Costs $ 96.959,764 (88.1%) 8 916,600 ( 8.1%) 3,908,250 ( 3.5%) 379,497 ( .3%) $110,154,111 Total Revenues $39.770 647 (60.1%) 8,069,969 (12.3%) 2.572,465 ( 3.9%) 15,701,154 (23.7%) $66,114,235 Net Government Revenues -57,179,116 -846,630 -1 335,784 15,321,657 -44,039,873 Planning department 1970 1008 MODU II II uumiiiiiE 8IISVIR pmum ECONOMIC IMPACT Residential Total personal income With the multiplier $ 388,429,800 1,192.479.486 Industrial Total sales With the multiplier 495,337,920 1,157,218.356 Commercial Total sales With the multiplier 385 443,292 958 379.365 Agricultural Total sales With the multiplier 153,443,292 475,367,318 Government Total expenditures With the multiplier 62,722,055 246,497,676 GOVERNMENT COSTS AND REVENUES Type of Land Use Total Costs Total Revenues Net Cover Rev em Residential Industrial Commercial Agriculture $46,551,120 (82,2?/o) 6,687,450 (11.8%) 2,932,635 ( 5.2%) 425,685 ( .8%) $17,619,420 (40.8%) 6,052,477 (14.7%) 1.930.301 ( 4.5%) 17,612,050 (40.7%) -28,931 -634 -1,002 +17,186 TOTAL $56,596,890 $43,214,248 -13,382 COSIS REVEIIUES JRA COUNTY. PLANNING DEF 9^k 1009 I lilll DEVEIOPMENI ECONOMIC IMPACT Residential Tot.jl personal income With the multiplier industrial Total sales With the multiplier Commercial Total sales With ihe multiplier Government Total expenditures With the multiplier $ 4 890,710,000 15,014,479,700 3,302,252,800 7,714.789,036 2.594,091,200 6,433.346,176 550,674,600 2.164,151,178 GOVERNMENT COSTS AND REVENUES Total Costs $486,405,600 (88.3%) 44.583,000 ( 8.1%) 19,686,000 ( 3.6%) $550,604,600 COSTS Total Revenues $199,532,822(78.9%) 40,349,848 (16.0%) 12,957,274 ( 5.1%) $252,840,274 REVENHES Net Government Revenues n -286,872.778 -4.233.152 -6,728,396 -297,834,326 SOURCE VENTURA COUNTY PL ANN ING DEP ARTMEN T 1970 72 - pt. 3A - 23 1010 AGRICULTURE IN VENTURIl CUUNTY Cahtoriii.) ;>,is •; ^ulilion.il 1 y Ix'uf ,)n agricultural state, anu i ur mti ici:5i iwcmy-i has t ,id the larcirst valur of ayriculturai production in the nation. In 1969. gross cash frntn jini to be made is that as cultivated acreaqe continues to shrink, that remain comes increasuiqly valuable. This is particularly true, as is the case for Ventura County, wf crops produceci ar,- h.av.ly weighted m favor of high value, ha.d-to-dupbcate specialty Even Willi the realization that productive acreage will be ever more valuable, it is pi that Class I uid II prime agricultural lands will dimmish, following present land use. ab trends, by more than 21,000 \icres by 1985 Presently, the following prime acreage is estir he within incorporated boundane-s. Planning Area Total Acreage Incorporated Acreage Camarillo - Las Posas ConcjO - Coastal Fillmore - Piru Moorpark 0|ai Oxnatd - Port Hueneme Santa Paula Simi Ventura 40.000 8,000 15.000 4.000 4,000 41,000 10,000 13.000 20.000 8,074 6.752 1.101 330 12,955 1.468 10,005 6,962 TOTAL 155,000 47,647 SOunCE VENTURA COUNTY. PLANNING DEPARTMENT 1970 If present trends are not altered, the future for agriculture in Ventura County does nc very promising And the loss will not merely be economic: farm land also has aesthetic v acts as a positive force m shaping and delineating urban form. Two ideas being advanced by the Assoeiation of Bay Area Governments aimed at pi prime agricultural land might provide direction for altering the trend toward future intrusion development on Ventura County's prime agricultural land The first proposal is to dir( services toward the least valuable agricultural lands (value is defined as value of gross agi output less the cost of operating capital and labor). This measurement would include the of land, given soil and climate conditions, to grow high value crops. id Use Ittues m Santo Clara County BO Space m Oronge County Analysis ond Recomm»ndotions ( bPciu.Mu .■. our tot.il ui 148 148 oomics. August l»< Research Report No. 303. ''ventiir.i County Assessor s Office "^JUe 6 2<)0 acres consist of two abutting properties. The first property was bounded by Del ^orte Boulevard fctting Ro,id to the South approximately 3 000 feet above Pleasant Valley Road to the Nortt,, *>d tojhe Road the second property runs West of Wood Road and tast along Fifth and 3.000 feet above Pleasant V Somis Road 1015 dual^per capita costs were then added together to give a total per capita cost of governmental es. In the area under consideration, we derived a per capita cost of $408.93 ^^ Taking this we then divided this figure by the number of people in the area under analysis and arrived at a :re cost of governmental services of $4.74 (6,200 acres divided by 72 people) Therefore in 200 acres used for analysis, a per acre cost of services of $4.74 and an average revenue per f $125.00 were derived. This is a net gam of $120.26 per acre for each acre under cultivation )TAL ECONOMIC CONTRIBUTION OF THE 6.200 ACRES EAST OF OXNARD Analysis of the crops and gross sales value of crops within the 6.200 acres reveals that -mately 38 percent of the land is in citrus and the remaining 62 percent ,s in vegetables acreage m citrus, about 2,200 acres are in lemons, 75 in oranges, and 74 in grapefruit Based rage crop value per acre in 1969, the total acreage in citrus would have generated gross sales )f somewhere in the neighborhood of $5,838,000. The remaining 3.850 acres is mainly comprised of vegetables. Some of the primary summer 3re tomatoes, celery, and green lima beans; some dominant winter crops are cabbage cauli- celery. spinach, peppers, and lettuce. In general, the area is double cropped. If the assump- made that in 1969 all the area was double cropped (realizing some of the acreage grew one Nile some acres grew three or more crops a year), a generalization can be determined as to ;ales per acre of vegetables in the area. An acre of land growing two crops in celery would OSS sales m 1969 of approximately $6,000. On the other hand, an acre of tomatoes and head would have gross sales of somewhere in the vicinity of $3,000 and an acre of head lettuce I peppers would have gross sales of approximately $1,800. For this reason any general- on the gross sales value of vegetables is somewhat arbitrary, however, a figure of $3 000 e does not seem unreasonable. Using this figure, gross sales of vegetables of $11 55o'oOO r K Tl'' "''^ ''''''' '^" " ' ^°^" 9^°^' '^'^^ °^ $17,388,000. The total economic ror the b,2U0 acres would be approximately $58,597,000. This detailed analysis of 6,200 acres reveals some of the costs involved m urbanizing prime ural lands. The costs are very significant in terms of the loss of yearly agricultural sales economic activity generated by growing, harvesting, transporting, and retailing fami produce this the loss of acreage that returns much more in revenue than it costs in terms of govern- serv.ces^ and the decision to convert agricultural land to urban purposes takes on an eco- -ght seldom considered since agriculture has traditionally been considered a residual land 10 1016 PRESEII IREIDS IKRm llll ECONOMIC Taking an area of 100,000 acres, which roughly corresponds to cultivated acreage in County a forecast was made of residential, industrial, and commercial land takes through IS projected that 15,507 additional acres will become residential, 3,080 industrial, and 1,3 mercial. The consequencies of pursuing present trends are as follows. Residential The fwpulation of Ventura County is projected to increase by 348.000 by 1980. In It IS hypothesized that throughout the county, the population density will nse to an averagi people per acre. Considering this inaeased density will affect the entire county, it is fore^ 268 271 of these new residents will live withm the 100,000 acres of undeveloped land being a model and the remaining 79.279 will reside in present urban areas. The per capita income 268 271 people has been held constant as have all other economic data such as industrial, tural and conmercial sales per acre, and government costs per acre. Per capita income is '- aggregated this will add $758,402,117 worth of personal income to the county. However, earlier for agriculture, this is not the total economic consequence of such projected person? since a large share of these dollars will be circulated to purchase goods and services stimulate additional economic activity. Using a multiplier of 3.07. a total economic i $2,328,294,500 is forecast from personal income. Industrial ^'^ Of the 3 080 acres of additional land going into industrial uses by 1980. the assum been made that it will all be in our model of undeveloped land. Taking 1969 manufacturing capital improvements, and material costs, and the value added to manufactured products final industrial sales of $523,039,470. With industrial sales per acre of $214,432 (after si 10 percent of the acreage assumed to be in the Food and Kindred Sector), the additional 3.1 will create new industrial sales of $660,450,460. To apply a multiplier to this figure r determination as to what percentage of firms are endogenous (local) and what percentage ai nous (firms and headquarters outside the county). This was necessitated by the fact that nr for the two types of firms differ fairly significantly. Exogenous firms have a much lower because of their greater tendency than endogenous firms to purchase materials and ship products to other regions, with a resulting reduction in the amount of economic activity c It has been found that 2/3 of the county" s firms are endogenous and 1/3 exogenous, and the t.on has been made that this ratio will hold constant through 1980. The multiplier applied i endogenous firms and 1.89 for exogenous firms. On the basis of these two multipliers we an economic contribution of $415,667,768 from exogenous firms and $1,127,732,541 from er firms for a total increase of economic activity generated from new industrial lands of $1,54. 'Per capita mcome f.gures a.e for 1968 ..nd were taken f.om Secur.ty Nat.onal Bank s. Col.«orn.o R.por.: Growth and Economic Stoture Food an.l K.ndred ProrUK ts (SIC Codes 19- 3M) have been OKcluded to keep f-om incoruorated into th. Agtuultural CommiSSiOnet S Annool Report 1969. double countinq since n *t^j ''' ^'-^'"9 th.s anx,unt c $40 07 " A^nr^^" ''"^ '' '" ''''' '"''^'^"^' -^^^ save us a total I with oral ,o ?' '"' """' '' ''' '''^''''' ^^^'^^'^^ '" ''' undeveloped area with a total local governmental expenditure by 1980 of approximately $110,154,111. 'o* f "oah°at,on. ^ni'2?'i970) '^°''*°""°' '^'"**' *""""' ''"'°" '^^'='*^«"'o Research and Stat,st,cs Un... "ra'^reTet-llre"',:';: TZ^T: """ ^'^^ - ^'^ ''"-"■ ^"--« '^« ---Vs percentage of '" sales .s obta.ni ^*^ "^ "' percentage of taxable sales, the f.gure of S141, 29^000 of non- e 29 percent ordiveSe^lidtraTwm'o'oT"^^^^ '"'"''"''• *^' '^^''«"''^' ^'^^^ " ^-s not c wvcu lano tnai will go to Other urban purposes by 1980 ctran'n^TblT"; iTsi:' rr'r^ ^^'^^ '^ '^^^ °" --^^ ^-^ -- -- . t^e .ode. .ea ^e deve.opedTthe nexften vSrs s n'ce .frasT" ."", "'"^'"^ °' ''^ agr.cu.tura. value of acreage '-9 reg.on for urban.zat.on. ' ""^""^^ '°^ '^^ °''"*'^ '''^'"^ ^^'^ '^'^ area w.ll continue ^' i°n'c:,::r ^eT H;::::r::3'r;.ra;'"s';:;i^^^;,':; '^ °"' ^^'^^-^ °^ ^^^'"-^"'^' --^ -^ - ^o .at .s pro.cted to be a ^^^eC^— ;:-:::z^:rz ^.^^^ ;;: :^:^^ 12 1018 Since local governmoni is highly localized and is labor intensive, it has a large multipli Therefore, after employing the multiplier of 3.93 for local government expenditures, a total activity IS engendered of $432,905,656. Summary The residential, industrial, commercial, agricultural, and governmental sales or exj in the area under consideration are estimated to have the following total economic imp; county by 1980. Residential Industrial Commercial Agricultural Governmental TOTAL $2,328,294,500 1,543,400,309 1,277,208,432 355,858,677 432,905,656 $5,937,667,574 GOVERNMENTAL REVENUES AND COSTS Revenues Revenues for each sector of the economy previously discussed have been deti taking total assessed land and improvements for each category, dividing it on an acre and applying the tax rate per $100 worth of assessed valuation. ^^ 1. According to Planning Department projections, the population will increase to 17.3 acre by 1980. At an average family size of 3.2, this will mean 5.4 dwelling unit Taking net family income in Ventura County of approximately $8,500 and assuming a purchase or rent homes worth approximately 2-1/2 times their annual income, there w average assessed value in these new residential areas of $28,487 per acre. Applyi rate of $9 per $100 of assessed value, a revenue of $2,564.69 is gained per acre. Tot from new residential acreage is, then, estimated to amount to $39,770,647.83. 2. Industrial lands and improvements have an assessed value of $83,846,000. Dividing into a total of 2,720 acres gives us $30,825 of assessed valuation. With a tax rate c $100 of assessed valuation, an average revenue of $2,620.12 per acre of induslria determined. 3. Cormierc.al lands have an assessed value of $41,923,000. With 1,870 acres of development, a tax rate of $8.50 per $100 of assessed valuation, and an average $1,905.53 IS generated. ^" Tax rates and ,.ssessed values (except for residential areas^ are for the fiscal year 1968-69 13 *f:^ 1019 lultural land has a total assessment of land and improvements of $217 999 600 This figure ed by the 100.000 acres of cultivated acreage gives us an average assessed value pe^ of $2,179 and average revenues per acre of $196.11. g per acre revenues derived by residential, mdustnal. commercial, and agricultural lands multiplying such receipts by projected land takes by 1980 provide the following estimated ue from new land uses and remaining agricultural production. Residential Industrial Commercial Agricultural 15,507 Acres 3,080 Acres 1.350 Acres 80.063 Acres $39,770,647.83 8,069,969.60 2,572.465.50 15,701.154.93 TOTAL 100.000 Acres $66,114,237.86 SOURCE VENTURA COUNTY. PLANNING DEPARTMENT. 1970 9StS le method of determining urban per capita costs was explained earlier. To arrive at per s for each type of development, the $410.07 per person was divided between school and !\9m 7Z '''"l'°? ""''' ^^^" "^"'^'P"«d by the 17.3 people per acre (the projected 1980) and the number of acres going mto residential uses to give us total school costs, nmg $216.01 of per capita governmental costs was applied to all land uses on a per acre i density of 13.4 people since our original per capita cost was averaged over an area with an uses not just residential. This necessitated, then, that we average the projected ^m^'lu T' T'^^ '''""'^"^ ^° ^" '^"^ ^° commercial, industrial and residential 1 fn K K ' .° '' "'^'" ^' ''^''' ^°^^' ^^^^ "^^'^'P''^ fi^s^ by the density of te $ Som^ir '1 '"''': "' '''^''''' ''"' ^^^^ ''' ' ^°^^' governmental cost of nd !'°^'7m """''' °' '"' ''"'^ ^'9"^"' '°^^^^' '^ '^'' '^ -s "°^ broken down no use as follows: 1980 GOVERNMENTAL COSTS IN THE NEWLY DEVaOPED AREAS Residential Industrial Commercial TOTAL $ 96.949,764 8,916,600 3.908,250 $109,774,614 SOURCE VENTURA COUNTY PLANNING DEPARTMENT. 1970 ore, It IS assumed that the remaining 80,063 acres isunder cultivation, and we apply the Of $37M9"^' °' '""""^"^^' ""'"^ °^ '''' ''''' '^ ' ^°^^' -P-- ^- '^---n 14 1020 SUMMARY OF PRESENT TRENDS As noted, the economic impact of mdustr.al, commercial, and residential land on an a basis generates a larger amount of economic activity than does agricultural production. This ence is somewhat reduced when the multipliers are added since agriculture has a large mu effect on the economy Nevertheless, comparison of per acre sales of industrial and comr land or urban per capita income on an acreage basis with per acre sales of agricultural p. (rather than total sales) creates the impression that the latters contribution is rather insign. AVERAGE TOTAL SALES PER ACRE BY LAND USE TYPE Industrial Sales Per Acre Commercial Sales Per Acre Urban Per Capita Income Per Acre (1980) Agricultural Sales Per Acre (Including Packaging and Processing) $214,432 381,484 61.121 1,706 SOURCE VENTURA COUNTY. PLANNING DEPARTMENT. 1970 A different picture is revealed when local government costs to service each function as total property taxes generated are analyzed. TOTAL GOVERNMENT COSTS AND REVBIUES FROM PROJECTED 1980 DEVELOPMENT Type of Land Use Total Costs Total Revenues Net Government Revenues Residential Industrial Commercial Agriculture $ 96,949,76421 8,916,600 3,908,250 379,497 $39,770,647.83 8,069,969.60 2,572,465.50 15,701,154.93 -57,179,116.17 -846,630.40 -1,335,784.50 +15,321,657.93 TOTAL $110,154,111 $66,114,237.86 -44,039,873.14 SOURCE VENTURA COUNTY PLANNING DEPARTMENT. 1970 From a property tax standpoint, it can be seen that agriculture is the only land use that Itself when industrial and commercial property is given a cost based on total urban expendi government Of course, there are revenues derived from urban development other than propert but on this basis, agriculture is, from the public perspective, the least expensive land use. Industrial and commercial costs are greater than revenues because all expenditures related '° f^^^l° separated from those related to land. Therefore, the costs above are urban costs which favor resident. ai as commercial and industrial governmental expenditures. Total costs, of course, will remain the same irrespec breakdown. 15 1021 lEHilirE CRIIII PIIIERI Following actual projected growth trends and assuming they w.ll take place with.n our rmdel 000 acres^ we arrived at the previously outlined economic consequences on Ventura County e costs and benefits to local government. With the alternative growth pattern, we simply start le premise that (1) population w.ll increase by three-fourths the expected rate (commercial iustn a expansion are also assumed to be 75 percent of projected growth trends) and (2) the t.on will reside at a density of 20 people per acre rather than 17.3. Using this alternative pattern, the following economic impact and local governmental costs and revenues are hy- ized. ' ALTERNATIVE POPULATION AND ACREAGE PROJECTIONS Projected population Projected population in the newly developed area Residential acreage Industrial acreage Commercial acreage Remaining agricultural acreage 261,000 137,40022 6.870 2,310 1,013 89.807 ECONOMIC IMPACT Residential Total Personal Income With the Multiplier $ 388,429,800 1.192,479,486 Industrial Total Sales With the Multiplier 495,337,920 1,157,218,356 Commercial Total Sales With the Multiplier 385,443,292 958,379 365 Agriculture Total Sales With the Multiplier 153,443,292 475,367,318 Government Total Expenditures With theMiltipher 62,722,055 246,497,676 SOURCE VENTURA COUNTY. PLANNING DEPARTMENT. 1970 '^cZZVslZacr :L7"J""^7"^ V ''' """"'^ "^"^ ^'^ '"— '" -'-'-9 -ban areas subtract the number of people expected to go mto already developed reg,ons. Therefore. 16 1022 GOVERNMENT COSTS AND REVENUES (ad valorem Property Tax) Type of Land Use Total Costs Total Revenues Net Government Revenues Residential Industrial Commercial Agriculture $46,551,120 6,687,450 2,932,635 425,685 $17,619,420.30 6,052,477.20 1,930,301.89 17,612,050.77 -28,931,699.70 -634.972.80 -1.002,333.11 +17,186,365.77 TOTAL $56,596,890 $43,214,250.16 -13,382,639.84 SOURCE VENTURA COUNTY, PLANNING DEPARTMENT 1970 Iim lEIEllPMEII The third model uses present trend data for household income, per capita income, po| density per acre, ratios of commercial, industrial, and residential development, etc. It diffi in that It assumed all 100,000 acres are developed; this assurrption Vi/as made to enable us tc the economic impact and costs and benefits to government if all 100,000 acres of agricuitu were converted to urban purposes. The following results were obtained from following suci jection. ALTERNATIVE POPULATION AND ACREAGE PROJECTIONS Projected population in the newly developed area Residential acreage Industrial acreage Commercial acreage 1,730,000 77.800 15,400 6,800 ECONOMIC IMPACT Residential Total Personal Income With the Multiplier Industrial Total Sales With the Multiplier Commercial Total Sales With the Multiplier Government Total Expenditures With the Multiplier $ 4,890,710,000 15,014,479,700 3,302,252,800 7,714,789,036 2,594,091,200 6,433,346,176 550,674,600 2,164,151,178 SOURCE VENTURA COUNTY. PLANNING DEPARTMENT. 1970 17 1023 GOVERNMENT COSTS AND REVENUES (ad valorem Property Tai) Type of I Land Use 1 Residonti.ii { lndustri.)i ComrrK.TCial ! Total Costs $486,405,600 44.583,000 19 686,000 TOTAL $550,674,600 Total Revenues $199,532.82? 40,349,848 12,950,274 Net Government Revenues -286.872.778 -4 233,152 -6,728 396 $252,840,274 ■297.834,326 SUIRCE VtMuRA COUNTV PlANMNG DEPARTMENT 1970 e datum presented ,s a first approximation and .s not meant to imply that the figures are .ther, ,t IS indicative of the consequences of various growth trends From the standpoint alys.s, agriculture .s the only land use that pays its own way m relation to the costs and ccru.ng to local government. This is a well known fact, the purpose of this study was to t Tho per acre economic impact of agricultural, industrial, commercial and residential are also quantified and it is clear that, economically, agriculture cannot compete with ^analysis makes it explicit if Ventura County simply wants the largest amount of economic .ssible It should be prepared to develop all its agricultural land as rapidly as feasible f the concern .s with governmental solvency and environmental quality it will be neces- .sider agriculture as more than a residual land use. If this concept is accepted it may not to preserve some of Ventura County's unique agricultural heritage VENTURA COUNTY PLANNING DEPARTMENT December 8. 1970 18 1024 Members c1 \^ PI Office of ih f3 ft annin g Ptjrgctor^ George H. Alien Carol Sknte 1 Jeffrey Chew Karei Dekk^ir Virginia DiHard George Draper Victor Hu':i band-. Fr^nk Keeran. Wtiljani Lo<.k«rcl Pfimefa Lok'^ ' Ronald Poitfa*5 Lehua ^ji'^k Subao SoiV John Sewetr ■ v"--^ i-v ■?v;.. ;ii •:;r ,:^- PI anntng A dnttntsftratio n D»v«j>icn riorenc. Davrc-o^ fab^fcn Dufau Doi^Aid Heckier Randy McCash^^ C