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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How well do surveys capture farmland market conditions in Oregon?

In the past, I’ve written several articles and posts on farmland markets in Oregon. All of these have relied on the results of surveys conducted by the U.S. Department of Agriculture, which ask producers to report their best estimate of the market value of their land. Naturally, this brings up the question of how well these survey responses capture the price at which land would sell in a market transaction. This post will briefly shed some light on that by comparing recent trends in USDA survey responses and observed, actual farmland transaction prices in Oregon.

The sales data I’m using come from CoreLogic, a private data vendor that assembles information on housing and land sales from each county in the US. Currently, the sales transactions cover the most recent transaction of all parcels labeled in the database as “agricultural” through July of 2021. In the next few months, I’ll have access to a larger database that covers land sales up through 2023 and includes both the most recent and historical sales of all farmland in the state, but for now this is what I have. To make an apples-to-apples comparison, since sales prices do not split out the price of any buildings or infrastructure present on the parcel, the survey data measure I’m using is the average farm real estate value, which represents the combined value of both land and farm-related buildings.

Because the database requires some cleaning, in this initial post, which I plan to be the start of a longer series of posts and articles on farmland prices in Oregon, I remove observations that might reasonably be considered outliers. First, I adjust the prices and survey values for inflation using the 2023 Gross Domestic Product Implicit Price Deflator. I then remove all sales with a per-acre price less than $100/acre or above $50,000/acre, as very low prices would potentially indicate sales between family members that are not at full market value and very high prices likely indicate sales that are not made for a bona fide agricultural use. I also remove sales that are less than 20 acres or above 5,000 acres. Although sales outside of these acreage bounds might reflect true agricultural sales, I do this to be conservative. Small-acreage sales often point to land in uses that are not truly agricultural in nature and large sales might reflect data processing errors.

To further minimize the presence of sales made for immediate non-agricultural use, using GIS data from the Department of Land Conservation and Development I remove sales of parcels inside of an urban growth boundary at the time of sale. For each year, I then take the average acreage-weighted sale price for all sales taking place in that year, which gives me the average price for an acre of land as opposed to the average unadjusted sale price.

The statewide trends in survey values and observed transaction prices are shown in the above figure. While both point to a general upward trajectory in farmland values over the 1997-2021 period, it is clear that survey values fall considerably short of average observed sales prices in each year. In a given year, sales prices are, on average, 78% higher than the survey value. Over the most recent five years (2017-2021), the average sale price amounts to $5,057/acre, while the average self-reported value from the USDA is $2,935/acre. The sales sample size ranges from 362 in 2009, during the depths of the Great Recession, to 821 in 2020, the most recent complete year available. I expect the sample sizes to be larger once I have the complete sales histories put together over the coming months. However, farmland markets tend to be fairly thin, with relatively few land parcels up for sale each year (e.g., compared to housing markets), which partly explains the more erratic trend in observed prices.

What might explain the large discrepancy between self-reported land values and actual sales transaction prices? For one, because farmland markets are thin, it could be a case of sales selection bias, where only higher-quality parcels are likely to be bought and sold. It could also be the case that sales data are skewed towards land bought by investors or other market participants who plan to develop land, which would lead to a price premium. Although I remove sales inside UGBs, all else constant, we would still expect the price of land close to existing UGBs to be bid up relative to land further away. Producers responding to surveys may also underestimate the market value of their land, especially if they are not fully considering the land’s potential in a future developed or other non-agricultural use. At any rate, this brief analysis makes clear that survey-reported land values and sales prices are capturing different features of Oregon’s land market.

Going forward, I plan to delve more deeply into the sales data to look at relationships between land prices and things like urban proximity, irrigation water rights, drought, and other ongoing policy issues in Oregon’s farmland market.

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Estimating the economic impact of wolves on livestock producers

Tim Delbridge

I attended the Oregon Cattlemen’s Association annual convention last week, in part to talk to ranchers about their experience operating in areas of wolf activity. While wolf management policy is often controversial, there isn’t much disagreement that the return of wolves to the Oregon landscape requires that ranchers adjust their management practices. Unfortunately, there is little research on the economic impact of wolf presence on individual livestock producers, mostly because of the difficulty in collecting data on all the direct and indirect ways that wolf-livestock interactions affect a ranching business. This is a gap that we are working to fill and in the meantime I will use this blog post to provide some background on the growth in wolf populations in the state and how those populations overlap with livestock grazing areas. I’ll also touch on the challenges associated with developing a richer understanding of the economics of the wolf issue in the western US.

Figure 1

Wolves returned to Oregon in 2009, and the population has been increasing since. Figure 1 shows the minimum wolf population over time in Oregon. The Oregon Department of Fish and Wildlife (ODFW) publicly releases these minimum known population numbers, along with GIS data showing the areas of known wolf activity (AKWAs) for each named pack, and reports of wolf depredation events (with exact locations withheld). Figure 2 shows a map with ODFW AKWAs for each named pack in 2022. The number of packs has increased significantly in recent years, with the highest wolf populations in the Northeast, but growing populations in Central and Southern Oregon.

Figure 2

With the spread of wolves across the state, there has been large increases in both the number of cattle grazing in areas of wolf activity as well as the density of wolves in affected grazing areas. Data from public grazing lands, while only one part of the grazing picture, provide useful insights into how the situation has evolved for Oregon ranchers in recent years. Figure 3 shows the increase in the number of livestock on public grazing lands that fall within an ODFW AKWA. This can be thought of as the number of cattle that are at risk of interaction with wolves while on the public allotment.

Figure 3

Interestingly, the wolf population density on public grazing allotments has grown at a faster rate than the number of cattle exposed to wolves. Figure 4 shows a measure of average wolf density on BLM and USFS allotments over time. The density of wolves increased by more than a factor of ten from 2011 to 2022 while the number of cattle grazing in an area of known wolf activity increased by a factor of six over this period. I calculated this density metric for each allotment by applying to it the density of an any overlapping AKWA. In the case that multiple packs were active on a single allotment, the allotment’s wolf density is the sum of the individual pack densities. This method is sensitive to ODFW estimates of a pack’s range, which may not be perfectly reflective of wolf hunting patterns in summer months when cattle are on the public lands.

Figure 4

While the most obvious impact of wolves on livestock is direct attack, there are several other ways that wolf presence can reduce ranching revenues and increase the cost of production. These include the labor costs associated with staying with and moving livestock to minimize interactions with wolves, and the cost of improved fencing, flags, and other materials that may deter wolves. Wolf related stress on cows and calves can result in reduced animal health and body condition, lower conception rates, and lower calf weight at the time of weaning or sale. These impacts likely exceed the cost of direct livestock kills, though we don’t have good data on how these costs vary from ranch to ranch and from year to year. The impact per producer or per head of cattle may be small when averaged over all livestock operations in the state, there can be very significant costs to individual ranches in affected areas.

Figure 5

Finally, Figure 5 shows the wolf density measure by grazing allotment in the form of a heat map for 2022.  The next step in our economic analysis is to gather data on ranch level production costs and revenue reductions that are associated with different levels of wolf activity. We will then apply ranch-level impact estimates on maps of public and private grazing areas according to the density of wolves seen there. With this approach we will be able to produce an estimate for total statewide impact and provide guidance on how these impacts are distributed across the landscape and across Oregon’s cattle producers.

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Most recent cash rental rate estimates paint a mixed portrait for Oregon

An OSU Extension article containing the same information as this post can be found here.

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 2017 Census of Agriculture, rented farmland in Oregon accounts for 30% of all farmland in the state. This is relatively low compared the national figure, which stands at 39%, but still accounts for roughly 4.7 million acres of land in the state.

The comparatively low rental percentage in Oregon can likely 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 27% of all cropland in the state was irrigated in 2017 – which is also less commonly rented out than non-irrigated cropland due to the capital and maintenance costs associated with irrigation infrastructure.

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 very short and less complicated compared to other USDA surveys, which tends to produce a higher response rate. In 2023, 70% of the 3,700 surveyed producers responded to the USDA-NASS cash rent survey in Oregon. 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 OSU Extension article here).

Note: Values in the figure are adjusted for inflation to $2023 using the BEA’s GDP Implicit Price Deflator.

Over the past year, the statewide cash rent for irrigated cropland declined by 3.75% in inflation-adjusted terms. 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 2023, irrigated cropland was rented for an average of $259/acre, which is comparable to the previous five-year average of $260/acre. Looking across the state, irrigated rents tend to be highest in the northern Willamette Valley and other counties along the Columbia River (Hood River, Wasco, and Morrow). 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. Changes in irrigated cropland rents over the past year varied widely, with the largest percentage gains occurring in Clackamas, Baker, Union, and Lake, and Grant, Cook, and Lane seeing the largest declines.

Note: The color shading in all maps corresponds to the cash rental rate reported for 2023. Where present, the numeric value on the map corresponds to the 2022-23 real percentage change in cash rent. Shaded counties without a numeric label did not report a rental rate in 2022. 

In contrast to irrigated cropland, non-irrigated cropland rent, at $107/acre, was up by 2.75% over the past year. Note, however, that the 2023 rental rate is actually down compared to the most recent previous five-year average of $109. Counties in the northern and mid-Willamette Valley tend to have the highest rents, along with Tillamook and Union. Southern, coastal, and northeastern Oregon tend to have lower non-irrigated cash rents. The largest annual percentage gains were in Jackson, Douglas, and Wasco. Columbia, Clackamas, and Harney, on the other hand, had relatively large percentage decreases.

The average 2023 pasture cash rent was $11.50/acre, a 3.01% decrease compared to the 2022 value, continuing a 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 2023 rent being nearly 16% lower than the previous five-year average of $13.68. The Willamette Valley, coastal, and central parts of the state tend to have the highest pasture rents, while eastern Oregon, where farms tend to be larger, have lower per-acre rents. Lake, Douglas, and Morrow had the largest percentage gains in pasture rents over the past year, contrasting with the large declines in Umatilla, Klamath, and Coos.

As I mentioned in a previous blog post, 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.

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. They do, however, tend to be a lagging indicator. Rental 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 2023 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 2021-2023 production years could also be included in the 2023 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 not limited to smaller producers, as most commercial farms in the US contain a mix of owned and rented land. As is the case with land values, changes in rental rates produce winners and losers. As commodity prices rise, landlords tend to raise rents and gain a higher nominal return on their land investment, which offsets the benefit of higher prices for their tenants.

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The urgent need to improve groundwater management

William Jaeger

Groundwater is one of the most challenging resources to manage, in large part because it is hidden below ground and thus poorly understood. Many regions of the world have a high dependence on groundwater for agricultural, municipal, and domestic uses, as well as for aquatic habitats and other groundwater-dependent ecosystems. Yet aquifer depletion continues at an alarming rate, imposing costs on rural communities, farms, the environment, and society generally. This is particularly true in the western United States where consumptive use of water is expected to exceed available surface and groundwater by 2030. As surface water becomes fully allocated, groundwater withdrawals have increased, in part because western U.S. states have not done enough to regulate groundwater pumping. A recent detailed analysis of the problem by the New York Times found declining trends over the past 20 years in many areas – as indicated in red and orange in the map below.

Source: NY Times

The trend is particularly severe in Oregon where two-thirds of monitoring wells have declined since 1980. How and why has this happened? Like other states, Oregon has been slow to recognize that the accommodating approaches to managing an abundant resource of the past are insufficient in a world of scarcity, one where nearly all new uses of groundwater can be expected to cause interference with existing uses of both groundwater and surface water.

As in most parts of the western U.S., Oregon’s groundwater use is dominated by agriculture (about 90% of the total groundwater withdrawn), and the areas of concern across Oregon are widespread as indicated in the map below:

Source: 2021 Oregon Groundwater Resource Concerns Assessment

Efforts are underway, however, to fully recognize the realities of groundwater scarcity and, to some degree, groundwater’s unique management challenges. Over the past six months I’ve participated in this process as a member of the Oregon Water Resources Department’s Groundwater Allocation Rules Advisory Committee (RAC). The goals include clarifying and updating the rules for evaluating applications for new groundwater rights. Central to the approval process is determining whether “water is available” (in order to allow additional groundwater right). It is not an easy question. Groundwater resource rights are connected hydrologically to surface water. Pumping from a new well will potentially impact other existing wells, as well as surface water where it can interfere with surface water rights, springs, stream flow, and wetlands.

So how do we decide if “water is available” to allow development of a new right to withdraw groundwater? We need data on water levels and trends nearby and over a period of years. But reliable data is scant, and levels can fluctuate year to year. Most wells don’t collect or report the kind of data needed to develop a good understanding of the capacity of a given aquifer to sustain additional demands. Many well owners are reluctant to share information about their pumping rates and water levels. This unfortunate situation is counterproductive to gaining a good understanding of the state of the resource. Imagine trying to manage Oregon’s coastal fisheries if fishermen didn’t report their catch?

Central to Oregon’s water law is the “prior appropriations” seniority system that allocates water to senior water rights (established long ago) before more junior water rights (established more recently). Determining the “interference” of a junior water right on a senior water right is relatively easy with surface water (we observe stream diversions and know which way water flows). But knowing which junior groundwater right has interfered with a given senior groundwater right (or with a surface water right) is effectively impossible for purposes of regulation.

Interference among surface water irrigators occurs entirely within a given growing season. In the case of groundwater pumping, however, there is both within-season interference as well as longer-term aquifer depletion. But regulators don’t have sufficient information about the underground hydrological connections between specific wells to have a strong basis for knowing which junior water right should be shut off to protect more senior water right holders, so regulation is almost never used. This puts senior water right holders in overallocated basins at risk, where some water rights having seniority dating back more than 100 years are degraded from the interference of newly approved groundwater rights.

We can’t be sure if a new permit will impact existing groundwater rights and capacity, but given that Oregon’s surface waters are fully- or over-appropriated, there is a strong argument for erring on the side of caution. The current OWRD proposal seeks to establish a quantitative test to ensure that groundwater levels are “reasonable stable” and that a given aquifer is not “overdrawn.” Do water levels show declines of more than 0.5 feet per year? Do water levels show total declines greater than 25 feet or 8% of saturated thickness of the aquifer? A “yes” to either of these questions would trigger a finding of “water is not available.” And if there is insufficient data to evaluate these tests, then a precautionary finding of “water is not available” is also applied.

Oregon’s seniority water law system places emphasis on protecting existing rights above the approval of new, additional water rights. But the risks of unsustainability are high due to two factors:  the lack of an effective or operational enforcement mechanism to adjust to within-season or long-term declines in groundwater supply, and the implied permanence of a new groundwater right — there is no way to fine-tune the amount of pumping allowed (no two-way adjustment mechanisms as in the case of a catch-share fishery where the total allowable catch can be revised up or down, year-to-year).

The revisions currently being considered by the groundwater RAC represent an important step, but more changes will be needed to better manage Oregon’s groundwater resources. There is an urgent need for more and better data, such as requiring groundwater right holders to measure and report water use and well levels. And we need to find policy mechanisms to adjust groundwater demand in response to changes in our understanding of groundwater supplies.

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What does the EPA Vulnerable Species Pilot Project mean for Oregon agriculture?

Tim Delbridge and Dan Bigelow

As the Capital Press and other outlets have been reporting over the last month, there is a draft plan from the EPA to protect a number of endangered and threatened species through new restrictions on pesticide applications. One of the protected species, the Taylor’s Checkerspot Butterfly, is found here in the Willamette Valley as well as in western Washington. The EPA’s proposed mitigations call for a near-total prohibition on applications of herbicide and insecticide use for non-residential uses in the affected “avoidance area”.  That is, if this EPA plan is implemented as currently drafted, farmers and forest managers will not be able to use pesticides on slightly more than one million acres of the Willamette Valley and more than 3.5 million acres of Washington. In addition to the proposed pesticide bans in the avoidance area, looser regulations on pesticide use are proposed for a smaller “minimization area” around its periphery. A well-produced interactive map along with information on the Taylor’s Checkerspot Butterfly can be found here.

EPA map of proposed pesticide avoidance and minimization areas in Oregon

This short blog post will outline a few general conclusions that we can come to about the potential economic impacts of the EPA’s plan. We will then use the USDA Cropland Data Layer (CDL) to estimate the acreage of each crop that would be affected in Oregon and Washington. Note that these statistics apply to the avoidance area subject to the strictest proposed pesticide use regulations, which understates the true number of acres that will be impacted. We then provide some early idea of the degree of impact that we might see in different commodity markets.

In general, the EPA plan will remove insect and weed management tools from farmers. The degree of impact will vary by crop and location. Where the restrictions are binding, they will increase production costs, reduce yields, and, consequently, reduce operating profits. The restrictions will make some production systems unprofitable and lead to changes in land use and crop choice. We can be confident that:

  1. At least in the short term, agricultural land values in the affected areas should fall relative to nearby unregulated areas. It is difficult to anticipate the severity of the potential land value declines. To the extent that farmers will generate less annual net revenue under the EPA restrictions, lower purchase prices and cash rental rates will result. Over a longer time horizon, as producers adjust (see next two bullets), land values and rents may rebound accordingly.
  2. Many individual farms would suffer financial losses and increased expenses associated with switching production to new crops and/or cropping systems that are less dependent on pesticides. These short-term adjustment costs are in addition to the sustained reduction in profits that could be expected under the new cropping choices. The adjustment costs could be larger for perennial crops, such as blueberries or hazelnuts, that are costly to establish. Note that these adjustment costs include both the tangible financial cost of changing how a farm operates, as well as the investment in learning how to grow something new, which is harder to quantify.
  3. Organic acreage would increase in the affected areas. High rates of organic adoption (either by existing farms or new buyers/tenants taking advantage of falling land values) in this area could lead to significant increases in overall organic acreage in the PNW. While this might sound positive to advocates of organic agriculture, we could expect some volatility in regional organic markets and downward price pressure on organic crops that are well suited for the affected area. Furthermore, this may be the first example of farms in US being so strongly guided towards pursuing organic adoption, and it is not clear how their success will compare to existing organic farms that chose to transition voluntarily.
  4. Prices of some of the most affected crops will increase in response to the potential fall in production. Some of these price changes may be tempered as production eventually shifts out of the affected areas. Farms outside of the EPA mitigation zones are likely to benefit financially from the higher crop prices, at least in the short term. Because the regulated areas represent a small fraction of the production land base for most commodities, the price effect will only be noticeable for crops for which the impacted area represents a significant portion of regional or national acreage (e.g. blueberries, grass seed).

By overlaying the EPA maps of proposed avoidance areas on the satellite imagery from the USDA CDL, we have generated a list of crops grown in both Oregon and Washington and the average acres planted in each over the past five years. You can access the full list for both states in a google sheet here. While these estimates are not perfect (and are particularly challenging for crops/forest types that look the same from space) they give us a pretty good sense of which crops would be most affected by the EPA plan. In addition to the agricultural uses listed in the table, note that sizable amounts of forest, wetlands, and developed land also fall in the areas that would be regulated.

In Oregon, grass seed looks like it will be among the most impacted crops. The “Sod/Grass Seed” category from the CDL includes more that 115,000 acres within the EPA avoidance area. That is roughly 25% of the grass seed acreage in the entire state of Oregon, where a vast majority of grass seed is produced. If these grass seed farms were no longer able to use pesticides we would see significant disruption and financial losses for individual farms and a large increase in farm-gate prices for grass seed, at least in the short term. In Washington, more than 7,000 acres of blueberries and 2,000 acres of caneberries fall within the avoidance area, representing about 20-30% of statewide acreage for these crops.

The ultimate fate of the EPA’s proposed pesticide regulations remains to be seen. A unique aspect of the discussion around the proposed rules is that disparate groups of stakeholders, including producers, environmental groups (such as the Center for Biological Diversity), and the USDA, all seem to agree that the regulations go far beyond what is necessary to provide adequate protection for the Taylor’s Checkerspot Butterfly. If implemented as proposed, the impacts of this EPA policy will be far-reaching and will affect farmers and landowners in complex ways. The impacts will be felt beyond the geographic area targeted in the mitigation plan and farmers across the region would be wise to consider them when planning future investments and cropping systems.

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