Monday, May 23, 2016
Lodians weigh in on farmworker overtime bill
By Joe Benapfl
California Assembly members recently introduced legislation that would require agricultural workers to be paid overtime after working more than 40 hours per week. But local officials and agricultural business leaders contend that the bill has the potential to hurt, rather than help, laborers.
Assembly Bill AB 2757, “Agricultural workers: wages, hours, and working conditions,” was introduced Feb. 19 by Assemblywoman Lorena Gonzalez (D-San Diego). The bill would incrementally reduce the number of hours an agricultural employee can work without receiving 1.5x overtime pay.
Currently, farmworkers can work up to 60 hours per week — 10 hours a day and six days a week — without accruing overtime. If passed, AB 2757 would reduce that maximum to 55 hours a week and 9.5 hours per day, starting in 2017. Those limits would then decrease each year until it ends in 2020 at 40 hours and eight hours, respectively.
The goal of AB 2757 is to create working-hour equality for farmworkers by giving them the same overtime pay rules as those of every other worker.
However, this bill would also increase costs for California farmers, who are already strapped with a minimum wage increase and the state’s ongoing water crisis, according to state senator Cathleen Galgiani (D-Stockton). For this reason, Galgiani opposes the legislation.
“Farmworkers who are paid minimum wage will be benefiting from the recently enacted increase in the state’s minimum to $15 per hour by 2020 (sic). … Adding an overtime component to the wage scale, especially during the harvest season when crops need to be sent to the market, will only further disrupt the difficult task farmers facing in trying to balance the cost of production and the value that they can receive for their crops,” Galgiani wrote in a statement.
Lodi agricultural leaders echoed the objection. Such legislation could “cause dramatic changes” in the agricultural workforce, according to Pat Patrick, president and CEO of the Lodi Chamber of Commerce.
“(Farmhands) say they’re going to get a pay cut,” Patrick said. “It’s going to hasten more mechanization. There is already a preponderance of grapes picked mechanically.”
Both Patrick and Joe Valente, manager of Kautz Farms in Lodi, argue that allowing farmworkers to work 60 hours a week is an agricultural necessity, especially during busy harvest seasons when time is money.
“If you just work 40 hours and quit, you would lose a lot of fruit, so California has allowed farmers to work their hands 60 hours a week during the harvest,” Patrick said.
If AB 2757 requires employers to provide overtime after 40 hours have passed, they may respond with limiting employee hours if they can’t afford the extra pay. Thus, the bill could actually hurt farmworkers’ overall take-home pay, Valente said.
“What this (bill) is going to affect is the farm employee, whose income is based on 60 hours. That gets reduced to 40 hours, and their income is going to be reduced by one-third,” Valente said.
Santa Maria Times
Large ‘farm labor camp’ proposed to house 600 farmworkers
By Kenny Lindberg
A “farm labor camp” capable of housing up to 600 workers under the federal H2-A program could be built near Santa Maria if the county Planning Commission approves a conditional use permit at its next meeting.
The site, also known as the Curletti Farm Employee Housing Project, but referred to as a “farm labor camp” by staff, will consist of 30 bunkhouses at full build-out, capable of providing sleeping quarters and bathing facilities for 20 laborers each, according to a county report.
Geographically, the project is located west of Orcutt, at 3650 Highway 1, approximately one mile northwest of the intersection of Highway 1 and Black Road.
Each bunkhouse is 1,443 square feet in size, and includes four lavatories, two toilets and two showers. Three common houses, providing cooking and laundry areas for 200 laborers each, also are included in the proposal.
While a maximum of 600 workers could live at the site at any one time, the agent for the project, David Swenk, predicted that the average occupancy will be 450 workers, according to county staff.
The H2-A program allows employers who meet specific regulatory requirements to bring foreign nationals to the country to fill temporary agricultural jobs, provided they file the necessary forms on behalf of a prospective worker, according to the U.S. Citizenship and Immigration Services.
H2-A workers are not considered undocumented.
In accordance with the H2-A program, the applicant and owner Robert Ferini, of Betteravia Properties, will provide his farmworkers with the necessary transportation needed to get to and from the workplace.
“The primary method of transportation for H-2A employees will be school-type buses to (and) from work, and a combination of buses and vans for lower occupancy, personal needs trips,” said Angela Ruberto of Tartaglia Engineering in a letter to Swenk.
“Since employees within the H-2A designation are not authorized to have personal vehicles, the area roads will realize a net reduction in total vehicle traffic involved with the applicant’s operations,” Ruberto said.
The anticipated work schedule is Monday through Friday, starting at 5 a.m. and ending at 4 p.m., Ruberto said.
“A typical harvest day starts very early when ambient air temperature is cool,” Ruberto said. “The goal is to have the product picked, packaged in the field and into the cooler before peak daily temperature are realized.”
Each worker will be provided three personal need trips per week, which Ruberto predicts will require 36 bus trips and 32 van trips per week.
The project will require one manager to live on site and one full-time maintenance worker responsible for routine maintenance and repairs.
The Santa Barbara County Planning Commission is set to discuss the issue June 1 in Santa Barbara.
Kenny Lindberg covers Santa Barbara County for Lee Central Coast Newspapers. Follow him on Twitter.
Voice of San Diego
San Diego’s Losing Its Grip on the Avocado Market
By Ry Rivard
Like any plants, avocados need water to thrive. But lately, water has been causing a lot of headaches for San Diego’s avocado farmers.
Water rates have soared over the past several years. And as San Diego water officials have scrambled to assemble a drought-proof water supply, they’ve begun to rely more on water from the Colorado River. That water, it turns out, is quite salty. Avocado trees are particularly sensitive to salt.
Salty water – even water that has been treated and is fit to drink – turns avocado leaves brown, curbs root growth and can even stop trees from producing fruit at all.
It’s started to take a toll: For decades, San Diego and its 18,000 acres of avocado trees has been the top avocado-producing county in the United States. Ventura County is now on the verge of overtaking San Diego, in part because water there is cheaper and not as salty.
“The thing I find that is quite interesting is that district water that passes state standards for human consumption is water that is not worth a damn for a grower,” said Charley Wolk, a longtime avocado grower in Fallbrook.
In the past three years, the amount of salt in the water used by most avocado growers in the county has gone up by 20 percent, said David Crowley, a soil scientist at University of California, Riverside. Even with good quality water, he said that growers may be applying 30 pounds of salt per tree, and much more if the water is salty.
Salt is a longstanding worry for farmers across the world. Typically, they hope for steady rains to carry away excess salt from irrigation or at least push it beneath the roots so the salts don’t harm their plants.
Of course, California is in a drought, so that needed rain hasn’t materialized.
“A lot of our trees are damaged and we just haven’t had the rains to wash the salts out of the soil,” said Jerome Stehly, a veteran grower in Valley Center.
Most of San Diego’s avocado orchards are in North County, around Fallbrook and Valley Center.
There, most water comes straight from the Robert A. Skinner Filtration Plant in Riverside County, which is operated by the Metropolitan Water District of Southern California.
Metropolitan tries to create avocado-friendly water at Skinner by blending the Colorado River water with less salty water from Northern California. But, because of the drought, the Northern California water hasn’t been making its way to Skinner, which means San Diego farmers last year got water that was almost entirely from the Colorado.
Avocado growers believe they are seeing the effects.
“The consensus of those who have been around the industry for a while is that the crop we’re harvesting now is that the fruit size is smaller,” Wolk told me earlier this month. “In my opinion, here we are in the first week in May and the fruit is not growing anymore, it’s not getting any bigger.”
To get rid of the salt, farmers could apply extra water to the trees, hoping to push away the salt build-up. But the high cost of water in San Diego means that’s not much of an option for many.
This is perhaps the top complaint by San Diego farmers. Other California farmers have much cheaper water. Farmers in other parts of California have relied on groundwater, which costs only what it takes to drill a well and then pump water from it; or they can buy subsidized water from the Central Valley Project, the federal government’s canal and reservoir system.
Neither is an option for most farmers in San Diego: Groundwater is scarce here, and the Central Valley Project ends around Bakersfield.
The price of water puts San Diego farmers at a disadvantage, at least when they are growing crops, like avocados, that are grown elsewhere.
In 2011, the University of California Agricultural Issues Center studied what it would take to plant a new 20-acre avocado grove in several counties. In San Diego, water costs were about four times higher than the cost of water in Ventura County, the second-largest avocado producing county.
To break even, a new avocado farmer in San Diego would need to bring in about $1.44 per pound. In Ventura, a farmer would be able to break even at just 88 cents per pound. Right now, non-organic avocados are selling for up to $1.36 a pound in mid-May. That price is up from earlier in the year, when Mexico flooded the market with avocados.
So, if salt is affecting crop yield, that could be a real problem, because farmers’ costs aren’t going down.
Jessica Hunter, a farm manager at Del Ray Avocado in Fallbrook, said growers could have substantially lower production because of salt issues.
“We’re starting to get where you significantly reduced your production because the nutrients aren’t going up the tree,” she said.
Some farmers are considering buying machines called sulfur burners just to re-treat water – not for salt but for alkalinity, another problem that can reduce yield. The machines would add yet another expense.
Then there’s the fact that San Diego’s avocado farms tend to be in some of the most fire-prone parts of the county. In San Diego, growers have taken out or lost in fires about 8,000 or 9,000 acres of avocado trees in the past decade. (The 2007 fires damaged about 1,722 acres, according to one estimate.)
In 1980, San Diego harvested from 24,820 acres of avocados and produced half the state’s avocados. Now, according to the latest estimates from the California Avocado Commission, San Diego has just 16,870 acres of producing avocado trees. Ventura County has 16,732 acres and is likely to produce about as many avocados as San Diego this year, according to the commission.
Water officials in San Diego have speculated about the possibility of a “death spiral” for agriculture in North County. As farms go out of business, water districts sell less water. That makes water prices even higher because water districts still have to pay to operate plants, pumps, reservoirs and pipelines – so they charge more for each unit of water. When water prices go up again, fewer farmers can stay in business, so they shut down, which then drives prices up again. And so on.
“It’s a matter of mathematics,” Stehly said. “Prices are going to just keep going up and people are just going to keep going out of business.”
He and most other growers believe it’s possible to make it as an avocado grower. But farmers are going to need to invest in different trees – ones that are more tolerant of drought and salt but also have higher yields. But Stehly, who is an active member of the California Avocado Commission, is also beginning to think about what can replace avocados in some parts of San Diego.
“We’re always looking for the next great crop that can take what we call cruddy water,” he said.
This summer, Metropolitan says it will be able to take some water from the State Water Project – a system of canals, pipelines and reservoirs that carries Northern California water to Southern California –and blend it with Colorado River water, so the water should not be as salty.
“That’s really our main lever, so until the State Water Project supplies consistently stay favorable, it will be challenging,” said Brent Yamasaki, Metropolitan’s manager of operations and planning.
The San Diego County Water Authority recently added one lever: its desalination plant in Carlsbad. The water from that plant has been so stripped of salt, it could be mixed with Colorado water to provide better water to farmers. So far, though, only the Rincon del Diablo and Valley Center water districts can get that desal water, because of the way the pipelines are connected.
Escondido’s City Council will decide later this month if the city should spend $29 million on a water recycling project to provide low-salt water to its farmers, particularly avocado growers.
Farmers are lobbying Metropolitan to lower its prices, but officials there say there’s little chance prices will come down. Metropolitan is offering incentives for avocado farmers to use technology to reduce their water use, which will reduce their expenses.
About 8 percent of the County Water Authority’s water is sold at a discount to farmers, though it remains expensive. But that lower prices comes with an attached string: When there are water cutbacks, farmers who get the discount are the first to get cut.
Enrico Ferro, an avocado grower in Valley Center, replanted some of his groves in 2013. When mandatory cutbacks hit farmers last year, the amount they needed to cut was based on their water use in 2013. His water use that year was low, because he had so many young trees that didn’t use much water. Now, the trees are grown and use more water. He was being asked to use less water even though he had more need for it.
“What I realized from that is that the smart farmers wait until they are told they have to cut back water and then remove sections of their grove,” he said.
Luckily, Ferro got a one-time reprieve from the Valley Center Municipal Water District, which allowed him to use more water than his original allotment.
“If my appeal hadn’t gone through,” he said. “I would have lost this property.”
People are still entering the industry, though they are not always optimistic about its future.
John Haskett, a businessman, bought an avocado orchard in Bonsall years ago. He’s worried about salt, about water prices, about avocados from Mexico and about the looming $15 minimum wage that will drive up his labor costs.
“We could be witnessing the end of California agriculture in our lifetime,” he said, looking out over his 106 acres, which can hold 10,000 avocado trees. “It could just be one large subdivision.”
As he rode his four-wheeler across the farm, he stopped suddenly and got off to pick up an avocado that was in the middle of the dirt road. Avocados that fall to the ground can’t go to market, but this one seemed fine. He cut into it with a pocketknife, and offered me a slice. It was a perfect green, and it was delicious.
This article relates to: California Drought, Food, Science/Environment
Ry Rivard is a reporter for Voice of San Diego. He writes about water and land use. You can reach him at email@example.com or 619.550.5665.
Recharge basin in Fresno County made to renew groundwater supplies
By Robert Rodriguez
A 52-acre earthen pool in south Fresno County could become a key part of replenishing depleted groundwater supplies in the drought-stricken region.
Unveiled Friday, the Laguna Irrigation District groundwater recharge project will direct flood water from the nearby Kings River and add approximately 2,600 acre-feet, or nearly 850 million gallons of water, a year to the aquifer.
Project organizers say that is enough water to irrigate about 1,300 acres of farmland.
Farmer Frank Zonneveld, chairman of the board for the Laguna Irrigation District in Riverdale, said the public-private project is vital because it provides another form of much needed water storage.
For years, farmers have complained about the state’s inability to capture and store water during wet years. That shortcoming became painfully evident during the four-year drought, which is now stretching into a fifth year.
Without adequate surface water, farmers were forced to pump heavily from their groundwater wells to keep their crops and trees alive. The result was a severely depleted aquifer in much of the Valley.
The $1.1 million project was hailed as a model for future recharge efforts. The Laguna project was a joint effort by the California Department of Water Resources, Laguna Irrigation District, Kings Basin Water Authority, Coca-Cola and the San Francisco-based Sustainable Conservation.
“While this year’s El Niño conditions have helped ease California’s historic drought, hotter, longer dry periods are becoming the norm for California,” said Ashley Boren, executive director of Sustainable Conservation.
Bruce Karas, vice president of environmental and sustainability at Coca-Cola, said that the world’s largest beverage company has made water issues a priority. It funds water projects globally and was impressed by the Laguna project.
“This is not the time for us to throw up our hands,” Karas said. “This is a time to look for projects that we can learn from and this is a great addition to that.”
Nestled between several nut orchards, the recharge basin sits empty for now. The basin has 8-foot-deep sides that are slightly sloped and head gates were constructed to handle the excess water that will be diverted from the Liberty canal.
Scott Sills, general manager of Laguna Irrigation District, said the parcel of farmland was chosen because its sandy soil allows water to percolate quickly through the soil.
Sills said he hopes the recharge basin won’t stay empty for long. The last time the area saw flood conditions was in 2011.
“We are ready,” Sills said.
Robert Rodriguez: 559-441-6327, @FresnoBeeBob, firstname.lastname@example.org
Napa Valley Register
Activists stir debate over reported weed killer in wines
By Howard Yune
Since reaching the market more than 40 years ago, glyphosate has become the most common of all weed-killing chemicals in the world’s farms and fields. In recent months, an activist group has turned the spotlight toward the presence of glyphosate in one of California’s most visible exports – its wines.
Laboratory testing on 10 California wines cited by Moms Across America, a campaigner against farm chemicals and genetically engineered crops, showed trace amounts of the herbicide widely known by the Roundup brand name.
Whether the reported amounts of glyphosate are a health concern has become a point of debate between Moms Across America, which decries the weed killer as a contributor to higher cancer rates and other maladies, and skeptics who describe such warnings as overblown.
“It has to stop now,” said Zen Honeycutt, a Mission Viejo mother of three boys who helped found Moms Across America in 2013. “It is poisoning America and destroying future of this great country.”
In recent days, however, some wine industry groups have struck back against the group’s claims, saying the report exaggerates the effect of trace amounts of glyphosate.
“You would have to drink 2,500 glasses of wine a day for 70 years to reach the EPA’s level of concern,” said Gladys Horiuchi, spokeswoman for The Wine Institute of San Francisco, an advocacy group for about 1,000 winemakers and related businesses. “We are talking about minuscule, trace amounts.”
In a March 24 press release, Moms Across America said an anonymous supporter had sent various California wines – some organic and others conventionally made – for analysis at Microbe Inotech Labs of St. Louis. Testing on the wines, whose brands and regions the group did not identify, revealed glyphosate levels ranging from 0.659 to 18.74 parts per billion, the group reported.
By comparison, the U.S. Food and Drug Administration sets a maximum safe level of glyphosate residue at 200 parts per billion on fresh grapes, and 700 parts per billion in drinking water.
“We focus so much on whether it could or could not be a carcinogen when bigger question is, ‘is it dangerous at the levels we are exposed to?’” said Dr. Carl Winter, a food science specialist at UC Davis. “The levels we are exposed to are many orders lower than doses required.
“The first principle is that the dose makes the poison. It’s the amount of exposure to the substance, and not its presence or absence, that determines the potential for harm.”
First sold in 1974 by Monsanto Co. under the Roundup name, glyphosate is a broad-spectrum herbicide that can kill numerous plant species and has gained wide and global use in farms and gardens alike. Its popularity has fed, and been fed by, the creation of “Roundup Ready” corn, soybeans, cotton and other crops genetically engineered to withstand the chemical while surrounding weeds die.
The herbicide has become a target in recent years of critics questioning its safety to humans.
A 2015 report from the World Health Organization’s International Agency for Research on Cancer described glyphosate as “probably carcinogenic,” citing a survey of existing studies of the compound. California regulators cited the WHO declaration in its proposal to add it to a state list of known cancer-causing substances, a move that led Monsanto to sue the state in January. At the federal level, the Environmental Protection Agency is reviewing the safety of glyphosate, which it listed in the 1990s as not cancer-causing.
A recent meeting of the WHO and the Food and Agriculture Organization of the United Nations, which was intended to clarify glyphosate’s risk level, has instead led to accusations of conflicts of interest, according to media reports.
On Monday, the two agencies’ Joint Meeting on Pesticide Residues issued a statement that glyphosate is “unlikely to pose a carcinogenic risk to humans” from diet. The next day, however, The Guardian newspaper reported the meeting’s two chairmen are members of the International Life Science Institute, which in 2012 accepted more than $1.28 million from Monsanto – which uses glyphosate in its Roundup weed killer products – and the Croplife International industry group, which counts Monsanto as a member.
“There is a clear conflict of interest here if the review of the safety of glyphosate is carried out by scientists that directly get money from industry,” Vito Buonsante, lawyer for the ClientEarth activist group, told the British newspaper. “This study cannot in any way be reliably considered when deciding whether to approve glyphosate.”
For grapegrowers, decisions on whether to use weed-killing agents or rely on non-chemical means involves deciding what trade-offs to accept, according to John Roncoroni, a weed science specialist for the University of California Cooperative Extension in Napa. Mechanically removing invasive plants from vine rows may reduce the direct use of chemicals, but the increased use of tractors also increases air pollution and raises the risk of erosion, he said Wednesday.
Whether by using chemicals or cultivation, grapegrowers seek to control low-lying plants such as willowherb, horseweed, ox tongue and mallow. While such weeds do not directly attack vines, they can out-compete vines for water as well as provide cover for mice that girdle and weaken vines, unless predatory birds can find and catch them, Roncoroni said.
The right way to keep a vineyard weed-free can vary greatly from site to site, he said, pointing to steeper areas where tractors are too dangerous to operate – but also to vineyards where simply setting mower blades higher can leave grass tall enough to shade weeds to death, without herbicides.
“There are other ways (than glyphosate), but we have to think about the pluses and minuses of every way we control weeds,” said Roncoroni, who estimates about 10 percent of his clients farm organically. “That’s what farming is, a balancing act.”
But Honeycutt, who founded Moms Across America after the 2012 failure of a California ballot measure to force disclosure of genetically engineered food ingredients, showed no willingness to roll back the group’s campaign to curb the use of the ubiquitous weed killer, even at levels governments deem safe.
In addition to giving interviews with news outlets, the group also has promoted opposition to the weed killer through its website and a series of “March Against Monsanto” demonstrations targeting the chemical’s inventor. The organization also sells a variety of dietary supplements online, including one that promises “to support resilience of cells to glyphosate” and promote “more diverse gut flora, improved immune system and mental clarity.”
On Thursday, Honeycutt said her efforts to publicize weed-killer traces in California wines is not meant to make a target out of the high-profile industry, but to convince more producers to turn to organic farming and more consumers to demand it.
“We didn’t put this out to be against California,” she said. “If we don’t face up to the overall contamination from glyphosate, we can’t change it. We want every vineyard owner to be healthy and stop using toxic chemicals. This is not only for the vineyard owners, but for farmers across the nation.
“What if California became the first to make its wine industry glyphosate-free? It would be amazing. It would put California on the map.”
California creates self-inflicted barriers to trade
By Jock O’Connell
May is International Trade Month, but there doesn’t seem to be much cause for celebration this year. To one extent or another, all of the surviving presidential aspirants have broken with a decades-long political consensus in favor of free trade, while also raising broader questions about the impact of globalization on the lives of middle-class Americans.
Foreign trade has also sparked controversy here in California. Growing crops for export during a drought has drawn sharp criticism. Democratic politicians like Elk Grove Rep. Ami Beri, who have backed President Barack Obama’s trade liberalization efforts, have lost support from organized labor.
Still, trade plays a vital role in California’s economy. The state’s seaports, airports and border crossings with Mexico are not only major conduits for America’s trade with the world, they provide employment for armies of blue-collar workers who might otherwise find themselves economically disenfranchised in an increasingly high-tech California.
At the same time, some 65,000 California firms regularly engage in export transactions that, last year, were collectively valued at $165 billion, according to the U.S. Commerce Department.
So it’s no wonder that state officials have historically struggled to find a role for the state to play in bolstering California’s exports and attracting foreign investment. Unfortunately, their proposals have tended to run from the perfectly dreadful (like opening state trade offices abroad) to the patently self-serving (offering to lead overseas trade delegations).
This is not to say that state government does not have a legitimate role to play in furthering California’s interests in the global economy. But it’s a more prosaic role, more akin to blocking and tackling than throwing game-winning touchdown passes.
Instead of focusing on foreign travel, state leaders should be more concerned with more elemental matters – such as why it currently costs more to haul a shipping container by truck the 90 miles from Sacramento to the Port of Oakland than it does to ship that container 6,200 miles across the Pacific to Shanghai.
While domestic transport costs are a salient concern for all California exporters hoping to remain competitive in a global market, they are especially critical for Central Valley shippers of agricultural products. Last year, exports of agricultural produce and food products represented 66.9 percent of the $17.95 billion in exports trafficked through Oakland.
Yet for a number of reasons the cost of shipping goods out of that port have risen sharply in recent years. Terminals at the port normally are run on a schedule that bankers would envy. Labor contracts inhibit flexibility in handling cargo. And a state-sanctioned monopoly that supplies the mariners who guide commercial vessels into and out of San Francisco Bay results in piloting charges to steamship lines that are three times higher than at the ports of Los Angeles and Long Beach.
But highway congestion and the deplorable condition of road surfaces loom large as cost factors. I have been driving in Spain and France the past three weeks and can personally attest that California’s highways are a civic embarrassment. There’s nothing world-class about them.
As recently as three years ago, truck drivers could hope to make two round trips per day from the Central Valley to the Port of Oakland, according to executives at Devine Intermodal, a West Sacramento trucking company. Now, trucking lines serving the Port of Oakland are fortunate to make one round trip per day. But with fixed equipment costs, the inability to make maximum use of their trucks and drivers due to the state’s failure to maintain a transportation infrastructure consistent with contemporary commercial needs ultimately results in higher transport costs to California exporters.
And there are more costs to come.
Last July, Gov. Jerry Brown issued an executive order calling on state agencies to develop “an integrated action plan that establishes clear targets to improve freight efficiency, transition to zero-emission technologies and increase competitiveness of California’s freight system.”
A draft of that plan was released for public comment on May 3. In essence, it insists that the policies and programs it will engender will keep California’s freight transportation systems competitive without compromising on Brown’s pre-eminent goal of dramatically reducing carbon emissions.
Pulling that off will be an exceedingly neat trick.
The draft, hastily cobbled together in just 10 months, reflects an antiquated grasp of transportation logistics and a dubious set of assumptions about the link between economic growth (especially as measured in terms of gross domestic product) and forecasts of the volume of goods expected to be handled in California in coming years.
For maritime officials in particular, implementation of the plan would require enormous investments in new equipment and facilities. According to a study by Moffat & Nichol, a leading infrastructure engineering firm, converting the state’s three big maritime gateways – the ports of Long Beach, Los Angeles and Oakland – to zero emission equipment will cost $35 billion in the next 30 years, compared with $7 billion to replace existing gear.
The rub is how to finance compliance with stricter environmental mandates. On this score, the draft plan issued this month is remarkably tentative. Indeed, the text is so cavalier in its consideration of the economic consequences of zero-emission mandates that it belies the Brown administration’s professed desire to maintain the competitiveness of the state’s goods movement system.
Terminal operators at ports around the world are financially stressed, as a recent report from London-based Drewry Shipping Consultants attests. In January, one major terminal operator unilaterally canceled its lease at the Port of Oakland in order to focus its limited financial resources at ports elsewhere.
Inevitably, new business costs get passed on. Saddled with huge new expenses, terminal operators at California ports will have no choice but to charge higher fees. But shipping lines and cargo owners have options, especially when an expanded Panama Canal opens next month and when ports in the Pacific Northwest are bolstering their cargo handling capacities.
As exporters of California products have long recognized, it’s very easy to be priced out of global markets because of the costs added by only-in-California fees, taxes and regulatory burdens.
So it’s no wonder that, during this year’s International Trade Month, businesses that depend on the efficient and economic transportation of goods are likely to be very skeptical about whether state government has their backs.
Jock O’Connell is a Sacramento-based international trade economist affiliated with Beacon Economics. Contact him at email@example.com.