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DISTRICT ECONOMIC REPORT UNDERESTIMATES FARM JOB LOSSES; A $25 TAX WOULD ELIMINATE 16,400 JOBS IN EAA

 DISTRICT ECONOMIC REPORT UNDERESTIMATES FARM JOB LOSSES;
 A $25 TAX WOULD ELIMINATE 16,400 JOBS IN EAA
 WEST PALM BEACH, Fla., Aug. 7 /PRNewswire/ -- Economist Dr. Leo C. Polopolus today said farmers' original estimates of the loss of more than 15,000 jobs under the state proposal to convert 35,000 acres of farmland into giant stormwater treatment areas (STAs) are low and the impact to the economy is far more serious than a recently released South Florida Water Management District economic study suggests.
 Using the government's own data and some industry data, but correcting what he calls "serious methodological errors and flawed assumptions in the District's study," Dr. Polopolus said the number of people who will be put out of work, assuming a minimum tax in the farm area of $25 per acre to build the artificial marshes, could reach as high as 16,400. The ripple effect of additional lost jobs outside of the Everglades Agricultural Area (EAA) would push that total to 19,400.
 In a presentation to the Funding Council of the Water Management District, Dr. Polopolus said the cost in jobs to build the $400 million project including IFAS BMPs would range from 9,800 if taxpayers foot the entire bill, to 38,600 people if farmers pay most of the cost.
 In addition, thousands of additional acres of farmland would be put out of production over the next 10 years because the financial burden imposed by the plan would make farming impossible, Dr. Polopolus said. He said that at a tax of $25 an acre, well over 100,000 acres would be lost. That total would approach 500,000 acres if the tax were $100 per acre, Dr. Polopolus said.
 "In an area where an unemployment rate already ranges between 10 and 22 percent, this plan poses an economic disaster to South Florida far greater than the recent failure of major airlines and banking institutions," said Dr. Polopolus. "Farming, essentially, could be wiped out."
 Dr. Polopolus, professor of Food and Resource Economics at the University of Florida and former president of the American Agricultural Economics Association, said his figures were calculated by correcting inadequacies in the District report. He looked at the effects of the treatment areas and implementation of state-mandated "Best Management Practices" in the farms.
 "The District's Hazen & Sawyer report is seriously flawed and significantly understates the potential economic impacts of implementing the Settlement Agreement and the "Best Management Practices" mandated by the state," Dr. Polopolus said. A major error in the report, he said, is the underestimating by more than 100 percent of the number of agriculture-related jobs in the EAA. The Hazen & Sawyer report claims only 15,600 "full time equivalent" jobs. Dr. Polopolus said approximately 38,150 people are employed. This information comes from the Florida Department of Labor and Dunn & Bradstreet reports, he said.
 "The District's report refers to 'full time equivalents' as though they are robots and not people who work and support families. Seasonal workers are not counted, even though many households are supported by employment during a six to eight-month harvest season," Dr. Polopolus said.
 "The Hazen & Sawyer report suffers from inadequate analysis based on flawed assumptions and models of 'sample' farms that don't exist in the EAA, on limited data and on an unrealistic timetable to complete the job," he said. The report based model farms on arbitrary "Ag-value belt" boundaries that do not represent farms operating in the EAA.
 Dr. Polopolus also criticized the Districts' assumption that farmers have no debt and can pay for new equipment in cash. "You'll be hard pressed to find any farming or other industry in the United States without debt," he said. "The assumption is totally out of touch with reality."
 Dr. Polopolus said, "The analysis of the impact of IFAS BMP costs is seriously inadequate, to the point of being totally unacceptable. The District study pegs the cost of implementing IFAS BMPs at only $40 per acre. In fact, it will be much higher," he said.
 The District study also failed to take into account the additional risk posed to sugarcane yields from such hydraulic BMPs which hold the water table higher on the farms, he said. These would require the water table on farms to be maintained one foot higher than normal, thus imposing greater risk of crop loss.
 If farmers were taxed even $10 per acre each year, more than 4,000 people in Florida would lose their jobs, Dr. Polopolus said. This number would escalate to more than 22,800 people in the state at $50 per acre, and to more than 28,800 people with a $100 per acre tax.
 He said that the farming industries in the EAA alone employ more than 30,000 people out of an EAA job base of approximately 38,000, a sharp difference from the District study, which reported a total of 15,600 jobs in the entire EAA.
 In addition, Dr. Polopolus said, the STAs and IFAS BMPs would result in lost sales of $437 million a year, rising to $858 million per year under a $25 per acre tax, $1.44 billion with a $50 tax and $1.7 billion with a $100 per acre tax.
 Lost Florida job revenue would range between $101 million and $404 million.
 Dr. Polopolus also said the report is flawed in that it assumes too high a return to farmers after implementation of the plans. In addition the report is not realistic in that it does not provide for risks associated with freezes or other weather events or changes in the price of vegetables and sugar. The report also assumes that mills will become more efficient instead of less efficient with less cane to grind and that these savings will be passed on to farmers. This assumption is simplistic and does not represent the realities of farming in the EAA, he said.
 Regarding rice, which is used as a rotation crop, Dr. Polopolus said it is unrealistic to assume that 60,000 acres will be planted in rice each year. The Hazen & Sawyer rice analysis is flawed from such assumptions as:
 1. extremely high rice prices;
 2. a "ratoon" or second crop of rice which is not normal for
 commercial rice growers;
 3. participation in the federal rice program is not a likely event
 for EAA farmers;
 4. it assumes no yield or price risk for rice; and
 5. Hazen & Sawyer assumes adequate rice milling capacity would be
 built, which would require major capital investment.
 "There simply isn't the milling capacity for that kind of volume, and farmers only get one rice crop, not two, in a year," Dr. Polopolus said.
 "Hazen & Sawyer was forced by the deadlines imposed by the Water Management District to rush their report. They only had four months from the time they issued questionnaires to farmers until their final report was presented to the District. They had inadequate time for such a complex study and had a limited budget. They also were unable to give farmers assurances their private financial information would be held confidential. Lacking this confidential data, and adequate time, they turned to estimates and models that simply misrepresent reality," the University of Florida economics professor said.
 -0- 8/7/92
 /CONTACT: Otis Wragg of Wragg & Casas, 305-372-1234, for the Florida Sugar Cane League/ CO: Florida Sugar Cane League ST: Florida IN: SU:


AW-XX -- FL003 -- 8027 08/07/92 12:30 EDT
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Date:Aug 7, 1992
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