Growing Pains : Farmers Say Rising Cost of Water Threatens Their Livelihoods

Just three years ago, George Rosenthal appeared to be on the verge of achieving his longtime dream of creating a commercially successful vineyard in the Santa Monica Mountains.

His first usable grape crop was in, and he envisioned a time when he would be able to produce 1,500 cases a year of his Rosenthal the Malibu Estate Cabernet Sauvignon.

High on his prospects, he planned to add seven acres to his 12-acre vineyard.

Since then, however, a single factor has dampened the optimism of 1991--local water rates.

Now Rosenthal laments that his fledgling grape farm may never be profitable. Even though he introduced his wine to the market this year, he canceled his plans to expand the vineyard, which is part of the 200-acre Rancho Escondido he manages for Raleigh Enterprises Corp.

And last year, to reduce costs, he cut off water to about 500 avocado trees, also grown on the ranch.

“At some point you have to look at the economics of this and say, ‘This is a losing business,’ and you have to stop your losses,” said Rosenthal, Raleigh Enterprises’ chief executive officer and president.

The cost of water for agricultural users has become a hot-button issue in recent years among growers throughout Southern California. In one area of San Diego County, water rates doubled in three years to about $1,000 per acre-foot--326,000 gallons--prompting growers to shut off water to about 4,000 acres of avocado trees.

Growers in the Agoura Hills-Malibu area--the last farmers left in their western corner of Los Angeles County--say it’s only a matter of time before they too are put out of business.

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Since 1986, water rates have more than doubled for the growers served by the Las Virgenes Municipal Water District, the small water retailer that serves that area.

Don Reeder, chairman of the Southern California Agricultural Water Team, a growers’ lobbying group, said Las Virgenes’ agricultural water rates are the highest in the state.

According to Las Virgenes officials, the agency buys water from its supplier, the Metropolitan Water District, for $412 per acre-foot. It sells that same water to its half a dozen or so agricultural customers for $1,300 per acre-foot.

Growers in eastern Ventura County, by contrast, pay about $380 per acre-foot.

The few growers served by Las Virgenes are urging the district to do away with its four-tier billing system, in which those who use the most water are charged significantly more than those who use less.

“We are not looking for subsidies or free water,” said Lewis Rose, office administrator for Raleigh Enterprises. “We are just looking for a fair price for the water we use.”

In defense of the billing system, water district officials argue that it is designed to conserve water, not discriminate against growers. Under the method, any customer who used that much water would be charged the same rate as the growers.

The officials say that they sympathize with the growers, but that the growers should have considered the scarcity of water before they settled in the area.

Meanwhile, the growers argue that they should pay less for water, if anything, because they buy it in such large volume.

“We are being penalized for using more water, and that’s not fair,” said Tami Semler, whose family operates a 350-acre avocado ranch on Mulholland Highway, just south of Agoura Hills. Last year, the Semlers shut off water to 10% of their trees, she said.

“We have to make a decision at some point in time whether we let all our trees die or pay $100,000 in water bills to generate $125,000 worth of fruit--and that’s not counting labor and other costs,” said her father, Ron Semler.

To help lower the growers’ water costs, the district has joined an MWD program that offers a $137-per-acre-foot discount for agricultural users. Las Virgenes officials stress that this subsidy comes from the MWD and that they are just passing it along.

Aside from that, Las Virgenes officials say there is little else they can do to help the growers.

A. Macneil Stelle, vice president of Las Virgenes’ board of directors, said the district would have to pass the costs along to non-agricultural customers if it subsidized the growers.

And others then would want subsidies, he said. The district recently passed an ordinance that gives discounts to the Las Virgenes Unified School District in exchange for allowing the water district to use classrooms to promote its conservation programs.

“Where do you draw the line?” Stelle said. “It’s a lot better not to get into the business.”

Glen Peterson, another water board member, said the district is already indirectly subsidizing growers in other parts of the state. “The MWD has to charge us more in order to give the growers in San Diego a deal,” he said.

Peterson, who also sits on the MWD’s board of directors, incurred the wrath of area growers when he suggested at a Las Virgenes board meeting last summer that he would prefer to see the district offer subsidies to golf courses rather than growers.

“That was all in jest,” said Peterson, an avid golfer. “What I really meant was, in our area, we have golf courses, and those are viable economic enterprises. You really have to look at your priorities. What do you want to subsidize? In L. A., they are subsidizing factories, because they provide jobs.”

The growers argue that they too provide jobs and stimulate the economy. Moreover, they aren’t sure that they want the $137 discount, because of a stipulation that would require growers to pay substantially more for water in drought years.

And even in good years, the discount won’t really help, because the cost of water will still be prohibitive, said Reeder of the Agricultural Water Team.

“The truth is, $137 off on your $1,300 bill is not that big a deal,” he said. “You’re still in trouble.”

San Diego-area growers, fed up with high water costs, organized to put pressure on the MWD to lower rates to its retailers, said David Owen, executive director of the San Diego Farm Bureau, which represents growers. They were the ones, he said, who persuaded the MWD to offer the $137 discount.

Growers in the Agoura Hills / Malibu area argue that if they are put out of business by the high cost of water, more development and suburban sprawl would occur.

“It’s not just Las Virgenes, it’s a collective thing that’s happening statewide, and people are very concerned about it,” Owen said. “Once you lose it, it’s gone for good.”