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April 2003, Volume 9, Number 2

California: Water, Agribusiness

Water. In 2002, the US Bureau of Reclamation agreed to pay owners of 33,000 acres on the west side of the San Joaquin Valley $107 million, or $1,500 to $3,000 an acre, in damages because the government did not complete a drain to remove brackish irrigation water. The 33,000 acres is part of an estimated 200,000 acres that may be retired from irrigated farming in the 600,000-acre Westlands district.

The federal government closed the underground San Luis Drain system in the 1980s after biologists found hundreds of dead and deformed wildlife at Kesterson Reservoir, where the irrigation drain water drained.

Fresno County officials in March 2003 moved to block the $25 million sale of 27,000 acre-feet of water from the federal Central Valley Project to the Broadview Water District, southwest of Firebaugh, and shifting it to Watsonville-area farmers. In the Watsonville area, sea water is seeping into underground basins, so growers' wells are producing more salty water that crops can not tolerate.

The Friant Water Users Authority, representing 15,000 east-side farmers, and the 600,000-acre Westlands Water District agreed to stop arguing over federal water in March 2003. In 2000, Westlands sued for a third of the water from the San Joaquin River, based on two untested 1943 laws that allow property owners, cities and other entities to get water for development and other uses from a river that originates either in their area or in their county.

In March 2003, the Metropolitan Water District of Southern California (MWD) agreed to buy 97,200 acre feet of water from three Sacramento Valley water districts for $100 an acre foot; the water would normally be used to grow rice. MWD serves 18 million California residents, half of the state's people.

Agribusiness. Dole Food Co., the world's largest fruit and vegetable producer, has annual sales of almost $4 billion a year. Chief Executive David Murdock plans to take Dole private by buying the 76 percent of Dole shares they do not already own for $2.5 billion.

Sun World International, a farm production subsidiary of Cadiz Inc, filed for bankruptcy; it was in bankruptcy when Cadiz bought it in 1996. Sun World, based in Coachella and Bakersfield, has 550 full-time employees. It owns 12,000 acres planted in vines and trees in its fields, two packing plants and a collection of patents covering special breeds of fruit; Sun World had sales of $110 million in 2001.

The 1965 Williamson Act (the California Land Conservation Act of 1965) lowers property taxes on farmland that farmers pledge not to sell for development for 10 years, and the state provides money to counties to compensate them for the lower taxes they receive. Some 16.3 million acres, including more than half the state's prime farmland, is protected under Williamson Act contracts, and Governor Gray Davis in January 2003 proposed ending the $39 million a year paid to counties as compensation.

Generic Ads. The federal 9th Circuit Court of Appeals in February 2003 held that table grape growers could not be required to pay assessments of about $10 million a year to support generic advertising of table grapes. The US Supreme Court in one case found that mandatory assessments for advertising were lawful- for California tree fruit growers operating as a "broader collective enterprise," but were not lawful when collected from "competing and independent" mushroom growers.

The three-judge panel of the 9th Circuit decided that the 600 table grape growers were more like "competing and independent" mushroom growers; the California table grape commission plans to appeal the decision.

Elizabeth Douglass, "Cadiz Subsidiary Files for Chapter 11," Los Angeles Times, January 31, 2003.

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