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Losing Everything

“I personally believe SGMA will force some farmers to go bankrupt and lose everything."

Aug 19, 2018

“I personally believe SGMA will force some farmers to go bankrupt and lose everything. Most of those farmers would be better off to sell out now and cut their losses." - Anonymous Ag Banker/Lender

There's a rally in Sacramento tomorrow where farmers and farm supporters will protest the State Water Resources Control Board's plan to send a whole lot more water down the Stanislaus, Merced and Toulumne rivers to the Sacramento-San Joaquin Delta to benefit the Delta's ecology and endangered fish.  That means there will be a whole lot less water for people, cities and farmers.  We would hope the elected state lawmakers and unelected bureaucrats would listen.  But, the statement from the anonymous ag banker above isn't about that.  It's about the Sustainable Groundwater Management Act (SGMA), another man-made agricultural disaster coming your way in the not-too-distant-future. 

Everyone should read the article below by Don Wright which recently appeared in the August newsletter of the Tulare Farm Bureau.  It tells you why every farmer in the State of California should be intimately involved with whatever authority is delivering their water to see how this is going to impact their lives, livelihood and their future farm value, and it should scare the hell out of every farmer in the state.  

Go ahead and rally tomorrow in Sacramento.  That's a battle that has to be fought, but keep your eye on the SGMA.  You have nothing to lose but your farms.


SGMA – What’s a Farmer to Do?

Special to the Farm Bureau

By Don A. Wright


Just when things are starting to get back to normal after the recent drought the Sustainable Groundwater Management Act of 2014 has sucked all the oxygen out of the room. It’s common for irrigation and water district general managers to spend at least half their time and talent on dealing with the requirements of this law. Many have said this is the most impactful piece of water legislation since 1914 when the Water Commission Act formalized the appropriation system and centralized appropriative water right records at the state level (now the State Water Resources Control Board). Under the act, the state required new appropriators to obtain a permit from the state prior to diverting water but left groundwater alone.

                The Valley’s aquifer is showing the stress of over pumping and some very real dangers lie ahead if this trend isn’t reversed. While there is plenty of room to blame misguided water policy from Sacramento – the blame won’t correct the problem. In fact most experts and laymen alike don’t see a way for business to return to usual.  SGMA requires critically over drafted areas such as much of the San Joaquin Valley to organize by sub basins. Each sub basin needs to be represented by at least one Groundwater Sustainability Agency. This GSA is responsible for preparing a Groundwater Sustainability Plan. The deadline for the GSP is 2020 when the plan must start implementation. The good news is the plans have 20-years, until 2040 to be fully implemented. The ultimate goal of the GSP is to determine how much groundwater per acre can be pumped and still comply with SGMA. This figure is known as the safe yield.  

                For illustrative purposes: a farmer has 100 acres planted in trees. Each acre requires three acre feet of water annually for the trees to thrive. That’s 300 acre feet of water. Most years the farmer can get 100 acre feet of surface deliveries from the irrigation district, if the orchard is in an area served by a district. The farmer needs to pump another 200 acre feet. However, the GSP for this area only allows a safe yield of one acre foot per acre. The farmer is now 100 acre feet short of enough water for his trees. What are the options? 

I asked some people whose opinions I respect; what can a farmer do to protect his assets? Here are some of the answers. 

County Official

Stephanie Anagnoson is the new Director of Water & Natural Resources for Madera County. Her opinion is shared by many others. 

“From my point of view, the most important thing is for growers to engage in the process and actively participate – attend the meetings, ask questions, meet others with similar issues, brainstorm solutions, engage with the consultants and staff. We all want the end result (i.e., How much water can I use?), but in many cases, that isn’t information that is available without extensive analysis, which is presented at meetings over the course of the next 18 months. 

“I completely understand that people don’t like process-focused work, but the most important thing growers can do is plug into the process and engage in it. Things are uncertain now, and that is uncomfortable, but it is also the reality of life with SGMA,” said Anagnoson.


The reality of life with SGMA has some difficult choices looming in the near future. While attending a recent social mixer of the Ag Lenders Society in Fresno I spoke with a banking executive with decades of ag lending experience. On the condition of strict anonymity, he or she told me much the same as Anagnoson, “Farmers need to read everything they can on the subject, attend all the meetings, and learn as much as they can. They need to gather information and then start thinking about their options.”  

When pushed a little more they said, “I personally believe SGMA will force some farmers to go bankrupt and lose everything. Most of those farmers would be better off to sell out now and cut their losses. But we don’t know enough yet to know which farmers will do better and which ones will lose. That’s why each farmer needs to know everything they can so they have the tools to make the best decisions for their own operation.”  


                California State University, Fresno has one of the best irrigation technology institutes in the nation and prides itself on its leadership in applied research of water. Perhaps because of this it is more in tune with studying the consequences of SGMA. Tommy Esqueda is the Associate Vice President of Water and Sustainability for the university. He sent an outline of what Fresno State is investigating at this time. 

First is identifying alternative strategies and methodologies for five items: a-measuring/estimating extractions from private wells, b-establishing costs and credits of water, c-addressing SGMA non-compliance, d-how to manage the volume of data from SGMA reporting and e-managing areas outside of districts known as “white areas” and disadvantaged communities that lack access to surface supplies.

Second the university is looking at developing a fallowed land strategy by; a-defining the economic impact of fallowing or retiring lands, b-identifying alternative revenue opportunities for this land such as: wildlife habitat corridors, solar power fields, stream and flood plain restoration, urban buffer areas with recreation and of course groundwater recharge, and c-develop a financing plan and management strategy. 


                Richard Schafer is a long-time Visalia engineer whose groundwater experience goes back decades. He wants landowners and growers to approach SGMA with eyes wide open. His advice for farmers in the short-term is to start prioritizing their land. Decide if a portion needs to be fallowed or retired, which portion that should be kept in production. He expects from 15 to 20 percent of productive agricultural lands will need to be set aside without groundwater use to conform to SGMA requirements. 

                Schafer sees the importation of supplemental surface water as the missing piece of SGMA. I asked him what question I should be asking and his Socratic reply was, “Ask why the state government is allowing the devastation of the agricultural industry in California.”


                Paul Minasian is an attorney specializing in water law. There is a very good chance at least some lawsuits will result from SGMA so I thought it would be appropriate to share his views last. Like Schafer, Minasian cautions against denial and wishful thinking. He feels a step in the right direction would be to pass some assessments earmarked for acquiring land and conveyance infrastructure; then recharging as much as possible. Fallowing is going to take place so growers planting or replanting orchards had better plan on using less than 100 percent of the field. The assessments could be reduced for those fallowing and even used to purchase lands with trees at the end of their productive life and convert this to recharge. 

                Minasian said there is another way already occurring. Landowners can buy one acre and fallow it for each acre they want to continue in production. He said to make this practical, land and the crops on it will probably have to decline in value or the value of the crops produced increase in this brief window before SGMA forces the fallowing of land. 

                Changing SGMA at this point isn’t important according to Minasian. He finds it amazing it took so long to realize the condition of the aquifer due to wall to wall planting. “Big lenders on ag land are now refusing to loan unless there is both a surface water supply and a groundwater supply,” said Minasian. “This should have happened years ago. Fallowing has to be taken into account in ag budgets as a necessity.”

                Some may believe the government will “sponsor a project” to save them. Minasian said the government is simply not organized that way anymore. It is instead geared up to force the local people to tell their neighbors to stop irrigating their land. 


                Preparing for SGMA is going to take education and involvement. Not every area of the Valley is on the brink of collapse. Not every area of the Valley will have to fallow half its land. But for the areas looking at fallowing and land retirement the key may be to find innovation to fallow only 60 percent or maybe 75 percent. When SGMA was first passed it was predicted attorneys and consultants would be parachuting into the Valley. Thankfully the vast majority of GSAs formed have competent and dedicated leadership able to winnow out the chaff. Be prepared for an influx of irrigation products and services offering to help provide solutions to SGMA. Not all mad scientists are selling snake oil and not all politicians are self-serving, but as the Latins like to say caveat emptor.    

Special to the Farm Bureau

By Don A. Wright


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