Officials discuss drought, regulations, technology, and the future of California agriculture
Over the past several decades, Israel had made large investments in its water system through water conservation, desalination, water recycling, and advanced irrigation management systems. Israel also leads the world in recycling water, with 85 percent of wastewater in Israel used for agriculture. These investments and technologies have led Israel to produce 20 percent more water than it consumes. Could these technologies and advancements be put to use here in California?
Earlier this year, the Israel Economic Mission to the West Coast, Israel NewTech, and The Israel Export Institute hosted the first Israel California Water Conference to focus on initiating and strengthening water technology partnerships and pilot projects between California and Israel to help meet California’s water needs. The conference grew out of the Memorandum of Understanding signed by Governor Brown and Prime Minister Netanyahu in 2014.
The conference was attended by California and Israel business leaders, water technology experts, researchers, policy leaders, regulators, and public officials. The day featured short keynote speeches, panel discussions, and roundtables with attendees and officials on a myriad of topics.
One of the more interesting panel discussions was on California agriculture; it featured Karen Ross, Secretary of Food and Agriculture; Michael George, Delta Watermaster; Mike Wade, Executive Director of the California Farm Water Coalition; Dave Puglia, Executive Vice President of Western Growers; Ron Nydam, President of the California Agricultural Irrigation Association; and Gilad Goshen, Senior Investment Associate at Pontifax AgTech. The panel didn’t discuss Israel so much but really focused on the problems facing California agriculture.
The moderator for the panel was Jim Thebaut, a writer, producer, and director currently working on a feature documentary on the spectrum of water issues facing the Central Valley. He began by saying that the water crisis in California is a microcosm of the global water crisis, and whatever solutions could be implemented can be helpful to the world.
“To me this is really a profound opportunity to do something for the whole world,” Mr. Thebaut said. “The population of the planet is projected to be 10 billion people by 2050, and consequently food security and international security is at stake. The farms in California throughout the Imperial Valley, the Central Valley, and along the coast, really supply a minimum of one-third of the food supply of this country. The country’s population is right now about 324 million people, and it’s projected to be 438 million by the mid-century, so consequently the responsibility of the agriculture industry to be able to meet these demands is profound.”
However, the past five years have been the driest in recorded history in California. “We’re getting much less water than was ever projected, so it’s putting a burden, particularly on the ag industry, but it’s also putting a burden on everyone who depends on the watershed,” he said.
Mr. Thebaut then turned to the panel for their comments, beginning with California’s Secretary of Agriculture, Karen Ross.
Secretary Ross began by talking about several things from a policy perspective. Incentives are important for agriculture to adopt new technologies. “That’s one area where we’ve gotten a little bit hung up on right now because right now a lot of our incentive dollars in particular are coming from our cap and trade funds, which is under a lot of discussion in the Capitol right now,” she said.
Ms. Ross pointed out that there are also other kinds of incentives, such as the work being done by the State Water Resources Control Board to accelerate recycled water projects, and work that’s yet to be done on advancing markets.
“One of the most significant policy changes was the passage of the Sustainable Groundwater Management Act,” she said. “This is hard work. It’s been touched on a little bit about how to bring people together, and doing that for the Groundwater Sustainability Agencies is one of the most difficult challenges we have before us. All the stakeholders have to be at the table. Getting the governance right for putting a sustainable plan in place is going to be critical because this agency that is created at the local level will be making decisions about water that can be pumped, and being able to get these basins into a sustainable balance over a 20 year period, recognizing that we didn’t’ get to where we are overnight.”
“We are going to have stakeholders and farmers, making determinations, sitting at a table and saying, ‘you have this much water,’ when it’s their livelihood that’s being impacted; and having the disadvantaged communities at the table who just want clean water to drink, and having rural residents who moved to these areas for quality of life,” Secretary Ross said. “This is going to be challenging work. How do you innovate a culture of people wanting to come together to make those kinds of decisions? This is a huge social engineering kind of exercise, and I don’t know that anybody has the answers, but it is absolutely fundamentally key to our future.”
“This is absolutely critical to our future, and I believe with leadership at the local level, the water districts, the landowners, the disadvantaged communities, we can make this work,” she continued. “That’s the biggest challenge in the state of California with regard to this reservoir underneath our feet. It’s absolutely critical to our future and to managing future droughts to use groundwater and to understand intentionally how we can recharge our basins to keep it in balance.”
Moderator Jim Thebaut then asks Delta Watermaster Michael George to talk about the Delta.
The Delta is the crossroads, began Michael George. “The rain falls in the north, the population is in the south, a lot of the irrigated agriculture is in the south, and it all goes through the Delta,” he said. “The Delta has been misused as a conveyance facility for a much longer time than anybody intended. Originally when we started to use the Delta as a conveyance facility, it was understood to be a temporary expedient. It was always anticipated that we would create what was originally conceived of as a peripheral canal and now the tunnels that would take pressure off the Delta to reduce the extent that the Delta is misused and therefore in ecological decline.”
“As part of that, we’re talking about significant cultural, social, environmental, and regulatory shifts in California,” he said. “One of the issues that we ran smack into the unfolding tragedy of the drought was that the data and the information that we had was inadequate to deal with the crisis we were facing. We muddled through pretty well for several years in the Delta primarily because water managers throughout the state had planned for it and put those plans into effect; they did a tremendous job of managing through the crisis with inadequate information.”
About a year ago, the legislation was passed that required those who divert surface water must measure and report their diversions, he said. “We’re trying to manage the rollout and the implementation of regulations to get better data so that it becomes more transparent so we can make better decisions at the local level, within the Delta, and at the state level,” he said.
“One of the things that I wanted to say is that companies in Israel who have done a lot of leadership work in managing data as well as managing water would be incentivized to take advantage of the market California is creating for better water management technology and better measurement technology,” said Mr. George. “That is one of the real opportunities that I believe we have here is to rollout this measurement regulation in a way that gets us better information at a continuously lower cost that is continuously better integrated to inform decision makers throughout the state. That is both the challenge and the opportunity that we have.”
Moderator Jim Thebaut then turned to Mike Wade from the California Farm Water Coalition. “You have a big responsibility in terms of having a coalition and working with the ag industry in general. What’s your perspective on where we are now and where you see where we’re going?”
“California agriculture understands our shared responsibility to the resource and we share our water supply with all Californians,” began Mike Wade. “Yet things have changed over time. Much of our infrastructure was built to meet agricultural purposes and we have different values now that have added pressure and added constraints to our ability to add water to the farms that grow our food. Farmers have reacted by investing in technology; over $3 billion since 2003 has gone into high efficiency irrigation systems, which has been great.”
“However, the biggest thing that we have an abundance of in California is uncertainty,” he continued. “And the uncertainty in water supply reliability is what is hampering our ability to have a stable, vibrant agricultural community. We see schools, we see local communities that are suffering through water supply challenges the same way farmers are, and much of its due to changes in how we manage our water supply system. We have priorities that we don’t see transparency in how decisions are being made for environmental purposes, we don’t understand where water supply is going to be dedicated in the future, and it hampers our ability to invest. We leave stranded assets on the table in terms of high efficiency irrigation systems that lie empty for one or two or three years at a time, and there’s a disincentive for further investment in that.”
“Large farms are able to weather some of those challenges, but we see an aggregation in agriculture with the loss of small family farms as people that can’t weather these challenges,” Mr. Wade said. “So the one challenge that I see that we need to overcome is the uncertainty. We need a better partnership. We need to work together with the regulatory communities, so they understand the decisions that are being made, how they affect agriculture, and how agriculture has to be a partner moving forward, and so we know what’s on the table in terms of water supply for the future so we can make sound investments, we can continue to be efficient, and we can continue to supply half of the nation’s fruits, nuts, and vegetables as we have for a long time.”
Moderator Jim Thebaut then turned to Dave Puglia from Western Growers for his perspective.
Dave Puglia began by saying he would add a couple things to what Mike Wade had just said. “Mike hit on uncertainty and business hates uncertainty on the one hand, but on the other hand, business adapts,” he said. “It’s adapt or die. Mike hit on a very important point – the consolidation of small farms to large farms in the state has been accelerated by the water supply situation but also by the landscape of regulatory impositions on farming in California. It’s a very heavily regulated industry in contrast to other ag production areas of this country or even especially in other nations.”
Mr. Puglia said that increasingly, depending on the crop, they are seeing the movement of capital to other states and other countries. “I think at the moment it’s a hedge, but it’s becoming more of a permanent investment than a hedge, because of the lack of certainty around water supply, but also because the water quality regulatory apparatus has gone into high gear. It’s necessary – no argument there, but when you pair that with water supply uncertainty, you pair that with increasing waiver in field regulatory restrictions and oversight, additional restrictions on pesticide use and fertilizer use – all of that is coming together at the same time in a very rapid fashion.”
“I think it goes to the reality that’s existed in the ag industry in California for a long time but we’re now really confronting it which is that this is both the nation’s largest ag production state and the nation’s largest urban state,” he said. “It is a highly urbanized state with a legislature that is roughly 85% urban, and 15% rural, and there is a severe disconnect between the policy makers, especially in the legislative branch, and one of the state’s largest legacy industries, and I think those chickens are coming home to roost.”
“And so as the consolidation occurs and you have larger and larger companies operating farms, they have the wherewithal to move,” Mr. Puglia said. “There’s this sort of misplaced notion in Sacramento that farms can’t move. Well, the land can’t move, but the capital can, and as they become larger, they do.”
“The other point I’d make is this,” he said. “The reality in the fresh produce industry which I represent is that we don’t have any real direct relationship with our consumers. Our relationship is with our buyers – Costco, Walmart, big grocery chains, restaurants and McDonalds. They call the shots as to price, as to delivery, as to supply, and if we can’t meet their price dictates with California supply, our people will go someplace else, and that’s what they are doing. You can grow a lot of things in places other than California. … For many of the crops that come out of California, fresh fruits, fresh vegetables, they can come from someplace else and they are. If you buy a bag of salad that says product of Mexico, probably 90% chance that was grown by California operation in Mexico.”
“I think there’s a social and economic question that we’re going to ask in front here,” said Mr. Puglia. “As we implement Sustainable Groundwater Management Act, as we confront the reality of uncertain and dwindling surface water supplies, as we confront the reality of more stringent water quality regulations and all the other regulatory stuff that is imposed on farmers here, does California really want to be a farming state? We still are, we’re the biggest by far, but I don’t see the trend line continuing in that direction if things don’t change. And maybe that’s where we want to go as a state. I think the populace hasn’t made that educated decision. We’re kind of falling into it.”
Mr. Puglia noted that there is a great opportunity for innovation and technology to solve many of agriculture’s problems, such as water supply, water use efficiency, water quality, and harvesting/labor problems, so they have established a Western Growers Center for Innovation and Technology, which is basically an incubator based in Salinas. The facility opened in December, and is already more than half full, and will likely hit maximum capacity fairly soon, he said.
“The whole concept here is to advance and accelerate the innovators into the ag industry; to get the venture capital industry out of the way and bring innovators directly to the big growers and processors in the state. Let the innovators come forward and say I have an idea … and our members can interact directly with them … that direct interaction, that incubation is very exciting to us, because as much as I just painted a dark picture, we’re investing heavily in that center and in innovation generally because we believe California will be the best place to grow so many fruits and vegetables and tree nuts for the foreseeable future. Technology is going to help us get through some of these challenges.”
Michael George then weighed in on the pressure on agriculture and the question of whether California wants to be an agricultural state. “I don’t come from the agricultural sector, but I can tell you it’s not a choice,” he said. “We cannot manage the land mass of California without the intentional work that farmers do every day. We can’t protect our species, we can’t protect the land that we have in California without a thriving sustainable and profitable ag sector, so even though I think there is an enormous amount of pressure and an enormous amount of regulation that drives not only innovation but consolidation, the ultimate question is, how does California maintain its agricultural sector, not whether we maintain it.”
Moderator Jim Thebaut turns next to Ron Nydam, President of the California Agricultural Irrigation Association, and asks him how technology fits into the spectrum.
“We’ve got 2.8 million acres of drip and micro-irrigation in California,” said Mr. Nydam. “The next closest state is Florida without 650,000 acres, so California farmers have invested a large amount of money in their capital. I also own a company that does irrigation design, and we work directly with farmers and growers to develop their irrigation systems in the field. … Farmers have spent billions of dollars over the last several years developing these infrastructures on their own facilities.”
“Where we’ve fallen behind is the facilities that supply all these farms and ranches,” he said. “Increasingly, we have growers who put in micro and drip irrigation systems that cannot access district water because the system is too outdated. Many of the irrigation districts were formed over a hundred years ago; that infrastructure is 50 to 100 years old. It was designed for high volumes of water for very short periods of time, and now we’re doing exactly the opposite. We’re trying to get short volumes water for longer periods of time for an on-demand type of system.”
“There are areas where that has happened; South San Joaquin Irrigation District developed an on-demand system it includes some reservoirs, and the growers go online and schedule their irrigation, they query the system, put in the time, and their system turns on automatically and they get pressurized water to their farm,” Mr. Nydam said. “We have many growers that turn to groundwater because their system is too old to manage that.”
Mr. Nydam noted that there is a learning curve with technology. “I talk to customers sometimes in the sense that they come from this mindset of flood irrigation and then they go to drip irrigation, and some of them want to run their drip irrigation like a flood system, so they have to make that change,” he said. “I look at them and say, ‘it’s kind of like if you went out and bought a nice sports car, and if you only drove it at 55 mph all the time, you’ve kind of wasted your money.’ The irrigation system is the same thing; it’s a tool for high performance and they have to learn how to use that.”
“We’ve seen a large number of farmers go to technology for soil moisture, for automation, and now with the regulated lands program, the Sustainable Groundwater Management Act issues coming up, farmers now have to identify and quantify nitrate use that has to be reported annually, so there’s a lot more reports and things going on. We’re seeing the regulations on small farming being affected; I hope that doesn’t affect the small farmers; hopefully they will be able to find ways to get through that.”
Mr. Nydam noted that he had been talking with a person who was talking about using imaging to see which farms are doing better and worse and being able to affect those by doing things such as adding fertilized water. “But you have to have the control structure physically in place so you can make those decisions,” he pointed out. “You can only get as micro with that as you can make a decision and control, so that’s an area where things can be finely tuned, but only to a point where you can make those decisions as well.”
Moderator Jim Thebaut turned to Gilad Gershon, Senior Investment Advisor for Pontifax Agtech, an Israeli firm that invests in food and agriculture technology. Mr. Thebaut noted that these kinds of things were accomplished out of necessity by Israel in order to be able to accommodate the population. “How do you see what we’re doing here in California in relationship to what can be accomplished and how Israel can work closer with California?”
“Israel made a decision seven decades ago that water is scarce and very precious resource that needs to be managed very carefully and tightly,” began Mr. Gershon. “In many ways, that allowed local growers to get some of that certainty. They understand what they are facing, they have a very clear guidelines on what they can and cannot do, and that allowed a lot of young Israeli companies to develop technologies that answer some of these well-defined needs.”
Mr. Gershon said that their fund invests in very interesting technologies in the food and agriculture sectors and a lot of that has to do with water. Some of the things coming out of Israel are very interesting for the farmers here in California, but there are differences. “A lot of the Israeli companies are designing solutions for the problem of the farmer in Israel, and things are very different in Israel. Even a 50-acre farm is relatively large in Israel. In many ways, and you wouldn’t necessarily expect it, but practices are a lot more traditional and old fashioned. I think the sophisticated growers in California use a much wider variety of technologies and sophisticated growing methods, so the companies that are coming from Israel to try to answer some of these agricultural needs need to spend a lot of the time on the ground here and speak with people to tailor their solutions for the California growers for they are very different.”
There are a lot of Israeli technologies that can be useful, he said. “We see a lot of companies that utilize the Israeli strength of data management and high technologies and try to offer solutions around precision irrigation,” Mr. Gershon said. “We see probably in the last year, maybe ten different companies that do all these kinds of satellite and drone imagery to really provide a grower with a real time map of where he should be putting more water or less water or even in many cases, identify where he is starting to have some problem with pests or diseases.”
There are other relevant technologies, like how to reclaim some of the water that is typically wasted, he said. “We do see very interesting companies that do all kinds of membrane filtration or desalination, even trying to take water from producing oil wells. There’s a lot of water coming out of the oil industry. For instance, for every barrel of oil that you take out in Bakersfield, you take out seven gallons of water that can be used for irrigation if cleaned.”
“Another technology I think is very interesting is that we see a lot where we now have the genetic tools to design crops that use water more efficiently, and we saw it in the last two decades in corn and in wheat, and now I think in the next years, we’ll see it more in almonds and pistachios as well.”
Secretary Ross said that this reminds her of a full-day robust discussion that they had at the Milliken Institute about these types of technologies and the critical importance of publicly funded, third-party objective collection of data to assure the consuming public. Treated wastewater and genetic tools won’t be able to be used if the consumers don’t accept it, she cautioned. “There is a very important role here for everyone to understand, and that is public funded agricultural research and the role of cooperative extension as a data resource of running the trials of these companies because we have very strong pushback. I’m very concerned about not being able to use the tools of the future if we don’t remember the critical importance of consumer trust and confidence and understanding the development as its happening.”
“That’s a very good point, but to be maybe a little bit contrary, respectfully, I’ll say this,” said Mr. Gershon. “If a young company comes to me, out of Israel or California, it doesn’t matter, and tells me, ‘my business is going to make money because the government is going to pass a law or because I’m going to get some information from government agency,’ for me that’s a big risk because I don’t if that’s going to happen in 2 months or five years from now. We prefer to work with companies who can get these resources themselves. Our business is to fund it … I think a company that is driven by regulation is a risk for us.”
Moderator Jim Thebaut agreed that public information and education is important. “I think you need to educate the public to understand a lot of the complexities associated with it, and how safe the system is, because there is a lot of concern about the safety.”
Mr. Thebaut then turned to Mike Wade. “I’d like for you to talk about how we could streamline the process so there’s more confidence in the part of the ag industry in relationship to and how we can streamline the whole decision making process and make it a little more comfortable for the ag industry to be able to work within the constraints that you have at the moment,” he said.
“There is a tremendous amount of information, research work, and success stories that have gone on in the private sector for a number of years,” replied Mr. Wade. “A partnership with our regulatory community where they would adopt some of that material would use it in their decision making process and would use some of the examples of irrigation districts that have recovered large populations of fish that are threatened or endangered on certain rivers in the state, and use programs like that to help restore fish, rather than using what we don’t see as science-based decisions on flow measurements or flow requirements in rivers, with the hope that we get fish, when we have proven activities that do that.”
“I think those partnerships where there has already been a private investment, there’s already been demonstrated success, and adopting in that in other parts of the state where the regulatory arena is affecting water supply, I think that brings back into balance our ability to supply water for people, to supply water for farms, and to make sure we have a healthy and sustainable environment,” said Mr. Wade.
“There’s a theme that kind of ties together all these comments that I want to bring back and that’s data,” said Mr. Puglia. “There are plenty of people offering widgets and tools and machines that can improve our water use efficiency and that’s fine, but what you’re really seeing is a drive for better, more accurate, more credible, and more transparent data across water use, water supply, and water quality. It’s being driven in part by regulatory demands, but also in part because water has become a cost and the market responds to that by investing in better measurement of the resources.”
“When we went through this last drought, we realized we didn’t have great data in some respects from irrigation districts,” Mr. Puglia continued. “The whole water system in California was built on paper with a multitude of irrigation districts, and so you’ve got an antiquated system built largely for irrigation purposes, now repurposed largely for environmental purposes, but still operating on a paper permit, pick up the phone and talk between managers system, rather than one that can function eventually in a more credible and truer water market where the water as a resource is moved more efficiently and at an appropriate economic valuation than it is today. So I think as much as you can innovate your way around some of the hardware, it’s data and the use of data that is going to drive water policy, as much as water policy is driving data.”
“First of all, data, data, data,” said Mr. George. “We need it better, but also more timely because when we get the data is when we can act on it, and when you’re dealing with information about diversions of large quantities of water that are a minimum of a month old, and you’re trying to regulate the use of water in an antiquated priority system overlain with a riparian system, and doing that on a monthly average basis, it’s very difficult to get it right. It’s okay when there’s a lot of excess in the system and the margins for error are pretty large, but when they get as tight as they’ve gotten in the recent drought, you have to have not only better information, but it has to be real time.”
“So we’re talking about a lot of investment in technology, and this issue about the role of the government, the role of the private sector and public-private partnerships, it’s much easier in most of the rest of the world to create public-private partnerships because we don’t have the distorting effect of federal tax law, and we don’t control that here in California. It’s very difficult to take public agencies which are funded through taxes and have access to the taxes and bond market, and marry that with the private sector because of federal regulation on that privilege of tax exemption, so public-private partnerships in California and in the US have not worked very well.”
“There is not an understanding in the public sector of the demands for returns in the private sector,” continued Mr. George. “That’s in large part because of the distortion; it’s pretty hard to compete with free money, or with the grant that you can get as a governmental agency that is not available to a public private partnership, so we have a lot of reforming of our regulatory environment if we really want to get the innovation and the investment from the private sector.”
Much of the investment in agricultural technology has been made at the farm level, Mr. George noted. “Generally, there are grants and so forth, but they are cumbersome, they take a long time, most of the innovative financing is done at the private level on the farm, and it’s one of the reasons why our irrigation systems, which were built in a prior period for different purposes, that we’re now trying to repurpose, aren’t working so well.”
Ron Nydam noted that the biggest concern for farmers is having available storage. “Whether that’s offsite or groundwater storage, the more access that farmers can have to surface water and the more accessible we can make that, the better off we are.”
“We have a lot of storage in the southern part of the state in these depleted groundwater aquifers, but if you can’t move water across the Delta, the system doesn’t pencil out,” said Mr. George. “We do need to capture more water more quickly because we’re going to get more rain and less snow, but we’re going to have to get a lot of that water across the Delta, and until we can do that, the opportunity to refill and manage sustainability our groundwater in the southern and central part of the state, just isn’t there, so we have to do something to improve the conveyance infrastructure and to use what we’ve got more efficiently, to add to it intelligently and to use it more efficiently.”
And with that, the panel was out of time.
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