Dryland wheat farm The farm organization and financial summary for two dryland wheat farms are shown in table 17. A farm with 1,440 acres constitutes a full-time family-size wheat farm typical of the area. Half of the acreage is fallow each year, a practice common to this area of limited rainfall. These budgets are representative of conditions without development, and are used in benefit determination only. With project development, it is anticipated that the lands now dry-farmed will be used in the production of fruit. Table 17.---Farm organization and financial summary for dryland wheat farms The foregoing farm budget analysis of payment capacity on representative farms shows the amount that would be available for payment of water charges on each of these farms under the conditions assumed. Soft-fruit budgets were constructed primarily for the purpose of demonstrating their payment capacity and to recognize soft-fruit production as a potential land use on at least a portion of the division. The adjusted payment capacity for each of the seven units of the division is shown in table 18. No serious economic problems are anticipated in connection with most units of the Greater Wenatchee division. A favorable attitude toward irrigation exists among owners of private lands in the area. The only questions raised concerning project development concern costs involved. SUBDIVISION OF EXCESS HOLDINGS Little difficulty is expected in regard to subdivision of holdings in excess of 160 acres of irrigable land. The matter of acreage limitation has been discussed with representatives of the 778-acre corporate farm in the Moses Coulee unit. Of this acreage, 413 acres are now irrigated, but under the project plan, the entire water supply would be delivered by the project. Representatives of this corporation are aware of the problem, and it can be expected that if these lands are served from federally constructed facilities the provisions of acreage limitations will be met. INDIAN LANDS A difficult situation will probably be encountered, with regard to the Indian allotment lands within the South Pateros and Antoine Creek units. Because of lack of owners' interest in fruit raising, it is expected that the Indian lands on these units will not be developed as orchard lands as long as they are in Indian ownership. This situation is significant on the Antoine Creek unit and the South Pateros unit where 39 percent and 55 percent of the irrigable acreage is Indian owned. A substantial acreage of Indian lands in this area has been bought by white owners in recent years and this trend is expected to continue. Inclusion of these units in the project would probably be dependent upon the sale of Indian-owned lands to other owners. DEVELOPMENT PERIOD Inasmuch as considerable time would be required to develop the fruit lands of the division and because a large investment would be involved in bringing an orchard into bearing age, the maximum development permitted under reclamation law (10 years) should be provided for all new 4F lands. The orchard lands now in production would not require a development period. A 3-year development period should be allowed for the general farm area of the Moses Coulee unit. Since the project lands in the East unit and Moses Coulee unit would receive water for both developed and undeveloped fruit lands, the development periods for these units have been appropriately weighted by the presently developed and undeveloped acreage. On this basis å variable development period averaging 7 years for the East unit and 5 years for the Moses Coulee unit would be desirable after the first delivery of water. All other units of the division would require a full 10-year development period since they consist entirely of undeveloped 4F lands. The returns from fruit orchards are slow to materialize. This is particularly true of apple trees. They normally do not come into bearing until 7 or 8 years after planting and do not start to show a profit until around the 10th year. By interplanting with soft fruit some return may be realized from the orchard at around the 5th or 6th year. It is necessary under this type of project that an individual develop his entire acreage at one time since he must start paying for water at the end of the development period whether he uses it or not. The high capital investment required to start an orchard (around $1,500 per acre to bring apple trees to bearing age) makes this development period a difficult one for the average individual. He must have off-farm income or other financial assistance, be willing to make sacrifices and work hard during this period. In these early years, expenses far exceed income. During this time, payment of the relatively high annual operating costs that would be required on all of the units expected to be planted to orchards would materially increase the financial requirements of establishing the plantings. To minimize these requirements, it is suggested that a portion of the annual operating costs of all units be deferred and added to the construction costs of the project for repayment by the water users over a 50-year period. Water users on new orchards could be expected to pay a minimum of $3.50 per acre annually toward the operating costs during the first 6 years. A uniformly graduated charge will be made each year thereafter until by the 10th year the full amount of the annual operating costs will be collected. PART VII. FINANCIAL SUMMARY Development of the Greater Wenatchee division under the plan proposed in this report has strong economic justification as benefits exceed costs in a ratio of 6.44 to 1 over a 100-year period of analysis. Water users can repay approximately 70 percent of the costs of the project. Repayment of the remaining reimbursable costs of $3,448,050 would be made by net power revenues from Chief Joseph Dam. ECONOMIC JUSTIFICATION Economic justification is based on a comparison of benefits with associated costs. The analysis that follows is based upon 50- and 100-year periods. An interest factor of 2% percent of the net Federal costs was used, and costs were converted to equivalent annual amounts for purposes of comparison. IRRIGATION BENEFITS The total annual irrigation benefits for the Greater Wenatchee division are estimated at an average of $2,974,890 for a 50-year period and $3,060,360 for a 100-year period. The direct benefits alone amount to $969,850 annually for the 50-year period and $997,620 annually for the 100-year period. The irrigation benefits are based upon the increased values resulting from increased production of goods and services or decreased costs of production that may be attributable to project development. Irrigation benefits for the individual units are presented in tables 19-25. Benefits for the division are summarized by units in table 26. 3 TABLE 19.-Summary of irrigation benefits, North Pateros unit $308, 590 Less increased farm costs 1 225, 110 Less alternative earnings 2 26, 000 Plus equity earnings 12, 300 Total. 69, 780 Indirect irrigation benefits: From increased farm marketings. 67, 720 From increased farm expenses 40, 520 From increased family living allowance 5 1, 960 Total... 110, 200 Public benefits: New settlement opportunities ? 26, 000 Improved community facilities o 6, 570 Total.. 32, 570 All irrigation benefits, total. 213, 550 Adjusted for development lag, 100-year period 188, 110 Adjusted for development lag, 50-year period 181, 940 1 Total increased farm expenses plus 5 percent of increased farm investment. : 26 new farm units would be created with development of the North Pateros unit at $1,000 per farm. 31 percent of the increased farm investment. * 18 percent of the increased farm costs. 5 18 percent of the increased purchases for family living which was derived as follows: Increased family living allowance less the sum of increased perquisites and alternative earnings. . Increased taxes. 8 TABLE 20.-Summary of irrigation benefits, South Pateros unit $635, 370 Less increased farm costs 1 464, 190 Less alternative earnings 54, 000 Plus equity earnings 25, 450 2 3 Total. 67, 840 All irrigation benefits, total. 438, 820 Adjusted for development lag, 100-year period ? 388, 360 Adjusted for development lag, 50-year period 375, 630 ! Total increased farm expenses plus 5 percent of increased farm investment. 5 : 54 new farm units would be created with development of the South Pateros unit at $1,000 per farm. : 1 percent of the increased farm investment. * 18 percent of the increased farm costs. $ 18 percent of increased purchases for family living which was derived as follows: Increased family living allowance less the sum of increased perquisites and alternative earnings. • Increased taxes. TABLE 21.-Summary of irrigation benefits, Antoine Creek unit $312, 750 Less increased farm costs 1 231, 030 Less alternative earnings 2 26, 000 Plus equity earnings 3 12, 530 Public benefits: New settlement opportunities? 26, 000 6, 790 Total 32, 790 All irrigation benefits, total. 213, 650 Adjusted for development lag, 100-year period ? 189, 080 Adjusted for development lag, 50-year period 8 182, 880 1 Total increased farm expenses plus 5 percent of increased farm investment. ? 26 new farm units would be created with development of the Antoine Creek unit at $1,000 per farm. 31 percent of the increased farm investment. * 18 percent of the increased farm costs, 5 18 percent of increased purchases for family living which was derived as follows: Increased family living allowance less the sum of increased perquisites and alternative earnings. * Increased taxes. |