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Stuck between two regulations

Kirk Kardashian Published on 10 October 2013

Jim Sweeney and his family have owned their 81-acre dairy farm in Visalia, California, for 24 years. It used to be surrounded by other dairy farms. Today, it’s walnut trees as far as the eye can see.

It’s impossible to identify the root cause of Sweeney’s success while hundreds of dairy farms in California have gone out of business. His is a small herd – 260 Holsteins and Jerseys – that has produced the highest-quality milk in Tulare County for 19 out of the past 20 years.

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Certainly, that attention to detail hasn’t hurt. Yet Sweeney doesn’t feel good about the future of his farm. Mainly, this is because regulatory costs associated with environmental protection are rising while the state-regulated milk price isn’t keeping pace.

The latest threat is a proposed wastewater discharge order that could cost dairies hundreds of thousands of dollars each in reporting and compliance.

Water pollution in California is regulated by regional water quality control boards, each having their own jurisdictional boundaries.

Visalia is part of the Central Valley regional board, which has taken aim at groundwater pollution from dairies since the cotton giant J.G. Boswell applied for a permit to build five large dairies in 2004.

The Center for Race, Poverty and the Environment challenged the proposal, and Boswell gave up, but it seems the lawsuit alerted the water quality board to the potential wastewater threats from dairies.

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So the board enacted the 2007 General Order, which required all dairies to complete costly reports about their manure retention ponds and submit nutrient management plans. Later on, the order was amended to also require dairies to maintain water quality monitoring wells.

Sweeney estimates the costs of compliance to be in the tens of thousands of dollars per year. It’s an estimate because Sweeney challenged the legality of the original order, claiming it didn’t take into account the economic considerations of the regulations.

His four appeals have been pending for years. Meanwhile a judge set aside the 2007 General Order in response to a lawsuit by citizen and environmental groups claiming it wasn’t strict enough.

Things heated up again this summer, when the regional board proposed a “Reissued Waste Discharge Requirements General Order” that maintained the requirement of the 2007 General Order and added new regulations about the design of manure lagoons.

Specifically, the new order will likely make it mandatory for dairies to upgrade their retention ponds with a plastic lining to prevent wastewater from leaching into the groundwater. S

weeney reckons this will cost a 300-cow dairy about $180,000. For a 1,500-cow dairy, the cost could be more than one million dollars.

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Sweeney is shocked that more dairy farmers are not as worried about this as he is. After all, “everybody is in survival mode,” Sweeney says. “The amount of money owed to feed companies by individual dairies is in the eight figures.

But it’s almost like nobody cares.” Sweeney has tried to make them care. He has written letters to California politicians, to his fellow dairy farmers, to California Secretary of Agriculture Karen Ross. “The response has been minimal,” he says.

Opposing a regulation that strives to protect groundwater could make Sweeney look like a callous businessman, but he maintains that he is just the opposite. “The Central Valley water quality board casts dairymen as villains who do not care about the environment,” Sweeney wrote in a letter to Karen Ross.

“Nothing could be further from the truth. We drink the water. Farmers appreciate the resources that they have been blessed with and are committed to passing these precious resources on to their children.”

Instead, Sweeney questions the efficacy of this regulation when it hasn’t been proven that manure lagoons actually pollute the groundwater in the valley. In Sweeney’s view, the water quality board is placing too much emphasis on lagoons, which only take up about 1 percent of a farm’s total land space.

“I think, rather than be concerned with lagoons themselves,” Sweeney says, “they need to be concerned with the other 98 percent of the land farmers are putting manure on.”

Furthermore, Sweeney believes this regulation is just poorly timed given the dire economic state of most California dairies. California milk prices are set and regulated by a state-run milk marketing order system that has been keeping prices artificially low.

As a result, California lost 25 percent of its dairy farms between 2008 and 2012. To get an idea how bad it is, the state’s dairy farmers are advocating for the state to join the highly flawed federal order system in order to get a more fair milk price.

“They’re going to pass the order, and we’ll lose 400 dairies over the next four years,” Sweeney says. “Politicians won’t start paying attention until the creameries start shutting down, which means losing hundreds of jobs.”

The Central Valley water quality board is holding a public hearing on the order in the beginning of October. Sweeney expects it will pass, and if it does, he will challenge it just as he challenged the 2007 General Order.

It could be the most important work he has ever done, and California dairy farmers should join him in the search for an equitable solution. PD

Kirk Kardashian is a senior writer at the Tuck School of Business at Dartmouth and the author of “Milk Money: Cash, Cows, and the Death of the American Dairy Farm.”

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Kirk Kardashian
Senior Writer
Tuck School of Business at Dartmouth

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