‘Clean Dirt’ Deals : Lenders are now forcing commercial borrowers to decontaminate their operations in order to qualify for new money.
By a strange coincidence on the first Saturday of this month, suburbanites on both the Atlantic and Pacific coasts were dealing with the issue of contaminated dirt.
In Oxnard, a chemical pesticide called methyl bromide leaked into the air from a strawberry field next to the Lemonwood housing tract, causing more than a dozen people to become ill. The same day in Fairfax, Va., a group of several hundred families living near a petrochemical tank farm resolved a 2-year-old toxics spill episode, which had rendered their houses valueless. They won $234 million in damages.
What interests me about both these events is that, if the farm industry switched to organic methods and the petrochemical industry was better about cleaning up after itself, such toxic incidents affecting nearby suburbs could be avoided. What’s more, court cases would be reduced and bank lending would be easier.
As you might expect, both the Environmental Protection Agency and the State of California are considering a ban on the substance methyl bromide, which has led to evacuations in other farming communities. But what you don’t expect is for the U.S. banking industry to be developing an interest in such matters as well.
Lenders are now forcing commercial borrowers to clean up their environmental act or forgo getting new money.
“Extraordinary conservatism applied to environmental risk is necessary,” wrote J. W. Campbell, a General Electric Capital Corp. vice president in a recent trade publication. “The (bank) must assume that contamination will become a problem in a transaction. . . . “
Why their sudden environmental concern? Two years ago, banks lost a U.S. Supreme Court case, which now makes it possible for them to be held responsible if a borrower bungles an environmental cleanup. Now, they don’t want to end up being the owner of contaminated land in case the borrower goes under.
When that happens here in Ventura County, said Los Angeles attorney Joel S. Moskowitz, a nationally recognized expert in land and water pollution, the banks “pursue the owner to the ends of the Earth.”
Moskowitz has been house hunting in Simi Valley because of the smog in Los Angeles. He was not amused to learn of the agricultural fumigant incident in Oxnard.
Readers of this column know it’s possible for local farmers to give up toxic chemicals and, over the years, clean up their acreage so it passes California standards for certification as “organic.”
Unfortunately, that isn’t happening faster, according to Dean Walsh, proprietor of Pure Pak in Oxnard, because “chemical insecticides, fungicides and fertilizer are what (agribusiness) people have been taught to do.”
Indeed, when I checked with the local Agricultural Commission, I was told that “there’s no alternative” (for methyl bromide).
So how do you explain the expansion of organic strawberry growing in such places as Santa Cruz and Temecula? And statewide, a tenfold jump in organic farm acreage in the last 10 years--everything from arugula to zucchini.
The answer is pretty simple:
“Slowly you ferret out the ways of getting by without chemicals by asking the old farmers to remember how they did it before they got lazy and started using chemicals,” said Tim Cochran, a grower with Swanton Berry Farm in Santa Cruz.
Cochran said he feels the extra effort is worth it because an increasing number of people want “old-time flavor and chemical-free (produce), and they’re willing to pay extra.”
Piru citrus grower Tom Wilson, a member of the board of directors of the California Certified Organic Farmers, switched to non-chemical growing to avoid contaminating his ground water.
“The use of chemicals is going down in Ventura County as more growers realize it is something they can do without,” he said.
To do without, sometimes all that’s needed is a bit of creativity. Instead of chemicals, Wilson has enlisted the aid of a herd of ducks. They keep the snails off his acreage.
So has all this extra effort on the part of organic farmers resulted in their acreage being more “bankable”? Paul Branham, manager of the organics program for the California Department of Food and Agriculture, says yes. “Just as organic food sells for higher prices, why not the land?” he asks.
An informal survey of organic acreage sales indicated that “clean” dirt is fetching a premium if it is being sold to developers.
“Home builders are more comfortable with the risk,” said grower George Hoffer, who is selling 75 acres. “There is less risk of finding toxics.”
Fewer toxics, even for mega-growers like Julio Gallo of E & J Gallo winemaking fame, is sounding better all the time. Gallo and his wife have reverted to a simpler time as far as their home garden is concerned, because “I’m concerned about the use of pesticides,” he said in a recent article in the Modesto Bee.
He is now encouraging all of his contract growers to follow his personal example. “We didn’t have all these diseases” before pesticides, he said. “We’re running into a very serious problem we didn’t have in those days.” He’s referring to a new root disease that threatens to destroy 50% of California’s grape vines.
Like the oldsters Tim Cochran queried about growing organic strawberries, Gallo’s views should be heeded. By advocating “clean dirt,” he’s trying to save us from disaster in the field, in the adjacent suburbs, in the courts and even at the bank.
