Agriculture sweating state power crisis Filed: 02/05/2001

By KAREN SANTOS

Californian staff writer

e-mail: ksantos@bakersfield.com

Even during this quiet time of the agricultural year, higher energy prices are putting a pinch on farmers, who face higher costs for running farm equipment, wells and packing facilities.

"Across the board, everyone is really feeling the crunch," said Heather Flower, spokeswoman for Western Growers Association. Western Growers, an advocacy group, represents about 3,500 fruit and vegetable growers, shippers and packers in California and Arizona.

Each of the three major energy sources — natural gas, diesel fuel and electricity — has increased in price over the last year.

"People think this is a short-term problem, but there is no quick fix," said Kevin Andrew, senior vice president of operations for Sun World.

He pointed out that the energy crisis is happening in the middle of winter, when demand for electricity is usually low.

"Just wait until June, July, August, when we start firing up all the cold storage facilities and all the air-conditioning units in office buildings up and down the state," Andrew said.

Summer is the most active packing season for many growers. Andrew said Sun World packs about 100,000 boxes of grapes per day during the peak season.

He estimates that Sun World's costs will go up 10 percent to 20 percent, but "it's anybody's crystal ball."

"We're being hit with so many increases," said Edwin Camp of D.M. Camp and Sons. "We don't know how we're going to be able to stomach it all at once."

Camp said he is also concerned about the summer months because that's when irrigation and cold storage are in heaviest use.

"We don't want to spend the money if we don't have to, but we can't afford to suffer crop failure," Camp said.

Energy costs are something that cannot be passed along to consumers and recovered, Flower said.

But she was still optimistic.

"This will definitely eat into the profits made by growers, but I wouldn't go as far as to speculate they won't make a profit," she said.

Cotton ginners were also impacted by the higher price of natural gas.

Mike Hooper of Farmers Coop Gin in Buttonwillow said that his costs doubled from 1999 to 2000.

"We were fortunate enough to have booked that price (of 45 cents per therm) and not forced to curtail production," Hooper said.

Despite that, "we're all holding our breath," he said.

On Friday, the price for a therm of natural gas was 67 cents, more than double the price of a year ago, 29 cents.

Energy costs can be a factor in the way cotton growers and ginners plan for the next year, said Mark Bagby, spokesman for Calcot.

"The world market is not supporting higher prices. That's going to put a real squeeze on budgets," Bagby said.

The higher cost of natural gas will also drive up costs at Sun World, Andrew said.

Sun World converted 30 pumps to natural gas from electricity, and did that based on paying 35 cents to 39 cents per therm, Andrew said.

As a solution to this, the Agricultural Energy Consumers Association submitted a proposal to the governor's office and to the committees that make energy policy in the state Legislature.

The proposal puts forth a program that would allow growers and processors to have their power interrupted, but to also give them financial incentives for installing backup generation so that they are prepared for an interruption, said Michael Boccadoro, executive director of the association.

"Producers can suffer irreparable economic hardship if crops are allowed to freeze or irrigation is interrupted," the proposal reads.

The association also wants the generators to be exempted from air quality regulations during Stage 3 alerts.

"One of the worst things we can say is that I can't ever be without power," Andrew said. "We have to learn to be flexible."

Some disagree that California should become a buyer and seller of electricity.

Andrew disagrees with a proposal that the state buy the hydroelectric power plants owned by Pacific Gas & Electric and Southern California Edison.

"It's the wrong people making the wrong decisions," Andrew said.

The state is currently buying $45 million in electricity per day to sell to the debt-ridden utilities.

http://www.bakersfield.com/oil/Story/302787p-302273c.html

Camp said he won't curtail any production because his plans are already made. Both Camp and Andrew said they don't know exactly how much their costs will increase.

-- Martin Thompson (mthom1927@aol.com), February 05, 2001