Grounded in uncertainty

Corn prices keep Yuma booming, but water-rights lawsuit looms

By Gargi Chakrabarty, Rocky Mountain News (Contact)

Published May 30, 2008 at 5 p.m.

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Dennis Schroeder / The Rocky

Yuma County farmers Don and Peggy Brown check a row of corn just planted on their farm in early May. The Browns are among the region's farmers benefiting from record yields and prices, but a lawsuit over who controls water in the North Fork Republican River and its tributary near Wray may threaten the agricultural boom in Yuma County.

Dennis Schroeder / The Rocky

The Laird Ditch, built in the early 1900s, is at the heart of a lawsuit over irrigation wells and water rights.

Photos By Dennis Schroeder / The Rocky

Don Brown drives a corn planter on his farm May 8. Record prices have enriched the county, but a lawsuit over irrigation wells has farmers worried.

Brown holds some of the hybrid corn he used for this year's planting. One acre produces about 200 bushels of corn, and one bushel translates into roughly 2.8 gallons of ethanol.

Farmers here worked the fields in worn jeans and T-shirts on a recent pale May morning, sowing hundreds of thousands of freshly tilled acres with corn.

It's an annual ritual in Colorado corn country that consumes 80-hour weeks and leaves all involved exhausted. But the pace may be even more feverish this year because the region's unprecedented agricultural boom shows no signs of abating.

The price of corn has pushed to an astonishing $6 a bushel, largely on the strength of demand for the alternative fuel ethanol. That's up $2 from last year and triple from the year before.

Even in a profession buffeted by everything from weather to water woes to instability in world markets, $6 corn has spirits up and hopes soaring.

"Corn prices are scary this year," said Jim Lenz, a farmer in Wray whose family planted corn on more than 3,000 acres. Scary as in scary good.

Yuma County farmers plant roughly 240,000 acres of corn, 18 percent of Colorado's 1.34 million acres. If $6 a bushel holds, the county's corn crop could fetch $288 million this year - nearly $100 million more than last year.

But the Lenzes and other families here will be the first to tell you that there are plenty of reasons for booms to dissipate, that hopes can be crushed. In agriculture, there are always clouds on the horizon, and it's no different this spring.

Skyrocketing prices could turn off buyers.

As it is, plans for additional ethanol distilleries in Colorado and across the nation have been scrapped or pushed to the back burner as investors - squeezed between rising corn costs and lethargic ethanol prices - scramble to recover profits.

Local farmers appear to be set, at least for now, with the ready market provided by an ethanol distillery close by and another in Sterling, 40 miles north.

Weather, too, is always a crapshoot, and this spring's cold snaps and strong winds across the county's vast open spaces have not helped.

Then there are more esoteric concerns.

For one, corn's long-term outlook remains hazy.

Riots in Haiti, Bangladesh, Egypt and other poor countries over soaring food inflation and a backlash against the diversion of a food crop to fuel might dampen ethanol demand, weakening corn prices.

Growing ethanol imports from Brazil and the Caribbean islands could limit domestic production and push down corn prices.

Strangely enough, record high prices for gasoline have not pulled up ethanol prices. This week, the nationwide average price of regular unleaded gasoline hovered at over $3.93 a gallon, while E-85, a fuel blend of 85 percent ethanol and 15 percent gasoline was 63 cents cheaper at $3.30 a gallon.

"It appears to me that ethanol and corn are separate from gasoline," said Robert Sharp, manager of downstream market development at Platts, an energy consulting firm in Houston. "I see ethanol prices have topped out, although gasoline keeps going up."

All in all, Yuma's farmers find themselves perched perhaps even more precariously between euphoria and despair: There could be a bumper crop at record prices but with more uncertainties than anyone should have to tolerate.

"We haven't raised it yet," noted farmer Don Brown, as he watched his wife, Peggy, turn the planter at the edge of the circular field.

Landowner lockout

The biggest scare for Yuma County farmers is the possibility of losing the lifeblood of their economy in what amounts to their latest water crisis.

Hundreds of farmers, including those from adjoining Kit Carson, Phillips and Washington counties, this year organized what they called the "Eastern Colorado Lockout" to protest the Colorado Division of Wildlife's decision to join a lawsuit brought by the Pioneer and Laird Ditch Co.

In essence, Pioneer and Laird is suing the state, contending that farm-irrigation wells are infringing on the company's senior water right by diminishing water in its ditch.

The lawsuit seeks to prevent farmers from using irrigation wells within a certain distance of the North Fork Republican River and its tributary near Wray.

The Division of Wildlife is worried that low stream flows are harming one of its fish hatcheries near Stalker Lake near Wray, said Grady McNeill, water resources engineer for the Division of Wildlife.

In response, the farmers participating in the lockout, pledging 511,000 acres to the protest, refused to allow the division to count pheasants and other birds or participate in the agency's Hunter Walk-In program. Farmers are paid in exchange for opening up their properties to hunters.

On Friday morning, the division pulled out of the lawsuit.

"I am not sure whether the landowner lockout did it or the DOW decided it was futile," Brown said. "It sure took them a long time to decide to get out."

The Pioneer and Laird lawsuit comes on the heels of litigation last year in which the state of Kansas similarly argued that the Colorado farm-irrigation wells were infringing on their rights to water flows in the Republican River.

As a result, the Republican River Water Conservation District paid millions of dollars to buy 10,000 acres and voluntarily shut off wells.

The district plans to construct a pipeline by the summer of 2009 to take groundwater to the Republican River at the state border.

Should Pioneer and Laird prevail, Yuma farmers say that 190,000 acres that now are irrigated - with an estimated value of $400 million - could be turned into dry land.

Assuming yield on dry land is 40 bushels an acre, one-fifth the 200 bushels on an irrigated acre, farmers and the entire region would lose tens of millions of dollars.

"If they win, they will bankrupt Yuma County," Brown said.

Corn-fed economy

Today, Yuma is far from bankrupt.

The corn bonanza has filled pockets and spilled into the local economy.

A new $9.3 million elementary school, a $24 million hospital and a $2 million wastewater- treatment plant reflect the local government's bulging budget. The private sector has also realized the region's newfound wealth, if a shiny John Deere dealership, bustling restaurants and fully booked motels are any indication.

Young people are coming back to live close to their families, making Yuma County - with close to 10,000 people - one of the rare rural counties in Colorado gaining population.

Land prices, especially for irrigated acres, have doubled in the past few years, a far cry from the county's downturn in the mid-1980s when land prices dropped in half and foreclosures were rampant.

"We saw the bust. It was terrible," said Brown, recalling the days when he first joined the farm.

His parents, Cleo and Jennie Brown, were among the first to set up an irrigation sprinkler in the 1960s, tapping into the underground aquifer to water their sprawling fields. The neighbors soon caught on, transforming the sandy drylands into a lush agricultural stronghold.

Yuma has been the perennial No. 1 among the state's corn growers. Much of its current wealth can be attributed to the run-up in corn prices caused by the growing demand for ethanol.

Here's the math: One acre produces about 200 bushels of corn, and one bushel roughly translates into 2.8 gallons of ethanol.

As new as ethanol-based fuel might seem, it's not.

Henry Ford designed his 1908 Model T automobile to run on alcohol. But carmakers junked the idea of alcohol-fueled vehicles in the early 20th century in the face of cheap and robust supplies of crude oil.

Some Midwestern states tried to boost ethanol use in the 1980s to infuse life into faltering rural economies.

Ethanol now seems poised to be in the continuing mix, at least, as the United States tries to reduce its dependence on foreign oil.

And Yuma farmers are poised and ready to play their role. "This should be our best year," Lenz said.

'No winning or losing'

Peggy Brown sat in the tractor cab, a petite woman driving a monstrous machine on an uneven field studded with the previous year's cornstalks chopped close to the ground.

The tractor dragged a planter that spread corn seeds in neat V-shaped rows. Brown checked various computerized screens propped inside the cab, keeping track of the amount of fertilizer and seed flowing into the ground.

She came to the field at 7 a.m., having done the household chores, and it was now six hours later.

"This is hard work, but I really enjoy it," she said, looking in the rear-view mirror to see Don wave at her - a signal to stop.

After 30 years of marriage, the Browns are in sync. She frequently ends his sentences. He reminds her of past family events.

The couple met at Northeastern Junior College in Sterling and decided to move back onto the Brown farm - never mind that Peggy was a city girl. She learned quickly enough, helping Don expand the farm and the family home.

When their daughter, Sabrina, came down with a rare illness a few years ago, she decided to focus on getting her the right treatment.

She withdrew from active farming, leaving the job of raising crops to Don and some hired hands. But the threat of losing their precious water has drawn her back into the fold.

"There's no winning or losing," Peggy Brown said, expressing her irritation again with the ditch company's lawsuit. "Even if they shut our wells off, they will lose because that won't produce enough water for them."

chakrabartyg@RockyMountainNews.com or 303-954-2976

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