Central Valley

Ag businesses leaving valley as farmers struggle to meet regs

Milk and related dairy products are the No. 1 farm commodity in the Northern San Joaquin Valley, earning dairy farmers more than $1.3 billion in 2006.

That's a good thing, right? What's more wholesome than milk?

Well, clean air and water would be right up there on the list.

The San Joaquin Valley faces an uphill battle to reach compliance with federal air quality standards, and groundwater contamination is a growing concern.

Dairies have been identified as potentially significant sources of air and water pollution in the valley, and some fear the cost of meeting tougher environmental standards will prevent those businesses from expanding or force them to move out of the state.

"California is a great place to live, but a tough place to do business," said Michael Marsh, chief executive officer for Modesto-based Western United Dairymen.

In 2006, the state had a net loss of 69 of its 2,043 dairies, according to statistics from the California Department of Food and Agriculture. The Northern San Joaquin Valley counties of Merced, Stanislaus and San Joaquin accounted for the loss of 47 of those dairies. Southern valley counties Fresno and Tulare had a net gain in dairies.

Dairies are closing or moving to states with fewer regulations, such as Texas, Idaho, New Mexico, Michigan and New York, Marsh said.

To build a dairy in the valley, a farmer needs permits from the local city or county, the San Joaquin Valley Air Pollution Control District and the Regional Water Quality Control Board. Getting environmental reports and permits can take five years, and cost $750,000, Marsh said.

Foster Farms is starting that process for an expansion of a dairy farm near Hickman. The company wants to expand from 720 cows to 2,400, and will need to do an environmental impact report.

An initial study of the project showed potentially significant effects on air and water quality. That finding triggered the environmental impact report. The reports can cost $100,000 to prepare, according to Stanislaus County Planning Department Director Ron Freitas.

Frequently, dairy operators who go through the lengthy and expensive process find themselves being sued by someone, Marsh said.

Farmers usually win the cases, Marsh said, but a trip through the state courts can cost $600,000 in nonreimbursable legal fees.

In Idaho, Marsh said, the permitting process costs $15,000, and a dairyman can be milking cows in 90 days.

On the other hand, in an effort to meet meet federal ozone and dust standards, and a 2013 deadline to get into ozone compliance, the San Joaquin Valley Air Pollution Control District requires new or expanding dairies to use best available control technology to curtail air emissions, said Dave Warner, director of permit services for the district.

"Even with the controls, there are some significant emissions in the larger dairies we see in the San Joaquin Valley."

Regulation-dairy size link

Dairy industry officials say the increasing level of regulation is, in part, what's driving the trend toward larger dairies. Dairymen need to spread the cost of regulation over a larger number of animals to maintain a profit.

The district isn't just singling out dairies, Warner added.

"From our perspective, all expansions -- dairies, warehouses, new subdivisions -- all have significant impacts that require careful thought," he said. "It's a wide-spread problem we are all responsible for."

Water regulations pose an even bigger challenge for dairies. The waste water and manure generated by dairies pose a potential threat to ground water and surface water, and the state and regional water quality boards have ramped up requirements.

New wastewater discharge regulations that went into effect in May cost a 1,000-cow dairy $40,000 to $60,000 the first year, and $30,000 to $40,000 each year after that, Marsh said.

"The additional financial burden will probably close some dairies," Marsh said. "We will lose some farms in Stanislaus County."

Many more will stay, meet the regulations and improve air and water quality, Marsh said.

"The costs are extraordinary, but we are doing it. We are enhancing the environment on farms. Our producers are committed to staying in California and complying with the regulations," Marsh said.

Carlos Estacio, a Turlock area dairyman, is one example. "My feeling is, there are some bad dairymen, but the majority, we are doing a fantastic job. We don't want to pollute the land. We live on our land. Why would we want to pollute it?" Estacio said.

But compliance for dairymen, who operate on thin and sometimes nonexistent profit margins, is difficult. They can't simply raise the price of milk, because the price is regulated by the state.

"I know we have to keep our air clean, but if they keep driving agriculture out of the state, what do we have left? Housing, with more and more cars," Estacio said.

Ultimately, the city or county involved is the lead agency for conducting environmental reviews, and must weigh the pollution issues against the benefits and decide whether to go ahead with the project.

"We look at overriding considerations," Freitas said. "The economic benefit, the number of jobs, how it plays into the local economy. We have a lot of milk processors, not just liquid milk but cheese, butter, dry milk."

Until a few years ago, new and expanding dairies in Stanislaus County didn't need a use permit from the county. It was agriculture, and farmers had a right to farm, Freitas said.

But as water quality concerns grew, the industry and the county worked out a permit process for confined animal operations, which included dairies and poultry farms.

The use permit requirement put dairies under the California Environmental Quality Act.

New technologies are giving dairies options that may make the environmental impact reports unnecessary, Freitas said. Organic dairies that feature less confinement in favor of pasture grazing, and covered methane digesters over dairy waste ponds are examples, Freitas said.

Fleeing the Golden State is not a solution, he added.

"You can't run away from something, you have to deal with it head-on," he said. "With a 3,000-cow dairy, you are basically operating a sewage treatment plant, no matter where you are. You have to become a steward of the land."

The states with less regulation are likely to get stricter if dairies start to congregate in an area, Freitas said. "At some point in time, someone will stand up and say, 'Wait a minute.' One or two won't hurt, but a whole bunch causes problems," Freitas said.

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