Among the many damaging contradictions that plague California society is its agriculture, which regularly, exports irrigated crops while pretending to develop sustainable groundwater plans and grabbing every acre-foot of surface water from every river it can, with contempt for the habitat of species it endangers and destroys. From farmworkers paid to carry signs at public meetings demanding more water to save jobs, to bank loan officers and hedge-fund rainmakers, no one involved with California agriculture can tell the truth about water. Most don’t know it, and those that do lie.
Two percent of the state’s economy should not be allowed to use 80 percent of the state’s water, particularly when wherever California agribusiness locates, it surrounds itself with poverty.
To assume the simple-minded position that California rents are being driven up solely by demand rests on the absurd claim that the California housing market is an operating “free” market, governed by those simple little graphs found in Econ 101 texts.
When the state Legislature can be “persuaded” by real estate lobbyists not to introduce a bill for rent control and real estate interests spend around $80 million to defeat Prop. 10, a rent-control initiative, two things emerge: Californians are facing terrifying rising rents; and landlords will spend millions to protect the rent escalation.. ---blj
Who keeps buying California’s scarce water? Saudi Arabia
Saudi-based Almarai owns 15,000 acres of an irrigated valley – but what business does a foreign food production company have drawing resources from a US desert?
by Lauren Markham
Four hours east of Los Angeles, in a drought-stricken area of a drought-afflicted state, is a small town called Blythe where alfalfa is king. More than half of the town’s 94,000 acres are bushy blue-green fields growing the crop.
Massive industrial storehouses line the southern end of town, packed with thousands upon thousands of stacks of alfalfa bales ready to be fed to dairy cows – but not cows in California’s Central Valley or Montana’s rangelands.
Instead, the alfalfa will be fed to cows in Saudi Arabia.
The storehouses belong to Fondomonte Farms, a subsidiary of the Saudi Arabia-based company Almarai – one of the largest food production companies in the world. The company sells milk, powdered milk and packaged items such as croissants, strudels and cupcakes in supermarkets and corner stores throughout the Middle East and North Africa, and in specialty grocers throughout the US.
Each month, Fondomonte Farms loads the alfalfa on to hulking metal shipping containers destined to arrive 24 days later at a massive port stationed on the Red Sea, just outside King Abdullah City in Saudi Arabia.
With the Saudi Arabian landscape there being mostly desert and alfalfa being a water-intensive crop, growing it there has always been expensive and draining on scarce water resources, to the point that the Saudi government finally outlawed the practice in 2016. In the wake of the ban, Almarai decided to purchase land wherever it is cheap and has favorable water conditions to produce enough feed for its 93,000 cows.
In 2012, they acquired 30,000 acres of land in Argentina, and in 2014, they bought their first swath of land in Arizona. Then, in 2015, they bought 1,700 acres in Blythe – a vast, loamy, agricultural metropolis abutting the Colorado river, where everything but the alfalfa seems cast in the hue of sand. Four years later, the company owns 15,000 acres – 16% of the entire irrigated valley.
But what business does a foreign company have drawing precious resources from a US desert to offset a lack of resources halfway around the globe?
What Fondomonte Farms is doing is merely a chapter in the long story of water management in the west, one that pierces the veil on the inanities of the global supply chain – how easy it is to move a commodity like alfalfa, or for that matter lettuce or clementines or iPhones, across more than 13,000 miles of land and sea, how much we rely on these crisscrossing supply lines, and at what cost to our own natural resources.
An astonishingly good rate
Though Blythe is a desert, it is adjacent to the lower Colorado river, a river that supplies water to roughly 40 million people and irrigates 4m acres of land.
Bart Miller, Western Resource Advocates’ healthy rivers program director, says that over the last 80 years, due to the growth of proximate cities such as Denver, Los Angeles and Phoenix and the expansion of large-scale farms, demands on the river have steadily climbed. The river is also shrinking due to climate change. It has endured a nearly two-decade-long drought, with only waning rain and snowpacks to supply its flow. As a result, the river is at a record low.
The state of the Colorado river can be traced, in part, to a water claim approved by the federal government all the way back in the 1800s when a British gold rush-era prospector named Thomas Blythe first laid eyes on the desert expanse adjacent to the rushing Colorado river and submitted a water claim application to the federal government.
That 1877 water claim, now owned by the Palo Verde Irrigation District, ensures that Blythe has “unquantified water rights for beneficial use”; in other words, as much water as those living and farming within the district could possibly need in this water-scarce region, and for free.
The Palo Verde Irrigation District is not allowed to sell the water – not to the company Calistoga, say, for bottled water, but not to their farmers, either. Blythe farmers are thus only charged to cover the water district’s overhead – $77 an acre a year, an astonishingly low rate.
In other places, people are charged according to how much water they use and are thus incentivized to use less. In Blythe, no matter how much he uses, a farmer gets his water for a cheap, flat rate.
It’s no surprise, then, that Fondomonte chose to set up shop here. While Saudi Arabia has enacted laws to manage their water resources, in the US we are still governing our water based on compacts made in the 1800s – before the western cities had boomed, before suburban sprawl, before factory farming and a global supply chain and, of course, before climate change.
Water from the Colorado might be limited, but in Blythe, while they still have it, it’s there for the taking.
Getting the water from the river to Blythe is a complicated engineering feat. “It’s a really unique system,” explains JR Echard, assistant manager of the Palo Verde Irrigation District, as he traces how the water moves throughout the valley on a map on his office wall.
“We’re in the desert,” Echard said, “but we live next to a massive river and have rights to it.” Thomas Blythe might have appeared crazy to want to build an empire of agriculture out here in the desert but, in Echard’s eyes, Blythe was on to something.
The Colorado river powers a meticulously managed system of canals and dams. Southern water districts like Palo Verde estimate their constituents’ water needs and submit corresponding orders to the Parker and Hoover dams upstream which then release the requested water as though turning a great industrial tap. Once in Blythe, the diverted water moves downward into the valley below with the help of gravity and into a 250-mile system of canals that wind through 100,000 acres of cropland.
The canals are outfitted with electronic gates that can be opened and closed with the click of a mouse from the Palo Verde Irrigation District’s offices.
In California, everyone’s after whatever water they can get. Because of the low supply, the Palo Verde Irrigation District is currently three years into a 30-year fallowing contract – when farmers are paid not to plant a portion of their fields so the water can instead be sent to cities – with the Metropolitan Water District, which supplies water to big cities like San Diego and Los Angeles.
Fondomonte inherited a fallowing contract, so they are restricted from planting a portion of their land each year. This drives the company mad, an employee whom I will call Jim, told me. He asked not to be named for fear of reprisal from Fondomonte. Alfalfa-hungry Fondomonte would prefer to plant every inch.
Despite its agricultural prowess, 23% of Blythe residents live in poverty (compared with 12% nationally). The town is home to 21,000 people – 6,000 of whom are incarcerated in one of the town’s two state prisons. “The prisons were supposed to bring economic development to the city,” Echard told me on our way back from the dam as we sped alongside one of the primary canals. “But it hasn’t done much at all.”
Fondomonte, on the other hand, has been a boon. “Everyone wants to be working here,” Jim told me. Not only does the company employ more than 100 locals full-time – as compared with the part-time or seasonal labor found on most farms – and with 401ks, vacation and health insurance, but they also support local farmers by purchasing their alfalfa to add to their bales and ship overseas.
“There are a lot of exporters here,” Jim said of US farmers and farm operations selling their crops to overseas markets. “They have been exporting from here for 30 or 40 years. I don’t see how this farm is any different.”
“The Saudis, they’re here buying up at a good price,” Echard explained. “They’re just the same as everyone else. They buy local. It’s a shot in the arm for the economy.”
But is it an outrage?
The thing about alfalfa is that it’s perennial; you can grow it all year and stagger the planting in the fields so that there’s nearly always a new crop of alfalfa ready to be cut as well as planted. Once it’s cut, it keeps growing, and they cut it again. A crop can last up to five years, but Fondomonte generally rips up and replants after two or three; any longer than that and the alfalfa grows more stem-heavy, and thus drops in quality.
Each day on their massive, gated farm headquarters, Fondomonte employees take samples of the alfalfa and test its quality: the higher the ratio of leaves to stems, the better the quality, and thus the better the milk the cows will produce.
“Almarai only wants the highest quality,” Jim explained. He broke open a bale with his hands as if tearing off a piece of bread. The outside of the alfalfa was brown, but just inside, was a vivid and surprising green.
Fondomonte employs some of the most hi-tech mechanisms big ag has to offer – computer programs that combine with satellite and drone imagery to delineate the soil characteristics of each speck of land, drones take videos of production in progress, and the company is currently improving their own system of intra-farm canals and electronic gates so that they can irrigate each field with the touch of a button from behind a computer screen in the office. It’s all part of their ongoing effort to maximize their efficiency and crop quality, thus their profit, thus their empire in Saudi Arabia – perhaps, eventually, here as well.
“If it’s raining,” the employee told me, the farm manager “can just farm from behind his desk”. They are entirely self-sufficient, and have expertise in constructing a hi-tech alfalfa empire having already done it in Saudi Arabia.
Dan Putnam, an alfalfa expert and UC Davis professor, explained US-grown alfalfa has long been shipped overseas, long before Almarai. Alfalfa is the third largest economic product in the US, but only 4% is exported annually. In the western states, however, which are high producers close to shipping ports to major export markets like China, Saudi Arabia and Japan, about 15% is exported each year. These high-export states are also the states that happen to be grappling with drought, meaning that the most water-strapped states are shipping much of their water overseas, in the form of alfalfa.
When Almarai first began purchasing land in the western US, environmentalists, and many average citizens, were outraged. “Saudi Hay Farm in Arizona Tests State’s Supply of Groundwater,” said an NPR article in November of 2015. “Saudi Arabia is Outsourcing its Drought to California,” wrote Gizmodo.
Yet Putnam takes umbrage with the outrage over alfalfa exports. Why, he wonders, are people so much more outraged over alfalfa using water here only to be shipped overseas, what about almonds, a water intensive crop of which 70% of California’s harvest is shipped overseas. Or oranges? Or lettuce?
I suggested to him that it might have something to do with the fact that alfalfa isn’t seen as food – it’s just a plant, a mega-crop divorced, in common perception, from its value as food. But as the basic element of a larger food chain of the dairy and meat industry, alfalfa, Putnam claims, is critical.
“I have a T-shirt,” he told me. “Alfalfa: ice-cream in the making.”
Putnam, along with many farmers I spoke to, urges people to consider how much water crisscrosses the globe in the current supply chain. It’s not just alfalfa, and it’s not just agriculture. People will find goods at the cheapest prices, and companies in areas with unstable resources will relocate elsewhere.
While it’s hard to then make a clear calculation of exactly how much US water is being poured into alfalfa and then shipped overseas (some evaporates, some filters back into the soil, some is deposited back into the river downstream) it’s clearly not nothing. But who knows how long it will last. “For the survival of that country,” Putnam said of Saudi Arabia, “they will look to other parts of the world.”
On our way back from the dam to the district offices, Echard drove me up along the access roads to get a panorama of the canals, and past some bright fields of alfalfa. We then drove to a part of valley where, in partnership with various environmental organizations, the Palo Verde Irrigation District had planted a large grove of trees to revive some of the habitat that once stretched so abundantly along this part of the Colorado. In August, he told me, it can be 115F (46C) outside, but under this canopy of trees, it might be 20 degrees cooler.
“Here in the middle of the desert, we’ve got a little forest,” he said, proudly. Like the river, this forest, too, is a manmade environment; man’s footprint is everywhere.
As we drove back to the office, I pointed out some nice bushy trees along the canal. “Oh, those are saltcedar,” Echard said. An invasive species from Asia that drain the water table and leave salt deposits in the soil, which destroys the other plants. “No one wants it,” he said, as he yanked the truck into gear and headed back out again amid the bright carpets of alfalfa stretching in all directions.
California farm exports help agriculture, but at what cost?
By Peter Drekmeier Special To The Bee
I’ve been told it’s impolite to criticize farmers with your mouth full, and I agree. Food production is one of the most important, yet under-appreciated, professions. However, not all farming is created equal.
In California, water is a public trust resource, meaning it belongs to the people of the state. Water agencies are granted water rights, but the state can determine which beneficial uses have priority.
While it could be argued that food grown in California for Californians is a beneficial use of our water, it’s harder to make that case for crops exported overseas for the benefit of a few farmers – often corporations – at the expense of other water needs.
The California Department of Food and Agriculture reports that in 2015, California exported 26 percent of its agricultural production by volume,
The state should take a serious look at how our water is allocated. Last year, 70 percent of Bay Area voters elected to tax themselves to pay for wetland restoration around San Francisco Bay, suggesting the health of the estuary is of great importance to the communities that ring its shore.
Tragically, the Sacramento-San Joaquin River Delta is slowly dying. Starved of freshwater inflow from Central Valley rivers, the size and location of the salinity mixing zone has shifted upstream into the Delta, affecting everything from plankton to marine mammals.
Changes in the chemistry of the Delta have enabled cyanobacteria to thrive, producing neurotoxins that can make people sick and kill pets and wildlife.
Saltwater intrusion also threatens drinking water quality for two-thirds of Californians who rely on the Delta for a portion of their drinking water.
Upstream of the Delta, low river flows have contributed to the collapse of the salmon fishery. In 2008 and 2009, the salmon population was so low that the commercial fishing season had to be canceled, costing 2,200 jobs and $255 million in annual revenue.
Salmon are keystone species, transporting tremendous amounts of nutrients from the ocean to upland habitats where they fuel the food web. The entire salmon-based ecosystem is now at risk.
To protect fish and wildlife, the State Water Resources Control Board recently proposed increasing unimpaired flows by a modest amount in the lower San Joaquin River and its three major tributaries, the Stanislaus, Tuolumne and Merced rivers. Irrigation district officials and other water purveyors met this proposal with fierce opposition.
Agriculture generates 2 percent of California’s economic productivity, but accounts for 80 percent of our water consumption. We all need food, and should appreciate the farmers who put it on our plates, but we don’t have enough water to continually expand acreage for export crops.
In recent years, thousands of acres used for grazing and seasonal crops that could be fallowed in dry years have been converted to perennial crops, such as nuts and grapes, that require water every year. Two-thirds of the almonds grown in California are exported.
The Legislature should adopt a fee on water used to grow export crops, and invest the revenue on water-efficient irrigation practices and groundwater recharge to make more water available for environmental purposes.
Such investments would help us prepare for future droughts, improve the health of our rivers, and maintain a vibrant and sustainable agricultural economy. It’s simply not fair that crop exporters privatize the gains from using a public trust resource while socializing the losses.
Peter Drekmeier serves as Policy Director for the Tuolumne River Trust, email@example.com.
UN accuses Blackstone Group of contributing to global housing crisis
World’s largest corporate residential landlords called out for their practices of inflating rents and ‘aggressive evictions’
Patrick Butler, Social policy editor, and Dominic Rushe in New York
The UN’s housing advisor has accused private equity firms and one of the world’s largest corporate residential landlords, Blackstone Group, of exploiting tenants, “wreaking havoc” in communities and helping to fuel a global housing crisis.
In a stinging critique of the role of private equity in the housing market UN rapporteur Leilani Farha and co-author Surya Deva, chairperson of the UN Working Group, singled out Blackstone’s business practices – which they claim include massively inflating rents and imposing an array of heavy fees and charges for ordinary repairs – as having “devastating consequences” for many tenants in countries around the world.
In a series of letters to Blackstone and government officials in Czech Republic, Denmark, Ireland, Spain, Sweden and the US, Farha and Deva accused private equity and asset management firms like Blackstone and its subsidiaries of undertaking “aggressive evictions” to protect its rental income streams, shrinking the pool of affordable housing in some areas, and effectively pushing low and middle-income tenants from their homes.
Blackstone disputed the claims. In a letter to Stephen Schwarzman, Blackstone’s founder and CEO, obtained by the Guardian, the company said the UN report contained “numerous false claims, significant factual errors and inaccurate conclusions”. And the company was “surprised and disappointed” that the UN would “send a communication without verifying your assertions and providing appropriate context”.
Blackstone has, in recent years, acquired hundreds of thousands of homes in the US, Europe, Asia and Latin America, often through subsidiaries, making it one of the largest and most powerful global players in the housing investment sector.
In its reply, Blackstone claimed private equity had helped build the rental market at a time when countries around the world were facing housing shortages and abided by all relevant locals laws.
Farha said the commodification of real estate by private equity investors in recent years had made housing for many people increasingly expensive and precarious: “Landlords have become faceless corporations wreaking havoc with tenants’ right to security and contributing to the global housing crisis.”
The authors also wrote formal letters to six countries, including the US, accusing them of failing to regulate corporate landlords and protect tenants’ human right to secure housing: “We remind all states that while gold is a commodity, housing is not, it’s a human right.”
The UN letter to the US government focuses on the way corporate landlords bought hundreds of thousands of ordinary family houses left empty after their owners defaulted on mortgage payments during the sub-prime crisis of 2008.
The firms were encouraged by US government agencies to acquire the heavily-discounted properties in part because they would bring homes back into use as local economies began to recover from the financial crash.
However, the need to maximize profits to repay investors typically led to a “constant escalation” of housing costs for tenants, primarily by hiking rents – in some cases by 30-50% – and ruthlessly pursuing eviction for non-payment. One corporation issued nearly a third of its tenants with eviction notices, the letter says.
The authors allege that a Blackstone subsidiary in the US, Invitation Homes, imposes charges for minor maintenance repairs and tasks such as removing insect infestations. She alleges that it imposes late rental payments of $100, even if they are just one minute late, or due to an error in Invitation Homes’ computer system.
In its reply, Blackstone said it was a small player in the US rental market, representing 0.5% of the nearly 16m single-family homes for rent in the United States, and that its customer satisfaction and retention rates were in fact higher than average.
Letters outlining similar breaches of housing rights and failure to regulate corporate landlords were also sent to Sweden, Czech Republic, Spain, Denmark and Republic of Ireland, each of which has seen large influxes of corporate rental investment in recent years.
Blackstone disputed these findings too.
Farha has made what she calls the “financialisation” of housing the priority of her tenure as housing rapporteur since 2014, highlighting how the transformation of real estate into an asset class traded on global markets has triggered housing insecurity and homelessness crises in many cities around the world.
A paper she published for the UN two years ago noted how trillions of dollars of investments in hyper expensive apartment blocks in neighbourhoods of major cities from London to Vancouver had put housing beyond the reach of all but the rich, breaking up established communities, and fuelling soaring rents and evictions.
Farha’s investigation into corporate landlords’ treatment of tenants around the world is the subject of a new documentary, Push, which premiered this month. A sub-plot of the film is Farha’s repeated but ultimately doomed attempts to secure a face-to-face meeting with chief executive Schwarzman to discuss its role.
Merced less affordable than many Valley cities, including Fresno, Clovis, Modesto, study says
By Thaddeus Miller
A real estate-tracking website said cities like Clovis, Fresno and Modesto are more affordable places to buy a home than Merced.
The list from HomeArea.com used the World Bank and United Nations standard of comparing a city’s median gross income to the median price for a house. At No. 35 on the list of cities of at least 60,000 people, Merced’s housing was deemed less affordable than many other Central San Joaquin Valley towns like Turlock (20) and Madera (17).
Merced’s notoriously low vacancy rate of less than 1 percent adds to the cost of housing, experts say. The city of nearly 85,000 fell six spots on the list from where it was last year.
Zillow shows the median home value in Merced is $245,500 compared to the median household income of $40,704, according to the U.S. Census.Enjoy 92% off your first month of digital access when you finish signing up today.
Along with few houses on the market, Mercedians don’t make as much money as residents in many neighboring cities. In a larger city like Fresno, the median house is $238,800 and its residents make more money ($44,853). So the city of more than a half million people is considered more affordable at No. 12 on the list.
Also this month, the nonprofit think tank Milken Institute said Merced took a huge leap upits “best performing cities” list in thanks to UC Merced’s planned growth through 2020.
The growth of UC Merced is also a large factor in those growing housing prices, according to Terry Ruscoe, owner of Merced Yosemite Realty.
“That’s key in our growth and that’s going to have an immediate impact on Merced proper simply because of its geographic proximity to the UC,” he said on Wednesday. “The closer the housing is to a job epicenter, the higher the cost of housing.”
The median monthly cost for those with a mortgage is $1,405 in Merced, while the median rent with utilities is $819, according to HomeArea.com.
Experts note that Merced’s housing construction has not kept up with its growth. The city grew at a faster rate than any other in the state, according to the U.S. Census update from last year.
A total of 659 permits to build single-family homes were issued in 2018 as building picked up in the northern part of town, city officials said. That’s compared to the 170 issued in 2017, and very few in the 10 years before that.
Permits have also been issued for about 800 rental units, but their construction is contingent on developers getting the financing they need, officials say. Merced leaders also approved a program to encourage in-law suites, which city staffers call “accessory dwelling units.” Though it would likely make only a small dent in the problem, according to staffers, it highlights the need for more spaces to live.
“We need housing. No doubt about it,” Mayor Mike Murphy said on Wednesday. “So we’re pursuing every angle to try to add additional housing stock for our residents. To keep pricing affordable.”
That said, none of the California cities on the list fit the United Nations and World Bank standard of affordable. A 3.0 score is considered affordable, and the statewide median score was 7.1. The most affordable city in the state according to the report, Visalia, scored a 3.6.
The least affordable cities on the list include Glendale, Santa Monica and Newport Beach.