Growing Dilemma
These days at Milgro Nursery in Camarillo, the man with the messiest job isn’t digging soil.
While workers cultivate lilies, poinsettias, daisies and mums that grace tabletops from Christmas to Mother’s Day, Chief Financial Officer Rob Olson struggles with an even tougher task: paying the natural gas bills that have kept those flowers warm enough to flourish.
Late fall and winter always yield the highest heating bills at Milgro--about $30,000 a month. But when November’s bill came, it was $250,000. Same story the following month. And the month after that.
“It’s just crazy,” said Olson, who is still negotiating a compromise with his gas supplier. “It’s well outside of our budget.”
Most of the 2,400 businesses in Ventura County’s billion-dollar agricultural industry are only now bracing for electricity rate hikes and rolling blackouts that could last through summer as crop production peaks.
But one portion of the farm sector--greenhouse operators--has been suffocating for months. Reliant on natural gas rather than electricity for their heaters, they’ve been in the grip of a commodity whose prices have spiraled for the better part of a year.
Last winter, natural gas prices spiked to as much as 24 times higher than normal, said Richard Myers, an energy program supervisor with the California Public Utilities Commission.
Since December, prices have eased up but are still 2 1/2 to 10 times higher than a year ago, Myers said. And rates could soar again this summer, because natural gas is a component of electricity generation.
So although the coldest days are past, financial woes linger.
“There’s a very grim mood out here,” said Wim Zwinkels, president of Pleasant Valley Farms in Camarillo.
Zwinkels said he’ll survive because his equipment is relatively new and fuel-efficient. But those with older operations risk going out of business, he said.
“People are hanging on by their toenails for dear life,” Zwinkels said. “Meanwhile, the pricing of our products has been lower this year than last year. It’s a double whammy.”
The rest of the agriculture sector is bracing for higher bills and rolling blackouts. Fruits and vegetables will spoil if they aren’t kept cool, farmers say. Some batches may have to be tossed if the power goes out during processing.
Farmers and packinghouses that can afford to do so are renting or buying diesel generators or installing turbines to ensure backup power.
Boskovich Farms in Oxnard had been saving on electricity bills by drawing some steam power from a cogeneration facility. But last month, the energy crisis forced that alternative energy provider to cease operations. The lettuce growers had to look to Southern California Edison to replace that lost power. That alone could add $20,000 a month to the company’s electric bill, one official said.
Boskovich rented five generators in case of blackouts. They may not all be needed for local operations; much of the work shifts to Salinas during the summer.
But it’s a year-round operation at Gills Onions in Oxnard, where 1 million onions are processed weekly using about 400 motors. There, owner Steve Gill invested $500,000 in a turbine to serve as a backup source should the electricity go out.
Competition from other states and nations means local growers have a hard time passing on increased production costs. Local operators hope industry lobbyists can get them some relief--a subsidy, a blackout exemption, anything--from Gov. Gray Davis and the Public Utilities Commission to ease the summer’s challenges.
County Agricultural Commissioner Earl McPhail said if growers can’t absorb their increased costs, “a lot of growers will end up in the red instead of the black. . . . We’re obviously extremely concerned.”
At Mission Produce in Oxnard, where 2 million pounds of avocados are processed each week, President Steve Barnard said he’s trying to conserve. He turned off every other light in the plant and substituted automatic doors for the less energy-efficient plastic strips that covered the entrances to walk-in coolers. He’s expecting the electricity bill to shoot from $20,000 a month to $35,000 anyhow.
Barnard held off on buying generators after getting a $150,000 estimate. Instead, he hopes his 80-member staff can work around any rolling blackouts. One plan calls for night shifts if necessary.
“I can deal with a 60- or 90-minute shutdown once a day. We could just plan our lunch around it,” he said. “But if it happens for very long, I will have generators in here.”
Back at Pleasant Valley Flowers, Zwinkels just shakes his head thinking about how, even with his relatively efficient equipment, he’s already spent $200,000 more on heat this year than he would normally have spent.
“I came from the Netherlands in 1978 to escape the energy crisis there,” he said. “And here it is, 20 some years later, and it’s repeating itself.”
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Staff writer Fred Alvarez contributed to this report.
