Water is front-of-mind for California dairy farmers, as scarcity is threatening to change the industry structure of the top U.S. dairy-producing state. While successful adjustments to a lower-water future are possible, the state badly needs moisture in the next few months to stave off greater immediate hardship for milk producers and improved government policy to help dairy prosper in the longer term, said Geoff Vanden Heuvel, director of regulatory and economic affairs for the California-based Milk Producers Council.
“I put 2,500 to 3,000 miles a month of my truck just driving up and down the Valley going to water meetings, and to see what's been built here is just incredible and marvelous,” said Vanden Heuvel in a Dairy Defined podcast. “We're running the risk of losing that if we don't do some things intelligently.”
Water is front-of-mind for California dairy farmers, as scarcity is threatening to change the industry structure of the top U.S. dairy-producing state. While successful adjustments to a lower-water future are possible, the state badly needs moisture in the next few months to stave off greater immediate hardship for milk producers and improved government policy to help dairy prosper in the longer term, said Geoff Vanden Heuvel, director of regulatory and economic affairs for the California-based Milk Producers Council.
“I put 2,500 to 3,000 miles a month of my truck just driving up and down the Valley going to water meetings, and to see what's been built here is just incredible and marvelous,” said Vanden Heuvel in a Dairy Defined podcast. “We're running the risk of losing that if we don't do some things intelligently.”
Alan Bjerga, NMPF: Water is the perpetual challenge of Western agriculture, but this time it seems different. Decades of drought are showing no sign of let up and water supplies are becoming harder and harder to maintain. And that's leading to questions of whether a structural shift is underway, one that could affect how dairy is produced and in some cases where it's produced at all. Geoff Vanden Heuvel is director of regulatory and economic affairs for the California based Milk Producers council. Geoff, thanks for joining us today.
Geoff Vanden Heuvel, California Milk Producer Council: My pleasure, Alan.
Alan Bjerga, NMPF: You've been involved in the California dairy industry your whole life. What's the evolution you've seen in the industry in its relationship to water?
Geoff Vanden Heuvel, California Milk Producer Council: Well, as overregulated as California is on everything, it never regulated its groundwater on a statewide basis. A huge amount of the dairy industry in California is now in the Central Valley of California, probably 90% of the milk, 85 to 90% of the milk produced in California is produced in the Central Valley. It's a vast groundwater basin, millions and millions of acre feet of water reside under the ground, and it was never regulated. Consequently, dairy sighting when the dairy industry came in, in a big way into the Central Valley which was probably 35 to 40 years ago, of course there's been dairy here for a lot longer than that, but it really took off and California took off, a huge amount of the increase in volume came from the Central Valley. Dairyman found large tracks of ground that were available and as long as there was water underneath you, you could put Wells in and construct the dairy and began to milk cows and grow feed around the dairy and all was well. California always depended on the Central Valley, a combination of groundwater and surface water.
And the surface water comes not so much in the local area, not a lot of rain in the California Central Valley, but there's a lot of rain and snow that occurs in the Sierra Nevada mountains, which is directly to the east of the Central Valley. And then up in the Cascades, which is more in the Northern part of the state. And so major irrigation systems were built both by the federal and the state government, which brought those large supplemental supplies into the Central Valley. And then the Sierra Nevada watersheds, the rivers that drained the Sierra Nevada from the east were all, most of those were developed by local water agencies with the exception of a large federal project that was done in the 1950s. So for many years it was a combination of surface water and groundwater that sustained agriculture in California and created really what is an agriculture marvel in the world. I mean, we grow about 250 different agricultural crops and become home of the nation's largest dairy industry. Water, it was there, there was a lot of it and there wasn't a huge barrier to accessing it. And so it wasn't something we spent a lot of time thinking about.
Alan Bjerga, NMPF: What's drawing the acute crisis we've seen in recent years?
Geoff Vanden Heuvel, California Milk Producer Council: It's a combination of droughts, but also what we call manmade drought. In the early 1990s, there were a couple of really critical policy decisions, regulatory decisions that were made that now 30 years later, we can see what the contribution that those changes made to the situation we're finding ourself in. And what that was, was there was a Central Valley Project Improvement Act that was passed in, I believe in 1991 or 1992, which took about 800,000 to a million acre feet of Central Valley Project yield and dedicated it to the environment. So when I talk about yield, in order to have a irrigation system, there's a lot involved. You start with some sort of a dam that creates a water supply lake. And in this case it was Shasta, Lake Shasta and several other federal lakes like Folsom and Trinity. And then you have a conveyance system. You use some rivers, they use the Sacramento river to flow the water south. And then flowing out of the delta, goes into this delta region, which a delta historically is a mixing zone between saltwater and freshwater.
And so we have a large delta in California and the water comes from the Sacramento River, from the northern part of the state. Comes into the delta, threads its way through the delta. Most of it is heading out to the Golden Gate Bridge, out to keep the sea from coming back into this delta region, which is also heavily farmed. And then there are two major water projects, canals, the California Aqueduct and the Delta–Mendota Canal. Those two facilities, their pumping plants are about a mile apart. They pump water out of the delta and then they bring it down into Central and Southern California. So that's the plumbing.
The Central Valley Project Improvement Act took about a million acre feet of the Central Valley Project's share of water and repurposed it for the environment. It also had some priorities on restoring some fisheries. Then at about the same time, there were two fish that were listed as endangered that lived in the delta. One is a fish called the delta smelt and it's a small kind of a bait fish. And the other was a winter run Chinook salmon. Now when Shasta Dam was built on the Sacramento River, all of the salmon runs up above that dam basically were terminated, exterminated, but there still were streams and rivers below the dam, and there are still some species of salmon that spawned in those areas. And one of those became listed as endangered.
And the Endangered Species Act is an incredibly powerful law. Really, once a species is listed as endangered, nothing may be done that would harm the species because the species is on the verge of extinction. And it supersedes any other law that exists out there except for maybe very minimal health and safety. And so the projects then in the early 1990s when these species were listed, the biologists had to come up with what they call a biological opinion on what it was going to take to save these species. And what it involved was more water going to the ocean and less water being diverted to agriculture and to Southern California. And the net effect of that was a couple of million acre feet a year reduced surface water supplies coming to Central and Southern California from those projects than what had been counted on previously.
Alan Bjerga, NMPF: Your original statement was that of all the things that are regulated in California, this is an area that hasn't been. It sounds to me like there's quite a lot of regulation we're talking about here, but it's not necessarily regulation that is helpful to the dairy industry.
Geoff Vanden Heuvel, California Milk Producer Council: Here's how you connect the dots. If your surface water supplies are reduced and groundwater is not regulated, what do you think people do? They pump more groundwater. We've already planted all these acres. I mean, we're got 5 million acres of irrigated agriculture, very productive, and a dairy industry is part of that. Roll the clock forward 30 years and throw in some drought years in there, and what have you done? You have done a major depletion of your groundwater resources to a point where it was completely unsustainable. We had to do something about it. And the state passed the Sustainable Groundwater Management Act in 2014. And the principle there is that groundwater will be regulated. But they realized that it took a while to get into this problem and it would be terribly destructive to the agriculture economy and frankly, the whole economy of the Central Valley to try to turn that whole ship around overnight.
And so they required all of the land in California that sits above groundwater. So what doesn't sit above groundwater? Mountains, that's sitting on granite, so there's no groundwater there. But any land that sits over groundwater had to become part of a Groundwater Sustainability Agency, which would be a public agency. There were a couple hundred of those agencies then that were formed 2015, 2016. And then those agencies in critically overdrafted basins, which is most of the Central Valley, had a requirement that by January 31 of 2020, they had to submit a plan that would show how that area was going to become sustainable by the year 2040. And they could do it in a ramp down fashion, but all of the areas of the Central Valley have now submitted those plans and they are implementing them.
And in the Southern San Joaquin Valley, south of Fresno is just naturally drier than the northern part of the Central Valley. And so it's facing kind of the crunch quicker than maybe other areas, but we have a lot of dairy in the Southern San Joaquin Valley. So there's areas that have a lot of dairy that are now already on a groundwater budget. That is, they're allocated a certain amount of groundwater that they can pump and they're allocated more than what will be be available in 2040, because there's a ramp down. But they're beginning to have to pay fees for accessing this essentially continued overdraft water and so this is beginning to have a bite. And then we're in the third year, this is a third pretty dry year in a row. So that is exacerbating the problem.
Alan Bjerga, NMPF: How is that affecting the face of California dairy?
Geoff Vanden Heuvel, California Milk Producer Council: I don't think you've seen a lot of milk production impacts yet. We need a wet winter really badly, or I think we will begin to start seeing some impacts here. Now the one thing about dairy is the water to actually run the dairy operation, that is the milking operation, watering the cattle, so the immediate dairy water needs are not that large on a comparative basis than what it takes to actually grow crops. And so the actual footprint of the dairy is probably sustainable, but it does present where are we going to get the feed from? And then what are we going to do about disposing our manure? Because the predominant method of manure disposal or utilization as it was, was fertilizer on crops, which if the water supply becomes limited to grow those crops, then that creates a problem. And it's a problem that we're faced with.
That is an interesting relative position to say someone who's growing walnuts, which take quite a bit of water. And if that walnut farmer is reduced in his water availability, he can't, I mean, he just has to start cutting acres and taking out trees. He doesn't really have an alternative to that. So how does dairy compete? That's really the question we're wrestling with as an industry here in California is what is this really going to mean to us? And we don't really have the definitive answer to that.
Alan Bjerga, NMPF: Are there any steps being taken along the way that are reasons for hope, that this is an environment where California dairy can continue to thrive despite the calls for reduced water use?
Geoff Vanden Heuvel, California Milk Producer Council: Probably the biggest thing that we've got going for us is the people that are very innovative. And the industry is organized in a good fashion, we've got the manure disposal pro problem and what to do about methane and what to do about our environmental impacts. We've done a lot to address those things, and we'll continue to do a lot to advance the efficiencies. When it comes to water, one thing about the situation we're facing is it's very site specific. So you can have dairy farmers that are across the street from each other, one's in a water district and one is not. The one in the water district has a different water reality than the guy across the street. Presumably, we believe that it's going to start raining again and it's going to start snowing again. And one of the things that historically we have not done is hang on to, we get a lot of rain in a short amount of time or a lot of precipitation, and then you have flooding. And if you've been around the dairy industry for any period of time, you've seen pictures of flooding in California.
We've all gotten, there's a new ethic now. When we have flood waters, we're going to grab as much as we can of that and we're going to spread them out over the fields and we're going to percolate them in the ground instead of trying to send them out of here as quickly as possible. So I think there absolutely is hope. We're going to have to manage better and it's going to require some investment, not only by the dairy industry and dairy farmers, but frankly, our governments are going to have to help us finance some of this infrastructure that's going to be necessary to capture these big flood flows. But there is an enormous amount of water that occurs in California in those flood years that historically has just run out to the ocean, and we're going to have to capture that.
Alan Bjerga, NMPF: I just want to jump back for one second, because you'd been talking about how one thing you really need is as a snowy winter. The implication being that if there isn't a snowy winter this winter, you could start seeing some tangible impacts on the structure of California dairy next year.
Geoff Vanden Heuvel, California Milk Producer Council: Yeah, I think you could, especially if beef prices stay high and there's something else you can do with the animals.
Alan Bjerga, NMPF: If you're looking at the California water story from the outside, one thing you hear a lot about is the Colorado River. California is bracing for its first ever cuts to Colorado River allocations. What impact does that have on California dairy farmers?
Geoff Vanden Heuvel, California Milk Producer Council: I think it's significant because that's a big forage growing area. Now that's starting to get attention in the national press, that we're growing all this alfalfa over there in the desert and what are we doing that for? Well, I mean, we're growing it out there because it grows well out there. There's been a lot of water there. We've got a lot of cows and another thing doesn't get any attention is we got about 700,000 horses in California and they all eat 10 to 20 pounds a head a day as well of alfalfa.
The Colorado River, all of a sudden it's getting a lot of attention. One of the reasons it hasn't in the past is that Lake Mead and Lake Powell are just massive, massive lakes. The biggest lake in California is Shasta and it's four and a half million acre feet. Mead and Powell are each about 27, 28 million acre feet each and they were both full in 1999. In the last 23 years, the amount of water that we've taken out of that system in excess of what nature has provided it is pretty astounding. That water has all been used for ag and municipal usage. And it's frankly, it's over-allocated. I mean, there's going to have to be cutbacks. What kind of impact that's going to have, it's going to have some and it's really hard to tell how that's going to play itself through the whole system.
Alan Bjerga, NMPF: And you talk about allocations. In the end, I mean, you're talking about municipal use. You're talking about lawns and showers and urban uses. Is it inevitable that agriculture and urban uses end up being pitted against one another?
Geoff Vanden Heuvel, California Milk Producer Council: I remember when I first started in water, was an elderly gentleman, farmer, wise man, and he would give talks to farmers. And he said always to us as farmers, "Always remember you farm at the pleasure of the urban population." And we don't like to hear that but the reality is that the people have the votes and ultimately their needs are going to be met. However, on the Colorado River, there's what's called the Law of the River and it's pretty powerful. It was initially, its first iteration was required by the federal government when they were getting ready to build Hoover Dam. And they insisted that the seven states that take water out of the Colorado that had rights, agree how they were going to divide this water up. And so they divided it into an upper basin and a lower basin. The lower basin states was Arizona, Nevada and California, and then that is further divided.
And California got 4.4 million acre feet a year. Arizona got 2.8 million acre feet a year and Nevada got 300,000 acre feet a year. Now remember in 1930, there was no thought that Nevada would ever have a Las Vegas, but that's how much water they got and that's how much water they get to this day. And there was a priority system, who had to take the cuts. There's senior rights, there's junior rights. And all of this is all spelled out in the Law of the River and you can actually go online and Google Law of the River and you can read it for yourself. So there are shortage provisions that come into play. They were all anticipated upfront and that system will execute itself. In California, the 4.4 million is further divided into a priority system.
And the first priority is Palo Verde Irrigation District. And the second priority is the California portion of the Yuma Indian Reservation. And the third priority is Imperial Irrigation District. And the fourth priority is the Coachella Valley Water District. And the fifth priority is Metropolitan Water District of Southern California. So Metropolitan is last in line and once Metropolitan's fifth priority then we're past the 4.4 million. So they have been doing, they've bought a lot of land in Palo Verde Irrigation District. They've done land fallowing programs in Palo Verde, because Palo Verde gets all the water they need first. So if they can cut down how much Palo Verde takes, then that leaves more in a system. They've been doing, San Diego did a big water transfer with the Imperial Irrigation District. And so they, Imperial has reduced their water use. They used to use 3.1 million acre feet a year. They're down to 2.6 million acre feet a year. Coachella's done deals also.
So there is a mechanism that is in place to handle shortages and ag has the senior water rights. So to get ag to give that up, it's certainly possible. There's a recognition by ag that like the wise old farmer said to groups 30 years ago, we farm at the pleasure of the urban population. It's in our interest to make sure they have the water they need because we don't want to provoke them to do something that's really damaging to us. And so you saw Congress, Senator Sinema from Arizona, which is, they're junior to California. What did she need to get the Inflation Reduction Act passed? $4 billion of federal money to deal with this Colorado River issue. And I suspect a fair amount of that money is going to go to pay farmers to fallow, to make more water available for Phoenix, Tucson, Los Angeles and Las Vegas.
Alan Bjerga, NMPF: When you start hearing about different irrigation districts in California, those are of intense local interests, but it's not necessarily accessible to somebody who is in another part of the country wondering what can be done at the level of government we participate in that can alleviate the California water crisis and help ensure that dairy can thrive in California. What perspective would you see on that from the federal level? What can be done?
Geoff Vanden Heuvel, California Milk Producer Council: Well, the federal government actually has operational control of substantial portion of the California water system, both the Colorado River system and the Central Valley system. So federal government, Bureau of Reclamation, Army Corps of Engineers, these are federal agencies. And then there's going to be a significant amount of federal investment along with state and local investment in water recycling and programs to help the urban areas to stretch their water supplies. And to the extent that those investments get made, that's very expensive water, but to the extent that the urban population can be satisfied with those types of things, it leaves more water available for agriculture, and we need to use that water very efficiently. But I think it's important to recognize that there are, California agriculture is a very, very unique national treasure in terms of what we can grow here and what we provide in terms of food security, food diversity to the whole nation and in some respects to the world.
One of the beauties, real enjoyments that I had as I transitioned from Southern California to the Central Valley and then had the responsibility to really follow water for the dairy industry. I put 2500 to 3000 miles a month of my truck just driving up and down the Valley going to water meetings, and to see what's been built here is just incredible and marvelous. And we're running the risk of losing that if we don't do some things intelligently. So I've got a lot of faith in the American people. One of my favorite quotes is from Winston Churchill. He said, "You can always count on Americans to do the right thing, but not until they've exhausted all the alternatives." And I think we've exhausted a lot of alternatives. And so I'm always optimistic. I think there is a lot of hope out there, but it's going to come from us continuing to work the problems.
Alan Bjerga, NMPF: We've been speaking with Geoff Vanden Heuvel, he's the director of regulatory and economic affairs for the California based Milk Producers Council, and that's it for today's podcast. For more on NMPFs policy activities, please visit our website at nmpf.org. And for more of the Dairy Defined podcast, you can find and subscribe to the podcast on Apple Podcasts, Spotify, Google Podcasts, and Amazon Music under the podcast name, Dairy Defined. Thank you for joining us.