Friday, March 12, 2021
CapitalPress.com 3
Bill would pay Oregon’s Harney
Basin farmers to stop irrigating
By MATEUSZ PERKOWSKI
Capital Press
Farmers in Oregon’s Harney Basin
would be paid to stop irrigating crops
under a bill that’s intended to alleviate
groundwater depletion in the region.
Providing incentives for irrigators
to stop pumping may prove less costly
than a purely regulatory approach,
which would likely provoke legal bat-
tles, said Rep. Mark Owens, R-Crane,
chief sponsor of House Bill 2257.
“Money upfront in an investment
will probably reduce litigation in the
basin,” Owens said during a recent leg-
islative hearing on the proposal.
The bill would provide $500,000 in
seed money for the approach, which
could be amplified with money from
the USDA’s Conservation Reserve
Enhancement Program.
The agency pays 70% of such proj-
ect costs, with 30% matching funds
from other sources.
The federal government has already
allocated funds for CREP under the
2018 Farm Bill for projects that meet
its criteria, Owens said. “It is sitting
there, waiting.”
The Oregon Farm Bureau sup-
ports HB 2257 as a matter of fairness
to growers and to ensure the economi-
cal viability of the Harney Basin com-
munity, said Mary Anne Cooper, the
Mateusz Perkowski/Capital Press
Rep. Mark Owens, R-Crane, on 3,000
acres of alfalfa he grows in Oregon’s
Harney Basin. Behind him is a low
elevation sprinkler application ir-
rigation center pivot, which con-
serves water.
group’s vice president of public policy.
“You’ve had folks who’ve devel-
oped water in reliance on the state’s
assurance there was water available,
and it turns out there was not,” Cooper
said, noting that such payments could
help farmers transition to non-irrigated
forms of agriculture.
Water regulators have already pro-
hibited new well-drilling in the Har-
ney Basin but groundwater pumping is
still estimated to surpass natural aqui-
fer recharge in the area.
Irrigators, environmentalists and
community members are working on
a collaborative solution to the prob-
lem, but it’s possible the Oregon Water
Dairy Margin Coverage
January calculation
Resources Department will have to
shut down some wells to prevent fur-
ther groundwater declines.
Paying farmers to cease irrigation
wouldn’t solve the problem entirely,
but it could be an important step in con-
junction with other tools, said Owens,
who estimates about $40 million would
be needed for the program over time.
Money from CREP is already being
used to ease groundwater problems in
other Western states, said Ken Bierley,
a consultant who’s advising the Harney
Basin collaborative group.
The goal would be to enroll about
20,000 acres in the program, which
could cut groundwater withdrawal by
40,000-50,000 acre-feet per year, Bier-
ley said. “That’s not an insignificant
amount when you’re over-allocated by
about two times that much.”
Under the bill, the state government
would pay irrigators to voluntarily can-
cel their water rights while the federal
government would provide conserva-
tion payments for planting cover crops.
Assistance from OWRD staff would
be needed to document that irrigation
was actually being ceased under the
program.
Aside from potential litigation,
regulatory irrigation restrictions are
a blunt tool based on the seniority of
water rights that can’t easily target spe-
cific geographic areas, Owens said.
Washington
Senate passes
overtime bill
Oregon Senate seeks increased
farm co-op accountability
By DON JENKINS
Capital Press
By MATEUSZ PERKOWSKI
Capital Press
OLYMPIA — The
Washington
Senate
approved
legislation
Tuesday to phase in over-
time pay for farmwork-
ers and shield dairies and
other farms from lawsuits
seeking to apply a state
Supreme Court ruling
retroactively.
Senate
Bill
5172
passed, 37-12, and now
goes to the House. Under
the bill, all dairy work-
ers would immediately
receive time-and-a-half
pay for hours worked over
40 in a week.
Phased-in
overtime
pay for other agricultural
employees would begin
Jan. 1, 2022, with work-
ers becoming eligible for
overtime after 55 hours in
one week.
The overtime standard
threshold would fall to
48 hours on Jan. 1, 2023,
and to 40 hours on Jan. 1,
2024.
The bill responds to a
5-4 Supreme Court rul-
ing in November grant-
ing overtime pay to dairy
workers. The ruling has
led to some 30 lawsuits
against farms seeking to
apply the ruling to the past
three years.
Some
Republicans
from agricultural areas
criticized the bill, call-
ing it incomplete at best,
failing to take account
the seasonal nature of
agriculture.
Sen. Kevin Van De
Wege, D-Sequim, said the
Supreme Court’s ruling
forced lawmakers to act.
“We worked hard to make
it as good as possible,” he
said.
The bill was a major
improvement for agricul-
tural employees compared
to the bill as it passed Sen-
ate committees.
SALEM — The failure
of NORPAC and other agri-
cultural cooperatives in Ore-
gon has spurred two legis-
lative proposals aimed at
making such organizations
more accountable to member
farmers.
However, opponents of
the two bills argue they’d
actually leave agricultural
cooperatives vulnerable to
increased litigation and could
reveal their sensitive busi-
ness information.
Senate Bill 468 would
prohibit directors and offi-
cers from providing false
or misleading information
to agricultural cooperative
members.
Under Senate Bill 469,
agricultural
cooperatives
couldn’t restrict the abil-
ity of members to access
or share the organizations’
records, subject to reason-
able conditions, for the pur-
pose of assessing their finan-
cial condition.
Cooperatives could face
lawsuits for violating these
requirements.
The legislation is necessary
because agricultural cooper-
atives are fundamentally dif-
ferent than similar businesses,
such as food processors, that
aren’t owned by their suppli-
ers, said Larry George, pres-
ident of the George Packing
Co. and a former state senator
who testified in support of the
bills on behalf of the Oregon
Family Farm Association.
When farmers deliver
crops to a regular food pro-
cessor, for example, Ore-
gon’s lien laws ensure they
are paid before the banks
and unsecured creditors in
the event of a bankruptcy, he
said. Cooperative members,
on the other hand, are the last
to be repaid.
Unlike similar businesses,
marketing cooperatives can
also use their members’
Carl Sampson/Capital Press File
The NORPAC plant in Stayton, Ore. Two bills aim to in-
crease the accountability of Oregon farm cooperatives,
such as NORPAC.
crops as collateral for loans,
increasing their borrowing
capacity, George said.
“What farmers don’t real-
ize is they are guaranteeing
the actions of the coopera-
tive,” he said.
Grower-members often
don’t realize a cooperative
faces serious financial prob-
lems until the company has
deteriorated so much that it
can’t be saved, George said.
When a cooperative does
fail, farmers are often owed
money for crops and retained
earnings that they won’t
recover.
“What you see is a mas-
sive crash that hurts farmers,”
he said.
The two bills seek to
reduce these hazards by pre-
venting a “toxic relationship”
from developing between the
cooperative’s executives and
its membership, George said.
The CEO and other top
leaders are currently invested
in keeping their jobs by per-
petuating the cooperative’s
existence, which can lead
them to manipulate financial
records to create the appear-
ance of solid performance, he
said.
Boards of directors who
should be overseeing the
executives are generally com-
prised of farmers who aren’t
able to recognize such com-
plex financial machinations,
George said. “The farmers
have so much invested that
they want to believe there is a
way out of the problem.”
The Northwest Agricul-
tural Cooperative Coun-
cil, which opposes the bills,
countered that the legislation
would subject farm cooper-
atives to different and unrea-
sonable standards than other
companies.
“Not all cooperatives have
failed. There are many suc-
cessful ones,” said Mike
Freese, the council’s repre-
sentative, during a recent leg-
islative hearing.
The bills would provide
a new opportunity for direc-
tors and officers to be sued
“if business decisions don’t
go as predicted,” he said. “In
our minds, this is just really
bad policy.”
Existing securities laws
provide adequate protection
from fraud, while the pro-
posed legislation would dis-
courage farmers from lead-
ing cooperatives to avoid
liability, said Dan Jarman,
a representative of the Til-
lamook County Creamery
Association.
Corn (bushel)
Blended alfalfa hay (ton)
Soybean meal (ton)
All milk price (hundredweight)
Final feed costs (hundredweight of milk)
Milk margin above feed costs (hundredweight of milk)
$4.24
$188.50
439.24
$17.50
$10.36
$7.14
Source: USDA Agricultural Marketing Service
Dairy Margin Coverage
to pay out for January
By CAROL RYAN DUMAS
Capital Press
Dairy farmers who
signed up for USDA’s
Dairy Margin Coverage
program can expect a pay-
out for January if they pro-
tected a margin between
milk prices and feed costs
of $7.50 per hundredweight
of milk or above.
USDA’s calculated mar-
gin above feed costs is
$7.14 per hundredweight
for January.
Of the 162.2 billion
pounds of production his-
tory enrolled nationally in
DMC for 2021, produc-
ers covered 48.4 billion
pounds at some margin
level. Of that, 95% — 46.2
billion pounds — was pro-
tected at a $9.50 margin per
hundredweight, USDA’s
Farm Service Agency told
Capital Press.
Farm Service Agency
hasn’t yet posted the Jan-
uary payout, which would
be for 1/12 of producers’
annual covered production.
At the $9.50 margin level,
that accounts for about 3.8
billion pounds, or 38 mil-
lion hundredweight of
milk.
A payout of $2.36 per
hundredweight at the $9.50
margin equates to almost
$89 million.
A producer who covered
5 million pounds annu-
ally at the maximum 95%
of production would have
coverage for 4.75 million
pounds or 47,500 hun-
dredweight of milk. One-
twelfth of that would be
3,958 hundredweight. Cov-
erage at the $9.50 level
would result in a payout of
$9,342 for January.
The annual premium
for that coverage, includ-
ing the $100 administrative
fee, is $7,225. So in Janu-
ary alone, that producer’s
net return on the program is
$2,117.
But that’s only on the
first 5 million pounds of
annual production, repre-
senting a herd of 200 to 250
cows.
DMC contracts for 2021
totaled 18,679. Of that,
17,899 — 95% of contracts
— are at the $9.50 margin
coverage level.
Total enrollment (not
coverage) represents about
74% of dairy operations
with production history
for USDA programs and
nearly 80% of established
production history.
The large difference in
volumes enrolled and vol-
umes covered is most likely
tied to the higher cost of
premiums for annual milk
production above 5 million
pounds — the average U.S.
production for which the
program was designed.
The premium rate for
$9.50 coverage on the first
5 million pounds is 15 cents
per hundredweight of milk.
Coverage is not available
for an $8.50, $9 or $9.50
margin for production
above 5 million pounds.
But coverage of an $8 mar-
gin on production above 5
million pounds is $1.81 per
hundredweight, compared
with 10 cents per hundred-
weight for 5 million pounds
or less.
Capital Press has filed
a Freedom of Information
Act request with USDA for
a breakdown of coverage
levels nationally and for
certain western states.
Of dairies with estab-
lished USDA production
history in Idaho, 72% are
enrolled in DMC, repre-
senting 67% of production.
How much production was
covered and at what mar-
gin level isn’t immediately
available.
Enrollment in Washing-
ton is 79% of dairies, rep-
resenting 83% of produc-
tion. Enrollment in Oregon
is 75% of dairies, repre-
senting 60% of production.
Enrollment in California is
72% of dairies, represent-
ing 79% of production.
Carol Ryan Dumas/Capital Press File
USDA’s calculated margin above feed costs under the
dairy margin program is $7.14 per hundredweight for
January 2021.
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