May 1997
In 1996, 81 California and Oregon growers paid $1.9 million to farm nearly 22,000 acres of leased lands within the Tule Lake and Lower Klamath NWRs. Table 3 provides a historical summary of acreage leased and revenues. In 1996, average leased payments were $86 per acre. Annual lease revenues have ranged from a low of $1.2 million (in 1980) to a high of $2.4 million (in 1984). If inflation is considered, lease revenues in the 1990s are considerably less than they were in the early and mid-1980s.
Annual lump-sum payments for Tule Lake and Lower Klamath agricultural leases are made in advance of the growing season. Payments for 1997 leases were due in mid-January 1997. Grower payments are made to the Reclamation office in Klamath Falls. Upon receipt of payments, Reclamation immediately transfers lease revenues to the U.S. Treasury Department in Washington, DC. Thereafter, lease revenues are treated as general revenues of the federal government.
The federal budget allocations from the Klamath Basin operations of Reclamation or the Service are not statutorily linked to agricultural lease revenues from within the wildlife refuges; none of Lower Klamath or Tule Lake agricultural lease revenues are directly used to fund Bureau or Service operations in the Basin. The Agencies are funded under congressional and agency budgetary processes.
Lease bid rates are affected by the productivity of individual parcels, the mix of crops permitted to be grown on the land, and anticipated market prices for crops. Lease revenues tend to be greatest from parcels where row cropping is allowed. Growers will bid more for highly productive lands which are free of detrimental insects, crop diseases and weeds. Market prices for farm commodities fluctuate widely, and also influence grower willingness to pay more or less for leased lands. Favorable market prices prompted the ambitious bidding for leased lands in the early 1980s. Lower commodity prices in the 1990s resulted in less federal revenues being generated by the leased lands. Not all lands available for leasing are bid on by area growers, particularly in times of unfavorable market conditions.
Sump 3 contains the majority of Refuge leased land farmed for row crop production. In 1996, growers paid nearly $1.1 million to lease 9,598 acres in Sump 3, an average of $113 an acre. Sump 3 accounted for 44 percent of total leased lands and 58 percent of total agricultural lease revenues from the leased lands. Average payments were $77 an acre in Sump 2 and $62 an acre for the Lower Klamath leases (Areas F and J). For a summary of leased-land revenues by management area, see Appendix D.
In 1996, 21,839 acres were leased for farming. Refuge lands available to agriculture have decreased slightly since the 1980.
The majority of leased-land acreage is devoted to grain production. In 1996, 70 percent of active farmland was devoted to grains, 17 percent to row crops, and 12 percent to hay (including alfalfa). About the same amount of land supports grains crops in 1996 as in 1980. Over the 1980-1996 period, row crop acreage has increased, whereas land used for hay production has decreased by 1,500 acres.
[Table 4 shows acres planted by crop type 1980-1996.]
From 1980 through 1996, the portion of leased land devoted to grain production has fluctuated from 14,000 to about 17,000 acres. Barley is the most widely grown crop on leased lands; an average of 47 percent of these lands have been devoted to barley production (1980-1996). Most Refuge barley growers are raising malting barley, giving them a much higher market value per acre than feed barley. Also relevant is that malting barley is often sold under contract to brewing companies. Crop quality influences the price received by growers; a premium is paid for higher quality crops. Growers receive less than contracted prices for crops damaged by pests or weeds.
Oats and wheat are the other grains currently being grown on leased lands. Both crops have experienced cycles of increasing and decreasing interest by growers. Rye was grown on Refuge lands in the early 1980s, but has been discontinued due to lack of a strong market.
There are important differences in cropping patterns within the two NWRs. Row crops are grown on Tule Lake, but not on Lower Klamath. Potatoes are the main row crop grown within Tule Lake leased lands -- 2,300 to 3,000 acres of potatoes were grown on Tule Lake NWR in the 1980s and 90s. Potatoes historically have provided farmers with the higher dollar value per acre than other crops permitted on the Refuge.
Sugarbeets and onions are the other row crops being produced on the Tule Lake Refuge. Sugarbeets were first introduced in 1991. From 1991 through 1996, Refuge land devoted to sugarbeets has increased from 265 to over 800 acres. Onion production has varied significantly from year to year. In 1996, about 400 acres were in onion production.
Alfalfa is grown on Tule Lake lands, while grass hay is grown on Lower Klamath. Alfalfa acreage gradually has been increasing on the Tule Lake to more than 900 acres in 1996. The amount of Lower Klamath land devoted to grass hay production has decreased from 3,500 acres in 1980 to 1,800 acres in 1996. Some of these former haylands are now devoted exclusively to wildlife habitat while other land has been converted to grain production. For more discussion on cropping trends, see Appendix D.
In 1995, Tule Lake and Lower Klamath leases were estimated to reap $22.8 million in crop value for their leaseholders. This estimate is derived using average yield estimates for the Tule Lake Irrigation District (TID). (It is possible that yields on leased lands exceeded the overall production norms for this irrigation district.) In 1995, grain crops accounted for 58 percent, row crops 37 percent, and hay 5 percent of the production value of Refuge farmland.
Row crops typically yield much higher dollar value per acre than grain or hay. In 1995, production values for lands in row crops averaged $2,180 per acre; land in grains generated an average production value of $856 per acre; and lands in hay provided an average value $404 an acre. For a comparison in value of crops raised on the refuges in 1995, see Figure 4 (60K).
Table 5 provides comparisons of average dollar returns per acre for individual crops grown on the two refuges in 1995. By a significant margin, potatoes generated the highest dollar value per acre ($2,660/acre). Onions were the second most value-intensive crop. Sugarbeets generated an average of $878 per acre in gross income. There was little difference in the per-acre production values for the three grains. Market values for barley, wheat, and oats ranged from $846 to $879 per acre. The market value for alfalfa hay ($570/acre) was considerably higher than the price received for grass hay ($320/acre).
Importantly, row crop production also involves higher expenditures for leases, labor, equipment and machinery, seed, fertilizer, and pest and weed control. In years with high productivity and favorable prices, row crop leases are likely to achieve greater net profits than leases devoted to grains and hay. However, because of the higher costs of farming inputs, the risk of major financial losses also is much greater for row crop growers. The potential for profit and risk of financial loss are major motivations for aggressive pest control by row crop farmers. Information on the net profits of individual farming operations on leased lands is proprietary, and unavailable for this project.
Figure 5 (40K) displays estimates of the gross market value received for crops grown on the wildlife refuges in 1995. Barley, occupying 48 percent of agricultural leased land, accounted for about 40 percent of gross farm earnings. Potatoes, which occupied about 12 percent of leased lands, provided 33 percent of gross farm earnings.
In the 1980s and '90s, yearly aggregate values for crops grown within the two wildlife refuges have ranged from about $11 million in 1987 to about $22 million in 1995. Figure 6 (40K) displays estimates of the gross market values of the Tule Lake and Lower Klamath crops in dollars unadjusted for inflation. Importantly, the market values for agricultural commodities have not kept pace with inflation. If 1995 dollars are adjusted for inflation, Refuge agriculture sales were exceeding $30 million in the early 1980s compared to less than $20 million during much of the 1990s. This phenomenon is characteristic of U.S. agriculture.
During the 16-year period, each major crop has undergone cycles of high and low aggregate values. The yearly values of barley production have ranged from $3.8 million to $8.7 in nominal dollars ($5.0 million to $15.5 million in "inflation adjusted" 1995 dollars). Potato production values have ranged from $2.8 million to $7.1 in nominal dollars ($3.5 million to $10.1 million in "inflation adjusted" 1995 dollars). Gross market value for other crops grown on the refuges have undergone similar volatility.
Crop selection choices/acres planted, crop yields (productivity), and commodity prices are major factors influencing aggregate values of crops grown.
Crop Selection/Acres Planted Since 1980, there has been an increase in the amount of leased land devoted to row crops and a decrease in the amount of land devoted to hay. Because row crops tend to generate higher market values per acre, this transition has contributed to increasing overall grower revenues from the Refuge leased lands.
Land Productivity-- Year-to-year Variation in Crop Yields Crop yields vary significantly from year to year on the leased lands. From 1980 to 1995, average barley production ranged from 96 to 130 bushels an acre, a 36 percent variation in yield. Average annual potato production ranged from 380 hundred weight (cwt)/acre to 450 cwt/acre, an 18 percent variation in yield. The range of variation in yields for the refuges' other crops was 40 percent for wheat, 50 percent for oats, 35 percent for onions, 30 percent for sugarbeets, 50 percent for alfalfa, and 67 percent for grass hay. Weather and the severity of pest conditions contribute to year-to-year variation in field productivity. The characteristics of a field's natural growing conditions and cultural practices of growers (e.g., seed choices; planting and harvesting scheduling; and proficiency of fertilization, irrigation, and pest management operations) also are major determinants of yield for individual fields.
[Table 6 shows high, low and median year crop yields 1980-1995.]
Variability in Commodity Prices Growers are rewarded with higher market prices for superior quality crops and penalized by lower market prices for crops damaged by pests or weather. However, in recent decades it has been the characteristics of national and international markets for agricultural commodities which have most profoundly influenced earnings of Klamath Basin growers. Market prices tend to decrease in years of abundant national and international harvests, and increase in years of poor production. Because of depressed market prices, Klamath Basin growers sometimes receive less total income in years of high-quality yields.
Table 7 displays the average market prices reported for crops grown in the TID from 1980 through 1995. The numbers in parenthesis are inflation adjusted market values. As in the rest of the country, the market prices for crops grown on Klamath area refuges did not keep pace with inflation in the 1980s and 90s.
Barley prices ranged from $3.90/bushel (1986) to $7.00/bushel (1995), a 79 percent price variation. When inflation is accounted for the "real dollar" price, barley has varied by more than 150 percent. Price patterns for other grains have fluctuated similarly.
Potato prices have ranged from $2.21/cwt in 1987 to $6.65/cwt in 1995. Accounting for inflation, the variation in market value of potatoes in the 1980s and 1990s was almost 300 percent. Prompted by favorable prices in 1995, over-production of potatoes in 1996 caused market prices to collapse. At the end of 1996, market prices for 1996 potatoes were in the $2.00/ cwt range. Onion prices also have fluctuated widely. If inflation is considered, the high market price onions was in 1981 and the low in 1995. Sugarbeets are grown under fixed fee contracts and in the 1990s, growers are receiving $45/ton for beets.
Alfalfa prices have ranged from $70/ton in 1981 to $110/ton in 1993. Adjusting for inflation, alfalfa prices were highest in 1980 and lowest in 1992. Grass hay follows the same price cycles as alfalfa hay, although it averages a 20 to 40 percent lower price.
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