Hope's Edge_ The Next Diet for a Small Planet - Frances Moore Lappe [52]
In some of the projects, the irrigators pay even less. Take the Fryingpan-Arkansas Project near Pueblo, Colorado. This half-billion-dollar project helps farmers grow corn, sorghum, and alfalfa for feed. The GAO calculated the full cost of water delivered to be $54 per acre-foot, but the farmers are being charged only 7¢ per acre-foot.60 (And the GAO’s “full cost” is based on an interest rate of 7½ percent.) According to Fortune magazine, the huge California Central Valley irrigation project is being subsidized at a rate of $79,000 a day.61
Cheap water encourages farmers to grow livestock feed. “Because water is so cheap, its use is based on its price and not its supposed scarcity,” observes Fortune. “Many farmers … use inferior land to grow low value crops that require large amounts of water, like alfalfa and sorghum” for feed.62
Government subsidies are so large that “the market value of the crops to be grown with federal water is less than the cost of the water and the other farming supplies used to grow those crops,” the government study concluded.63 But Robin Hur has an even dimmer view of the economics of federal irrigation. After studying federal irrigation in the Pacific Northwest, he calculated that in six major projects the value of the crops produced doesn’t cover even the cost of the water alone!
Federally subsidized irrigation water helps keep grain cheap. It also helps make people rich. To a farmer with 2,200 irrigated acres in California’s Westlands district, the federal water subsidy is worth $3.4 million—that’s how much more the land is worth simply because of what the government contributes to irrigation.64
A key 1902 federal law stipulated that beneficiaries of the subsidized irrigation were to be small farmers only, those owning no more than 160 acres. But the law has never been enforced, despite suits filed by National Land for People and others seeking the irrigated land they are legally entitled to. Today one-quarter of the federally subsidized irrigated land is owned by a mere 2 percent of the landholders, who own far more land than the legal limit. In California, for example, over a million and a half acres of federally subsidized water are controlled illegally—that is, by farms over the legal acreage limit.65 Southern Pacific alone controls land almost 700 times the legal limit for an individual. (All told, Southern Pacific owns almost 4 million acres in three states.66)
Tax Benefits at the Feedlot, Too
Besides directly and indirectly subsidizing the feedlot system by keeping the price of grain low, we taxpayers also subsidize the feedlot operations themselves. Tax laws favoring feedlot owners and investors in feedlot cattle shift the tax burden onto the rest of us. While these tax advantages were cut back in 1976, there are still “income tax management strategies” that can benefit cattle owners who contract with feedlots to fatten their cattle, putting on the last 200 to 600 pounds of each head.67 According to a Department of Agriculture report, the law that allows farmers to use cash accounting for tax purposes can also profit investors in feedlot cattle, especially those with high nonfarm incomes seeking to reduce their taxable income. More than a quarter of “custom feeding” clients in the Southern Plains are such outside investors, including doctors, lawyers, and bankers.68
Agricultural economists V. James Rhodes and the late Joseph C. Meisner of the University of Missouri offer this observation of tax favors to feedlot operations:
Subsidies to large-size feedlot firms, indirect though they be, would tend to lead to survival and growth of those firms