California’s farming heritage faces a new predatory threat—this time from state legislature.
When it comes to agriculture, California truly is the “Golden State.” With annual sales nearing $40 billion, its ag industry is more than twice the size of any other state’s. The California Department of Food and Agriculture estimates that California agriculture also generates more than $100 billion in related economic activity and ranks as the world’s fifth largest supplier of food and commodities.
Yet, as the state grapples with a record budget shortfall, Governor Jerry Brown and the state legislature are sharpening their axes. So while virtually every segment of the state budget faces major pruning, there’s particular concern among those in the agricultural community over the potential loss of key programs that are critical to ensuring the livelihood of family farms, not only in the North Bay, but throughout the state. Even the traditional ag showcases—county and community agricultural fairs—are facing the scythe.
Meanwhile, back at the ranch, new state regulations governing water and air quality have the potential to threaten the financial viability of virtually all agricultural operations. And in Sonoma County, in particular, proposed changes in agricultural zoning rules have property rights activists swarming to public hearings to protest.
Is ag really under attack? To find out, NorthBay biz talked with agricultural leaders in the North Bay and Sacramento to gauge their reaction to pending proposals. Here’s what they had to say.
The Williamson Act
At a heated South Carolina town hall meeting about the overhaul of the nation’s health care system two years ago, a frustrated senior citizen stood up and told his congressman to “keep your government hands off my Medicare.” If there’s one subject that evokes the same response among California’s agricultural community, it’s the California Land Conservation Act of 1965, better known as the Williamson Act. It provides property tax relief to owners of farmland and open space land in exchange for a 10- or 20-year agreement that the land won’t be developed or converted to another use. It’s a rolling contract between the state and land owners, which means it’s automatically extended each year until the land owner notifies the state (a minimum of 90 days in advance of the annual renewal date) that he or she intends to remove the property from the program; it then takes nine or 19 years for the contract to wind down.
Currently, some 16.4 million acres of California farm and ranch land—10.4 million acres of nonprime range land and 6.5 million acres of prime farmland—is protected under the Williamson Act, according to John Gamper, director of taxation and land use for the California Farm Bureau Federation, headquartered in Sacramento.
The act’s formula is straightforward: The land is assessed using an income approach to value (a way to determine how much money the property actually generates), which results in a lesser value than a Proposition 13-based value assessment, which is more common. This saves the average land owner between 20 to 75 percent in tax liability. Each county then receives $5 per acre for prime land enrolled in the program and $1 per acre for nonprime land to help make up the property tax difference. The annual cost to the state is $37.6 million out of a $100 billion budget.
“It’s truly an insignificant part of the budget. It’s so small that many refer to it as budget dust or a rounding error,” Gamper says. “But since 2001, the Williamson Act has become a political pawn. Davis [Gov. Gray Davis], Schwarzenegger [Gov. Arnold Schwarzenegger] and Brown [Gov. Jerry Brown] have used it to extract republican votes for the budget, since agriculture is rural and republicans usually represent rural areas.”
Gamper compares negotiations on the state budget to a log rolling contest: “They just keep going back and forth until someone falls off the log.” And while funding for the Williamson Act always seems to be on the chopping block, Gamper notes that it retains broad bipartisan support in the legislature.
In 2009, Gov. Schwarzenegger basically eliminated funding for the Williamson Act for 2010, reducing it to a $1,000 placeholder. This required counties, already strapped by budget cuts and lower tax revenues, to make up the difference. Governor Brown, at this point, appears ready to do the same. As a result, some counties, including Sonoma County, have put a freeze on accepting more acreage into the program.
Sandy Elles, executive director of the Napa County Farm Bureau, agrees that the Williamson Act is “a political football, despite the fact that both republicans and democrats support it.” She notes that Napa County has strongly supported the act for many decades and says it has “deep benefits, not only for our county, but the entire state.”
Currently, Napa County has 70,000 acres enrolled in the Williamson Act. Elles says the Napa County Board of Supervisors is committed to the program and sees the long-term value of protecting the county’s farmlands.
For Napa, making up the shortfall in funding from the state for the Williamson Act is “not a huge budget issue for the county,” Elles says. “Out of a $322 million county budget, it was only a $90,000 hit in lost state subsidies. Since the county has committed to continuing support for the Williamson Act, the impact in Napa County is negligible for the immediate future,” she explains, “but should the act exit state budget priorities in a more permanent way, there’d certainly be more concern and worry on our part.”
Anxiety is a little higher in Sonoma County, which has suffered a $439,000 loss in Williamson Act payments from the state (Marin faces a $110,000 shortfall).
Doug Beretta is a third-generation dairy farmer on a 400-acre parcel on Llano Road in Santa Rosa. His family has had land enrolled in the Williamson Act since his grandfather first started the business back in the 1960s. Should the act disappear, Beretta fears his property would be appraised at a much higher value, and the increased property taxes would force him out of business.
“The state asked us to sign long-term commitments and we’ve upheld our end of the deal,” Beretta says. “Now it wants to take away our family farms.”
His sentiments are shared by Joe Pozzi, whose family has been raising cattle and sheep in the Valley Ford and Bodega areas for four generations. Pozzi is also president of the Sonoma County Farm Bureau; with the Bureau, he’s been working with both the county and state to voice the concerns of the local ag community. He notes that tax relief isn’t the only benefit of the Williamson Act.
“It’s the most important conservation program out there,” he explains. “It keeps ranching families and farmers on the land as stewards and stimulates a strong economic base for all farms out here. Should it disappear, we’d be taxed on the value of the land, not the income it generates. Taxes would outpace our income potential.”
Gamper agrees. “Half of California’s 100 million acres of land is owned by the government,” he explains. “In 1973, there were 10 million acres of prime farmland in the state. We’re now down to 8 million. That’s a 20 percent reduction in just one generation. Having the Williamson Act makes a lot of sense when it comes to conserving land and protecting our nation’s food security.”
Wendy Krupnick, vice president of the North Coast Chapter of the Community Alliance with Family Farmers and a sustainable agriculture adjunct faculty member at Santa Rosa Junior College, calls threats to the Williamson Act “a difficult situation.”
“If farmers go out of business, how will that help the economy in California?” she asks. “It’s an incredibly short-sighted proposal. If we are to grow our economy, we need to support agriculture. It’s just that simple.”
Fair game
The Williamson Act may get most of the ink when it comes to discussions about proposed ag-related budget cuts, but it’s not the only victim of what Elles describes as “Draconian cuts.” The California Department of Food & Agriculture (CDFA) slashed $15 million this year and another $15 million for 2011/2012 from the general fund budget of $100 million, she points out. The state’s agricultural fairs, which showcase and celebrate everything from chickens to homemade jams, are also losing considerable funding—some $32 million.
Al Wagner is the vineyard operations manager for Clos du Val in Napa Valley and volunteers his time as president of the Napa Valley Expo in downtown Napa. The Expo owns 37 acres of fairgrounds on Third Street and annually hosts the Napa Town & Country Fair, to be held this year August 11 to 15.
“We currently receive almost $200,000 from the state, but in 2012, we’re pretty much going to be cut off,” Wagner explains. As a result, the Expo has had to raise its rental rates for everyone, “even the nonprofits that use the facilities for their crab feeds and those that provide shelters for the homeless during the winter.”
The Expo is increasing its recreational vehicle park rentals and is also expanding the RV park “to get more cash infusion,” Wagner says. The cost to attend this year’s fair will jump 30 percent, from $10 to $13. “In reality, if we have a normal year, we’ll get close to our normal apportionment, but we likely won’t make up all of it.”
Wagner scratches his head as to why the state wants to pull the plug on fair funding when the fairs contribute so much to the economy.
“Their economic impact is huge,” he says. “There are 56 fairs in California and they generate $150 million in sales tax alone. Plus, there are 25,000 people employed by the fairs statewide—add in the employee wages and payroll taxes the state derives from that. Then you have vendors on top of that. It’s just a huge number. I think it’s very short-sighted thinking to cut funding on something that’s a revenue generator. I mean, $32 million is just a drop in the bucket when you consider the total shortfall in the state [budget]. They’re just not looking at the bottom line,” Wagner says.
Looming cuts in fair funding also will impact the Marin County Fair, which will lose $173,000, or 10 percent of its $1.7 million budget. But Jim Farley, director of cultural services for the County of Marin, prefers to look at the bright side, calling it a “healthy exercise to trim down and return to your core mission and priorities.”
“There’s an old Chinese proverb: ‘When the wind changes directions, there are those who build walls and those who build windmills,’” Farley says. “It may sound corny, but that’s the model for dealing with this kind of change. We need to step back, do fewer things and focus on quality. In a recession, guests have many choices and fewer dollars for nonessentials. We can’t change a recession, but we can focus on customer service to enhance the best experience possible.”
Marin’s County Fair this year (June 30 to July 4) will still have headliner entertainment (Three Dog Night and The Pointer Sisters are among the acts), but it will save a bit by also having the United States Air Force Concert Band, which performs for free. There will be new styles of tents, a bit less staffing and slightly fewer attractions. “We took a 10 percent cut, so my mantra is now 10 percent less on just about everything,” Farley says.
This year’s fair will be a special celebration, launching the 75th anniversary of the completion of the Golden Gate Bridge. Farley says the admission prices of $15 for adults, $13 for seniors and children 12 years of age and under (kids under the age of 5 are free) will remain the same as last year and will still include free access to all rides and concerts. “We want to keep the price the same to make the experience as affordable as possible, which is important to families on a tight budget.”
Raising the bar
At the same time the state is tightening its purse strings, it’s also initiated higher agricultural environmental standards that many feel will increase the financial burden of operating farms, ranches and vineyards.
While water quality regulations have been in place for years and agricultural operations in the North Bay in general have been “far ahead in meeting water quality standards,” according to Beretta, the state is proposing to increase water rights fees, which it’s allowed to do each fiscal year to conform to the revenue levels set forth in the annual budget. (The water board is required to generate enough revenues to support its regulatory expenditures in the amount the Budget Act sets forth. If there’s a shortfall, it increases fees for water rights.)
Statewide, farmers are facing multiple new regulations regarding irrigated land water quality.
In addition to the Irrigated Lands Water Quality program, farmers in the Napa River watershed are faced with two new water quality programs that regulate total maximum daily loads (TMDL) of pathogens and sediment, Elles says. “The farming community is committed to sustainable farming and being good stewards of resources,” she explains. “But many of these programs exact heavy compliance costs and place bureaucratic burdens where water quality problems don’t exist.”
Wastewater treatment from agricultural operations is also expensive and a major issue, even though no one argues it’s unnecessary. By using Best Management Practices (BMP), farming operations that use pesticides and fertilizers reduce threats for both wildlife and humans and prevent these chemicals from infiltrating the water supply. Likewise, the potential threat to water quality, food safety and human/ecosystem health from livestock producers is reduced by good stewardship and ranch water quality plans. California is the nation’s leading dairy state, and milk is its number one farm commodity, according to the California Department of Food and Agriculture. In 2009, the U.S. Environmental Protection Agency reported the state had 2,400 dairies and 1.3 million cows that generate more than 30 million tons of solid and liquid waste every year.
The need to comply with the rules isn’t the issue, according to Elles. “It’s the explosion of new, complex and, oftentimes, duplicative rulemaking and the increase in regulatory fees that’s putting a burden on farmers and growers,” she says.
Up in the air
Of particular concern to those interviewed are the new regulations governing air quality and diesel emissions. Under previous California air pollution law—which was in violation of the Federal Clean Air Act—farms were exempt from the permit requirements that applied to other industries. In 2004, fearing loss of federal funding, the state initiated compliance with the federal law and began requiring pollution permits for large, concentrated animal feeding operations and agricultural operations that use fermentation, open burning, commercial dryers and agricultural water pumps.
Three years ago, the California Air Resources Board (CARB) proposed more new regulations to control exhaust emissions from diesel engines in trucks and off-road vehicles such as tractors.
The new rules were a Catch-22 for farmers. While long-haul trucks may amass as many as 150,000 miles per year on their odometers, requiring replacement on a much more frequent basis, most diesel trucks used in farming only see action a few months of the year, usually during harvest. As a result, their annual mileage is much lower. This means those farming vehicles are usually older and not outfitted with the latest in emission control devices. As originally written, the regulations would have meant California farmers would have to replace or retrofit as many as 400,000 trucks and tens of thousands of older diesel tractors—a major economic burden. After input from the ag industry and heavy campaigning by state agricultural organizations, CARB revised its rules to give additional time for limited-use diesel vehicles to comply.
“[CARB] produced volumes of information on new diesel regulations and we [Napa County Farm Bureau] worked to find ways to achieve improvements in air quality without being extraordinarily expensive,” Elles says. “It took a huge amount of time to understand the rules, let alone comply with them. We’re grateful CARB responded to our input and revised the regulations significantly, giving owners of diesel trucks and pumps more flexibility in modifying or replacing engines.”
Beretta is still uneasy about the proposed air quality regulations. Even with the time extension, he predicts he’ll need to replace the vehicles he currently has over the next 10 years. And since other ag-related industries will also be impacted, “it will drive up our freight costs as well,” he says.
In the zone
While budget cuts and new regulations are disconcerting to many ag leaders on their own, the Sonoma County Planning Commission has created its own tempest in a teapot with proposed changes to its agriculture zoning ordinance.
The trouble started six years ago, when the county updated its General Plan but didn’t alter agricultural zoning to bring it in compliance with those General Plan changes, according to Krupnick. As a result, the county has recently proposed new rules, including allowing food processing on smaller agricultural parcels (a practice that’s currently banned), changing the size and types of properties that qualify to enroll in the Williamson Act, gradual elimination of ag vacation rentals and expansion of educational farm stays (which welcome paying overnight visitors to farms, dairies and the like).
Public hearings on the new rules have been quite spirited. As reported in The Press Democrat, one group of property rights activists has organized a campaign to “paint the rules as part of a worldwide, United Nations-driven conspiracy threatening land owners.” One of the group’s more outspoken members, offering remarks that were off the agenda, actually pushed the Planning Commission to call a brief recess in the proceedings.
Krupnick says her own experience in working with the county on the proposed zoning changes is much more positive.
“It’s really housekeeping, but the devil is in the details. The General Plan paints a broad picture, and this current process is working out how to specifically move toward those goals,” she says. “It’s constructive dialog and people are being heard. It’s just that some of the issues aren’t so black and white.”
She cites farm stays as one example. “They’re very popular in Europe. One or two people stay on a local farm, where they work and observe. It’s a low-cost way of traveling and learning about an area. It’s great, because people need to learn where food comes from. But, on the other hand, real estate and tourism people are pushing for the continuance of vacation rentals and are using the same argument, even though groups are coming for a week, looking for a place to stay and aren’t necessarily interested in farming. Which do you support?”
Krupnick says the problem with vacation rentals is people wanting to have them in places zoned for agricultural, not commercial, use. “You end up with increased traffic from family reunions and parties. It’s a whole different scene than having a bedroom in a farmer’s home. Since agriculture is rural, why would neighbors want a vacation rental nearby?”
Looking at the future of agriculture in the North Bay (Sonoma County in particular) and reflecting on ag under attack, Krupnick feels it’s important to be more supportive of a diverse agricultural region and not rely so much on grapes and dairy.
“I’m talking fruits, veggies, small livestock and berries. The demand for these products is increasing, and so much of what we have in our food system currently comes from outside the county. Everyone would like to see more local food production. It’s better for our economy, it reduces our food insecurity, and it reduces our carbon footprint with less trucking in and out of the county,” she says.
“No one wants to attack agriculture. It’s just like education, health care and the environment—all of which are essential services that are being threatened [because of the current economy]. Nobody wants to attack these positive things,” she says.
But Beretta has a different perspective.
“From my point of view—and it drives me crazy—legislators are so far removed. Not just from agriculture but from everything that relates to our daily lives,” he says. “They just don’t know what’s going on anywhere.”
