A look at the economics of Colorado’s agricultural sector

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Here’s an in-depth look at the 2010 Statewide Water Supply Update forecasts and the possible effects on Colorado’s agricultural sector, from Chris Woodka writing for The Pueblo Chieftain. Click through and read the whole article. Here’s an excerpt:

Two top-ranking state officials brought that message home last week. Continuing to dry up agriculture could amount to a hit of more than $1 billion to the state’s economy. John Stulp, who is advising Gov. John Hickenlooper on water issues, made a case for leaving water in the areas where it has historically been used. “You can use and reuse water, but once you ship it out, it’s gone,” Stulp said. “If we double our population in 40 years, think of how long you’ll be sitting in traffic on Interstate 25.”

Stulp’s replacement as Colorado Agriculture Commissioner, John Salazar, called for more attention to the impact of costs to rural communities if land is dried up. “Agriculture is the second-largest contributor to the state economy,” Salazar said. “The next 10 years are supposed to be good for agriculture, but the only way for us as a state to benefit is to have the water available to produce crops.”[…]

State agricultural revenues in 2007 were $6 billion, according to the Census of Agriculture, and irrigated acres were far more productive than dryland acres.

Worst-case scenarios:

– In the Arkansas River basin, the five counties with the largest production from irrigated acreage generated ag revenues of $616.9 million. If 17 percent of the farm land were dried up, that could amount to more than $100 million from farm income alone.
– In the South Platte basin, where there are nine of the 10 largest ag production counties, up to one-third of irrigated farm land could be dried up. That would mean a drop of about $1.25 billion in an annual $4 billion farm economy.
– In the Rio Grande basin, ag revenues totalled $320 million, and a 14 percent drop would mean a loss of $58 million.
– The losses statewide from continued dry-up could be close to $1.5 billion, just in the value of products sold. That would not take into account the impacts on communities…

The actual value of crops grown in the state was examined in a 2005 study by Colorado State University. Values ranged from $350 to $1,100 per acre. The study found the highest per-acre values in the San Luis Valley and the lowest in the Arkansas River basin. When results of the study were published, many farmers in the Arkansas Valley told The Chieftain the numbers were too low. “We haven’t updated the land value study, but have been working on analysis for the changes to the ag sector if lands are retired,” said James Pritchett, professor of economics, who led the 2005 study. “We’ve also been doing work on limited-irrigation economics.”[…]

Colorado residents need to be better educated on where their food comes from, Salazar said. “A lot of folks think our food comes from a grocery store,” Salazar said. “Once people understand, they’ll see the relationship to agricultural businesses in the rural communities.”

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