The Flint River Drought Protection Plan was developed from a series of meetings with farmer input. The major objective of the plan is to maintain water flows in the basin at a level consistent with current guidelines. This can partially be achieved by a reduction in agricultural water withdrawal in the basin during drought years. Agricultural producers who participate in the plan would have some of their losses reimbursed from the plan. 

If a drought is forecast by March of any given year, farm operators with permitted irrigation systems in a designated area of South Georgia (herein referred to as Flint River basin counties), will be eligible to submit a bid that will preclude their operating their system(s) during that calendar year. 

At this writing, current guidelines specify bids can be submitted only for irrigation systems that withdraw surface water (from streams).

If the bid is accepted, the monies received will be in lieu of expected profits from a crop produced on that irrigated land. To participate in the program, the water withdrawal must be a permitted withdrawal by the Georgia Department of Natural Resources, and the irrigation system must have been in operation in previous years. 

This publication is designed to provide guidelines for those considering participating in the program by providing data to help with production loss estimates.
 
 

Begin by estimating returns from the crops you may plan to grow under the irrigation system(s). Table 1 provides an estimate of costs and returns from selected irrigated crops. These figures are averages . You as a farm operator can best estimate your individual returns -which means having an estimate of yields, expected price and operating costs. The worksheet on table 2 is provided to assist your estimate. A more detailed estimate of cost items of selected irrigated crops is shown in table 3.

The returns in table 1 estimate two levels of returns. The projected returns over all costs except land estimate the amount per acre available to pay land costs and profit when growing a acre of that crop. 

The returns above variable costs estimate the amount available to pay land costs and profit, plus, fixed costs associated with that enterprise. 

The majority of the fixed costs for growing irrigated crops are for irrigation system overhead (depreciation, taxes, interest). Any fixed cash costs will still be incurred even if the system does not operate. However, the operator may have irrigation debt payment obligations. Attention should be given to total cash flow obligations of the operator. If a farm lender has loaned funds with expectation that the irrigation system would help generate monies to pay production costs plus the annual debt payment, one should contact the lender to determine how they view not operating the irrigation system for a year.
 

Table 1 Estimated Expenses and Returns of Selected IRRIGATED Crops, per Acre, Southwest Georgia, 2001
Crop	Expected Yield	Expected  Price +	Expected  Returns	Projected Expense *		Projected Returns Over:
				Variable	Fixed	Var. $$	All $$ #
			Dollars per Acre
Cotton	1000 lbs	$0.67	$670	$396	$219	$274	$55
Corn	175 bu	$2.60	455	327	189	128	(61)
Peanuts	1.75 T.	$610	1,067	472	269	595	326
Soybeans	50 bu	$5.50	275	166	169	109	(60)
Watermelons	250 cwt	$0.05	1250	785	123	465	342
Yellow Squash	325 box	$7	2275	1515	135	760	625
Soybeans - RR	50 bu	$5.50	275	161	149	114	(35)
Coastal for Hay	7 Tons	$55	385	354	172	31	(141)

+ Includes LDP.
* Expenses Are Exclusive of Land Costs.
# Amount Available to pay Land Costs
 

Interpret these cost and return estimates carefully. For example, should your costs, yields and projected price for irrigated cotton approximate the figures in table 1, we see a profit of $55 per acre above all costs except land. However,the fixed costs of this crop include $219 for overhead on machinery and irrigation equipment. A portion of this fixed cost allowance may currently be used to make debt payments. Should you bid $55 per acre, and the debt payment is greater than this amount, then you will have a negative cash flow if your bid is accepted.

...Then your only cash costs incurred will be taxes on land and equipment plus any debt payment you may have on the land, farm machinery or irrigation system.

Use planning caution if you consider growing dryland crops on this land. Past experiences have shown that dryland yields of most crops - in years when a drought is as severe as one to declare this drought situation - are extremely low - often zero yield. Losses are, more often than not, incurred with dryland crops in drought years. 

This information is not intended to be used as a basis for a bid - rather to provide potential participants a budget planning sheet to estimate their loss of production and to determine an approximate starting point for the bid process.

The worksheet below is designed to help estimate returns for selected crops in your farming operation. Estimate your per acre yield and expected price per unit to obtain projected returns. Next estimate variable costs of that enterprise. The returns less costs will provide estimated returns above variable costs.

If you decide not to irrigate this particular crop, some of the cash fixed costs associated with that crop will still be incurred. Your bid should be competitive with the returns from that crop after all costs are paid. See these estimates in table 1.
 

Worksheet To Estimate Crop Returns, per Acre
	Your Estimate				Your Estimate
Crop	Yield per Acre	x	Price per Unit	= =	Projected Returns	-	Variable Expenses	= =	Returns Over Variable Costs+
Cotton	_______		$______		$______		$_______		$___________
Corn	_______		$______		$______		$_______		$___________
Peanuts	_______		$______		$______		$_______		$___________
Soybeans	_______		$______		$______		$_______		$___________
Watermelons	_______		$______		$______		$_______		$___________
Squash	_______		$______		$______		$_______		$___________
Others-list
1.	_______		$______		$______		$_______		$___________
2.	_______		$______		$______		$_______		$__________

+ Returns available to pay per acre land costs, machinery overhead, debt payment, and profit.

Some provisions of the Flint River Drought Protection Bill raise concerns about some of your operational procedures. As this publication is concerned only with data to prepare a bid, there should be an understanding of all provisions as well as other operational questions - and participation. The following are items a producer should understand.

• Only the irrigation permit holder can sign-up. If you are a tenant, how do you fit into the planning process? Further, irrigated land in parts of Southwest Georgia rents for $125 to $155 per acre. If a bid of $100 was accepted, the land owner would have less income than when renting, and the lessee would be left with no income.
• The March 1 sign-up date can create problems with planning. This date has been selected as rainfall in January and February can be normal, or excessive and can alter the stream flow of water. But most growers in this area complete most planning prior to January 1, and have completed soil preparation by March 1. Hence, some production costs are incurred before the proposed sign-up date.
• If an irrigation system is leased or being financed any associated payments would have to be made. A contract with a lender would be mandatory if one plans to give up irrigating for a time period.

• The bill specifies that the period of "non-irrigation"is for the time period March 1 until the next January 1. This could impact decisions made about fall seeded crops.
• Current guidelines specify that bids can be submitted only for surface water withdrawal directly from the Flint river or its' tributaries. 
• What effect will the plan have on the Risk Management Agency (crop insurance) yields? What yield levels will be used in a year of not producing a crop under irrigation? Will not planting a crop or going dryland for a year affect one's production history over time? Or, if a grower who traditionally irrigates plants a non-irrigated crop, what yield level can be insured?
• Other factors must be accounted for when considering participation in the plan. One of the most difficult items to explain is fixed cost vs. variable costs. In short, a system that has been installed long enough to have been "depreciated off the books" would have a bid less than a system that was still being financed. These items will influence your bid.
• A detailed estimate of costs and returns are necessary if one is to consider participating. Irrigated crops usually have less yield variation than non-irrigated. As a result, many growers with irrigation systems have borrowed funds to install the system, or may have leased the facilities. The budget cost estimates for the major crops include depreciation as a non-cash cost for crop production. However, in reality this amount may be needed to make a loan payment. Any bid should include an amount sufficient to make the loan payment plus some amount for profit - which would be realized if the crop were grown.
• The cost estimates shown in tables 1 and 3 do not include an allowance for land charges. Owned land would incur taxes plus any debt payment. Individuals who rent irrigated land have a sizeable rental cost. While the owner of the irrigation system permit can submit a bid, care should be taken to carefully weigh returns to both land owner and lessee.
• It appears likely that high value crops (peanuts, most vegetables, some cotton) will have an estimated return too high to submit of a bid low enough to be accepted. However, we emphasize again, that "each grower should make the most realistic estimate of costs and returns".
• As a drought such as is being currently experienced has reduced non-irrigated crops to almost zero yields, it is suggested one carefully weigh the factors when considering growing a dryland crop in lieu of irrigated crops. 
• The aggregate $10 million in the first year would result in 100,000 acres of irrigated systems being idled with an average bid of $100 per acre. Given the yield responses obtained from irrigation, it is likely these funds will not idle the desired amount of irrigation systems. If so, then any means of idling more systems should be made available prior to submitting the bids. 
• Different irrigation systems on the same permit number CANNOT have different bids. In some cases, one might submit a bid for one amount for the pivot irrigated acreage on a permit and an entirely different bid amount for the traveler irrigated acreage on the same permit. 

* Costs estimates are for conventional crops. Costs of modified crops production will be higher for seed and less for herbicides and machinery.
## Includes items such as drying, commodity fees, ginning, marketing.

The Georgia legislature has appropriated the fund for the Flint River Drought Protection plan and monies will be available in 2001, if needed, to pay growers not to operate approved irrigation systems. This fund is intended to pay growers in the Flint River Basin for the returns they would realize rather than if they produced crops using irrigation systems. If a drought situation is declared by the Director of the Department of Natural Resources then growers desiring to participate would submit a bid (and the acres associated with the each bid) by the deadline date. Some specifics of the plan include:

• Declaration of plan implementation made by Director of DNR by March 1.
• Only permitted irrigated withdrawals may participate.
• Initial plans are for the bid process to be completed within 3 weeks of the declaration date.
• Individuals with surface water permits in the Flint River Basin can participate in the bidding process..
• Unless rescinded by the Director of DNR, irrigation can not resume until next calendar year.
• A method for verifying compliance is still being determined.
• Irrigation systems that are operated after agreeing to participate will be required to repay (fined) an amount equal to three (3) time their accepted bid amount.
• If sufficient acreage can not be obtained by the bid process then the order of participation will begin with the last permitted system (by date of application) and proceed in a reverse order.