Corporate Consolidation of Farms and Water in the Western US

by Kai Olson-Sawyer

Published: 3/28/22, Last updated: 3/28/22

Farm consolidation is a major concern in the US, and with good reason. As farms become bigger, they push out smaller family farms, drive up the price of land and increase monocropping — the practice of growing a single crop on a huge tract of land — and the environmental problems that come along with it. One concern that often gets overlooked is how this consolidation affects access to water, especially in the American West, where consolidated agriculture is abundant, but water is not. In just the last few months, drought and low water levels have led to massive water cuts for California and Arizona farmers.

Despite this strain on water supplies, the West’s friendly climates and fertile soils have helped the region, from the high plains to the flood plains and valleys, become a farming powerhouse. California alone produces one-third of US vegetables and two-thirds of its fruits and nuts. The eight Great Plains states are America’s breadbasket as they produce nearly one-fifth of all its wheat, corn, cotton and cattle. Washington is the apple state, and a corner of Arizona is the country’s winter lettuce hub.

But the lack of water remains a vexing feature of the West. The Colorado River Basin and much of the Southwest is embroiled in a so-called “megadrought,” but this 20-year drought is better characterized as intensifying aridity aggravated by climate change. California and the Pacific Northwest are experiencing a disorienting “weather whiplash” marked by drought and floods. California persists through the third year of its current drought. This climate shift means average temperatures rise, soil moisture and water evaporation increase, and precipitation gets more erratic — like more rain than snow falling on mountaintops in winter. Over time, these conditions will likely reduce water availability while agriculture makes up more than 80 percent of US water consumption. Add growing populations and competing demands from cities, farms and industry, and the Western water picture looks complicated, if not bleak.

Right to Water

Scarce water in the West predates climate change. It was in 1893 that John Wesley Powell, during a lecture to an irate assembly of the Irrigation Congress, said “I tell you, gentlemen, you are piling up a heritage of conflict and litigation over water rights, for there is not sufficient water to supply these lands.” As prescient as these words were, coming from the then-aging water visionary of the American West, they went unheeded.

Industrial Crop Production

Water has grown scarcer and agriculture and development have expanded exponentially, but development of the West remains so synonymous with securing water rights and building massive infrastructure, seemingly at any cost, that it’s part of American lore. Today’s farmers, business interests and public officials are just as keen to get hold of water as they were in the 19th century. Over generations, water rights have become a complex legal tangle, although the basis of Western water law rests largely on the doctrine of “prior appropriation.” The adage “first in time, first in line” sums up the notion that the earliest claimants on water have senior rights and physical control of that water, as long as it’s put to “beneficial use.” Under prior appropriation, that water has to continuously be used or it’s lost, and as part of that use, the water may be transferred or sold.

This differs from the legal framework called “riparian rights,” which predominates in the wetter Eastern United States. For riparian rights, user rights go to an owner whose property is adjacent to the water, like a stream or pond located on a farm.

While disputes over water are widespread, the water rights system in the American West makes access to every drop a constant contest between various groups. It also transforms water into a more marketable asset, one that can be sold off to neighbors, or further afield to farms or water wholesalers hundreds of miles away. Water is costly to move, but these transactions do happen across the West. California, for instance, launched a water trading market in 2021 that allows farmers and businesses to buy and sell water in order to lower financial risk.  Concerns over financial transactions like these has risen to a level that Sen. Elizabeth Warren and Rep. Ro Khanna recently proposed a bill to keep water out of all futures trading.

Big Farms, Big Water

As water becomes more precious, the drift continues towards large-scale farms controlling more of the US market. Even though 97.6 percent of all US farms are technically “family owned” — ranging from fewer than 100 acres to many thousands of acres — the composition of family farms is changing. According to Department of Agriculture data, just between 2011 and 2020, large farms increased their total share of land and value of production by approximately 10 percent. The tiny remainder of farms that aren’t family owned are what most would consider typical investor-owned “corporate farms,” which still produce an outsized 13.4 percent of total value despite the small amount of land they occupy.

Put plainly, big farms are big business. Combine the trends of farm consolidation with water scarcity and it’s a vise squeezing out smaller Western farms that have trouble competing not only in terms of production, but also access to water.

Then there are those who capitalize on enormous water resources. Take two agricultural giants that each hold more than 100,000 acres around the parched yet bountiful farming hub of Kings County, California: J.G. Boswell Company, a cotton and tomato producer, and Sandridge Partners, a farmland investment company and almond grower. In this part of the Central Valley, Boswell and Sandridge are as renowned for harvesting water for profit as they are for crops, as Lois Henry has detailed through in-depth reporting at Center for Collaborative Investigative Journalism and elsewhere. 

Both have had rights to sell Kings River water in the thousands of acre-feet (or billions of gallons) out of the county for upwards of $40 million. (One acre-foot of water is about the volume of water used by two households.) By exploiting locations and connections to water districts, they’ve also bypassed other water rights holders to acquire and store water in order to transport it away.

Down the road from these billion-dollar agribusinesses, the experience is different. Farmers with far less land and even less water are at the end of their rope. These smaller farms sometimes resort to selling land when facing insufficient water for crops. Corporate agriculture can afford to accumulate more land, water and flexibility, while many small Central Valley farms rely on groundwater as their primary irrigation source. But like a bank account that’s steadily drawn down, the groundwater is dwindling.

Across California, and especially in the Central Valley, water has led small farm operations to shut down and thousands of household wells to dry up while one million people go without safe drinking water. In the meantime, Boswell and Sandridge are fighting each other in court over water rights while literally selling county water downstream.

The Water Rich

The Kings County water transfers are exceptionally egregious. But water conflicts are common out West, even if they come in different forms. Head to a farm in the Arizona desert spread over 10,000 acres and jointly owned by an investment fund and Almarai, the leading Saudi dairy corporation. There they grow thirsty alfalfa for export to Saudi Arabia as dairy cow feed. What attracts this multinational corporation to La Paz County, Arizona is unregulated groundwater extraction and thus, unlimited irrigation.

Or at least endless water is inferred since there’s not mandated monitoring of groundwater pumping. In reality, so many wells are being drilled and groundwater pumped in these rural drylands that the aquifers are being depleted. The Almarai operation alone claimed 15 wells when the property was bought in 2014, and each well can pump about 1.5 billion gallons of water annually. Groundwater levels have fallen 100-plus feet in more than 2,000 wells from the time of their construction. What’s worse, these desert aquifers contain “fossil groundwater” that took millennia to fill, and once exhausted, will take millennia to recharge. This race to the bottom of groundwater wells concerns neighbors who depend on aquifers for their daily needs, for drinking, bathing and cleaning. Some locals who live near the Almarai farm had their wells run dry and had to haul in water for a time before they could afford to drill a new well. Meanwhile, mega-farms in the area are permitted to extract huge amounts of water while groundwater levels plunge.

Farm water rights get flipped in other ways. Because of its value throughout the West, water attracts interest as a speculative investment. In Arizona near the California border, an investment company called Greenstone purchased 485 acres of farmland in hopes of selling this desert land’s Colorado River water to housing developments in a fast-growing Phoenix suburb 200 miles away. Like-minded investors have bought up thousands of farmland acres in Arizona to split then sell water rights from the land. In the Pacific Northwest, a New York City investment firm successfully obtained water rights in Washington for the purpose of selling and leasing them. This caused public outrage and forced the company to dump another plan and compelled state legislators to review water sales.

"You are piling up a heritage of conflict and litigation over water rights, for there is not sufficient water to supply these lands.”

John Wesley Powell, 1893

Geologist

Potential Solutions

The forces behind corporatized farm consolidation are the same as those consolidating water. In many cases, gaining control of land and water to maximize resource efficiency and profit are the goal. The problem is that water is a common pool resource, at least on the local level, and greater control by even one large farm can harm neighbors, communities and ecosystems.

As John Wesley Powell predicted, Western water rights continue to be contentious and adversarial. Confronting a reality of “use it or lose it” can drive many farmers to focus on acquisition and use of water in a manner harmful to farming itself. Whether farmers, public officials, communities or scientists, people are truly recognizing that the world is heating up and the West is drying out. Saudi Arabia is a cautionary tale of not adapting to the hydrological facts. After the Kingdom pushed agricultural self-sufficiency so hard, they essentially depleted their whole aquifer system, leading their enterprises to set up farms in the US — like Almarai in Arizona — to directly tap into less restrictive water resources abroad.

That doesn’t mean that the West’s water will disappear entirely and that agriculture will cease, but the status quo will have to change. Agriculture in  water-scarce places must shift, whether through fallowed or retired farmland, the cultivation of crops with smaller water footprints, the reduction of meat and dairy production, and climate and water-smart regenerative agricultural practices. Farmers must recognize that their demands on water must be balanced with public water users, developers, energy producers, manufacturers and so on.

For instance, farmers that share a common water source, like the Ogallala Aquifer whose levels are in decline, will have to stop pumping as much water as they once did. In western Kansas’ Sheridan County, some farmers realized their section of the Ogallala were falling fast and that if they kept to status quo pumping, that they would all lose out with dry wells. To address this, farmers came together to form a local enhanced management area in which they’d agree to firm irrigation limits instead of striving to maximize water use to get the biggest crop yield. This led to the deployment of more efficient irrigation technology with help from incentives and other conservation changes to decrease irrigation by 20 percent, and when it was all done, they actually cut water use by 31 percent.

Such arrangements don’t come easily, and for many farmers it will likely take a mix of monetary incentives and stronger governmental action. Drought and the fear of water shortages often push legislative changes. After the last California drought, the state finally passed groundwater regulations, but they are still years off from being implemented. But there is hope. A genuine discussion of overhauling California water law is happening as the state is in constant water crisis and farmers will again face water shortages. During the 2022 Utah legislative session, among other water initiatives, the state is trying to reform the “use it or lose it” aspect of water law to give farmers the ability to let surplus water go downstream without losing their rights for future usage, and paying them a fee for doing so.

Securing water rights will always be essential to farming in the arid and semi-arid West since land without water is just a load of dirt. But the power of large-scale farms and corporations to buy and control water rights above smaller farms and other users must be curtailed since water is a common good and a basic necessity. Meager water resources stretched by human demands — agriculture chief among them — and a changing climate means that government regulation and public accountability must change to reflect those realities.

 

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