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Capital Press
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Friday, April 8, 2022
Volume 95, Number 14
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A MATTER OF GREAT INTEREST
Brad Carlson/Capital Press
Logan and Paul Skeen in their farm shop near Nyssa, Ore.
Rate hikes put brakes on inﬂ ation
but squeeze farmers’ cash ﬂ ow
By BRAD CARLSON
Capital Press
N
YSSA, Ore. — Faced with soaring
input costs and inﬂ ation at a 40-year
high, Logan Skeen decided to reduce
his farm’s footprint this year by
15-20%.
Most of his farm is leased except
for a small amount of land he owns.
Other concerns also came into play in his decision
to downsize — the continuing drought across much of
the West and a tight land rental market.
“It all adds up, and it all aﬀ ects your bottom line,”
said the 32-year-old Skeen, who owns Arrow Farms
near Nyssa, Ore.
Of all the factors, however, higher interest rates —
the costs of borrowing money — presented an inescap-
able challenge to Skeen and other farmers entering the
2022 growing season.
In an eﬀ ort to rein in inﬂ ation, the Federal Reserve
Board on March 16 raised its federal funds rate from
0.25%, to 0.50%. While that may not seem like much,
it was the ﬁ rst of seven expected increases this year
aimed at slowing inﬂ ation.
Impact will be felt
Doug Robison, Idaho president of Northwest Farm
Credit Services, said recent and expected increases in
the federal funds rate will be felt.
“These rate increases will have a direct impact
on borrowing costs for businesses and consumers by
increasing the base rate indexes that most lines of
credit are priced oﬀ of, including operating lines, busi-
ness lines of credit, and even credit cards and home
equity lines,” he said.
Robison said farmers, ranchers and dairy producers
will “have the interest rates on their operating lines of
credit and other variable rate loans increase by approx-
imately the same amount as the increases in the fed-
eral funds rate.”
But, he said, interest rates are still likely to remain
relatively low.
“Even with the anticipated increase in short-term
funding costs, interest rates are expected to remain
well below historical averages,” Robison said.
See Interest, Page 11
‘THESE RATE INCREASES WILL HAVE A DIRECT IMPACT ON BORROWING
COSTS FOR BUSINESSES AND CONSUMERS BY INCREASING THE BASE
RATE INDEXES THAT MOST LINES OF CREDIT ARE PRICED OFF OF.’
Doug Robison, Idaho president of Northwest Farm Credit Services
Drought begets diﬃ cult decisions for Oregon farmers
By GEORGE PLAVEN
Capital Press
MADRAS, Ore. — As drought inten-
siﬁ es across parts of central and southern
Oregon, farmers and ranchers are having
to make diﬃ cult decisions heading into
the irrigation season.
“I think at this point, we’re just in sur-
vival mode,” said Phil Fine, who grows
seed crops, alfalfa and grain near Madras.
“Budgets are really tight. ... It’s more
about getting by and not getting too far
behind right now.”
Fine is a member of the North Unit Irri-
gation District, which set its annual water
allotment on March 29. This year, patrons
will receive 0.45 acre-feet per acre, which
is less than one-quarter of normal.
In response, Fine said he is transition-
ing more of his alfalfa ﬁ elds to spring bar-
ley, which requires less water to grow
while still producing an adequate hay
crop.
Customers depend on Fine to provide
feed for livestock, which is becoming
increasingly scarce and more expensive.
He estimated there are 25% fewer cattle
in the region than a year ago, as ranchers
have downsized their herds.
“I’ve had people calling, just scroung-
ing for hay,” Fine said. “I’ve turned peo-
ple down.”
A shortage of irrigation water last
fall also forced Fine to cut back on
planting higher-value bluegrass and
carrot seed, pivoting instead to win-
ter wheat. Unless the region gets some
timely rain, it may amount to no more
than a cover crop.
“Our farm plans basically change daily
Ryan Brennecke/EO Media Group File
at this point. It’s weather-dependent,” he
A sign warns visitors to stay away from the inlet
said.
pipes exposed by low water at the Wickiup Res-
See Drought, Page 11 ervoir dam.
Upper Klamath Lake sees another year of record low inﬂ ows
By GEORGE PLAVEN
Capital Press
KLAMATH FALLS, Ore. — One year after
the U.S. Bureau of Reclamation shut oﬀ water to
the Klamath Project amid a devastating region-
wide drought, conditions appear to be worse
heading into the 2022 irrigation season.
Upper Klamath Lake is again getting record-
low inﬂ ows following another dry winter. As
of April 5, the Klamath Basin had received just
67% of its median precipitation for the water
year dating back to Oct. 1 and 26% of median
snowpack.
Brian Person, a senior adviser for the Bureau
of Reclamation in Klamath Falls, Ore., said the
agency will announce its annual water allocation
for the Klamath Project on April 12. He declined
to speculate whether there would be a second
consecutive shutoﬀ , but said it has been “a very
diﬃ cult year.”
“We had a promising start to the water year,”
Person said, adding the basin had above-average
snowpack in November and December. “It just
George Plaven/Capital Press File
Water ﬂ ows from Upper Klamath Lake into
the A Canal, part of the Klamath Project.
stopped. It almost ﬂ atlined through this calen-
dar year.”
During that time, Upper Klamath Lake
inﬂ ows totaled 425,000 acre-feet of water. That
is a record low, Person said, even lower than
the previous record of 427,000 acre-feet set last
year.
Person said each of the last three years —
2020, 2021 and 2022 — rank in the top ﬁ ve dri-
est years on record for Upper Klamath Lake.
“That’s not a record we were hoping to set,”
he said.
The Bureau of Reclamation manages water
in Upper Klamath Lake for irrigators and two
species of endangered sucker ﬁ sh, known by the
Klamath Tribes as C’waam and Koptu. Under
the agency’s interim operations plan, the lake’s
water surface elevation must remain above
4,142 feet in April and May to provide shoreline
spawning habitat for the sucker ﬁ sh.
However, Person said the lake has already
failed to meet that requirement.
The operations plan also calls for a spring-
time “ﬂ ushing ﬂ ow” of water from Upper Klam-
ath Lake down the Klamath River to protect
coho salmon from C. shasta, a ﬁ sh-killing par-
asite that thrives in warm, slow-moving water.
Person said the bureau is working to formu-
late a ﬂ ushing ﬂ ow for this year, though there is
not enough water in the lake to release the full
50,000 acre-foot volume.
See Inﬂ ows, Page 11