81 1 STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS 2 SUGAR CANE GROWERS COOPERATIVE OF) 3 FLORIDA, INC., ROTH FARMS, INC., ) and WEDGWORTH FARMS, INC., ) 4 ) and ) 5 ) FLORIDA SUGAR CANE LEAGUE, INC., ) 6 UNITED STATES SUGAR CORPORATION ) and NEW HOPE SOUTH, INC., ) 7 ) and ) 8 ) FLORIDA FRUIT AND VEGETABLE ) 9 ASSOCIATION, LEWIS POPE FARMS ) W.E. SCHLECHTER & SONS, INC., and) 10 HUNDLEY FARMS, INC., ) ) 11 Petitioners, ) ) 12 v. ) ) 13 SOUTH FLORIDA WATER MANAGEMENT ) DISTRICT, ) 14 ) Respondent, ) 15 ) and ) 16 ) MICCOSUKEE TRIBE OF INDIANS OF ) 17 FLORIDA, the UNITED STATES OF ) AMERICA, FLORIDA DEPARTMENT ) 18 OF ENVIRONMENTAL REGULATION, and ) FLORIDA WILDLIFE FEDERATION, ) 19 ) Intervenors. ) 20 21 ---------------------------------------------------- ORAL DEPOSITION OF RONALD D. LACEWELL, Ph.D. 22 VOLUME II TAKEN ON MARCH 2, 1993 23 ---------------------------------------------------- 24 25 PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 82 1 A P P E A R A N C E S: 2 MS. DONNA H. STINSON Hopping, Boyd, Green & Sams 3 123 South Calhoun Street P. O. Box 6526 4 Tallahasee, Florida 32301 5 COUNSEL FOR SUGAR CANE GROWERS COOPERATIVE OF FLORIDA, ET AL. 6 7 8 MR. RICK J. BURGESS Peeples, Earl & Blank 9 One Biscayne Tower Suite 3636 10 Two South Biscayne Boulevard Miami, Florida 33131 11 COUNSEL FOR FLORIDA SUGAR CANE 12 LEAGUE, INC. 13 14 MR. KEITH E. SAXE United States Department of Justice 15 Environmental & Natural Resources Division General Litigation Section 16 601 Pennsylvania Avenue NW Room 879 17 Washington, D.C. 20004 18 COUNSEL FOR UNITED STATES OF AMERICA 19 20 ALSO PRESENT: LONNIE L. JONES, Ph.D 21 TEOFILO OZUNA, Ph.D. 22 23 24 25 PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 83 1 T A B L E O F C O N T E N T S 2 PAGE 3 AGREEMENTS OF COUNSEL. . . . . . . . . . . . . 85 4 EXAMINATION OF RONALD D. LACEWELL, Ph.D., VOLUME II 5 BY MS. STINSON . . . . . . . . . . . . . . 88 6 BY MR. BURGESS . . . . . . . . . . . . . . 129 7 BY MR. SAXE . . . . . . . . . . . . . . . 288 8 RE-EXAMINATION 9 BY MS. STINSON . . . . . . . . . . . . . . 173 10 BY MR. BURGESS . . . . . . . . . . . . . . 229 11 WITNESS' SIGNATURE PAGE. . . . . . . . . . . . 290 12 CORRECTION SHEET . . . . . . . . . . . . . . . 291 13 REPORTER'S CERTIFICATE . . . . . . . . . . . . 293 14 15 16 17 18 19 20 21 22 23 24 25 PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 84 1 E X H I B I T S 2 NO. DESCRIPTION PAGE 3 1 Memorandum to G. Johns from R. Lacewell dtd 5/21/92 . . . . . . . . . . . . . . 36 4 5 2 Memorandum to G. Johns from R. Lacewell, L. Jones and T. Ozuna dtd 6/3/92 . . . . 37 6 3 Letter to G. Johns from Peterson Consulting 7 dtd 7/31/92 . . . . . . . . . . . . . . 47 8 4 Handwritten Notes - 20-Year Analysis . . 59 9 5 Handwritten Notes . . . . . . . . . . . 70 10 6 Memorandum to K. Saxe from L. Jones dtd 10/23/92 . . . . . . . . . . . . . . 90 11 7 Memorandum to K. Saxe from L. Jones and 12 R. Lacewell dtd 8/28/92 . . . . . . . . 91 13 8 Memorandum to K. Saxe from L. Jones dtd 8/4/92 . . . . . . . . . . . . . . . 102 14 8-A Memorandum to K. Saxe from L. Jones. . . 15 9 Handwritten Notes to S. Ponzoli . . . . 112 16 10 Fax to S. Ponzoli dtd 1/22/93 . . . . . 112 17 11 Florida Sugar Cane League Summary of 18 Hazen & Sawyer's Potential Economic Impacts Analysis . . . . . . . . . . . . 164 19 12 Economic Effects of the SWIM Plan on 20 Sugarcane Production in the Everglades Agricultural Area of Florida . . . . . . 174 21 13 Memorandum to K. Saxe from R. Lacewell 22 dtd 6/16/92. . . . . . . . . . . . . . . 284 23 14 Letter to R. Rosenberg from I. Hirschhorn dtd 5/21/92 . . . . . . . . . . . . . . 24 25 PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 85 1 E X H I B I T S 2 NO. DESCRIPTION PAGE 3 15 Florida Sugar Cane League Summary of Hazen & Sawyer's Potential . . . . . . . 4 16 Notes . . . . . . . . . . . . . . . . . 5 17 Letter to G. Johns from L. Jones . . . . 6 18 Agricultural Property Tax Assessment in 7 the EAA . . . . . . . . . . . . . . . . 8 19 Review of World Price Situation. . . . . 9 20 Review of World Price Situation. . . . . 10 21 Letter to G. Johns to Peterson Consulting dtd 7/31/92 . . . . . . . . . . . . . . 11 22 Debt . . . . . . . . . . . . . . . . . . 12 23 The Validity of Benefits Transfers: 13 The Case of the Florida Everglades . . . 14 24 Issues Related to the Profitability of Farming in the EAA Draft 6/15/92. . . . . 15 25 Memorandum to K. Saxe from T. Ozuna 16 dtd 7/30/92 . . . . . . . . . . . . . . . 17 18 19 20 21 22 23 24 25 PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 86 1 A G R E E M E N T S 2 DEPOSITION AND ANSWERS of RONALD D. LACEWELL, 3 Ph.D., VOLUME II, who resides in Bryan, Brazos 4 County, Texas, taken herein by Counsel for 5 PETITIONERS, before Lori A. Belvin, a Certified 6 Shorthand Reporter and Notary Public in and for the 7 State of Texas, on March 2, 1993, between the hours 8 of 8:30 A.M. to 5:30 P.M. at the Hilton Hotel, Board 9 Room, located at 801 University Drive East, College 10 Station, Brazos County, Texas, pursuant to NOTICE 11 and the following stipulations and agreements: 12 IT WAS AGREED by and between counsel for the 13 Petitioners and Respondent, in the above-numbered 14 and styled cause, that all formalities specifically 15 waived and that the oral deposition of 16 RONALD D. LACEWELL, Ph.D., VOLUME II, may be taken 17 herein forthwith before Lori A. Belvin, a Certified 18 Shorthand Reporter and Notary Public in and for the 19 State of Texas, said deposition being taken with the 20 same force and effect as though all the requirements 21 of the statutes and rules had been fully complied 22 with. 23 IT WAS FURTHER AGREED that no objections need be 24 made by any party at the time of taking said 25 deposition, except objections as to the form of the PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 87 1 question or the responsiveness of the answer, which 2 if not made during the deposition are waived; but if 3 and when said deposition, or any portion thereof, is 4 offered in evidence on the trial of this cause by 5 any party hereto, it shall be subject to any and all 6 other legal objections, such objections to be made 7 at the time of the tender, the same as though the 8 witness were on the stand personally testifying. 9 IT WAS FURTHER AGREED that the witness shall 10 sign the deposition transcript before any notary 11 public or official authorized to administer oaths; 12 and, at such time, the witness has the privilege of 13 reading over said transcript and making any 14 corrections that he finds to be necessary such 15 corrections to be made in accordance with the Rules 16 of Civil Procedure. 17 IT WAS FURTHER AGREED that in the event the 18 original deposition transcript is not signed by the 19 witness within 20 days of receipt and filed at the 20 time of trial or any hearing, that the original or a 21 certified copy of said transcript may be filed in 22 court and used herein as though the witness had 23 signed said original transcript. 24 IT WAS FURTHER AGREED that after said deposition 25 transcript has been returned to the deposition PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 88 1 officer along with changes, if any, made by the 2 witness in accordance with the Rules of Civil 3 Procedure, that the original deposition transcript, 4 together with copies of all exhibits, will be 5 delivered to MS. DONNA H. STINSON for safekeeping 6 and use in trial. 7 IT WAS FURTHER AGREED that after said deposition 8 transcript has been returned to counsel in 9 accordance with these stipulations and agreements, 10 it will be treated by the parties hereto and may be 11 used herein with the same force and effect as though 12 all statutes and rules relating to the taking and 13 returning into court of depositions had been fully 14 complied with. 15 * * * * * 16 17 18 19 20 21 22 23 24 25 PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 89 1 P R O C E E D I N G S 2 * * * 3 THE REPORTER: Ladies and gentlemen, 4 we're back on the record. 5 MR. SAXE: We are observing today 6 Professor Lonnie Jones and 7 Teofilo Ozuna. 8 * * * 9 RONALD D. LACEWELL, Ph.D., 10 having been first duly cautioned and sworn upon 11 his oath to tell the truth, the whole truth 12 and nothing but the truth, testified as follows, 13 to wit: 14 * * * 15 E X A M I N A T I O N 16 * * * 17 BY MS. STINSON: 18 Q. Good morning. 19 A. There was a couple of other things that I 20 remembered during the night on your question about 21 different things that I have worked on. 22 Q. Okay. 23 A. This still may not be inclusive, but let me 24 get it on the record that one is a contract of the 25 United States Department of Agriculture, Agriculture PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 90 1 Research Service, in the lower Rio Grande Valley to 2 look at economic implications of alternative farming 3 systems. So I have an employee that's in the Valley 4 doing that work. 5 And another legal activity that I had 6 forgotten about was being retained by Chevron Oil 7 relative to a class-action suit brought on by 8 farmers in New Mexico where the farmers were 9 claiming price-fixing on natural gas, which is used 10 for irrigation. 11 So my objective with Chevron was to look at 12 what the economic impact was on the farmers because 13 they paid a price differential and how that 14 reflected back. 15 Q. Did you testify in that case? 16 A. That was settled out of court. No, I did 17 not. I was thinking about the question that was 18 asked relative to impacts analysis, and let me just 19 clarify on that one. 20 My mind was relative to indirect and 21 induced impacts, and what I do work on is direct 22 impacts. I do have expertise in the area of 23 quantifying direct impacts, which then is used to 24 do, what was in my mind, the indirect induced. 25 Q. Define for me the "direct impacts" that you PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 91 1 do. 2 A. Direct impacts would be change in sales by 3 target industry. 4 Q. Relate that to the sugar industry in this 5 instance. 6 A. In this case what it would be would be what 7 would be the change in gross revenues to agriculture 8 in the EAA. 9 Q. But you would not consider yourself an 10 expert in extrapolating from there to lost jobs and 11 that sort of thing? 12 A. Not an expert. I have worked with 13 Dr. Jones on that, and then I rely upon his 14 expertise at that point. 15 MS. STINSON: Mark this 16 (WHEREUPON, Exhibit No. 6 17 was marked for identification.) 18 Q. (By Ms. Stinson) I show you a document 19 that's marked as Exhibit 6 and ask you to identify 20 it. 21 A. This is a fax that Dr. Lonnie Jones sent to 22 Mr. Keith Saxe on 10/23/92, and the subject of the 23 fax relates to Dr. Jones' analysis of some work that 24 Dr. Polopolus did on estimating secondary impacts. 25 Q. Is that your work or Dr. Jones' work? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 92 1 A. It's Dr. Jones' work. 2 Q. Did you help prepare it? 3 A. I visited with Dr. Jones about it. I 4 didn't make the calculations, but I looked over the 5 work and reacted to it; but it's basically 6 Dr. Jones' work. 7 Q. The table that's on the last page, was that 8 also something that Dr. Jones did? 9 A. Dr. Jones generated this table from work 10 that was in the Hazen & Sawyer Report, and that was 11 recorded by Dr. Polopolus. 12 Q. But he prepared the table? 13 A. Yes. 14 MS. STINSON: Mark this document. 15 (WHEREUPON, Exhibit No. 7 16 was marked for identification.) 17 Q. (By Ms. Stinson) No. 7? 18 A. Okay. This is a communication with 19 Mr. Keith Saxe again from Dr. Jones and myself, and 20 it is a review of comments by Ronald T. Luke 21 regarding, "The Hazen & Sawyer Draft Final Reports 22 on Economic Impact Evaluation of Economic Benefits 23 of the Everglades." The date is August. 24 Q. Did you participate and develop that 25 document? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 93 1 A. I interacted with Dr. Jones on this. 2 Q. Let me ask you some specific questions 3 about it. Point 1 -- and just read it to yourself 4 first, and then I'll ask you a question about it. 5 A. Is there a way we can come up with this -- 6 Is that what you're going to do? 7 (WHEREUPON, there was discussion 8 off the record.) 9 A. Okay. I have read the first part. 10 Q. (By Ms. Stinson) Okay. Would you explain 11 to me the comment, "This is preferable to performing 12 economic analysis on other unknown or hypothetical 13 assumptions relating to nutrient discharge levels," 14 et cetera. 15 A. Let me read it again. As I recall the 16 criticism here, was that there was not an evaluation 17 of the biological and hydrologic viability of the 18 STA's. And the comment here is that the biological 19 and hydrologic viability of STA's is not a valid 20 criticism of the economic procedures that were 21 carried out by Hazen & Sawyer. 22 Q. Okay. 23 A. So they're bringing up criticisms because 24 Hazen & Sawyer didn't do biological and hydrologic 25 analysis, and they weren't asked to do biological PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 94 1 and hydrologic analysis. They were asked to do an 2 economic study. So that's not a criticism of the 3 economic study. 4 Q. Okay. 5 MR. SAXE: Counsel -- excuse me -- do 6 you have the underlying document to 7 which this document refers, the Luke 8 transmission of criticisms concerning 9 the Hazen & Sawyer report? 10 MS. STINSON: It's in my luggage. 11 MR. SAXE: Because this document 12 and a number of others refer to 13 documents, and the witness is without 14 the benefit of the base document to 15 which these refer. So if you have 16 those, it will be a lot -- 17 MS. STINSON: Off the record. 18 (WHEREUPON, there was discussion 19 off the record.) 20 Q. (By Ms. Stinson) I'm handing you a copy of 21 the report that you're analyzing in Exhibit 7. It's 22 actually the second sentence of Point 1 that begins, 23 "this is preferable to," that I'd like you to 24 explain. I'm not sure what's preferable to what. 25 A. Well, Luke, in his letter relative to the PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 95 1 criticisms of the Hazen & Sawyer report, for this 2 particular point have indicated that there was 3 "Failure to address unknowns and uncertainties." 4 He describes several possible unknowns. 5 That means that you would need a different size STA 6 or different type STA or things like that. 7 His comment says that, basically, there are 8 infinite alternatives that exist but there is one 9 plan that has been developed and that Hazen & Sawyer 10 took the right approach to analyze this economic 11 impact under that plan and stick to some basic 12 knowledge rather than drifting off into unknowns. 13 Q. I might as well keep that in front of me. 14 Okay. 15 Let me ask you about Point 4 on your 16 Document 7 here. Just take a look at it, and then 17 let me ask you. 18 A. (Witness complies.) Point 4 relates to a 19 comment by Dr. Jones and I on "short study period," 20 and I've got to see what Dr. Luke said about that. 21 Q. Point 4, not 5. 22 A. I'm sorry. "Jurisdiction, specific 23 impacts." This particular point by Dr. Luke relates 24 to Hazen & Sawyer not doing a study of individual 25 towns, school districts, and other jurisdiction PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 96 1 specific projections in the field of socio-economic 2 impact. 3 And the comment that we have here relative 4 to Luke's comment is that Hazen & Sawyer is not 5 asked to do the socio-economic analysis. They did 6 what was asked for in their report and their 7 contract. 8 Q. You have the comment, "I notice they left 9 out those done in Texas. Oh, well." 10 What studies are you aware of that were 11 left out of the Luke citations? 12 A. That exact wording is not mine. 13 Q. I should ask Dr. Jones about that? 14 A. Yes. 15 Q. On the jurisdiction, would you agree, 16 however, that the primary impacts will be within the 17 EAA not within other parts of Palm Beach County of 18 the proposed SWIM plan projects? 19 A. That's a broad question and requires first 20 an accurate estimate of what the direct impacts are 21 before you can go to the indirect impacts. 22 So I would say that if there are any 23 significant impacts, that probably they would be in 24 the EAA. 25 Q. And Point 5 you make the comment that, "The PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 97 1 implementation of the $100 assessment on agriculture 2 probably would not significantly affect the bond 3 rating of SFWMD." 4 Do you have any expertise in bond issuance? 5 A. No, I don't have expertise in bond 6 issuance. 7 Q. Do you still believe that to be a true 8 statement? 9 A. Yes. 10 Q. By that statement, are you giving me an 11 opinion that a bond could be issued based on a $100 12 assessment on agriculture in the EAA? 13 A. The basis of the statement is that the 14 property values in the EAA comprise less than 15 1 percent of property values in the 16 Palm Beach County area. 17 Q. So you're talking about a bond that would 18 be based on some kind of ad valorem taxation of the 19 whole county? 20 A. Well, I'm talking about what might happen 21 to bond ratings of the South Florida Water 22 Management District; and the specifics of how a bond 23 is put together, I don't know at this point in 24 time. 25 Q. Are you aware of any work the Water PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 98 1 Management District has done or has had done 2 regarding the bond debility of certain assessments? 3 A. No, I'm not aware of specifics. 4 Q. No. 8, "Litigation Analysis." 5 A. This point in the comments by Luke are 6 titled, "Inadequate Mitigation Analysis." 7 He indicates that the Hazen & Sawyer Report 8 has taken measures and a step in the right direction 9 relative to displacing the workers and other 10 mitigation measures, but suggests more work is 11 needed. 12 Some of the things he suggests is, what is 13 the age distribution of those affected, education 14 level, et cetera, and what are some programs that 15 could help assist the different demographics of the 16 people affected. 17 Our comment, relative to that, is that that 18 was not a complete and total detailed analysis in 19 Hazen & Sawyer; but that they -- our impression was 20 in the contract, they weren't asked to do anything 21 along these lines. 22 As we looked at that and based on the 23 information for the Palm Beach economy, relative to 24 the EAA, it is a robust economy. There are jobs 25 being added every year and the nonagriculture part PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 99 1 of that economy is growing each year. So the 2 percent coming from agriculture is declining. 3 Q. Let me ask you on that: What analysis have 4 you done of Palm Beach County, specifically? 5 A. In this case, I was relying upon some work 6 that Dr. Jones had looked at relative to the total 7 economic activity for the county. 8 (WHEREUPON, there was discussion 9 off the record.) 10 Q. (By Ms. Stinson) Are you telling me that I 11 should ask Dr. Jones about the analysis of 12 Palm Beach County? 13 A. You should ask him about the economic 14 activity of the county, yeah. 15 Q. When it says, "I have done enough 16 analysis," that's Dr. Jones? 17 A. Yes. 18 Q. No. 9, you indicated, "They are trying to 19 link SWIM costs to Everglades benefits savings or 20 enhancement as if this were a B/C analysis. It is 21 not. They may or may not know the significance of 22 the difference." 23 Tell me what the difference is between what 24 was done by Hazen & Sawyer. And I take it "BC" is 25 "benefit cost." PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 100 1 A. Yes. 2 Q. Is that correct? 3 A. That's true. 4 Q. What do you mean by that statement? 5 A. Primarily for the Endangered Species Act 6 and for this settlement of the Everglades 7 agriculture area, it doesn't indicate that economics 8 are a significant factor and that you have to do a 9 national benefit cost analysis. Hazen & Sawyer -- 10 Q. Let me stop you there. What doesn't? You 11 said "it doesn't" -- 12 A. The SWIM plan, the settlement agreement. 13 Q. Does not require -- 14 A. -- a B/C ratio. 15 Q. So what is the difference between what is 16 being done or what has been done in a B/C analysis? 17 A. What the board asked for was an estimate of 18 the economic impacts from implementation of the SWIM 19 plan. That is all they asked for basically on that 20 first contract, and that doesn't constitute a 21 benefit cost analysis. It just constitutes what 22 would be expected of economic impacts of 23 implementation of the SWIM plan. 24 Q. There was an analysis done of the benefits 25 of the plan as well; is that correct? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 101 1 A. I would be hard-pressed to say there was an 2 analysis of all the benefits of the plan, but there 3 was a part of the contract that asked for an 4 analysis of other reports that had been done that 5 looked at a similar type issue to see if there was a 6 way to transfer those results back to estimate what 7 the value of the Everglades was. 8 Q. Would you agree, then, that there wasn't, 9 in fact, a thorough analysis done of the benefits of 10 the SWIM plan? 11 A. There was not a separate analysis done. 12 There was an analysis done of other literature that 13 used techniques that you would need to use for 14 primary data-type analysis of the Everglades, but to 15 use other information to relate to the Everglades is 16 probably pretty good. 17 Q. "Probably pretty good," is that what you 18 said? 19 A. Yeah. I'm not an expert relative to 20 nonmarket valuation of transferability of nonmarket 21 valuation studies. 22 Q. You anticipated my next question. 23 Point 10 says, "The experts who selected 24 the analogous studies are more expert than Luke or 25 Liestritz." PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 102 1 You would agree that you, also, are not an 2 expert in that area? 3 A. Yes, I would agree. 4 Q. Yesterday we spoke some about the work done 5 by Craig Diamond. Are you familiar with the report 6 done by Mr. Diamond? 7 A. Is that the Wilderness report? 8 Q. Yes. 9 A. Okay. Yes. 10 Q. You have reviewed that report? 11 A. I read that report. 12 MR. SAXE: Counsel, one moment. There 13 was -- if I recall the testimony 14 yesterday, it wasn't established that 15 the Diamond report and the Wilderness 16 report that Professor Lacewell 17 indicated he'd read were one in the 18 same. 19 Q. (By Ms. Stinson) Let me just ask you to 20 assume that they are one in the same, I think. 21 A. Okay. 22 Q. If we had it here, we could demonstrate 23 that. In your opinion, is that report a fair and 24 unbiased analysis of the economic situation 25 involving the sugar industry? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 103 1 A. I believe that they did use credible 2 economic procedures and that the estimates are 3 reasonable estimates of the situation in the EAA and 4 sugar in the South Florida Flood Control Project, 5 yes. 6 Q. Would you not agree that that report is 7 more in the nature of an attempt to persuade than an 8 unbiased analysis? 9 A. I haven't read it in a long time, so I 10 would not have an opinion relative to that. 11 Q. Okay. 12 MS. STINSON: Let's have this marked. 13 (WHEREUPON, Exhibit No. 8 14 was marked for identification.) 15 Q. (By Ms. Stinson) Would you identify what's 16 been marked as Exhibit 8, please. 17 A. This is a communication between Dr. Jones 18 and Mr. Keith Saxe; and the title of this one is, 19 "Florida Sugarcane, Evidence of a Heavily Subsidized 20 Industry." 21 Q. Did you participate in that work? 22 A. I read that as he was working on it, yeah. 23 Q. There's a comment that, "The Florida sugar 24 industry has expanded its acreage and production 25 since 1960 in the face of a declining national PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 104 1 market for its product." 2 Does the production exceed the national 3 market? Does U.S. production exceed the U.S. 4 market? 5 A. There's more sugar consumed in the 6 United States than is produced in the United States. 7 Q. Would you agree or disagree that the world 8 price is artificially low due to other countries' 9 market practices? 10 A. I haven't studied that enough to have an 11 opinion that it's artificially low. 12 Q. There's a comment that, "The very existence 13 of the Florida sugar industry is dependent upon 14 price supports in come cities." 15 Do you agree with that statement? 16 A. I don't entirely agree with that particular 17 statement. My anticipation is there would be sugar 18 production in the EAA without subsidies. 19 Q. Would you agree that there are other 20 agriculture crops, also, that are dependent upon 21 price supports and subsidies? 22 A. This is a longer-type response. There are 23 other crops that are covered by target prices and 24 support prices in a completely different type 25 program than sugar. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 105 1 There are some recent studies that were 2 done from Auburn in conjunction with Texas A & M 3 that was given at a seminar in Washington. And the 4 analysis indicated that they were going to take the 5 target price away from the commodity crops in the 6 United States, which would be crops like, wheat, 7 cotton, corn, et cetera. 8 As it turned out, when these subsidies were 9 removed from these traditional crops with 10 traditional programs, the equilibrium position was 11 not dramatically different from the position they're 12 in at this point in time. 13 So I'm in the process of trying to 14 determine what that might mean. And one of the 15 things that might mean is that the USDA and farm 16 programs have been through Congress, have had the 17 subsidy decline progressively over time to the point 18 where farmers, without their knowledge, may not be 19 very dependent upon those farm programs. 20 Q. Can you identify the study for me? 21 A. This was an analysis done by Dr. Bob Taylor 22 and Dr. John Penson at A & M with an econometric 23 model, and it was done for the USDA Soil 24 Conservation Service and presented at a seminar in 25 Washington in January. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 106 1 Q. Is this document published somewhere? 2 A. No, it's not. 3 Q. Did that analysis look at sugar or just 4 these other crops? 5 A. No, sugar was not included in that 6 analysis. 7 MR. SAXE: Off the record. 8 (WHEREUPON, there was discussion 9 off the record.) 10 Q. (By Ms. Stinson) You say you were in the 11 process of trying to determine the dependency, I 12 guess. Are you doing some analysis of that issue 13 yourself? 14 A. Not independently, no. 15 Q. Are you working with Drs. Taylor and 16 Penson? 17 A. I interact with them, and I'm interested in 18 any further analysis they do or any other analysis 19 along those same lines. 20 Q. Are you interested, in part, because of 21 your work on this Everglades litigation? 22 A. No. 23 Q. Can you give me source information for the 24 chart that's on Page 5 of Exhibit 8; or, again, do I 25 ask Dr. Jones for that information? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 107 1 A. I would recommend you ask Dr. Jones, but at 2 the bottom it says, "Sources, ERS," which is the 3 Economic Research Service, USDA, which is U.S. 4 Department of Agriculture. "Cost of 5 Production-Major Field Crops, 1990," that would be 6 for cotton, wheat, rice, and corn. 7 "Sugar & Sweetner Situation Outlook Report, 8 March 1992," for sugar. 9 Q. Do you know what year or dates the figures 10 are for? 11 A. I don't know which dates, no. 12 Q. The item that says, "Net Returns from 13 Market Sales ($/acre.)" 14 Is that what I take it to be, either the 15 profit or loss from per acre of product to the 16 producer? 17 A. I'm not sure what all Dr. Jones put in 18 here, but one of the things that I am pretty sure he 19 put in here as a cost, would be a charge against 20 land; and I wouldn't have done that. 21 So I wouldn't have built this table exactly 22 the same because there is a very large discrepancy 23 between what is typically put in as a charge against 24 land and the charge against cotton, wheat, rice, or 25 corn. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 108 1 Q. Explain that to me. I'm sorry. A 2 difference in charge against land between the 3 different crops? 4 A. The others are much less than sugar. 5 Typically, there's $180 charge per acre that's put 6 in as a cost against land for sugar, and for cotton, 7 wheat, rice, and corn. It's significantly less. I 8 don't have the exact numbers, but it can be $30 or 9 $40, maybe $60; but it's not $180. 10 Q. What does that charge represent? 11 A. The charge can represent a return against 12 land which is also a residual. So whenever you 13 begin to make investments, you can make investments 14 in land and then you draw a return from what's left 15 after you have your crop -- you produce a crop, you 16 sell a crop, and you take out for your nitrogen, 17 your fuel, purchase labor, et cetera, et cetera; and 18 you subtract those away from this gross revenue at 19 the top. That would be a return to land. 20 That value can vary as the residual, and so 21 what I'm saying is that is the residual. And rather 22 than inputting the cost to it directly, I would 23 leave it as a residual and would leave it out there 24 where I could see what it's doing and what that 25 residual is. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 109 1 So I would not have buried it just as part 2 of the cost of production. I would have left it as 3 a residual so I could see it. 4 Q. Do you know what figure is used in this 5 chart? 6 A. No. 7 Q. There's a reference in here to Knutson, 8 Schmitz and Earley. Can you tell me what -- 9 MR. BURGESS: What page are you on? 10 MS. STINSON: 3. 11 Q. (By Ms. Stinson) It's at the bottom of the 12 page there. -- (continuing) what study that is or 13 report? 14 A. Knutson, Schmitz & Earley. I didn't read 15 that particular study. But Knutson is the director 16 of the Food and Resource Policy Center at 17 Texas A & M, and he does studies relative to farm 18 policy primarily. 19 This would be a report that was done by 20 these three economists that relates to the sugar 21 program and the policies related to the sugar 22 program. 23 Q. Do you know for whom that report was done? 24 A. No. 25 Q. Let me ask you one more question about this PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 110 1 chart. The deficiency payment listed on Line 2 2 shows, for example, under "Rice" a deficiency 3 payment of a little over $200 per acre. 4 Is that an amount that the government 5 provides or puts into the rice program? 6 A. That's the difference between the market 7 price and the target price or the loan rate if the 8 market price is below the loan rate, but it's the 9 difference between what a farmer receives and the 10 target price on the yield per acre. So it's a 11 direct payment to the farmer. 12 Q. Out of tax dollars? 13 A. That's right. 14 Q. I don't know if we need to put these in or 15 not. These are not stapled, but can you tell me 16 what this document is? It appears to be all but 17 one. 18 MR. SAXE: Counsel, can I see the 19 document from which these might be 20 pages? 21 MS. STINSON: It was like that. 22 MR. SAXE: Can I just take a look 23 at the exhibit pages? 24 MS. STINSON: Off the record. 25 (WHEREUPON, there was discussion PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 111 1 off the record.) 2 MR. SAXE: Counsel, I believe that the 3 staple may have not gone through, but 4 these are sequentially following the 5 last sequence number on the document 6 you've marked as Exhibit 8, and I 7 believe that these are pages of this 8 document. 9 MS. STINSON: Okay. 10 MR. SAXE: Would you like to look 11 at them? 12 MS. STINSON: Yeah. 13 MR. BURGESS: It goes with the 14 sentence on the bottom, "Without these 15 subsidies the recently" -- and then 16 continues -- "observed expansion in 17 the sugar industry." 18 Is that where you are? 19 MS. STINSON: Yeah. 20 MR. BURGESS: And it doesn't 21 follow. 22 MR. SAXE: No, it's not that page 23 you're looking at, Rick. It's page, 24 Bates No. DRL0050048. 25 MR. BURGESS: Is the last page? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 112 1 MR. SAXE: No. That's the first 2 page of the loose pages that Counsel 3 Co-op has handed to Professor 4 Lacewell. 5 The last page on the exhibit is 6 DRL0050047. What I'm saying is I 7 believe that these are pages that 8 belong to that document. 9 Could I take a look at this 10 again? 11 MS. STINSON: (Complies with 12 document.) 13 MR. SAXE: It's a fax stamp on 14 top. In fact, the fax transmission 15 stamp at the top of the pages suggest 16 that they were part of the same 17 document. 18 Would you like to -- 19 MS. STINSON: Let's put them 20 altogether, then, if we could, and 21 make them part of Exhibit 8. 22 MR. SAXE: Counsel, I've just 23 taken a quick look at a copy of the 24 documents that I kept of recent 25 productions; and my copy confirms that PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 113 1 it was all one document. 2 MS. STINSON: Okay. I'll leave 3 that for now. 4 Q. (By Ms. Stinson) Let me show you what's 5 been marked as Exhibit 9 and ask you if those are 6 your notes? 7 A. Yes, they are. 8 Q. And what are they? 9 A. This is a response to Suzanne Ponzoli in 10 Miami where she had provided some information for a 11 reaction, and this was a fast turnaround reaction 12 back to what she had done. 13 Q. What information were you reacting to? 14 Do you know? 15 A. Perhaps what you have in your hands. 16 Q. Well, this is another fax I'll show you to 17 Ms. Ponzoli. 18 A. Yeah. That fax you just showed me was what 19 I was reacting to. 20 (WHEREUPON, Exhibit Nos. 9 and 10 21 were marked for identification.) 22 Q. (By Ms. Stinson) Can you tell me what 23 documents 9 and 10 represent? 24 A. It's good to work with these together. 25 We received a document from the office in PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 114 1 Miami where they were looking at what the cost might 2 be on a per pound of sugar basis or acre basis of 3 the SWIM plan and ask that we react to that. 4 Q. Do you know where that information came 5 from that you were reacting to? 6 A. Sugar & Sweetner Report, SWIM plan, and 7 documents of that nature. This represents our 8 recommendations relative to what they were doing and 9 our reaction to what they had done at that point. 10 Q. Are you essentially, then, in 9 and 10 11 analyzing the cost per pound or per acre of sugar 12 production? 13 A. Yes. 14 Q. Can you walk me through what you have done 15 and give me the numbers? 16 A. What we did was suggested that for sugar 17 not all the sugarcane land is harvested and so the 18 estimates that we provided took the cost of the SWIM 19 plan and said, "We want to take the cost for the 20 SWIM plan that would be allocated to the sugarcane 21 in the EAA on a proportionate basis; and, further, 22 take the total cost against all sugarcane acres but 23 allocate them even further down to adjust the 24 harvested acres because the harvested acres are 25 going to have to pay the assessment for acres. If PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 115 1 they're in canals, roads, ditches, they are not 2 harvested." 3 So we wanted to further refine the 4 estimates to make sure that we got it on a per acre 5 harvested basis to better reflect what a farmer 6 would really have to pay. 7 Q. You're not talking about cost of 8 production? 9 A. No. 10 Q. You're talking about cost of the STA's? 11 A. That's exactly right. 12 Q. Okay. I'm sorry. 13 A. That's exactly right. 14 Q. So what cost did you begin with, I guess? 15 A. The cost that came out of the SWIM plan 16 would be what we began with, which would be the cost 17 for the STA's. 18 Q. And tell me the number you were working 19 with. 20 A. $314 million. 21 MR. BURGESS: Is that on one of the 22 exhibits? 23 THE WITNESS: Yes, it is. 24 MR. SAXE: It's been marked as 25 Exhibit 10. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 116 1 MR. BURGESS: Well, where are 2 you? 3 MR. SAXE: It's Bates 4 No. DRL0050112. 5 Q. (By Ms. Stinson) So you began with that 6 being the overall cost of implementing the 7 SWIM plan? 8 A. Yes, that would be the cost for the STA's. 9 Q. Okay. 10 A. We looked at what that cost would be for 11 20 years at 6.5 percent. 12 Q. Let me stop you a minute. Why 20 years and 13 why 6. -- 14 A. 20-year bond, typical bond period. 15 Q. And why 6.5 percent? 16 A. That's a typical bond rate at this point in 17 time. 18 Q. That would be an insured bond, correct, not 19 a junk bond? 20 A. Not a junk bond, no. 21 Q. Do you know what the rate is for 22 junk bonds? 23 A. No, I don't. 24 Q. Okay. Did you add to that cost any 25 percentage or amount for the cost of financing in PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 117 1 those types of -- 2 A. The 6.5 percent is all we included, was the 3 rate of interest. 4 Q. Okay. Keep walking me through, if you 5 would. 6 A. And that gives you 28.6 million per year as 7 the annual cost for the SWIM -- for the STA's. 8 Q. When you say for the "STA's," are you 9 distinguishing that from other things required by 10 the SWIM plan? 11 A. BMP's, yes, I am distinguishing that. 12 Q. Okay. 13 A. We then took 457,000 acres of cane. 14 Q. And where is that number from? 15 A. I believe that's Hazen & Sawyer's number. 16 Q. Okay. 17 A. 428,000 acres of harvested. 18 Q. Do you mean "harvested per year"? 19 A. Yes, average per year, recent years. 20 Q. Do you know where that number's from? 21 A. And, again, I believe that came from the 22 Sugar & Sweetner Report. But it may have come from 23 Hazen & Sawyer. I don't recall exactly. 24 The cane acres going to an STA is 26,000. 25 We took that from Hazen & Sawyer and the work they PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 118 1 did where they took the STA's and divided it across 2 the EAA for different crops' land uses. 3 Then, using some percentages from 4 Hazen & Sawyer, we took the 26,000 acres of cane and 5 said that represented 24,500 acres of cane that 6 would be harvested. 7 Q. That's basically 428 divided by 457? 8 A. Yes. 9 Q. In that ratio? 10 A. Yes. Yes. Yes. 11 Q. Okay. 12 A. If we're on Exhibit 9, I'm going to jump 13 down to, "New cane acres harvested, 403,500." 14 Q. That's after the STA's? 15 A. After the STA's. 16 Q. "New cane total is 431,000 acres." Tell me 17 again how many harvested new. 18 A. 403,500. 19 Q. Okay. 20 A. That gives us 17,500 acres that are not 21 harvested. 22 Q. Wait a minute. 23 A. If I go to Exhibit 10, the last page, we've 24 got the -- 25 Q. Wait a second, if you would. My brain's PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 119 1 working slowly. Okay. 2 A. What we get on Exhibit 10, the last page, 3 is calculating the acres in the EAA 522,000 crop 4 acres from Hazen & Sawyer. We take out STA acres -- 5 in this case, we have 32,000 -- that we subtract, 6 which gives us a net of 490,000 acres. 7 Q. Why 32,000 acres? 8 A. Those are STA acres without the Everglades 9 Nutrient Removal Project, which has already come 10 out. Approximately. 11 Q. And the 522 already has had the ENR Project 12 acreage subtracted from it? 13 A. Subtracted out. That's my impression from 14 Agent Sawyer, yeah. Because I'm not positive about 15 that. 16 This gives us 490,000 acres. If we took 17 the 490,000 acres, divide that into $28,000,000, 18 that gives us $58.37 per acre after STA's. 19 Q. Now, the 490,000 includes both vegetables 20 and -- 21 A. Yes, and sod. 22 Q. Sod and everything in cane, not just that 23 which is harvested? 24 A. That's true. So the 58.37 would be 25 applicable to the cane acres harvested, not PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 120 1 harvested, et cetera, for the cane acres based on 2 Hazen & Sawyer is BMP cost of $11.50. We add those 3 together, and we get $69.87. 4 Q. Okay. 5 A. Now, if it's $69.87, that's going to be on 6 a per acre of cane basis. 7 Q. Right. 8 A. Gross acre of cane. We took the 69.87, and 9 said, "What we want to do is allocate back to the 10 cane acres and see what we look like on cane 11 acres." 12 We took the 69.87 times the 431,000 acres 13 of total cane; and we got the cost for the SWIM 14 plan, which would include STA's and BMP's of 15 $30.13 million a year. 16 Q. Tell me that number again. 17 A. 30.13 million. 18 Q. Okay. 19 A. And then we took the 30.13 million and 20 said, "That's got to be paid by harvested acres." 21 What were harvested acres? 403,500 is 22 harvested acres. 23 Q. Yes. Okay. 24 A. Dividing 30.13 million by 403,000 acres 25 gives a value of $74.67 per harvested acre for the PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 121 1 SWIM plan. 2 At that point a yield was being used of 3 8,650 pounds of raw sugar per acre. If you divide 4 8,650 pounds of raw sugar into $74.67 cents, you 5 get -- 6 Q. Wait a minute. 7 A. I'm sorry. 8 Q. Too fast. Okay. A yield of 8,650 pounds 9 raw sugar per acre? 10 A. Yes. 11 Q. What next? 12 A. Then you would get a cost per -- cost for 13 the SWIM plan of 87 hundredths of 1 penny. 14 Q. Where did the 8,650 come from? 15 A. That was a yield in 1990 or '91. 16 Q. From Sugar & Sweetner, do you know? 17 A. Sugar & Sweetner. As I recall, the 18 Sugarcane League statistic showed the same thing. 19 Q. The 87 hundredths of 1 cent per pound of 20 raw sugar is simply a function of the $74.67 over 21 8,650 pounds? 22 A. That's correct. 23 Q. Is that the end of your analysis then? 24 A. Primarily. We have a comment that says 25 that if used 8,000 pounds per acre, it goes up PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 122 1 6 one-hundredths of a penny more than that. So it 2 would be 93 hundredths of a cent. 3 Q. Just shy of 1 cent? 4 A. That's true. 5 Q. When did you do this analysis? 6 A. January the 22nd, 1993, is when we sent our 7 comments back to Ms. Ponzoli. 8 Q. Okay. On Exhibit 9 you have "SWIM costs 9 $65; cane, only $11; BMP, $76." That's somewhat 10 different from the numbers you were telling me of 11 58.37 and 11.50. 12 Can you compare Exhibits 9 and 10, and why 13 do you seem to have a 75 or $6 per acre cost of the 14 SWIM plan, and the other, something just shy of $70? 15 A. My recollection of this is that the $65 is 16 on a crop -- on a harvested acre basis, where we 17 went ahead and made the calculation here. We were 18 looking at some approximate values to get ballpark 19 numbers. We refined the numbers more in 20 Exhibit 10. 21 Exhibit 9 is a working paper, and I could 22 classify Exhibit 10 as a working paper. 23 Q. With regard to the BMP cost, do you recall 24 whether that number is, in fact, from the 25 Hazen & Sawyer Report; or is it from some other? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 123 1 A. It's Hazen & Sawyer, and she developed it 2 from some work done by Bocher. 3 Q. The figures you've used to develop the work 4 you did in Exhibits 9 and 10 do not include, do 5 they, the operation and maintenance costs of the 6 STA's or the BMP's? 7 A. They're part of the BMP cost that are 8 included in there; and it, also, has the cost for 9 water table management. So, yes, it does have the 10 cost included by the SWIM plan. 11 MR. SAXE: Would you repeat your 12 question, please. 13 MS. STINSON: I don't think I 14 can. She can read it back. 15 MR. SAXE: Read it back, please. 16 (WHEREUPON, the requested 17 portion of the record was read 18 by the court reporter.) 19 Q. (By Ms. Stinson) Your response is? 20 A. They do. 21 Q. Even of the STA's? 22 A. Yes. 23 Q. How do they include the cost of the STA's? 24 A. The $314 million is an accumulation of the 25 cost of building, operating, and maintaining the PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 124 1 STA's. 2 Q. For 20 years? 3 A. For 20 years. 4 Q. On the cover letter you indicate that, 5 "When we recalculated the bond at 6.5 percent, it 6 resulted in the cost and values," et cetera. 7 Was there a calculation sent to you at some 8 other number? 9 A. We did -- we calculated that at some 10 different values and I can't recall what, but we 11 were looking at one which would have been a bond 12 rate that was effective several months ago of -- I 13 don't recall what -- 7 percent, perhaps. 14 Q. Was the choice of 6.5 percent yours, or was 15 that a number you retained elsewhere? 16 A. That was ours. 17 Q. I don't know if we need this marked at 18 all. I'm handing you a document that contains some 19 information I gathered provided to you by 20 Mr. Hirschhorn. 21 Can you tell me whether you used that 22 information? What is the date of that letter? 23 A. October 3, 1992. 24 Q. Have you used any of that information in 25 any of your work? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 125 1 MR. SAXE: Well, let the record 2 reflect that the document is a letter 3 from Irwin Hirschhorn to 4 Robert Rosenberg, Assistant U.S. 5 Attorney. 6 You're not going to mark this? 7 MS. STINSON: I don't know. 8 Not yet. 9 MR. SAXE: And it has a 10 handwritten chart attached as well as 11 a map. 12 A. There was not any material in this that I 13 used. 14 MS. STINSON: Okay. No, I'm not going 15 to mark it. 16 MR. SAXE: Let's take a break. 17 (WHEREUPON, a recess was taken.) 18 Q. (By Ms. Stinson) Dr. Lacewell, regarding 19 the analysis we were just talking about in 20 Exhibits 9 and 10, have you carried that analysis 21 further to determine whether or not the farmers in 22 the EAA are able to make those kinds of payments to 23 pay for the SWIM plan? 24 A. We've done further analysis on this, yes. 25 Q. And what have you done? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 126 1 A. We refined this analysis that was done here 2 by carrying it on to look at the data from the 3 Sugar & Sweetner Report; and then combined that with 4 the SWIM plan costs to develop estimates of cost per 5 pound of sugar, per acre returns, per acre per pound 6 of sugar to get some of the comparisons. 7 MS. STINSON: Keith, I don't 8 believe -- let me back up. 9 Q. (By Ms. Stinson) Is there a document 10 reflecting that work? 11 A. Yes, there is. 12 MR. SAXE: Yes. Let me take that -- 13 MS. STINSON: We can go off the 14 record if you want. 15 MR. SAXE: No. That's fine. I 16 was going to take this up at the end, 17 but as long as it's come up; the 18 document production was based on a 19 collection done some weeks ago. 20 So, naturally, any documents that 21 were produced subsequently that might 22 be responsive are not included in the 23 production that we've received. Those 24 would have to be addressed in a 25 subsequent production. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 127 1 I was operating under the 2 expectation that there was some 3 likelihood Professor Lacewell would be 4 deposed again; and if that is the 5 case, certainly the production will be 6 updated at that time. 7 MS. STINSON: We can go off the 8 record. 9 (WHEREUPON, there was discussion 10 off the record.) 11 Q. (By Ms. Stinson) Dr. Lacewell, the 12 analysis that you've just referred to, was that 13 presented or were the results of that analysis 14 presented to the South Florida Water Management 15 District in February? 16 A. They were presented in Florida to somebody 17 in February. 18 Q. By Dr. Jones; is that correct? 19 A. By Dr. Jones. 20 Q. Would you have working papers that contain 21 the actual numbers you used in developing the 22 conclusions? 23 A. The working papers are the 24 Sugar & Sweetner Report. 25 There may be -- without looking at it -- PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 128 1 there may be other sources of data that we did use 2 in that. Let me refrain from saying that's the only 3 thing we used. 4 Q. Okay. 5 MR. SAXE: Off the record. 6 (WHEREUPON, there was discussion 7 off the record.) 8 MR. BURGESS: We can go on the 9 record. 10 Counsel for the United States has 11 suggested that since over the lunch 12 hour, Dr. Lacewell will see whether he 13 has any further documents responsive 14 to the duces tecum request; that it 15 might be appropriate for the Co-op to 16 adjourn their questioning for the 17 moment and for me to begin. And I 18 don't have any problem in doing that. 19 What I would propose to do, 20 though, would be to take some time and 21 review questions on documents already 22 in evidence with the witness and then 23 perhaps that would bring us to the 24 lunch hour. 25 If there are any other further PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 129 1 documents, then Donna could begin and 2 conclude her examination after lunch 3 and then I could go. 4 MR. SAXE: That's fine. We have 5 no problem with that. Just that the 6 clarification that any documents we 7 might find at this point would be 8 newly received or created documents. 9 MS. STINSON: Right. Let me 10 request or suggest that with this 11 analysis he bring the source data so 12 that we can -- not that it will go 13 into evidence, but just for ease of 14 questioning and responding -- be able 15 to tell is where numbers came from, 16 you know, The Sugar & Sweetner Report, 17 whatever. 18 MR. SAXE: That sounds like that 19 stuff would be responsive under your 20 original request for documents. 21 So I'll just use the same 22 criteria that we used; and that would 23 include any data that's been 24 considered or relied upon, to the 25 extent that there's such data. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 130 1 And I don't know that there's a 2 lot. 3 MS. STINSON: Off the record. 4 (WHEREUPON, there was discussion 5 off the record.) 6 MR. SAXE: On the record. 7 I'll see what we can find, and we'll 8 take it from there. 9 MS. STINSON: Okay. Thank you. 10 * * * 11 E X A M I N A T I O N 12 * * * 13 BY MR. BURGESS: 14 Q. Dr. Lacewell, my name is Rick Burgess. I 15 represent the Florida Sugarcane League and the 16 United States Sugar Corporation in this litigation. 17 And I would just ask -- similar to 18 Ms. Stinson -- if you don't understand any question 19 that I ask, ask me to rephrase it, so I'm clear that 20 you're answering the question that I've asked you 21 to. 22 To begin with, I'd ask you to refer to 23 Exhibit No. 1. 24 A. Okay. I have Exhibit 1. 25 Q. Thank you. On the second page of that PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 131 1 Exhibit Paragraph G reads, quote, "It is important 2 to emphasize that the BMP's are a higher level of 3 technology; and if applied correctly, there is not 4 expected to be a significant yield of decline." 5 You authored that statement; is that 6 correct? 7 A. Yes. 8 Q. And what is the basis or what was your 9 basis for that statement? 10 A. The basis of this statement is that as we 11 move to higher levels of technology across the 12 United States in agriculture, it's important that we 13 implement the new technologies appropriately. And I 14 would say that the BMP's are the same relative to 15 "You forget to do it correctly." 16 And that's what that means there is that -- 17 in discussions with Dale Bocher, he indicated there 18 would be no yield effect from implementing the new 19 BMP's done correctly. 20 Q. And what BMP's are you referring to in that 21 paragraph? 22 A. The ones developed by Dr. Bocher in the 23 reports he did for the South Florida Water 24 Management District and IFAS. 25 Q. Other than Dr. Bocher, are you aware of any PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 132 1 other studies or reports which deal with potential 2 yield effect or yield effects of implementation of 3 the BMP's? 4 A. No, I'm not. 5 Q. Are you aware of any on farm impacts that 6 any EAA farmers have experienced with respect to 7 implementation of some or all of the BMP's contained 8 in the SWIM plan? 9 A. I would refer to the deposition by 10 Mr. Wedgworth who indicated that the farmers are 11 currently implementing a significant number of the 12 BMP's and that they've been doing this for a fairly 13 long period of time and they've had no yield impact 14 from that. They do it as a matter of course. 15 Q. Are you aware what percentage of the farms 16 in the EAA have implemented the water table or pump 17 BMP as of this point in time? 18 A. I would expect that all the farmers have 19 implemented, to some extent, some part of the BMP's 20 and water table management. 21 The question, "to what extent." 22 Q. The next sentence reads, "Significant yield 23 impacts can be expected to result only if the BMP's 24 are implemented incorrectly." 25 Are you aware of any studies or reports PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 133 1 which have attempted to quantify potential yield 2 impacts from implementation of the BMP's? 3 A. I don't know of any that attempted to 4 quantify yield impacts of implementing BMP's. 5 That would go back to the Bocher study that 6 says, "There would be none if they're done 7 appropriately." 8 Q. And that's what you're relying on for your 9 statement in Exhibit 2? 10 A. Yes. 11 Q. Paragraph E on that same page says, "We 12 need an the alternative," and maybe the "the" there 13 is inappropriate. 14 "We need an alternative crop to sugarcane," 15 is that the way it should read? 16 A. Yes. 17 MR. SAXE: Excuse me. Counsel, where 18 are you? 19 MR. BURGESS: Paragraph E. 20 Q. (By Mr. Burgess) The second sentence says, 21 "The region appears to have been in livestock before 22 crop production." 23 MR. SAXE: For the record, let me just 24 indicate that this is Point E, which 25 is a Subsection of Point 2, titled PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 134 1 "Other Data Sources or Insight into 2 the Analysis." 3 MR. BURGESS: Correct. 4 Q. (By Mr. Burgess) And the witness says the 5 paragraph should read, "We need an alternative crop 6 to sugarcane. The region appears to have been in 7 livestock before crop production." 8 My question is: What is the basis for the 9 statement, "We need an alternative crop to 10 sugarcane"? 11 A. The basis of that statement is that, 12 typically whenever one crop is not produced in a 13 region, an alternative crop is produced. 14 And the question I had is: What are the 15 possible alternative crops to sugarcane for the EAA, 16 if any? 17 Q. And why in this situation would you have, 18 in your words, a crop that wouldn't be produced? 19 A. You'd need to rephrase that one. 20 Q. I'm asking in reference to the specific 21 SWIM plan that we're here discussing, why do we need 22 an alternative crop to sugarcane? 23 You said, "Typically, whenever one crop 24 isn't produced in the region, another one is." 25 Why do we need an alternative? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 135 1 MR. SAXE: Objection to form. 2 I think you misquoted the 3 witness. 4 As I indicated, this is a 5 subpoint under category titled, "Other 6 Data Sources or Insight into the 7 Analysis." 8 I don't think the witness 9 testified that the EAA needs an 10 alternative crop to sugarcane. 11 Q. (By Mr. Burgess) Does the EAA need an 12 alternative crop to sugarcane? 13 A. The basis for this suggestion right here is 14 this is a part of a letter to Grace Johns where I 15 was indicating, "As you do this economic analysis, I 16 would suggest that, as you do the analysis, if your 17 analysis shows that sugarcane becomes uneconomic 18 rather than abandoning the land to no use or idle, 19 it would make economic sense to see if there is some 20 other crop or use that could exist for this land." 21 Q. And in that context, do you know whether, 22 in fact, other uses, other than idling the land or 23 abandoning the land have been examined by 24 Grace Johns? 25 A. Relative to the 10-year study, my PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 136 1 impression is that she did not look at an 2 alternative use; and she idled the land. 3 What she might do on a 20-year analysis, I 4 can't say. 5 Q. Are you aware of any studies, whether 6 ongoing or completed, which have examined 7 alternative crops or land use to sugarcane in the 8 EAA? 9 A. No. 10 Q. The second sentence in that same paragraph 11 says, "The region appears to have been in livestock 12 before crop production." 13 How did you become aware of that? 14 A. That would be from review from the soil 15 survey from Soil Conservation Service, and 16 discussions with a variety of people that are 17 associated with the EAA. 18 Q. Do you know, in fact, how many acres were 19 in livestock in the EAA and during what periods of 20 time? 21 A. No. 22 Q. Do you know whether livestock was 23 profitable in the EAA? 24 A. I would assume it was because they were 25 producing livestock, and they went from livestock to PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 137 1 sugarcane. 2 Q. Do you know why it went from livestock to 3 sugarcane? 4 A. Sugarcane's more profitable. 5 Q. Do you know whether anyone is examining 6 whether, in fact, livestock could replace sugar crop 7 production in the EAA? 8 A. Again, I don't know if Dr. Johns is going 9 to include that in the Hazen & Sawyer study, given 10 factors that might make sugarcane uneconomic, and if 11 she's going to look at livestock as a possible 12 substitute. 13 Q. What factors might make sugarcane 14 uneconomic? 15 A. If the cost of production, out-of-pocket 16 costs, exceed your returns, then it becomes 17 uneconomic to produce a crop. 18 Q. The third page of that same exhibit 19 identifies persons associated, I believe, with 20 either IFAS or the SCS. It simply asks you to 21 review that list. 22 And my question is: Since your retention 23 by the Department of Justice, you have spoken with 24 all of those people on that list? 25 A. This is a list of names and phone numbers PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 138 1 that have expertise in the EAA that I included on 2 this letter to Dr. Johns as potential contacts that 3 she might want to get input data on. 4 Relative to each one of these names -- do 5 you want me to read each one? I have talked to each 6 one of these people. 7 Q. You have? 8 A. Yes. 9 Q. Did you get vegetable budgets from 10 Tim Taylor? 11 A. I got vegetable budgets from somebody, and 12 I think it was Tim Taylor. 13 Q. And do you know whether that information 14 was among the documents that you have produced? 15 A. I believe it was. 16 MR. SAXE: For the record, Counsel, 17 you're probably aware that there was a 18 volume of public-published documents 19 that were identified as responsive 20 documents and producible; but for 21 which, rather than providing copies a 22 list was provided to Counsel with a 23 request that Counsel indicate which 24 documents, if any, they wanted hard 25 copies of. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 139 1 Q. (By Mr. Burgess) Exhibit 2, if you could 2 refer to that one. 3 A. (Witness complies.) 4 Q. What is this, again, for the record, 5 Exhibit 2? 6 A. This is a fax that went to Grace Johns on 7 6/3/92 from me, Dr. Jones and Dr. Ozuna. 8 Q. And the purpose for sending it was? 9 A. We had been visiting with Dr. Jones about 10 her interim reports and progress and indicated a 11 willingness to look at, review, and service peer 12 reviews for the work she had done. 13 She said, "Be specific in what you might be 14 interested in looking at," which was everything; and 15 we wrote them down and faxed them to her. 16 Q. On 6/3/92; is that correct? 17 A. Yes, that would be true. 18 Q. Had you, in fact, reviewed drafts of her 19 report by this date? 20 A. I can't answer with 100 percent assurance, 21 but I do not think we had. 22 Q. But, subsequently, you did review a draft? 23 A. Yes. 24 Q. Do you know when that was? 25 A. No. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 140 1 Q. Subparagraph C under Paragraph 1 talks 2 about, "Alternative assessments for funding the 3 STA's (range in cost of implementing BMP's across 4 farms)." 5 Do you know how Dr. Johns selected her 6 alternative assessment amounts? 7 A. These would be the 10.25 one-hundredths? 8 Q. Yes. 9 A. My impression is that she developed those 10 values with the South Florida Water Management 11 District, or they were in the contract. I can't 12 tell you exactly which. 13 Q. Did you or any of the authors on this memo 14 have input in recommending either of those amounts 15 or other amounts? 16 A. No. 17 Q. What does Paragraph 6 refer to? What 18 strategies are you referring to there? 19 A. "Strategies for reducing the economic 20 impacts as gleaned from other areas." 21 This would relate to the mitigation issue 22 of if there are negative economic impacts, some 23 sectors of the economy would be effected. What has 24 happened in other areas of the United States or in 25 other areas of the world where there were strategies PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 141 1 or programs enacted that could help mitigate those 2 impacts. 3 And that was a question of, what has she 4 done relative to develop and review literature on 5 strategies in other areas where there could have 6 been a negative economic impact. 7 Q. And do you know what she has done in those 8 areas, if anything? 9 A. She developed a review of literature in her 10 completion report that addresses some activities in 11 other parts of the United States. 12 Q. What are you referring to when you say, 13 "her completion report"? 14 A. It was a completion report by 15 Hazen & Sawyer to the South Florida Water Management 16 District, which I don't have the title or the date; 17 but the cover will say "Completion Report." 18 Q. And that's on the impact study as opposed 19 to the benefit study? 20 A. Yes, on the impact study. 21 Q. Other than Dr. Johns' review of the 22 literature, are you aware of any other studies, 23 whether ongoing or completed, which reviews what has 24 happened in other areas of the United States or the 25 world with respect to negative economic impact? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 142 1 A. I don't have any specific references I can 2 give you, but there are activities in the University 3 of California; the University of Colorado; Colorado 4 State University; Washington State University; 5 Idaho, University of Idaho that have people that 6 look at these kinds of issues. 7 Q. Are you aware of anyone looking at these 8 kinds of issues for the SWIM plan? 9 A. No. 10 Q. What does Paragraph No. 7 refer to with 11 respect to "methodology"? 12 A. Again, what we're asking her for is if she 13 has material we can review, then we would be happy 14 to review it; and in this case, it's the 15 "Methodology selected for valuing the Everglades." 16 This has to do with the extension of the 17 contract where she's looking at the issue of the 18 Everglades. 19 Q. What do you understand that she's doing 20 under the extension of the contract? 21 A. That's been completed. That was part of 22 the other contract and that's where she was to look 23 at methodologies and any opportunities for 24 estimating value of the Everglades. 25 Q. Is this the natural resource benefits PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 143 1 analysis? 2 A. I'm not sure. I did not spend a lot of 3 time in this area. 4 Q. You testified either earlier today or 5 yesterday as to Grace Johns having conducted what 6 amounted to a literature research with respect to 7 natural resource benefits. 8 Is that what you're referring to here 9 again? 10 A. I don't recall what the reference was to 11 yesterday, but she did address the benefits of a 12 natural resource or wetlands by subcontracting with 13 some other firm. 14 Q. Are you aware of, other than that study, 15 whether she is doing anything else in this area? 16 A. No, I'm not. 17 Q. Other than that particular study, what 18 studies or reports are you aware of, whether ongoing 19 or completed, that deal with methodologies selected 20 for valuing the Everglades? 21 MR. SAXE: Objection to form. 22 Counsel, are you confusing the 23 benefits or valuation of the 24 Everglades with -- I'm sorry. Excuse 25 me. I'm confusing it. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 144 1 Retract the question. Go ahead. 2 Do you want the question reread 3 to you? 4 THE WITNESS: Yes. 5 (WHEREUPON, the requested 6 portion of the record was read 7 by the court reporter.) 8 A. I'm not aware of other studies that have 9 taken place. 10 Q. (By Mr. Burgess) Paragraph 8 speaks in 11 terms of, "If benefits or value from another study 12 site is used to value the Everglades, what is the 13 other study site or sites?" 14 Given your last answer, am I correct in 15 assuming that other than what is contained in 16 Grace Johns' report done on a subcontract basis, 17 you're not aware of any reports or studies which 18 attempt to extrapolate results from other study 19 sites from valuing the Everglades? 20 A. I'm not following that review literature. 21 This is simply, again, a question to Grace Johns 22 that, "If you have done some work in this area, we 23 would be interested in knowing what the site is that 24 you're using to transfer the data from." 25 Q. And my question is: Other than what PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 145 1 Grace Johns has done in that area, you're not aware 2 of anyone that has attempted to do that; is that 3 correct? 4 MR. SAXE: Objection to form. 5 Counsel, specifically, with respect 6 to the Everglades, transfer of other 7 valuation studies to valuing the 8 Everglades? 9 MR. BURGESS: Right. 10 A. No, I'm not aware of other studies. 11 Q. (By Mr. Burgess) In Paragraph 10, you 12 speak in terms of, "estimation of secondary 13 impact." What secondary impacts are you referring 14 to there? 15 A. In this case, we're looking at how she's 16 going to fulfill the objectives of her study on what 17 are the impacts of economic activity on employment 18 and some of the nontarget sectors of the economy. 19 Q. And in that context, defining "secondary 20 impacts," what would the "primary impacts" be? 21 A. The primary impacts are changing gross 22 revenue to agricultural output. 23 Q. If you could, turn to Exhibit 3. 24 A. (Witness complies.) Okay. 25 Q. On the fourth page of that exhibit I PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 146 1 believe you refer to one of your handwritten notes 2 yesterday during your testimony, towards the bottom 3 which reads, "but all does not have to be paid by 4 farmers." 5 Do you see that? 6 A. Yes. 7 MR. SAXE: Could we stop for a 8 moment. 9 (Brief phone interruption.) 10 MR. BURGESS: Back on the 11 record. 12 Q. (By Mr. Burgess) My question is: What is 13 the basis for that statement? 14 A. The basis on that statement where I 15 indicated that, "but all does not have to be paid by 16 farmers," was a comment that I was making to myself 17 as I read through this, and is it resolved by the 18 South Florida Water Management District by 19 Southern Florida that all the assessment will be 20 placed against agricultural land. 21 So it's more a note to myself or a question 22 or an unresolved issue. 23 Q. Well, it seems to be an affirmative 24 statement, does it not, that all does not have to be 25 paid by the farmer? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 147 1 A. Still, it was a question in a note to 2 myself that, "Does it all have to be paid by the 3 farmers," and I don't have the answer to that and 4 I'm not drawing a conclusion about that. 5 Q. Are you aware of what the basis would be 6 for apportioning, any portion, of the expense 7 between farmers and any other group? 8 A. I would assume this is a decision from the 9 South Florida Water Management District; and how 10 they go about making decisions on assessments and 11 apportioning, I don't know. 12 Q. If we could turn to Exhibit 4. 13 A. Okay. 14 Q. And I believe you testified yesterday that 15 these were some thoughts you were writing down to 16 yourself with respect to the expanded 20-year 17 analysis? 18 A. Yes. 19 Q. In Paragraph No. 2, the second indentation 20 talks about, "trend in costs of production." 21 Have you looked at those trends? 22 A. I have not drawn out the trends and 23 analyzed them, no. 24 Q. Are you aware of anyone that has? 25 A. Not specifically. But it is my impression PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 148 1 that Grace Johns may be looking at that. 2 Q. Do you know over what time period she's 3 examined it? 4 A. No. 5 Q. How would you define the word "trend" for 6 purposes of economic analysis? 7 A. A trend is a fairly consistent change in 8 one direction. 9 Q. Down at the bottom, towards the bottom of 10 that page, the third bullet from the bottom says, 11 "Review sugarcane production in South Florida from 12 1970 to 1990 for trends, adjustments, et cetera." 13 Have you done that? 14 A. No, I have not done that. 15 Q. Are you aware of anyone that has? 16 A. No, I'm not. 17 Q. Do you have an opinion as to whether or not 18 a review of such production -- strike that. 19 Do you have an opinion as to whether or not 20 a review of sugarcane production in South Florida or 21 that 20-year period for trends, adjustments, 22 et cetera, is a necessary component of a 20-year 23 analysis? 24 A. I wouldn't say that it was a necessary 25 component. It could be part of the information used PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 149 1 to try to determine how you're going to project for 2 another 20 years. It can be useful input 3 information. 4 Q. What are you referring to in the last 5 bullet on that page, which reads, "The 'parity' 6 syndrome is a strawman that needs to be laid to 7 rest"? 8 A. This comment relates to the efforts by some 9 that have a tendency to fix yields, fix prices 10 received for a product and then put cost production 11 down and then begin an inflation on cost production 12 and demonstrate how an inflating cost production is 13 going to override your returns and that invariably 14 everyone's going broke. 15 Q. And have you raised that in a context of 16 the EAA? 17 A. Dr. Polopolus had one graph at one point 18 where he drew this phenomenon. 19 Q. And why do you think that it is a strawman? 20 A. I think it is a strawman because we've 21 heard this since 1914 about, "Agriculture deserves 22 the same profit share that they had in every case." 23 And what we see is adjustments that people 24 don't consider, which is input change mix, 25 technological changes; and in some cases, we'll get PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 150 1 an increase in output, or activity increases, 2 changes in efficiency, and adjustments in 3 production. 4 Q. When you say "input change mix," what are 5 you referring to? 6 A. I'm referring to change in the relative 7 amount of fertilizer to water to new varieties, to 8 labor versus machinery. 9 Q. And what are you referring to when you say 10 "technological change"? 11 A. Technological changes can be improved, 12 efficiency-improved or specifically to sugar, 13 improved sugar content in the cane; improved milling 14 efficiency; higher yields, and biomass; improved 15 management practices; substitution of machinery 16 harvesting for labor harvesting as possibilities. 17 Q. And what adjustments in production are you 18 referring to? 19 A. That would be an adjustment in production. 20 Adjustments in production are the same 21 things as adjustments in the input mix. 22 Q. If I can refer you to Paragraph 6A on the 23 same exhibit. 24 A. Okay. 25 Q. How do you define a "price cost squeeze"? PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 151 1 A. The "price cost squeeze" would be the 2 phenomenon that would say that cost of production 3 relative to prices received is narrowing. 4 Q. "Cost of production relative to" -- what? 5 I'm sorry. "Prices"? 6 A. Cost of production relative to price 7 received is becoming more narrow. 8 Q. And are you aware of any studies or reports 9 that have examined the price cost squeeze relative 10 to the EAA? 11 A. Nothing beyond what Dr. Polopolus developed 12 and presented to the board. 13 Q. Why, in your opinion, is it not relevant? 14 A. In my opinion, we've had this brought up as 15 a problem since the 1930's, 40's, 50's, 60's and 16 on. And what that ignores, totally, is the input 17 mix, adjustments, the ability of farmers and 18 processors to make adjustments to adopt new 19 technology; and in the cases of the soothsayers that 20 continually forecast the demise of agriculture 21 that's continued as a viable sector. 22 Q. What specific technological improvements 23 can you reliably project for the Florida sugar 24 industry relative to, let's say, production? 25 A. Reliably projecting technologies is PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 152 1 probably a part of the problem. We can go back 2 20 years and do any kind of analysis you want trying 3 to project the future and miss it completely. So 4 you'd be very unreliable in trying to go to the 5 future. 6 But there are shifts that take place, and 7 there are new technologies coming on line, such as, 8 Dr. Polopolus' suggestion in his publication with 9 IFAS that says that, "There are opportunities to 10 improve the processing by several percentage points 11 in the EAA at the mills." 12 So I would rely upon his expertise as -- 13 that's one. Improved water table management, 14 drainage, coming from efforts of IFAS, Soil 15 Conservation Service. Even the League, I believe, 16 is supporting work along those lines in developing 17 technologies. 18 Improve varieties that have higher yield to 19 biomass and/or sugar content, which I believe, also, 20 is being supported by the Sugarcane League. 21 Improve mechanization, Dr. -- 22 Mr. Wedgworth, in his deposition showed 23 innovativeness of sugar by him being one of the 24 pioneers in developing mechanical harvests, which 25 has been improved progressively. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 153 1 Q. Okay. The same Paragraph 6A, the first 2 bullet speaks in terms of, "Trends of yield 3 technology, price input mix will take care of 4 them." 5 I suppose you're referring to, it will take 6 care of what the price cost squeeze or the syndrome 7 of parity or both? 8 A. The price cost squeeze. As farmers reacted 9 to economic incentives, they will make adjustments. 10 And we probably can find some indication of 11 the kind of adjustments they've made in the past by 12 looking at the historical data to see what is 13 happening in, for example, sugarcane production, and 14 what's happening to our input mix, how they produce 15 cane now, relative to how they did 20 years ago and 16 how that's had some evolution of adjustment. 17 Q. Are you aware of any studies, whether 18 ongoing or completed, which have reviewed the trends 19 you speak about in that paragraph, "yield technology 20 price input mix"? 21 A. No, I have not. I assume you mean for 22 the EAA? 23 Q. Yes. What does Paragraph B refer to there 24 with respect to "vegetables," and I believe it 25 reads, "productivity gains are not addressed for" -- PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 154 1 A. 6B, "Sod and Vegetables-productivity gains 2 are not addressed." 3 Q. ("Start from veggies to cane")? 4 A. I'm trying to read that. 5 Q. ("Shift from veggies to cane on some 6 acres")? 7 A. Again, these are comments relative to what 8 we consider on a 20-year analysis, and what are the 9 options. Everything's on the table. Let's think 10 about everything. 11 The concern I've got, particularly in the 12 first Hazen & Sawyer study, when I look at 13 vegetables, what she does is she locks yields, she 14 locks prices, and she begins an inflation against 15 cost production; and the cost production on 16 vegetables are relatively high compared to corn or 17 wheat or other crops. 18 And she has the inevitable happen, which 19 is, in a very few years, the cost overruns the gross 20 revenue. 21 And my impression, my opinion is that needs 22 to be addressed to see if that is a logical outcome, 23 which I don't think it is. 24 Q. And you think there are similar 25 productivity gains that will be made in sod and PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 155 1 vegetables which will prevent that cost price 2 squeeze? 3 A. There may be productivity gains and there 4 may be input mix shifts and there may be adjustments 5 due to the economic incentives. 6 Again, in which case for vegetables, this 7 is a small acreage relative to the world's 21,000 8 acres. The market is one where they hit a market 9 that has a window, and they've got the acreage at a 10 level where the price is responsive to output. And 11 what I'm saying, you can reduce your acreage of 12 vegetables somewhat and get a positive price 13 response to offset this increasing cost. 14 Q. Paragraph 7 speaks in terms of 15 "Harvesting," first bullet entry, "is full 16 conversion to mechanical." 17 Do you have any opinion as to whether a 18 full conversion to mechanical will have a positive 19 or a negative effect on yield in terms of tons per 20 acre? 21 A. I would like to see information on that. I 22 don't really have a real strong opinion about that. 23 Q. Have you heard of any studies or reports 24 that speak in terms of productivity gains or 25 decreases as a result of going from hand harvesting PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 156 1 to mechanical harvesting? 2 A. Again, I can't document the exact 3 references; but in visiting with people and looking 4 at a lot of documents in the Wedgworth deposition, 5 you can get both sides. 6 There are some that say mechanical 7 harvesting of sugarcane on the Muck soils may result 8 in somewhat less cane being harvested. 9 Mr. Wedgworth indicates, "mechanical 10 harvesting has no effect." 11 Q. The same page, Paragraph 8, addresses 12 "BMP's," and -- I'm sorry. It's Paragraph 9, which 13 address "Sensitivity Analysis." 14 Are you aware of any ongoing sensitivity 15 analysis being conducted in relation to this 20-year 16 study? 17 A. My impression is that Dr. Johns plans to do 18 some sensitivity analysis, yes. 19 Q. And what is a "sensitivity analysis"? 20 A. Sensitivity analysis to put it in context, 21 20 years is a long time to project. If we projected 22 20 years -- starting in 1970, projecting where 23 Russia would be, the United Soviet Union in 20 years 24 would have been really out of line because there is 25 no Soviet Union. PARLIAMENTARY REPORTING OF FLORIDA, INC. 800-521-9125 157 1 Nevertheless, sensitivity analysis gives us 2 the option of saying we're going to make the best 3 projection we can; but on some of the factors that 4 we project, "We're going to try to look at some 5 bounds on it to see just how much it changes the 6 projection if you take an optimistic approach at it, 7 if you take a pessimistic approach. And let's try 8 and put some bounds around these estimates." 9 The further you project, the wider those 10 bounds will get. 11 Q. And are you aware of upon what estimate she 12 is conducting sensitivity analysis? 13 A. I don't recall the factors that she is 14 going to do sensitivity analysis on. No, I don't 15 recall those. 16 Q. Do you have an opinion with respect to this 17 particular 20-year study as to what factors would be 18 good candidates for the sensitivity analysis? 19 A. Did I list any on the next page? I'd want 20 to take a little bit of time just to be careful with 21 that. Some