DJ FARM SCENE: Power Cos Pay Idaho Farmers To Be Idle Copyright © 2001 Dow Jones & Company, Inc.
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BUHL, Idaho (AP)--Mike Larson has pulled out all the stops to be a successful alfalfa farmer.
He checks a half-dozen Internet weather sites to schedule his hay cuttings. He contracts with the state's burgeoning dairy industry to maximize revenues. And in a year of drought and soaring power costs, he's taking advantage of Idaho Power Co.'s electricity buyback offer.
But even with strong prices, he questions how even the most conscientious farmer will be able to make it again in 2002 if the state is still in the throes of drought and exorbitant electric bills.
"A year ago, if I said I'd get a check from Idaho Power, you would have thought I was crazy," he said.
Nearly 440 irrigators in southern Idaho have agreed to turn off their pumps in return for a check. About 154,000 acres will be idled or planted with an alternate crop that does not demand as much water. Idaho Power will pay those growers a total of $79 million, company spokesman Dennis Lopez said.
Larson and the other producers taking the utility's money reflect a broad range of growers struggling against difficult financial odds.
"There's a lot of people starting to think that this is not a one-year flash in the pan, and many acres are never going to return to production," said John Thompson, director of the Potato Growers of Idaho.
Only the biggest operators are eligible because to qualify a producer has to save at least 100,000 kilowatt-hours. The Boise-based utility thinks it's smarter to pay growers up to 15 cents a kilowatt hour for power it can divert to other customers rather than paying 30 cents or more on the wholesale market to meet the needs of those other customers.
Idaho Power is heavily dependent on hydroelectric systems for its power, and the drought has forced it to turn to the wholesale market - which has been made more volatile by California's problems - to make up for reduced energy of its own. The company got approval for a one-year rate hike this spring that pushed irrigation rates up 31%.
The Larson Magic Farms is a kelly green-and-purple carpet of alfalfa over 3,200 acres, amid public rangeland bleached bone-white by summer heat. Electric pivot sprinklers wind their way across hundreds of acres to turn southern Idaho desert into a garden.
Although he is just a few miles from the Snake River, Larson draws water from Salmon Falls Creek. And this year, which compares with the severe drought years 1977 and 1992, the creek will dry up by midsummer.
So instead of growing four crops, he is cutting one and turning off the pumps as the swathers move over the land. The last pump will shut down by month's end.
Larson's farm supplies premium hay to an exploding dairy industry, and the drought has sent prices from $70 per ton to as much as $150 and $200 in California.
Although Larson and his sons will stop after the first cutting, his costs remain. He promised the people who work for him every year that they would have jobs until September. He faces mortgages and taxes on his land and payments on $1 million of elaborate tractors, swathers and balers needed to cut hundreds of acres a day.
He also expects higher rates from Idaho Power in the coming year, which will make it even more difficult to operate.
"If it looks like it won't run a profit, we won't farm," he said. "It's a business just like a Subway sandwich shop."
Growers of Idaho's famous potatoes, already suffering from a record 2000 crop that sent prices down to just one-fifth of their production costs, rely more on gravity than pump irrigation and have been more interested in programs allowing them to change diversion points than in power buybacks.
If water limits were applied, diversion programs would allow irrigation ditch users to idle some fields and divert water that would've gone on those fields to others.
"They will have to juggle to get water to parts of their crops where it's needed," said Bruce Huffaker, North American Potato Market News publisher. "Overall, I'm confident that potatoes will get enough water."
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