Cadillac Desert_ The American West and Its Disappearing Water - Marc Reisner [241]
“When we started here in 1967,” Melville told an interviewer, “we ended up with some $500 per ton of fruit. In 1980, we were down to $350 a ton. We’re getting less for our fruit now than we were getting in 1946.” Melville’s costs, meanwhile, were constantly rising, and his disposition and his health were failing. The problem wasn’t competition from imported olives; it was the California Water Project.
At the other end of the valley, the Prudential Insurance Corporation was farming more acres of olives than all four-hundred-odd olive growers in Tehama County, where Les Melville’s farm is. Prudential had five thousand acres planted in olives on its McCarthy Joint Venture A ranch near Bakersfield, in which it owned a 75 percent interest, and those five thousand acres were only about a quarter of the entire ranch. Its olive trees were planted very close together, like hedgerows—not because the country wants more olives than anyone can produce, but because the fruit can then be harvested by machine. Machine harvesting wastes fathomless numbers of olives, but saves a substantial amount of labor. The olive-harvesting machinery was developed, in large part, by the taxpayers of California, who finance the agricultural experimentation programs of the University of California’s extension service—which are largely devoted to inventing and perfecting laborsaving machinery. (One of its star creations, the tomato harvester, is said to have displaced twenty thousand agricultural workers.)
When Prudential’s olive trees matured in 1978, they began producing all at once. California’s production of olives increased by 46 percent in that year—a single year—and olive prices fell like overripe olives. Of all the state’s growers, however, only one was relatively unaffected by the drastic drop in wholesale prices: the Prudential Insurance Corporation. The company was well aware that its prolific production would cause the collapse of the market, and therefore decided to write an unusual contract with Early California Industries, the state’s largest independent olive processor. In exchange for an opportunity to defer the purchase price of $1 million, Early Cal agreed to buy Prudential’s entire harvest. Previously, it had bought from many small growers around the state, like Les Melville, who now had to look elsewhere to sell their production. The deferred payment, Early Cal proudly remarked in its annual report, “bears no interest and is repayable only on termination of the contract.” It was what labor unions like to call a “sweetheart” deal. With a single stroke, a New Jersey-based insurance corporation had, in its first year of competition, with a single gigantic orchard, pretty much captured the olive market of the United States.
Like a number of other corporations, holding companies, and investor cartels, Prudential got into farming in the 1960s, when Congress passed legislation allowing investors to deduct all expenses on a number of crops (chiefly orchard fruits and nuts) while the trees or vines are maturing and bearing no fruit. All of a sudden, a lot of land that wasn’t worth very much was worth a great deal—in an inverted sense. According to economists at the University of California at Davis, the new tax provisions amounted to a tax break of $346 on an acre of land for persons in the 70 percent bracket. For corporations it was less of a break, but still a good one. With its 75 percent share of the McCarthy Ranch, Prudential could realize a tax saving of around $1 million per year, farming the government. Then, when the trees were mature, it could begin earning at least that much income every year. It was all made possible by the State Water Project.
The land on the far southwestern side of the San Joaquin Valley, where the McCarthy Ranch sits, is underlain by a brackish, boron-poisoned aquifer. The quality of the water ranges from