On the other side, the two broad categories of horticultural crops, which include all tree crops, vegetables, and melons, berries and nursery crops, comprise well over half of all agricultural receipts in California, but receive a combined total of only 25 percent of the total PSE for the state. Producer Subsidy Equivalent by Commodity in California Discussion of Specific Policies Certain policy categories warrant further discussion to better understand how we calculate their contribution to the California Producer Subsidy Equivalent. Water subsidy is discussed first. The policies affecting the dairy industry are summarized next. We then turn to direct payment programs and finally to the set of policies important to the horticultural commodities.
Irrigation is a key input for agriculture in California.
In California, surface irrigation water is provided to some users at prices below cost and below potential market prices for the water. Much of the reservoir and distribution system that serves agriculture was developed long ago. Almost half of the water available in the San Joaquin Valley comes from CVP or SWP sources. In addition, over 90 percent of Imperial Valley water comes directly or indirectly from federal or state projects. Our PSE calculations are based on irrigation water usage by crop and estimates of the subsidy implicit in the state and federal water projects.