Private companies have been snatching up more and more farmland and drilling deeper wells, according to new research.
A newly published study looked at data from 2003-2017 and showed a drastic increase in limited liability companies (LLCs) buying up farmland throughout the state. It also looked at well drilling in the San Joaquin Valley specifically and linked deeper wells with those LLCs.
“It’s really essential to understand who accesses groundwater and how,” said Jenny Rempel, lead author of the study and doctoral candidate of energy and resources at UC Berkeley. “And although groundwater access is often determined by farmland ownership, the impacts of land acquisitions on groundwater access are poorly understood.”
More than 18% of farmland in California was sold at least once during the range of years the study looked at. But in critically overdrafted basins, where groundwater levels have plummeted because of overpumping, more than 23% of farmland was sold at least once.
The makeup of who, or what, is buying farmland is the study’s most significant finding. Farmland purchases by individuals decreased by half in the study’s date range, said Rempel. LLC purchases rose from less than 10% to more than 30% from 2003-2017.
Companies go deep
And in the San Joaquin Valley, wells owned by those companies were, on average, 77-81 feet deeper than individual farmers’ wells, said Rempel.
Rempel and her colleagues compiled data to build a comprehensive dataset tracking farmland sales. They then used the state’s online system for well completion reports to identify wells drilled on recently sold plots of land. Data was only accessible up to 2017, hence the study’s date range.
“I think the results broadly raise both equity and sustainability concerns,” said Rempel. “New corporate well owners will, on average, be less vulnerable to groundwater depletion than new individual well owners, which exacerbates structural inequities in groundwater access.”
Boardroom control over valley water
The study’s information supports trends that advocates and managers are seeing on the ground.
A lot of farmland is being consolidated and farm sizes seem to be getting bigger and bigger, said Nataly Escobedo Garcia, policy coordinator for nonprofit Leadership Counsel for Justice and Accountability. That’s a concern from a governance perspective, she said.
“They are the decision makers when it comes to what is done with our groundwater,” said Escobedo Garcia.
The Sustainable Groundwater Management Act aims to bring overdrafted groundwater basins back to sustainable levels by 2040. The law created local groundwater sustainability agencies (GSAs) which decide how landowners in their jurisdictions will reach sustainability. Some of those GSA plans have been approved by the state while others have been rejected and face state intervention.
“We’ve gotten a pretty big tranche of plans that got approved which means right now most of the governance and management of our groundwater is completely in the hands of pretty massive landowners,” said Escobedo Garcia.
It’s difficult to say whether the trends have stayed consistent in the most recent years since that data wasn’t available during the study. But state data shows that the average farm size is still increasing.
In theory, the groundwater plans should apply to everyone regardless of size. But some landowners have gone to court in controversial adjudication cases, such as legal action over groundwater brought by carrot farming giants Bolthouse and Grimmway in the small Cuyama Valley.
The groundwater plans technically cannot be replaced by adjudication results but, “honestly, the lines are really fuzzy,” said Escobedo Garcia. “How this actually plays out on the ground is going to be pretty tricky.”
It will be important to keep an eye on LLCs to see if they end up triggering more adjudication scenarios, she said.
Not too big to fail
For some, the rise of LLCs in farming doesn’t necessarily mean bad news.
In the McMullin Area GSA in western Fresno County, about half the land is owned by LLCs, said Matt Hurley, general manager of McMullin. LLCs do likely have more financial capability to expand planted acreage, said Hurley. But Hurley doesn’t think that necessarily translates into any sort of abuse of the system.
And from Hurley’s perspective, the rise of LLCs and corporate farm takeovers doesn’t seem to be accelerating as much these days.
“There’s an awful lot of land for sale right now. And there’s an awful lot of defaulting going on,” said Hurley. “And most of the ones that are for sale or defaulting, interestingly enough, are the corporate farms.”
Prima Wawona and Trinitas, both large valley farming operations owned by private firms, declared bankruptcy within the past four months.
But the expansion of farms and corporate interests does not seem to be helping domestic well owners and small communities, which have both seen wells go dry en masse in dry years. The state tried to alleviate the problem with an executive order last year that was aimed at reining in well drilling. But it wasn’t enough, said Escobedo Garcia.
“It was a pretty low bar,” said Escobedo Garcia. “I think we really need to figure out how these different resource planning documents work together and then actually make sure that we have adequate coordination within all the different entities that will be responsible for monitoring all of this moving forward.”
