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Irrigators suffered much more than report indicated
By DICK CARLETON
Last December, those of us whose irrigation water was shut off in 2001 were appalled to learn that a recent Oregon State University economic study suggests that we actually made money that year. I, for one, can tell you another story that I hope will reveal the major flaws in the OSU report.
I have three general concerns with this study.
First, the OSU report incorporates the entire area covered by Klamath, Modoc and Siskiyou counties into its economic assessment. However, the Klamath Reclamation Project comprises only a small part of each of these counties.
Communities as far away as Yreka, Alturas and Chemult - all included in the study - were not directly impacted, but were still reflected in the report. The resulting conclusion incorrectly masks the severity of impacts in the near vicinity of the project. To me, this is like telling New Yorkers who suffered from the World Trade Center attack that they were not financially harmed because the gross national product was not affected.
Second, the report is based on a computer model. Had the OSU economists taken the time to go out in the field and talk to some of us who were directly affected, I believe they would have drawn different conclusions.
Third, the OSU study does not take into account the long-term effects of the water shutoff. We are still feeling those effects as we try to put our lives back together.
I am a third-generation farmer. My 82-year-old mother still lives on the farm near Merrill that has been in our family since 1909. She is hoping my grandson - a fifth-generation family member - will be able to farm that land one day.
Because of the water shutoff in 2001, our family farm lost an estimated $800,000 in total gross sales.
That income would have been generated primarily from the sale of hay and potatoes to support three families, as well as my mother.
Until 2001, we had three full-time employees as well as three to four seasonal employees. That income would have helped support them as well as three other families we rent ground from. Further, it would have helped pay for such things as fertilizer, fuel, implements, parts, labor, land, equipment, as well as pay our operating line. Almost all of that lost income originates from outside of the Basin, from places as far away as the East Coast and foreign countries such as Japan, Korea and Taiwan. That money then circulates throughout the Basin in the form of goods and services that we purchase. The OSU report does not fully consider the loss of revenue to local business such as grocery stores, car dealers or clothing outlets.
Because of the revenue lost in 2001, we were forced to declare bankruptcy.
The bankruptcy court ordered all the money we received in federal aid to go to the bank. However, that same money was taxable. Because we did not realize most of our 2000 income (when we had water) until 2001 (when we were unable to farm as usual) we had no expenses to offset our claimed income. Therefore, we fell into the 50 percent tax bracket, which meant we had to return $61,000 of the $122,000 we received through government assistance.
I know we were not the only ones in this position who were taxed in this manner. The OSU assessment does not take this into consideration.
The long-term effects of this shutoff are still being felt throughout the Klamath Project.
Because of our bankruptcy, we were unable to make payments on the long-term debt. These loans are being re-amortized, but the interest continues to accrue. So, instead of the debt decreasing through the payments we otherwise would have made, it actually increased because of the interest.
Also in 2001, there were several auctions where equipment sold for 10 cents on the dollar. This is a 90 percent loss. Again, the OSU report does not reflect this, either as a loss to the individual or to the bank. While we have survived this disaster so far, others have not. Many of us who did survive were forced to dip into our savings, which the report also fails to consider.
Many of us in agriculture invest in land, buildings and equipment as a way to build a retirement fund.
Without water and with future water deliveries uncertain, these values have dropped. This is no different than what was seen by other people who have long invested in the stock market, only to see it drop in the past year. This devaluation was also not captured by OSU researchers, who assumed that, since we received water in 2002, things were back to normal. This was not the case at all.
It wasn't until 2002 that we discovered additional, unexpected costs.
Equipment that we did not use in 2001 required unexpected repairs. Bearings had rusted and frozen up, which took extra time and money to repair. We had to put new batteries in all our trucks at harvest time in 2002 because of lack of use. Sprinkler equipment required attention before it could be used in 2002 because it had been neglected in 2001.
Some of our alfalfa crops that were planted in the fall of 2000 had to be replanted in 2002, which added extra expense because we had to rework the ground, buy seed again and use more herbicides to control the weeds that grew in 2001. While theses are just a few of the added expenses we incurred in 2002, the OSU report, again, does not consider them.
To me, the OSU report shows the disconnect between the academic world, where studies are done using computer models, and the real world, where research is conducted in the field and conclusions are based on the data collected from that research.
This report should have been based on research that was done entirely within the Klamath Basin, using data gathered from us who suffered the actual loss. OSU's assessment terribly distorts the actual picture of economic impacts suffered by my community. Knowing the report comes from Oregon's land grant institution just makes it that much more disturbing.
The Author
Dick Carleton is a long-time Klamath Basin farmer.
I have three general concerns with this study.
First, the OSU report incorporates the entire area covered by Klamath, Modoc and Siskiyou counties into its economic assessment. However, the Klamath Reclamation Project comprises only a small part of each of these counties.
Communities as far away as Yreka, Alturas and Chemult - all included in the study - were not directly impacted, but were still reflected in the report. The resulting conclusion incorrectly masks the severity of impacts in the near vicinity of the project. To me, this is like telling New Yorkers who suffered from the World Trade Center attack that they were not financially harmed because the gross national product was not affected.
Second, the report is based on a computer model. Had the OSU economists taken the time to go out in the field and talk to some of us who were directly affected, I believe they would have drawn different conclusions.
Third, the OSU study does not take into account the long-term effects of the water shutoff. We are still feeling those effects as we try to put our lives back together.
I am a third-generation farmer. My 82-year-old mother still lives on the farm near Merrill that has been in our family since 1909. She is hoping my grandson - a fifth-generation family member - will be able to farm that land one day.
Because of the water shutoff in 2001, our family farm lost an estimated $800,000 in total gross sales.
That income would have been generated primarily from the sale of hay and potatoes to support three families, as well as my mother.
Until 2001, we had three full-time employees as well as three to four seasonal employees. That income would have helped support them as well as three other families we rent ground from. Further, it would have helped pay for such things as fertilizer, fuel, implements, parts, labor, land, equipment, as well as pay our operating line. Almost all of that lost income originates from outside of the Basin, from places as far away as the East Coast and foreign countries such as Japan, Korea and Taiwan. That money then circulates throughout the Basin in the form of goods and services that we purchase. The OSU report does not fully consider the loss of revenue to local business such as grocery stores, car dealers or clothing outlets.
Because of the revenue lost in 2001, we were forced to declare bankruptcy.
The bankruptcy court ordered all the money we received in federal aid to go to the bank. However, that same money was taxable. Because we did not realize most of our 2000 income (when we had water) until 2001 (when we were unable to farm as usual) we had no expenses to offset our claimed income. Therefore, we fell into the 50 percent tax bracket, which meant we had to return $61,000 of the $122,000 we received through government assistance.
I know we were not the only ones in this position who were taxed in this manner. The OSU assessment does not take this into consideration.
The long-term effects of this shutoff are still being felt throughout the Klamath Project.
Because of our bankruptcy, we were unable to make payments on the long-term debt. These loans are being re-amortized, but the interest continues to accrue. So, instead of the debt decreasing through the payments we otherwise would have made, it actually increased because of the interest.
Also in 2001, there were several auctions where equipment sold for 10 cents on the dollar. This is a 90 percent loss. Again, the OSU report does not reflect this, either as a loss to the individual or to the bank. While we have survived this disaster so far, others have not. Many of us who did survive were forced to dip into our savings, which the report also fails to consider.
Many of us in agriculture invest in land, buildings and equipment as a way to build a retirement fund.
Without water and with future water deliveries uncertain, these values have dropped. This is no different than what was seen by other people who have long invested in the stock market, only to see it drop in the past year. This devaluation was also not captured by OSU researchers, who assumed that, since we received water in 2002, things were back to normal. This was not the case at all.
It wasn't until 2002 that we discovered additional, unexpected costs.
Equipment that we did not use in 2001 required unexpected repairs. Bearings had rusted and frozen up, which took extra time and money to repair. We had to put new batteries in all our trucks at harvest time in 2002 because of lack of use. Sprinkler equipment required attention before it could be used in 2002 because it had been neglected in 2001.
Some of our alfalfa crops that were planted in the fall of 2000 had to be replanted in 2002, which added extra expense because we had to rework the ground, buy seed again and use more herbicides to control the weeds that grew in 2001. While theses are just a few of the added expenses we incurred in 2002, the OSU report, again, does not consider them.
To me, the OSU report shows the disconnect between the academic world, where studies are done using computer models, and the real world, where research is conducted in the field and conclusions are based on the data collected from that research.
This report should have been based on research that was done entirely within the Klamath Basin, using data gathered from us who suffered the actual loss. OSU's assessment terribly distorts the actual picture of economic impacts suffered by my community. Knowing the report comes from Oregon's land grant institution just makes it that much more disturbing.
The Author
Dick Carleton is a long-time Klamath Basin farmer.
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