Stable statewide cash rents for Oregon mask large changes across counties in 2024

Agricultural producers can gain access to the land they need through two general channels. Some own their land, after purchasing it from another landowner, bidding on it in an auction, or inheriting it from a family member. The alternative to ownership is renting land from another producer or a non-operating landowner (a person who owns land but is not actively involved in agricultural production). Per the most recent data published in the 2022 Census of Agriculture, rented farmland in Oregon accounts for 29% of all farmland in the state. This is relatively low compared to the national figure, which stands at 39%, but still accounts for roughly 4.5 million acres of land in the state.

The comparatively low rental percentage in Oregon likely can be chalked up to a few things. One is the large amount of grazing (pasture and range) land in the state. If it is not owned by the federal government, grazing land is generally more likely to be owned by the producer using it. There is also a large amount of irrigated cropland in Oregon – roughly 46% of all harvested cropland in the state was irrigated in 2022 – which is also less commonly rented out due to the capital and maintenance costs associated with irrigation infrastructure. For example, of Oregon’s farms where all of the harvested cropland was irrigated, only 24% of the land was rented. These farms account for 39% of all farmland in the state, but only 10% of all farmland in the US.

Each year, the US Department of Agriculture’s National Agricultural Statistics Service (USDA-NASS) publishes cash rental rates at the state and county levels. The county-level data come from a cash rental rate survey conducted every summer to collect information on the cash rents paid for non-irrigated cropland, irrigated cropland, and pastureland. A unique aspect of this survey is that it provides county-level data on an annual basis. Additionally, at just one and a half pages in length, the survey is shorter and less complicated than other USDA surveys, and as a result, the response rate tends to be relatively high. In 2024, 55% of the 3,349 surveyed producers responded to the USDA-NASS cash rent survey in Oregon. This is actually down from the 70% response rate in the 2023 survey, so the latest numbers should be interpreted with that in mind. The state-level cash rent data come from the same June Area Survey that USDA-NASS uses as the basis for its annual farmland value estimates (see my recent blog post here).

Note: Values in the figure are adjusted for inflation to the year 2024 using the Bureau of Economic Analysis’s Gross Domestic Product Implicit Price Deflator.

Over the past year, the statewide cash rent for irrigated cropland increased by 0.8% in inflation-adjusted terms, bouncing back from declines in the previous two years. Irrigated cropland tends to be rented for much more than non-irrigated cropland, due to the higher returns associated with irrigated production and the costs of maintaining irrigation-related equipment and water conveyance infrastructure. In 2024, irrigated cropland was rented for an average of $266/acre, which is in line with the average rent over the previous five years (2019-2023). Looking across the state, irrigated rents tend to be highest in the northern Willamette Valley and other counties along the Columbia River (Hood River, Morrow, and Umatilla). With a couple of exceptions (Klamath and Malheur), counties in the eastern, central, and southern parts of the state tend to see lower irrigated cash rents. The largest percentage gains over the previous year occurred in Clackamas and Morrow, while Deschutes, Baker, and Klamath saw the largest declines.

Note: The color shading corresponds to the cash rental rate reported for 2024. Where present, the numeric value on the map corresponds to the 2023-24 real percentage change in cash rent. Shaded counties without a numeric label did not report a rental rate in 2023. 

In contrast to irrigated cropland, non-irrigated cropland rent, at $107/acre, was down by 1.85% over the past year. Note that the nominal 2024 rental rate of $107/acre is identical to the one reported in 2023, so the decline is entirely due to the inflation adjustment. Compared to the inflation-adjusted average over the previous five years, the 2024 rate is down by about $5/acre. Counties in the northern and mid-Willamette Valley, along with Tillamook County, tend to have the highest rents. Given its dry climate, Eastern Oregon tends to have lower non-irrigated cash rents. Over the past year, the largest annual percentage gains were in Umatilla and Clackamas, whereas Union, Tillamook, and Wasco had relatively large percentage decreases.

Note: The color shading corresponds to the cash rental rate reported for 2024. Where present, the numeric value on the map corresponds to the 2023-24 real percentage change in cash rent. Shaded counties without a numeric label did not report a rental rate in 2023. 

The average 2024 pasture cash rent was $11.50/acre. Like the non-irrigated cropland rent, this value is unchanged in nominal terms compared to the previous year but represents a 1.85% annual decrease after accounting for inflation, and continues a general downward trend since USDA-NASS started their current rental rate reporting program. Although the dollar values involved tend to be lower on a per-acre basis, pasture operations tend to be much larger, so small deviations in rental rates can add up quickly. Pasture rents have generally declined continuously since 2009, with the 2024 rent being about $2.50 (or 18%) lower than the 2019-2023 average of $14/acre. Western Oregon tends to have the highest pasture rents, while eastern Oregon, where farms tend to be larger, have lower per-acre rents. Lower average pasture rents give way to large percentage changes from year to year. For example, Gilliam and Harney had 85 and 45% respective gains, while Polk (-30%) and Columbia (-22%) had large declines.

As I’ve mentioned before, it bears emphasizing that the USDA-NASS pasture rent figures paint an incomplete picture of the rental market for this type of land. This is because the USDA survey only reports on land rented for cash, but most private grazing land is rented on a per-animal unit month (AUM) or per-head basis. In addition, a considerable fraction of land in grazing operations comes from public land owned by the Bureau of Land Management or U.S. Forest Service, with those lands also rented on a per-AUM basis.

Note: The color shading corresponds to the cash rental rate reported for 2024. Where present, the numeric value on the map corresponds to the 2023-24 real percentage change in cash rent. Shaded counties without a numeric label did not report a rental rate in 2023. 

Cash rents can be a useful snapshot of the overall health of the farm economy, as they are heavily influenced by the net returns to agricultural production. Nationwide, cash rents reached a record level this past year, which may squeeze farm profits for renters when other input costs remain high amid falling commodity prices.

Rents also tend to be a lagging indicator. Leases for the upcoming year tend to be negotiated following harvest in the late fall, winter, or early spring, so the values reported by NASS for 2024 are more reflective of what landowners and renters expected the year to bring, not what actually happened. In addition, some leases, particularly for irrigated farmland, tend to be renewed on a multi-year basis. Thus, for example, a three-year fixed-cash lease covering the 2022-2024 production years could also be included in the 2024 NASS values, which makes it further removed from current production conditions.

Because purchasing land outright typically requires extensive financial capital (e.g., money for a down payment and other land currently owned as collateral), renting is often seen as a way for new and beginning producers, or producers who are otherwise financially disadvantaged, to build and grow an operation. Land rental, however, is far from being limited to smaller producers, as discussed in this 2016 USDA report that I coauthored. Most commercial farms in the US contain a mix of owned and rented land. In addition, it can be difficult for beginning producers to find land to rent, as landlord-tenant relationships tend to be fairly long-lasting, despite the fact that most contracts for farmland are renewed annually, and about one-third of land is rented between family members.

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Food Price Inflation and the Farm Share of the Food Dollar

Rising food prices seem to be on everyone’s mind these days. Consumers are frustrated that prices have not come down from pandemic levels, even after the reasons for those cost increases seem to have abated. Food price inflation has slowed this year according to official CPI numbers, but consumers still perceive prices to be increasing quickly. The proposed merger between Kroger and Albertsons highlights the growing concentration in the food retail sector, and the proposal has generated concern among the public as well as federal regulators. Here in Oregon, the merger would result in the sale of 60 Kroger stores to C&S Wholesale Grocers. In the last week, the issue was further elevated when food prices were brought up by the Kamala Harris campaign and the idea of a federal ban on price gouging was floated.

Since I spend most of my time working on issues related to farm production and profitability in Oregon, for me, the discussion of food prices always leads back to the relationship between the prices that consumers face at the grocery store and the prices that Oregon farmers and ranchers receive for their products. The ‘price spread’ is the difference between what consumers pay at the store and what farmers receive. This gap covers the costs of processing, shipping, marketing, and any profits made along the way. An increase in the price spread could be caused by an increase in the cost of shipping, increased labor costs among processors, increased cost of regulatory compliance, or an increase in the profits generated by processors and retailers.

The degree to which retail prices filter down to the farm sector also depends on market power and concentration at the processing and retail levels. For example, if a competitive meat processing market became a monopoly overnight, we would expect the price spread for meat to increase because the processor would be able to charge higher prices while passing relatively little on to beef producers.

This blog post will use historical beef price data to discuss the changes in the retail-farmgate price spreads and farm share of the retail food dollar over time. Beef is a good example because cattle production is spread across many small beef producers, processing is concentrated largely in the hands of four very large firms, and recent increases in meat prices are often a source of consumer complaint. While this type of simple analysis cannot identify the specific reason for a change in the farm-retail price spread in a given quarter or year, it can reveal the degree to which food expenditures are captured by supply chain steps downstream from the farm. It can also be helpful when thinking about the impact that further consolidation might have on the food prices and farm profitability.

These figures, based on USDA-ERS meat price data, show the price spreads and farm share of the food dollar for beef. Price spreads for other commodities are available here. For the beef industry in particular, the value captured by processing, distribution, and retail has increased by a factor of 15 over the past 5 decades. The farm share of the retail beef dollar has fallen from 65% to about 45%, dipping below 35% during the pandemic. Although it is difficult to generalize, these charts can help us put the current discussion about market power and food prices into perspective.

I think there are three main conclusions to make.

  1. The Covid years were very difficult for some sectors. Meat processing provides a perfect example of a Covid-related capacity constraint that temporarily changed the relationship between producers and processors and led to high retail prices (see Lusk et al., 2021 for more detail). As meat processing facilities reduced throughput because workers were sick or to comply with health and safety protocol, the volume of meat being processed fell, driving down average farmgate prices. In other agricultural sectors, shipping costs, input prices, and labor costs increased rapidly, and the processors/distributors share of the food dollar increased.
  2. In the case of beef at least, the farm share of the food dollar has recovered in the last year or two as the pandemic has faded and supply chains have normalized. Cattle inventories are currently at historically low levels and many beef processors are struggling to maintain their desired production volumes. This should not be taken as a conclusion that there is not significant market power in meat processing, but the market dynamics currently give beef producers a stronger hand in the market. We may see price spreads adjust downward again as cattle inventories return to more typical levels.
  3. The farm share of the food dollar will look different for commodities like beef, milk, and potatoes than it will for highly processed foods. Intuitively, the supply chain costs for highly processed foods are much higher than for “whole” foods. As diets have incorporated more highly processed foods, farm revenues have increased at a slower rate than food sales. It remains an open question whether or not the farm share of the overall food dollar will shrink further, or if we have reached a point of stabilization.

Further Reading: This is a huge topic and there is a lot of academic literature that has addressed food prices, market power, and the consolidation in the modern food system. A few interesting academic works and other resources are below:

  • Ma et al., 2017: An article about market power in grocery, which reminds us that market power can also exist at the neighborhood level.
  • Howard, P. H. 2016. Phil Howards book “Concentration and Power in the Food System: Who Controls What We Eat?” is not an economic approach to this topic, but he presents an interesting viewpoint and does rigorous work. There are some excellent figures.
  • Raw data on retail food prices, rather than agricultural commodities are managed by the Bureau of Labor Statistics. They can be found here.

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Latest USDA estimates point to continued strong growth in Oregon’s farmland values

The US Department of Agriculture (USDA) recently released its latest state-level data on farmland values. The data come from the USDA’s June Area Survey, which asks a rotating panel of producers to estimate the market value of their land. Responses from surveyed farmers are then weighted and extrapolated to generate estimates for entire states. The survey-based estimates are broken down into four categories of per-acre land values: (1) farm real estate, measuring the value of all land and buildings on the farm, (2) non-irrigated cropland, (3) irrigated cropland, and (4) pastureland.

In Oregon, the per-acre value of farm real estate is $3,720 in the most recent data, representing a $220 (6.3%) increase in nominal terms over the past year (see Figure 1 and Table 1). Note that this is in nominal terms, meaning that it is not adjusted for inflation. In addition, this is based on a revision to the previous five years of land value data. After the release of the five-year Census of Agriculture data, the previous five years of annual land values are subject to revision. Because the 2022 Census pointed to higher land values than revealed by the annual survey, this resulted in an upward revision for Oregon’s 2019-2023 values. For example, the 2023 nominal value that was previously reported as $3,180/acre is now $3,500/acre.  

Figure 1: Per-acre farm real estate (land and buildings) value, Oregon, 1999-2024

It is often informative to examine trends in farmland values over time using real (or inflation-adjusted) values, which account for shifts in values relative to incomes and the prices of other goods. After adjusting for inflation using the Bureau of Economic Analysis’s Gross Domestic Product Implicit Price Deflator, the change in farm real estate value amounts to a $154 (4.3%) increase in 2024 dollars. When compared to its most recent 5-year average, real farm real estate values are up $281 (8.2%). The value of Oregon’s farm real estate continues to outpace inflation, with 2013 being the last time an annual reduction in the statewide real value was observed. In nominal terms, farm real estate values have not decreased since 2009 during the Great Recession.

Table 1: 2024 USDA farmland value estimates for Oregon

After decreasing over 2022-2023, non-irrigated cropland value rebounded in 2024, increasing by $96 (3.3%) in real terms to $3,010/acre. The value of irrigated cropland continued its upward trend over the past year, increasing to $7,650/acre, a $253 inflation-adjusted gain of 3.4%. Pastureland value, at $1,050/acre, increased by a more modest 1% over the past year. Relative to their 5-year rolling averages over 2020-2024, all classes of land values point to strong growth in 2024. With few exceptions, the values for all categories of Oregon’s farmland have generally more than kept up with inflation in recent history (see Figure 2).

Figure 2: Inflation-adjusted farmland values for different land uses, Oregon, 1999-2024

With aggregated state-level data, it is difficult to tease out any direct cause of the observed trends or year-to-year changes. The strong growth across the board in Oregon stands out compared to other states in the Pacific Northwest (Table 2). For all farmland value categories, Oregon’s growth in 2024 was more than double the growth observed in Washington. With the exception of pastureland in Idaho, Oregon’s growth rates were also higher than those of California and Idaho. In level terms, however, land values in Oregon generally remain below these other states.   

Table 2: 2024 farmland values in Oregon, Washington, California, and Idaho

Using a proprietary database of sales transactions, recent analysis by AgWest Farm Credit points to several factors that have affected land values in Oregon, including low inventories of land available for sale, strong interest in purchasing land from institutional investors (and buyers from Idaho), and a positive outlook on current-year water availability. The AgWest report also notes the weak relationship between farm profits and land values in recent years, suggesting that investment activity and other factors not directly related to farming are playing an increased role in farmland markets. These factors have bolstered land values despite the relatively high interest rates seen over the previous few years. When interest rates are higher, land values are generally expected to go down, as debt payments for land purchases go up and landowners put a greater discount on the net income they expect to receive from the land in future years. Interest rates are now are expected to go down in the near term, suggesting that any downward pressure current rates are exerting on land values will subside.  In addition, it is worth keeping in mind that the June survey used to construct the USDA estimates took place prior to the large wildfires that have affected producers in eastern Oregon.  

Of course, the fact that Oregon’s agricultural land has continued to appreciate in value has both pros and cons. Investors tend to be attracted to farmland because it generally keeps pace with inflation, which makes it an attractive and relatively safe asset class. Having access to affordable farmland is key for producers, as real estate is the most common source of collateral in farm-related loans. In addition to investment interest, the AgWest report also notes stronger demand from large operators, suggesting that small producers are increasingly at a disadvantage when it comes to accessing both the land and financial capital needed to grow their operations.

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Pasture, Rangeland, Forage Insurance in Oregon

Credit: Tim Delbridge

I spent most of last week traveling in Eastern Oregon to speak with livestock producers, and the subject of Pasture, Rangeland, Forage (PRF) insurance came up in conversation. It is clear that PRF has become increasingly popular, and may even be impacting land prices and lease arrangements for grazing land. In this blog post I will discuss some basic information about the PRF insurance product and share participation and loss ratio outcomes for Oregon. Later in the post, I link to a spreadsheet that contains more detailed county level data on PRF participation, premiums, and payments.

The PRF insurance program is designed to help livestock producers manage the risk of poor forage production. It is essentially a rainfall “index insurance”, meaning that neither the insurance premiums nor the insurance payouts (known as “indemnities”) depend on the management or production outcomes of the individual producer. Rather, the premiums and payouts of the PRF program are based on monthly rainfall totals in a specified grid location. This type of index insurance has the advantage of low administration costs, as farm-level yields and losses do not need to be verified before payouts are made. The drawback is that the forage production on individual pastures may not be highly correlated with the rainfall index for the larger grid, which weakens the effectiveness of PRF as a risk management tool for individual ranches.

Livestock producers are eligible to insure at coverage levels up to 90% of the expected precipitation amount and must choose how to distribute their coverage over the calendar year. Like other USDA crop insurance programs, PRF premiums are subsidized, with the subsidy percentage based on the coverage level chosen by the producer. For more detailed explanation of the purchase process, and for information on national PRF outcomes, please see this excellent article by Jay Parsons, John Hewlett, and Jeff Tranel.

PRF Insurance has become increasingly popular in Oregon. Figure 1 shows the number of acres insured under PRF from 2016 to 2024. Insured acreage has grown rapidly in the state, with roughly 17 million acres insured. There has been similar participation growth at the national level, with nearly 300 million acres insured in 2023 (USDA-RMA, 2024).

Producers that buy coverage under the PRF program will receive payments if the precipitation index is below the trigger level for the specified months. Given that recent years have been drier than average in much of the state, a large percentage of purchased PRF policies have resulted in indemnity payments. Figure 2 shows the average “producer loss ratio” for PRF coverage in each county in 2022. The producer loss ratio is defined as the insurance indemnity divided by the net premium paid by the producer (i.e. premium less the premium subsidy). For example, in Union County, the producer loss ratio is 2.26, meaning that for each dollar that the producer paid in PRF premiums, they received an average of $2.26 back in indemnity payments. This is close to the Oregon average producer loss ratio since 2016. A spreadsheet with county level PRF outcomes from 2016 to 2023 can be found here.

Because the PRF insurance is based on a rainfall index, the payouts are correlated with drought conditions. Figure 3 shows the drought monitor map for October 11, 2022. While not a perfect match, we can see that the areas in drought are more likely to receive higher payouts from PRF coverage.

Crop insurance is often viewed as a gamble, with farmers and ranchers wondering if the decision to insure will pay off. Looking at the map of producer loss ratios alongside the drought monitor map is a good reminder that this program is designed to reduce the financial risk posed by low rainfall and reduced forage production. A “good year” for forage is more likely to be a “bad year” for PRF insurance, and vice versa. Livestock producers should carefully consider how a year of poor pasture conditions will affect their revenues, and whether PRF insurance could help protect them from these outcomes. Also worth considering is that in Oregon and in the U.S. as a whole, in each year since 2016 producers have received more than they’ve paid in premiums.

References:

USDA-RMA. 2024. “Nationwide Summary – By Insurance Plan”. Summary of Business. Available at https://www.rma.usda.gov/SummaryOfBusiness. Accessed July 16, 2024.

Parsons, J., Hewlett, J. and Tranel, J. 2023. “Managing Risk in a Small Agricultural-base Business.” RightRisk News, Vol. 11, Issue 2. RightRisk Education Team. Laramie, WY.

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Unpacking the 2022 Census of Agriculture

Over the past few months, I’ve been analyzing what the 2022 Census of Agriculture reveals about Oregon’s agricultural sector. Two data points that have garnered attention concern the loss of 667,000 acres of Oregon’s farmland and the substantial 29% gain in the per-acre value of Oregon’s farm real estate. Both findings were discussed in a recent episode of OPB’s Think Out Loud (I’m better in print). Now that I’ve gotten a better grip on the full picture painted by the Census, I want to put these results, and how they should be interpreted, into context.

Decline in farmland: The 667,000-acre (or 4%) decline in Oregon’s farmland area over 2017-2022 is strikingly large. Although Oregon still has over 15 million acres of land in farms, this decrease represents an area more than seven times the size of Portland or 72 times the area of Corvallis. In addition to the reported loss of Oregon’s farmland, the Census also shows a significant decline in the number of farms, which dropped by 2,069 to 35,547, a 5.5% decrease from 2017. It’s worth noting that the previous Census in 2017 showed a farm gain (compared to 2012) of 2,177, which offsets the decrease shown in the latest year. At the same time, the 2012-2017 Census change pointed to a 339,000-acre decrease in Oregon’s farm acreage, which seems odd but not totally implausible.

What explains the fluctuations in the number of farms? The USDA defines a farm as “any place from which $1,000 or more of agricultural products were produced and sold, or normally would have been sold, during the census year.” This administrative definition probably doesn’t match what most people think of as a bona fide farm or ranch operation. It’s important to note that the $1,000 sales threshold doesn’t actually need to be met,  only that it would have been met in a typical year. This relatively loose definition is important when considering the scope of Oregon’s farm population. Specifically, 9,465 (about 27%) of Oregon’s farms had less than $1,000 in sales in 2022. And note that the number of farms in this group, those with less than $1,000 in sales, actually decreased by 2,197 in 2022, suggesting it accounts for at least some of the decline in the overall farm count.

Regarding the 667,000-acre decrease, where did all the farmland go? We certainly did not develop 667,000 acres worth of housing, a conclusion I worry people are tempted to jump to when seeing this figure. The Census data indicate that about half of the decrease was from the loss of cropland and half from pasture. Other land-use data sources, however, paint a different picture. If we compare the National Land Cover Dataset, a satellite-based data product from the US Geological Survey, for 2016 and 2021 for Oregon, we find that only about 80,000 acres of cropland moved to a different land cover, typically pasture, grassland, or shrubland. About 2,300 acres went from cropland to development. Similar results are obtained for the pasture/hay category.

Another commonly used land use data source is the USDA’s National Resources Inventory (NRI), which is based on a combination of aerial imagery and ground-truthing. Unfortunately, we don’t yet have the most recent NRI data for 2022, but the changes from 2012 to 2017 provide insight. Over this period, the Census reports that Oregon lost 339,000 acres of farmland. The NRI, in contrast, puts that at more like 10,000-20,000 acres, depending on which categories are counted as being agricultural uses (e.g., rangeland is sometimes, but not always, used for livestock grazing).

In addition, the NRI, which is designed to track land-use change, shows that the rate of land development in Oregon and elsewhere has declined substantially over the past couple decades. Farmland does get developed, but we aren’t actually losing farmland, in a land-use sense, at anything near the rate suggested by the most recent Census. Given all of this, it seems more likely that a good chunk of the 667,000 acres was misplaced, rather than lost.

Increase in land values: The 29% increase in Oregon’s per-acre farm real estate value, adjusted for inflation, is also substantial. This compares to gain of about 9.5% in the US as a whole, and puts Oregon fourth in the US in terms of its rate of farmland value appreciation, behind Utah, Wyoming, and New Mexico, and slightly ahead of Colorado and Idaho. The value of Oregon’s farmland has been rising over the past several decades, but did it really go up by 29% in such a short period?

It’s worth noting how the Census tracks the value of farmland. Respondents are asked to estimate the current market value of all land and buildings that are part of their farm. These values are not based on actual market transactions but rather on people’s perceptions of their land’s value, including land they rent and never purchased.

Other sources confirm an increase in Oregon’s farmland value but not by as much. The annual USDA land value report, which provides state-level information, indicates a 9% gain in per-acre farm real estate value over the same period covered by the Census, largely driven by increases in the value of irrigated cropland. This report, like the Census, is based on self-reported producer estimates of land value. Observed farmland transaction prices show similar gains to the annual USDA data, though sales prices can fluctuate due to the amount of land bought and sold in a given year. The most recent farmland value report from AgWest Farm Credit, which is based on observed transactions, provides another data point showing more modest gains in the value of Oregon’s land.

Putting all of this together: An advantage of the Census is that it provides a rich data set covering all sorts of things down to the county level, which is useful for understanding what’s driving the state-level numbers. For example, the top three counties in terms of farmland value gains—Jefferson (80% increase), Benton (70%), and Wasco (68%)—also saw significant decreases in farm acreage. Jefferson County, for instance, lost 250,000 acres (32%) between 2017 and 2022, mostly due to a decrease in grazing land and woodlands. Benton County lost 24% of its land (about 30,000 acres), mostly woodlands. Wasco County lost 30% of its land (about 410,000 acres), with over 90% classified as grazing land. Similar patterns are seen in Sherman, Union, and Curry counties. In general, the recent Census appears to have accounted for disproportionately less of the lower-valued land in these counties, which sort of mechanically drives up the county-wide value of what’s remains.

In general, counties that lost a lot of farmland tended to see large gains in farmland value, but the converse doesn’t always hold. Crook and Lake county, for example, saw increases in farmland acreage and increases in farmland values of more than 60%. The point is that we need to think carefully about all of the different factors that are changing when drawing conclusions based on the Census data.

Another factor to keep in mind is that the Census is really more of a comprehensive survey. The response rate in 2022 was 61% nationwide, down from the 70-75% response rates obtained for the last two Census years. Lower response rates inherently introduce more noise and less certainty in the estimates. Many of the counties with large farmland acreage declines experienced severe droughts in the years leading up the Census which could have conceivably affected whether they responded at all and how they responded in terms of the land they considered to be part of their farm.

Wrapping up: With all of this said, what can we conclude about the trend of Oregon’s farmland acreage and land values? On one hand, the direction of the changes reported in the Census is, by all accounts, accurate. We are, and have been, losing farmland and simultaneously seeing its value rise. On the other hand, the substantial changes reported in the most recent Census seem to be driven at least partly by survey design and response rates, rather than actual changes in these two high-level summary statistics. When studying something like farmland over a broad geographic area, it’s impossible to track every change that occurs with 100% accuracy. Instead, analysts rely on different data sources, some of which are based on surveys. There’s always going to be some error in what’s being measured, so it’s important to pay attention to how data are collected and what effect that might have on your findings. Given all this, it’s probably best to consider the massive changes for Oregon revealed in the latest Census to be upper bounds on what actually happened and, in all likelihood, a bit of an exaggeration.

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Per the 2022 Census of Agriculture, the value of Oregon’s farm real estate continues to climb

In addition to being a fundamental input to agricultural production, farmland and other forms of farm real estate are the most important assets on the farm sector balance sheet. As part of the 2022 Census of Agriculture, producers are asked to estimate the value of their farm real estate, including land and farm-related buildings, if it were to be sold in a market transaction. A unique aspect of the census data on farm real estate value is that it provides the only regularly updated source of county-level values for the United States. In this article, I’ll discuss what the census numbers tell us about the value of farm real estate in Oregon and how it has evolved since the previous census was taken in 2017.

State summary

  • The total estimated value of Oregon’s farm real estate increased $10.7 billion between 2017 and 2022, representing an increase of over 23%. The gain in Oregon outpaced the 7% gain in total farm real estate value for the United States as a whole.
  • On a per-acre basis, Oregon’s farm real estate value increased from $2,870 to $3,693, a gain of almost 29%, which again, is considerably larger than the 9.5% increase throughout the United States.
  • The average farm in Oregon comprises real estate worth over $1.5 million, reflecting a 30.5% increase since 2017. This is more than double the 15% increase in per-farm real estate values for the United States.
Notes: Map colors correspond to per-acre farm real estate value estimates reported for 2022. The numbers in the map show the county-specific percentage change compared to 2017.

County summary

  • The most valuable farmland in Oregon is found in the Willamette Valley, as well as parts of Central and Southern Oregon. These regions correspond to where high-valued commodities are produced including vineyards, orchards and other specialty crops. In 2022, the counties with the highest per-acre values were Clackamas, Multnomah, Washington and Josephine, all of which had average values above $20,000 per acre.
  • Land in Eastern Oregon tends to be associated with lower values on a per-acre basis, but farms also tend to be much larger in that part of the state. Harney, Grant, Gilliam and Wheeler counties all had values below $1,400 per acre. However, some of the largest gains in value between 2017 and 2022 occurred in Eastern Oregon.
  • The biggest per-acre increases, in percentages, took place in Jefferson and Benton counties, where farm real estate rose in value by 80% 70%, respectively. Wasco, Morrow, Lake and Crook counties all saw gains in excess of 60%. Only two counties, Josephine and Wallowa, experienced an inflation-adjusted loss in per-acre farm real estate value since 2017.

Economists use the farm real estate value information provided by the census in a variety of research and outreach applications. A main appeal of these data is that they are available at the county level, which provides more detail than the typical land values data published by the U.S. Department of Agriculture. It is worth emphasizing, however, that these values don’t represent actual transaction prices, but rather producers’ perceptions of what their land would sell for in a market transaction. Nonetheless, they reveal important information about the value of farm real estate in Oregon, where farmland values have appreciated at rates that dramatically outpace the trends seen throughout the United States. 

Note that a version of this post will appear as part of the 2022 Oregon Agriculture by the Numbers series I have been writing for OSU Extension.

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Have Oregon’s urban growth boundaries been too conservation-friendly?

Promoting an orderly pattern of land-use change, particularly when it comes to the conversion of farmland and forests to developed uses, is the cornerstone of Oregon’s statewide land-use planning system. A key piece of our system, which largely traces back to 1973 under Senate Bill (SB) 100, is the broad mandate that all incorporated cities and towns in Oregon must establish and maintain an urban growth boundary (UGB). UGBs determine where cities are able to expand and are supposed to be designed to accommodate roughly 20 years of future urban growth.

Although the ability of cities to expand their UGBs was built into the intent of SB 100, a brief look at some high-level summary statistics paints a clear picture that UGB expansions have not kept pace with population growth. Between 1980, when most cities formally adopted their UGBs, and 2020, Oregon’s population grew from 2.6 to 4.2 million, a 61% increase. Over the same period, however, UGBs in the state expanded by just 10%. Moreover, some cities haven’t expanded their UGBs at all. Take Corvallis, for instance, which saw its population increase by about 50% between 1980 and 2020 yet has never expanded its UGB.  

In the most recent state legislative session, lawmakers passed an important change to the rules governing the expansion of UGBs. Specifically, new bipartisan legislation expedites the UGB expansion process and allows for a one-time expansion based on the population of the city (or cities) a UGB contains: 50 acres for cities with a population under 25,000, 100 acres for larger cities, and 300 acres for Portland Metro. The UGB expansion process typically involves extensive planning and documentation requirements that, when coupled with legal challenges to a proposed expansion, can create significant and costly delays in the ability of cities to meet their housing and development needs. The recent legislation is designed to relieve eligible cities of having to adhere to some of these requirements. Among other details, including safeguards against prime farmland development, these one-time exemptions must be used within 10 years, are not available to cities that have recently expanded their UGBs, and must earmark at least 30% of the housing built in the expanded area to meet certain affordability requirements.  

While land conservation organizations have largely decried the UGB policy change as posing a threat to Oregon’s farms and forests, an overarching goal of Oregon’s land-use planning system is to preserve working agricultural and forest lands while still providing a path for cities to grow through UGB expansions. As I documented in an earlier post, Oregon developed considerably less land than its neighbors between 1982 and 2017 and, furthermore, the amount of land developed per year has declined over the 21st century. How to balance land conservation and the provision of land available for housing is a constant challenge, and the fact remains that Oregon has a serious housing affordability problem. Temporarily streamlining the UGB expansion process is one way to narrow the widening gap between housing demand and supply, while at the same time preserving the intent of SB 100 and conserving the vast majority of our state’s land resources.

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What can employment data tell us about the meat processing industry in the Pacific Northwest?

Tim Delbridge

[updated 3/19/24]

Along with colleagues at Oregon State (NMPAN, OSU Clark Meat Science Center) and Blue Mountain Community College, I am a part of a USDA-NIFA funded project that aims to strengthen the development of the meat processing workforce in the Pacific Northwest. A lot of attention has been focused lately on the organization of the meat supply chain, and how regulatory structure and market concentration at the processing level affects market access for small scale beef producers and the resiliency of this part of the food system. This is an issue that impacts consumers, producers, and ultimately, the economies of rural communities. 

While our larger workforce development project involves some teaching infrastructure and curriculum design, I’ve been exploring the challenges that small-scale processors face in hiring and retaining staff, and how the experience of meat processing firms relates to broader economic trends. In this blog post, I’m going to provide some background on labor within the meat processing sector in Oregon, Washington, and Idaho that I shared at the Northwest Meat Processing Association annual meeting last Friday, and discuss in more detail how the available employment data provide insights into the challenges that our project seeks to address.

The exploratory analysis presented in this post is based on a combination of data, including the Oregon Quarterly Census of Employment and Wages (QCEW) and unemployment insurance records managed by the great team at the Oregon Employment Department (OED), and individual wage record data managed by the US Bureau of Labor Statistics (BLS). These data and results are not official OED or BLS releases and are intended for exploratory research only. There are five key conclusions I’d like to share.

1. The number of meat processors and meat processing employees has been rising in recent years, and this growth has largely come from small firms. Figure 1 shows the number of meat processing firms in Oregon by year, with firms with 10 or fewer employees represented by the darker color in the stacked bar chart. The yellow line shows the number of total meat processing employees in the state and shows significant growth in the last 15 years.

Figure 2 shows the upward trend in meat processing employment at the regional level. The increase in Oregon is matched by similar increases in Idaho and Washington, and closely mirrors the rate of growth in the overall labor force in the Pacific Northwest.

2. Meat processing wages have risen significantly in recent years. Figure 3 shows the average hourly wage rate paid by Oregon meat processing firms, along with hourly wages by firms in commercial and residential construction. This figure highlights the fact that not only have wages been increasing rapidly in many industries in recent years, but meat processing wages have “caught up” to those in industries that often compete for workers. The fastest wage increase in meat processing occurred in 2020 during the height of the Covid pandemic, and did not come back down after serious infections declined in number and supply chains recovered.

3. Retention seems to have gotten harder. Despite the higher pay, the meat processing industry in the Pacific Northwest has been able to retain fewer of the employees that leave their jobs. Based on individual employment histories contained in the BLS wage records, figure 4 shows the industry retention rates for two cohorts, those leaving their jobs in 2013 and those leaving in 2018. Among employees separating from their employers in 2013 (represented by the dashed lines), between 54% and 60% were working in meat processing in the PNW two years later. Among those that left their jobs in 2018 (solid lines), between 45% and 50% were still working in meat processing after two years. Again, while some of this may have been caused by the Covid pandemic, these workers did not return to the industry.

4. When employees leave their meat processing employers, they appear to do so for higher hourly pay, though they might not earn more in total wages. Figure 5, also based on the individual wage records managed by the BLS, shows that workers that left their meat processing employers generally tended to earn higher hourly wages in the same quarter in the subsequent year. This shouldn’t be surprising, as higher pay is a common reason to take a new job. However, figure 6 shows that overall wages go down, on average, after leaving meat processing. This seems to suggest that many employees are leaving the industry for higher paying jobs in which they work fewer hours.

[Note: From what I’ve heard from my colleagues in NMPAN and the NWMPA, this conclusion runs counter to the experience of many small scale processors. It is important to point out that a close look shows that the average hours worked before leaving a meat processing employer are high (close to full time) and well above the average hours worked by employees at small processors (see figure 7). Moreover, the BLS queried these data for the 4th quarter of each year, which is a particularly busy time for the industry. Further analysis is needed to determine if this trend holds for firms of all size and if results would look similar in all seasons, or if these averages are dominated by employees leaving large meat processors and numbers are skewed by big fourth quarter pay checks.]

5. All size classes show seasonality in terms of hours per worker per week, though workers for larger firms work more hours on average. The third and fourth quarters of the year (July through December) are traditionally the busiest times for meat processors. Figure 7 shows that in these quarters, the hours worked per employee are higher than in quarter 1 and 2, and that this holds for small, medium, and large meat processing firms. Interestingly, workers for larger firms tend to work more hours in all quarters than those at smaller firms. This likely indicates that small-scale processors rely more on part-time workers, and/or that they struggle to keep volume high enough in Q1 and Q2 to fully employ their staff, thereby contributing to retention challenges.

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Does the Conservation Reserve Program promote organic transition?

The US Department of Agriculture (USDA) spends upwards of $20 million dollars each year in an effort to support and grow the organic agricultural industry. One thing that makes obtaining organic certification difficult and risky for producers is what’s known as the “transition period”. During this three-year period, producers must adopt and adhere to USDA organic production standards but, importantly, are unable to label their output as organic and receive the accompanying organic price premium. This can be a significant deterrent to organic uptake because during the transition period producers are incurring the costs of switching to organic production, including learning costs and lower yields, but are not able to access any of the financial rewards.

In a recently published paper, my coauthors (Hannah Wing and Kate Binzen Fuller) and I examine the role that the USDA’s Conservation Reserve Program (CRP) might play in reducing the transition period barrier. The CRP temporarily takes cropland out of production, normally for a 10- or 15-year contract period, in exchange for adopting a conservation cover/practice that mitigates soil erosion, increases wildlife habitat, or promotes other environmental goals. CRP participation is voluntary, where producers either apply for the program through a competitive bidding process (the General sign-up) or can enroll automatically if they fit one or more specific initiatives (the Continuous sign-up). Once enrolled, participating producers receive an annual rental payment for the duration of their contract and normally have the opportunity to re-enroll at the end of the contract period.

What’s the connection between CRP and organic transition? Intuitively, while land is enrolled in the CRP, it is by definition not being used for conventional crop production. Furthermore, most CRP practices comply with organic standards involving pesticide and herbicide use. Therefore, land coming out of the CRP (i.e., land that isn’t re-enrolled at the end of the contract period) usually satisfies the transition period requirement incidentally. This allows former CRP enrollees to obtain organic certification immediately and benefit from the accompanying price premium in their first post-CRP growing season.

Using county-level data on organic certifications and CRP contracts between 2011 and 2020, our study finds that there is a detectable causal relationship between the amount of land coming out of the CRP and the number of new organic certifications. Specifically, we find that a 1% increase in net-exiting CRP contracts leads to a 0.029% increase in organic certification. While this is relatively small compared to the area of land in the CRP (22 million acres in 2022), the results suggest that 780 additional organic certifications resulted directly from exiting CRP contracts, or approximately 6% of the 13,198 organic crop farm certifications in our dataset. As a very rough estimate of its potential implications in dollar terms, the organic industry was worth $10 billion in 2019, 6% of which is $600 million.

Where does Oregon fit into the picture? Oregon ranks sixth in the US in organic acreage, with 228 thousand acres of certified organic farmland, based on a 2021 USDA survey. Most certified organic operations are located in the Willamette Valley and southern Oregon, but counties in other parts of the state, such as Umatilla County, have a significant organic presence as well. In terms of land enrolled in the CRP, Oregon ranks 15th­. CRP contracts in Oregon are concentrated in the northern part of the state east of the Cascades. If we re-estimate the primary model used in the paper and allow for Oregon to have its own separate effects, we find that they are not statistically significant, meaning they aren’t measurably different compared to what we estimate for the US as a whole.

Overall, our paper contributes to the growing body of work looking at the “fate” of land coming out of the CRP. The idea of CRP being a means to increase organic transition is something that has been discussed in farm policy circles. Our paper provides the first concrete evidence of this connection being borne out in the data. This avenue for organic transition was actually highlighted in a recent USDA press release about a CRP policy change that allowed producers to exit the program early to bolster crop output in response to the ongoing war in Ukraine. To the extent that organic farms retain more of the CRP-related soil health and environmental benefits than conventional farms, which, to be clear, is not something we take a stance on in our paper, our findings also highlight the potential for these benefits to endure beyond the contract period.

An ungated version of the paper can be found here. Full paper reference:

Wing, H., D.P. Bigelow, and K.B. Fuller. 2024. “Does temporary land retirement promote organic adoption? Evidence from the Conservation Reserve Program.” American Journal of Agricultural Economics, in press. DOI: https://doi.org/10.1111/ajae.12465

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California Forever: A glance at the underlying economic and policy issues

With the housing crisis facing many communities in the western US, who can argue against dense, affordable housing with tree-lined streets and easy access to bike lanes, shops, and schools? It’s a gamble that the investors in California Forever are willing to make. As has been reported widely over the past several months, the company is seeking to build a new city from scratch in Solano County, California. A recent piece in the New York Times paints a vivid picture of one of the main challenges the company has faced in getting the project off the ground: getting farmers to sell the land on which the proposed city will be built.

Acquiring a land base is the obvious first step for the project to proceed. The company’s tactics, which involves offering residing farmland owners lucrative, above-market prices for their land, has been met with some controversy, in no small part because of a lawsuit filed against a group of holdouts which accused them of colluding to drive up the company’s offer prices. Once the land base is acquired, it seems unlikely that it will be smooth sailing for the project to be completed. Building a city from scratch would require a complete upending of existing zoning laws made all the more difficult because the proposed development will border a US Air Force base, which has brought the Department of Defense into the fray. And that’s just to get the permission to build, never mind the actual construction of infrastructure and buildings that would make the city a livable reality.

With all of this said, here are some issues that the California Forever enterprise brings to mind for Oregon and other areas:

  • How should land use be regulated? Overhauling local zoning laws is challenging, to say the least. In Oregon, this issue would be compounded because of our statewide land-use planning program, the cornerstone of which is the establishment of urban growth boundaries, which dictate where new urban development is allowed to occur. In other words, Oregon’s land-use laws would effectively make something like “Oregon Forever” a non-starter. In addition to amending local zoning maps, a proposal like this would require approval from the Land Conservation and Development Commission, a state board that works in concert with the Oregon Department of Land Conservation and Development, to assure local adherence to statewide planning guidelines. Oregon’s land use laws can make hosting weddings on farm properties extremely challenging, never mind building an urban utopia from the ground up. As much as anything, California Forever should be thought of as a backlash against the difficulty of getting new development approved in existing urban areas.
  • Land market fundamentals. Most economists tend to think about farmland markets through the lens of what’s known as the “fundamental value of land”, which states that the value of land should reflect the discounted stream of income accruing to the landowner. When thinking about the role of non-agricultural factors, like development pressure, economists usually assume an orderly pattern of urban expansion where undeveloped land closest to existing urban areas is developed first. For this reason, the price of farmland with the same productivity potential can command widely varying prices depending on its location. If successful and mimicked elsewhere, California Forever’s model of farmland purchases in outlying rural areas has the potential to throw a wrench into the practical usefulness of existing land valuation models.
  • Who is going to live there? If it ends up being another bedroom community for the Bay Area, how will increases in commuting, as well as all of the necessary road and infrastructure construction, eat into the green-minded aspirations of the project developers? The Bay Area is often thought of as an outlier in terms of housing costs and availability, but how much of an effect will it really have on housing costs in the region, especially if it attracts migrants from outside the state? A related factor at play is remote work and whether prospective residents would even need to commute. That also brings up the issue of office-residential conversions, with a recent analysis pointing to the Bay Area as having one of the highest concentrations of candidate buildings for redevelopment.

In a broader sense, innovative ideas to generate rural wealth are often met with support, but how do we think about what this means if rural landowners are simply cut a check to fundamentally alter the character of their community? Despite all of the logistical hurdles that will need to be overcome, the California Forever CEO has a steadfast belief that the project will be completed in years, not decades. Regardless of how realistic that timeline might be, I’ll be interested to watch how this story plays out.

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