Dairy operations and cattle producers in the Southwest are bracing for potentially higher feed bills, depending on how farmers respond to a historic agreement among California, Arizona and Nevada that’s intended to slash agricultural water usage. 

The cutbacks in water usage are voluntary, and it’s far from clear how many farmers will agree to reductions in return for the compensation they would be offered, according to farm groups and outside experts. In any case, they stressed that the cutbacks only buy time to find longer-term fixes to the shrinking water supply.

Under the deal, California, Arizona and Nevada agreed to a plan to conserve at least 3 million acre-feet of water until 2026. The cutbacks are intended to preserve water levels in Lake Mead and Lake Powell.

The plan, which still must be approved by the Bureau of Reclamation, could significantly affect alfalfa production in the Yuma region of southwestern Arizona and the neighboring Imperial Valley in California, and the reductions could in turn squeeze feed supplies and raise costs for dairy operations in both states. Beef cattle producers in the area could also be affected.

“If the dairies are having a harder time getting high-quality alfalfa, or any alfalfa for that matter in close proximity, that's going to start put pressure on the feed systems for everyone in Arizona,” said Stefanie Smallhouse, a cattle rancher who is president of the Arizona Farm Bureau. 

Stephanie_Smallhouse_AZ.jpgStefanie Smallhouse, Arizona Farm BureauBut she said the compensation may fall far short of what's needed in the Yuma region to get farmers to participate. The issue is complicated by the complexity of water contracting practices in that area, she said.

Jim Boyle, a dairy producer south of Phoenix in Pinal County, has already lost access to Colorado River water because of cutbacks in central Arizona, which has lower-priority water rights than the Yuma region. If farmers in southwestern Arizona are enticed to reduce water usage, the agreement could put further pressure on alfalfa supplies and prices, Boyle said. That, in turn, could lead to a slow decline in dairies in the Southwest, he believes. 

“The whole region is an alfalfa-growing region,” said Boyle. “It’s going to make an impact on the supply. I think the days of cheap hays are gone.”

Alfalfa is critical to milk production in both Arizona and California, and the Colorado River has been key to growing alfalfa.

California produced 3.2 million tons of alfalfa in 2022, more than any other state except for Idaho; Arizona ranked seventh at 2.1 million tons. Arizona, as usual, led the nation in yield at 8.2 tons per acre, followed by California at 7.2 tons, more than twice the national average. 

While alfalfa fields need 30 to 80 inches of water annually, farmers in Arizona and the Imperial Valley can get nine to 10 cuttings a year, compared to six or fewer in other parts of the West, according to a report by two farmer-led groups, the California Farm Water Coalition and the Family Farm Alliance.

Boyle has turned to pumping groundwater since he lost access to river water. He fallows one-third of his 1,000-acre farm during the summer because of restrictions on the amount of water he can use. Meanwhile, feed costs have soared in recent years because of the combination of strong global prices for feed commodities and shrinking local supplies, he said. Alfalfa prices went from $175 per ton a few years ago to $400 last year and are now running about $300. 

Mike Wade, executive director of the California Farm Water Coalition, said dairy producers tell him the impact on dairy operations of the Colorado River agreement will depend on the grower response to the voluntary cutbacks, the type of fallowing programs they implement, and to what extent farmers reduce the production of other crops. 

“One grower told me that if it's just alfalfa, then it's possible that supplies will be impacted with a potential to cause price impacts. If it's a comprehensive program involving more crops than just alfalfa, the results could be different,” he said. 

Tina Shields, who was involved in the negotiations as the water manager for the Imperial Irrigation District, said there are many “issues to be addressed regarding schedules and flexibility and commitments and timing. And all of that still has to be worked out.”

She said that despite its senior water rights, the district has a “realistic view” of the situation facing the Southwest. 

“It is our only water supply, and going to court and fighting for preservation of what the law says and what our rights are, you know, could crash the system in the meantime,” she said. 

She stressed that farmers would be compensated for reducing water usage. 

“We still stand by our water rights, but that doesn't mean that we can't help develop solutions and be a part of them from the voluntary standpoint.”

George Frisvold, an agricultural economist with the University of Arizona, said that cutting back on alfalfa production during the hotter months would be less disruptive than fallowing land altogether. 

“One of the things that's been proposed is cutting watering of alfalfa during the hottest part of the year,” he said. Ultimately, Arizona dairy operations may have to bring in alfalfa from other states, he said. 

Frisvold said the Colorado River agreement essentially buys time for finding longer-term solutions. Farmers in the region made investment decisions based on water rights and now worry about eventually losing them. “I think there's concern, you know, is that going to get changed out from under them?” 

Kara Heckert, an agriculture adviser with American Farmland Trust, also said farmers don’t want voluntary cutbacks to lead to them losing water rights. 

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If farmers have to drastically reduce their water use, some may go out of business, some might temporarily fallow their land, some may change what crops they produce, and others may install renewable projects to get additional income, she said. 

“I think one of the challenges that I hear from farmers directly is that, you know, water is a valuable asset and they're nervous about parting with it, because it suggests that you don't really need it after all,” she said. 

Dan Keppen, executive director of Family Farm Alliance, which represents farmers, ranchers, irrigation districts and allied industries in 17 states, also sees the agreement as a bridge to a longer-term solution to the water shortage in the Colorado River basin. 

Under the agreement, water users would be compensated for up to 2.3 million acre-feet of reductions with money from the Inflation Reduction Act. The remaining 700,000 acre-feet or more of water reduction would either not be compensated or be paid for using state or local funds.

“It buys time to focus on the really important things, and that is the next set of long-term operating guidelines following 2026,” he said.

He also said the agreement doesn’t put the entire burden on agriculture. “Everybody has to sort of, you know, share the pain of the cuts. And it looks like that's been reflected in this agreement.”

Keppen and others note any long-term solution to water conservation in the West needs to include infrastructure improvements and “finding ways to improve the conveyance of the water so you're not losing so much water in these old leaky canal systems.” 

Boyle, the Arizona dairy producer, believes irrigation technology will help address the region’s water challenges to some extent. He currently relies on flood irrigation and has applied for a state grant to install a robotic sprinkler system that could ultimately reduce his total water usage by 20%, he said. 

“That goes a long way to dealing with the water cutbacks and our ability to pump water,” Boyle said. 

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