– Saving the Family Farm

18 Oct – Saving the Family Farm

Agriculture is the cornerstone of our rural community, yet farms and ranches are increasingly challenged by fragmentation of farmland, development and other non-farm uses, complex regulations, and planning for generational transfers.

Hood River County now has the most expensive farmland in the entire state of Oregon. The average cost of an acre of farmland rose from $11,951 in 2002 to $19,000 in 2012. That’s a whopping 59 percent increase, and anyone who has looked at property values recently knows that the cost of land in Hood River County has increased even more in the last three years.

The average age of a farmer in the Columbia River Gorge is now 58, and most farmers do not have a plan for transitioning their farm to the next generation. This is a statewide problem: 64 percent of Oregon’s farmland — 10.45 million acres — will change hands in the next 20 years.

Researchers at Portland State University recently released a sobering public report called “Analysis of Oregon Farmland Sales 2010-2015.” According to the report, in 2015, Hood River County had by far the highest median price per acre of farmland in Oregon in all categories, including exclusive farm use zoned ($29,300), non-exclusive farm use zoned ($91,822) and improved ($42,477).

Other counties in the Gorge have relatively more affordable land, but it doesn’t always come with epic mountain views, substantial rainfall, irrigation rights, or prime soil.

“Who owns farmland matters, for our agricultural economy and workers, rural communities, environment, food system, and our landscape,” states Dr. Megan Horst, assistant professor of urban studies and planning at Portland State University and primary author of the Oregon farmland report.

A lot of players, including out-of-state buyers and corporations, are involved in farm property sales. While individuals and trusts continue to comprise the majority of buyers, there appears to be a shift underway to greater corporate ownership. Statewide, corporations accounted for a little more than one out of every five sales and more than 40 percent of acres purchased from 2010-2015. In other words, corporations are buying larger properties than other buyer types.

Highlights: Columbia Gorge Farmland Sales and Prices between 2010-2015

• Hood River County had by far the highest median price per acre in all categories, including EFU zone ($29,300), non-EFU($91,822) and improved ($42,477)
• Average sale price is almost three times the market assessment for farmland (323.4 percent)
• 35.6 percent of all sales between 2010-2015 were for less the $100
• Median prices per acre for improved farmland ($17,292) were roughly 1.7 times higher than unimproved farmland ($9,903)
• Median prices per acre for non-EFU farmland ($69,721) sold for 3.3 times as much as EFU farmland ($21,155)

 

Highlights: Farmland Buyers between 2010-2015

• Agriculture only accounted for two of the top 10 buyers by price and three of the top 10 buyers by acreage.
• Corporations buy approximately three properties of farmland annually, shifting ownership of about 99.46 acres of farmland from individuals to corporations
• Smaller farmland properties have a higher median price per acre than larger properties
• Properties in the 2-3 acre range had the highest median prices per acre ($139,831) than other properties below 5 acres
• Fannie Mae or Banks Alon purchased farmland at the highest median purchase prices ($650,000) than other buyer types
• Out-of-state buyers paid the highest median prices per acre ($28,301)
• Corporations incorporated 1 out of every 4 sales, and 37 percent of acreage sales: Corporations are buying larger properties than other buyers.
• Agriculture accounted for 13.4 percent of all sales, and 21.2 percent of all sales by acreage
• Real Estate, etc. accounted for 8.5 percent of all sales, and 10.7 percent of sales by acreage
• Corporations unrelated to agriculture accounted for 11.5 percent of all sales and 15.9 percent of all sales by acreage

As Portland grows and newcomers seek rural estates, second homes, short-term rental property, or other investment opportunities, those that actually work the land (farmers) are in jeopardy of getting forced out.

Hood River, Sherman, and Wasco counties are all in designated “Opportunity Zones.” The Tax Cuts and Jobs Act of 2017 establishes a new federal tax incentive to encourage long-term investments in certain low-income communities newly designated as Opportunity Zones. Through Opportunity Funds, private investment within a designated Opportunity Zone may earn tax relief on both the capital gains invested in the funds and those generated through the investment by the fund.

Corporations unrelated to agriculture (for example, involved in real estate and development) are among those purchasing farm properties, increasing the price of land for the farmer and raising concern over the future. In part because of non-farmers’ demand for farmland, the average sales price is almost three times the assessed rate. The increased demand is driving up the cost of the land to far more than any farmer can cash flow with income from their crops. These owners may also be more likely to develop the land if that means more profits for their shareholders.

The report identifies the top ten buyers between 2010 and 2015, by price and acreage, in each region and statewide.

• The Columbia Gorge region had the highest percentage of properties purchased by out-of-state buyers (14 percent) in Oregon between 2010 and 2015.
• The percentage of corporate buyers was highest in the Columbia Gorge (25 percent) and Central Regions (25 percent) of Oregon.

So what does this mean for our local farms and food system? Several of the larger orchards in the Gorge are now owned in part or entirely by corporations, sometimes with a family member as a shareholder. For smaller farms, the value of the land in Hood River has far exceeded the carrying capacity, or what a farmer can make producing food from that land.

PRESERVING FARMLAND
Few people in the state of Oregon have been more involved in protecting working farms than Michael McCarthy of Trout Creek Orchard in Parkdale. He sits on the board of the State Farm Bureau, 1,000 Friends of Oregon, Hood River Parks and Recreation, and Parkdale Valley Land Trust.

McCarthy and his mother, Kate, started the Hood River Valley Residents Committee in 1977. The organization’s mission is to protect farm, forestland, watersheds and the livability of urban and rural communities through advocacy, education and monitoring land use processes and decisions.

“The prices of farmland are getting totally out of hand,” McCarthy says. “I’m really concerned about the future of agriculture in Hood River.”

McCarthy has been farming since he was 8 years old. He settled in Hood River in 1980 and raised his three children on Trout Creek Orchard. McCarthy and his family recently went through the arduous process of transitioning the orchard to McCarthy’s son, Adam. McCarthy is really pleased with how it went, but he said it took years of planning and thought, and he worries about Hood River’s fruit industry. There is a serious shortage of labor, and the new requirements for food safety certification are an enormous burden and cost to smaller family farms.

One tool that is being used increasingly in Oregon to address the issues of succession planning and farmland preservation is a working land conservation easement. These are agreements between landowners and an authorized organization like a land trust or soil and water conservation district to lock up a property’s development rights forever, and preserve it for agricultural and conservation values. It allows the landowner to farm, pays them for the development rights they’ve given up, and reduces the land’s value, making it more affordable to the next generation of farmers.

The Oregon Agricultural Heritage Program was created by the 2017 Legislature to provide grants for working land conservation easements and other tools that can help address the issues of succession planning and farmland preservation. Established under House Bill 3249, the Oregon Agricultural Heritage Program is the result of unique collaboration between the Oregon Farm Bureau, Oregon Cattlemen’s Association, Coalition of Oregon Land Trusts, Oregon Association of Conservation Districts, Sustainable Northwest and the Nature Conservancy.

If funded, the Oregon Agricultural Heritage Program would help pay for permanent working land easements, 20-to-50-year easements, called “covenants,” and conservation management plans. It would also support succession planning training and a study of Oregon’s estate tax. This program could be an important part of the solution if it receives funding from the legislature for the grant programs. The Oregon Watershed Enhancement Board is requesting $10 million to administer the program, and the Oregon Agricultural Heritage Commission, which oversees the program, spent the last eight months drafting program rules, which are available for public comment until October 5, 2018.

Ken Bailey of Orchard View Cherries in The Dalles sits on the 12-member commission. Bailey is engaged in transitioning Orchard View to the fourth generation of his family.

Nellie McAdams is the Director of Rogue Farm Corps’ Farm Preservation Program, a third-generation hazelnut farmer from Gaston, Ore., and has long been involved with the program. Rogue Farm Corps is training the next generation of Oregon farmers and ranchers, and helping communities develop programs and policies that assist with farm succession and permanent farmland protection.

“Oregon is an amazing state that can produce over 220 crops, but we can’t grow them without land,” McAdams says. “People tend to settle in flat bottom ground near rivers, which is exactly where you’ll find our best soils. The land use program has done an excellent job at slowing the paving of our soil, but we’ve still lost half a million acres from agriculture and 65,500 acres from Exclusive Farm Use zoning since the program started in 1973.”

Last spring, Rogue Farm Corps, Gorge Grown Food Network, Oregon State University, and Washington State University held a workshop on farm access and succession planning in Hood River. Thirty-eight ranchers and farmers attended the event, most of whom are retiring soon and looking for options to transition management and keep their farms productive.

Adam McCarthy of Trout Creek Orchard spoke on the panel, as did Katrina McAlexander who now manages her family’s farm, Mt. View Orchards. Mosier lavender grower and lawyer Steven Seymour offered legal advice and insight from his experience helping several families transition farms from one generation to the next.

“Agricultural land is changing hands, aging farmers want to see their legacy continued, and qualified beginning farmers and ranchers are ready to take it on,” says Nillie McAdams. “We should continue to explore tools and opportunities for connecting generations of farmers and ranchers for the future of agriculture in Oregon.”

Many of the orchards producing fruit in the Gorge are century farms, with third or fourth generation descendants returning to farm that land. Most of the vegetable farmers in the Gorge are first generation, and buying smaller pieces of farmland for intensive vegetable production can be more difficult and cost prohibitive. It takes patience and creativity.

Ben Saur and Anastasia Mejia are from Hood River. They married in 2009, and spent years growing produce on leased land scattered around Hood River, paying landowners in fresh produce. It was a lot of driving, but their experience helped them qualify for a loan from the Farm Service Agency to buy 10 acres in Parkdale in 2015. Two draft horses, Wilma and Betty, provide the power for Ben and Anastasia to grow vegetables for the Hood River Farmers Market, various restaurants, and 35 families who purchase a box of produce a week through a Community Supported Agriculture (CSA) share.

Ben Zimmerman was raised in Hood River. After some time away, he returned to the Gorge and managed to buy a piece of land in Snowden, Wash. He soon met Brooke Nicholls who was working as a nurse at One Community Health, and they married in 2017. They grew much of the food served at their wedding — including 80 chickens. They love tending the land, but with jobs off the farm and a new baby they can’t manage it all, so they informally lease part of their 3-acre parcel to friends Kristin and Colin Franger, owners of Blue Bus Cultured Foods.

The Frangers enjoy having a hand in growing some of the produce for their sauerkraut and other products, and being able to do so on their friends’ property is a win-win. Their products are now in stores throughout the Pacific Northwest, including New Seasons and Whole Foods, and they’ve won the prestigious “Good Food Award” several times. Short-term, informal leases may not work for everyone, though. They require trust, and farmers can’t build equity on borrowed land. Leasing also often keeps farmers from making long-term investments in infrastructure and soil improvement.

Raices Cooperative Farm, a project of The Next Door in Hood River, connects community members to land and training in marketing, sales, and leadership. The project started as a one-acre plot on Barker Road, where about two-dozen families grow food in individual plots. Another acre off Tucker Road was added to the project, and now some of the farmers are growing food commercially on other satellite plots. Raices members Joel Pelayo and Vitalina Rodriquez sell produce through the Raices CSA and Odell’s Mercado del Valle.

The demand for local vegetables has exceeded the supply. Gorge Grown Food Network’s Veggie Rx Program now provides hundreds of families with fresh veggies each month, but it’s impossible to source all of the produce locally, especially in the late fall and winter. The Hood River Farmers Market runs year round now, so there is a lot of potential for Gorge farmers to sell winter storage crops like squash, onions, and garlic. And the eastern end of the Gorge, which receives more sun than Hood River, is prime for winter greenhouse production. The demand for year-round food is growing, and the local food system is dependent on access to healthy, productive, affordable land.

What works elsewhere may not translate perfectly in the Gorge because of tax codes and other reasons, but there are some great models to learn from. The Equity Trust, based in New York State, runs an innovative “Farms for Farmers” program, which promotes alternative ownership structures for farms. This program supports farmers who need affordable land, and communities that want a secure source of locally grown food and a way to preserve their environmental heritage. The Equity Trust Fund is a revolving loan fund enabling socially conscious lenders and donors to support projects that are creating new ways of owning, using, and stewarding property.

Dirt Capital Partners in the northeastern states pools capital from private investors to help beginning farmers buy land; and some land trusts help farmers purchase land in transactions that include a working land conservation easement (which the Oregon Agricultural Heritage Program could help fund, if it receives support from the state legislature). What about a Gorge farmland trust?

A VISION FOR THE FUTURE, AND A CALL TO ACTION
Gorge Grown Food Network just updated its Strategic Plan through 2021, and one of our top priorities is working with community partners to ensure that farmers have access to land in the future. Our mission is to build a resilient, inclusive food system that improves the health and well-being of our community.

Preserving farmland doesn’t just mean slowing development, it means supporting agricultural productivity and what farmland conservationists call “working lands.” It also involves protecting the systems that support farms and farmers like the water, land use laws, habitat for pollinators like bees, and the markets that enable farmers to sell and share their products.

Oregon Farm Link is an online forum where those seeking to transition land after retirement can connect with beginning farmers and investors to preserve farms, and keep them in production. Increasing the use of this tool in the Gorge could help new farmers find land.

A training center, like the Headwaters Farm Incubator Program outside of Portland, could provide the capital, experience and support for new farmers to launch thriving businesses.

Many of our local healthcare providers now recognize that quality food is a cornerstone of health, like One Community Health. They provide more than $35,000 a year for Veggie Rx for their food insecure patients from general operating funds. What if some of our local institutions actually employed farmers to grow quality produce for patients, hospital cafeterias, schools and healthcare employees?

We need to be creative and collaborative as we seek to protect the agricultural history of the Gorge with its skyrocketing prices of farmland. The future of farming depends on it.

The public report, “Analysis of Oregon Farmland Sales 2010-2015,” is available on the website of Planning Oregon, a research into action initiative of the Nohad A. Toulan School of Urban Studies and Planning at Portland State University, at: https://www.pdx.edu/cus/planning-oregon-research-practice-innovation.

This article was initially published in Savor the Gorge.

 

By Sarah Sullivan, Executive Director of Gorge Grown Food Network