Report Prepared by: Charles Slagter, WWTF Operations Supervisor
Title
SUBJECT: Approval of Two Separate Agreements for the Harvesting and Brokerage of Wastewater Treatment Plant Land Application Crops with Big Iron Custom Farming in the Annual Amount of $260,000 for Harvesting Services, and San Joaquin Hay Grower’s Association for Brokerage Services; Each Agreement for a Three (3) Year Term Beginning July 1, 2023, Through June 30, 2026, with an Option to Extend the Agreements for Two (2) Additional One (1) Year Term(s)
REPORT IN BRIEF
Considers approving two separate agreements with Big Iron Custom Farming, in the amount of $260,000, for harvesting services and with San Joaquin Hay Grower’s Association for brokerage services of Wastewater Treatment Plant Land Application fodder crops.
RECOMMENDATION
City Council - Adopt a motion:
A. Approving the agreement with Big Iron Custom Farming, in the annual amount not to exceed $260,000, for the harvesting of the Wastewater Treatment Plant Land Application Area fodder crops; and,
B. Approving the agreement for brokerage services with San Joaquin Valley Hay Growers Association for the brokerage of said crops; and,
C. Authorizing the City Manager or the Deputy City Manager to execute the necessary documents and authorizing future contract amendments for harvesting services for varying crop acreages at a mutually agreeable rate, contingent upon available budget, through June 30, 2028.
Body
ALTERNATIVES
1. Approve, as recommend by Staff; or,
2. Approve, subject to other than recommended by Staff; or,
3. Deny; or,
4. Refer to Staff for reconsideration of specific items; or,
5. Continue to a future meeting.
AUTHORITY
Charter of the City of Merced Section 200.
CITY COUNCIL PRIORITIES
As provided in the Proposed Budget for the 2023-2024 Fiscal Year.
DISCUSSION
The Wastewater Treatment Facility (WWTF) Land Application Area (LAA) serves as an environmentally friendly way of disposing the biosolids that result from the process of treating wastewater. The biosolids are a soil amendment for the 750 acres of farmland that grows fodder crops for local farmers and ranchers. Due to the small operation, staff does not have equipment to harvest the crops, nor the contacts in the farming industry to sell the hay. Therefore, the WWTF contracts the harvesting and brokerage of the crops.
A Request for Proposal (RFP) for harvesting and brokerage services was issued in January 2023. Staff received 5 responses for harvesting and 2 for brokerage.
Harvesting:
Derek Mumby Custom Hay
Bertuccio Hay Service
MB3 Farms
Pierre Peret Ag
Big Iron Custom Farming
Brokerage:
San Joaquin Hay Growers Association
Mclaughlin Hay
To determine which proposals best serves the City’s interest, staff compared criteria for harvesting, such as the total cost of harvesting (swathing, raking, baling, and stacking) as well as the number, type, and age of the equipment; for brokerage services, staff compared the percentage per ton of harvest and the volume of hay brokered. All vendors were compared in regard to experience of handling large volumes of hay and silage. After careful consideration, staff recommends Big Iron Custom Farming for harvesting and San Joaquin Valley Hay Growers Association for brokerage services.
The contracts will be for a period of three years, commencing on July 1, 2023 and ending on June 30, 2026. The City shall have the option of renewing the agreements for two (2) additional one (1) year periods.
Big Iron Custom Farming will harvest crops at a cost of $40.67 per ton. Staff estimates the following tonnage:
• Alfalfa: 240 acres @ 7 tons/acre = 1,680 tons x $40.67 per ton. = $68,325.60
• Sudan: 340 acres @ 4.5 tons/acre x 2 cuttings = 3,060 tons x $40.67 = $124,450.20
• Winter Hay: 400 acres @ 4 tons/acre = 1,600 tons x $40.67 per ton = $65,072
The grand total to harvest all crops for hay is just under $260,000 per fiscal year.
Revenue from the sale of the fodder crops is dependent upon the amount and type of crop harvested, as well as current market rates. The revenue generated is used to cover the costs of purchasing seed, fertilizer, and for the production costs of operating the LAA. San Joaquin Hay Growers association will broker the harvested crops, retaining 6.5% of the sale price and submitting the remaining amount to the City.
IMPACT ON CITY RESOURCES
Funding is available in the proposed FY2023-24 budget within Fund 6000-Wasterwater System Operation, Land Application Division. The contract cost for future years will be allocated with the annual budget process.
No appropriation of funds needed for brokerage services as the broker deducts their percentage from the proceeds of the sale of the fodder crops.
ATTACHMENTS
1. Big Iron Custom Farming, Contract
2. San Joaquin Valley Hay Grower’s Association Contract