Agriculture in Cumberland Co Fa 08

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The Impact of Developmental Pressures on Agricultural Land Allocation

Introduction

We became interested in the topic of agricultural land allocation and changes in it due to pressures from developers because we have seen first hand increasing development that has replaced agricultural land in Cumberland County, Pennsylvania.

Through our initial research of interviewing farmers in the Cumberland Valley in the Fall of 2007, it became known that farmers were very concerned about the current trend of being bought out by incoming developers. They stated that the lay of the land has dramatically changed in recent years and they expected that it would continue to increase in the near future.

We continued upon this initial ethnographic research, creating a more comprehensive report on the effect of developmental pressures on agricultural land allocation, focusing on Cumberland County. We will be considering general trends—historical and current—in the changes to agricultural land. Our research will include consideration of the factors affecting the price farmers are willing to accept for their land and that which developers are willing to pay. We will then outline the economic and environmental impacts of this land use conversion. The study concludes with some recommendations on how improve farmland preservation.

Historical and Current Changes in Agricultural Land Allocation

Over the past few decades, farmland has been disappearing. Since 1959, the number of farms in Cumberland County has dropped from 1,873 to 1,116. Furthermore, the number of acres used for agricultural purposes has been reduced by 61,000. Not only is this rate alarming, but it is also rising. In a study done on agricultural land in the Cumberland County area, results showed that between 1959 and 2002, the rate at which farmland was lost per year was 1,420. Between 1997 and 2002 however, the rate of acres lost per year increased to 1,983. This increase shows a steady trend of rising agricultural land loss. In fact, between the years of 1992 and 1997, Pennsylvania ranked 6th in the nation for the highest amount of prime farmland lost.

One factor that is causing this trend is population growth. Between 1970 and 2000, the population of Cumberland County grew 35%. This rate is 31% higher than the average growth rate in Pennsylvania. With all of these people moving into the area, the county has become much more suburban.

Because of this high population growth, the demand for development has also increased. Residential areas, retirement homes, and other housing developments have sprung up all over the county. Since farmland is flat and well drained, it is ideal property for construction. From 1992 to 1997, approximately 6 million acres of farmland were converted for developmental use. This rate is up 51% since the 1980's.

WTA and WTP: Why Farmers Sell and Why Developers are Buying

Several factors from both the agricultural and development sectors are combining to result in the conversion of greater amounts of farmland to development usage. The desire of farmers to sell their land and for developers to purchase this land is reflected in the price of farmland. A 1997 study of farmland prices in West Virginia found that the price of farmland is impacted by returns from farming and pressures from urban development. These two factors seem to be the primary determinates of farmland value. Thus, from the perspective of the farmers, changes in the price of agricultural goods and the necessary inputs for the production of these goods determine the price they are willing to accept for selling their land. For developers, the land’s proximity to urban centers acts as the primary motivation for offering a higher price. Inflation also plays an important role in setting the price of farmland, suggesting that macroeconomic changes impact this market along with the regional factors.

Why Farmers are Selling

Farmers are experiencing difficult times. According to a 2007 study, 84 percent of young farmers in Pennsylvania stated that they had experienced significant economic difficulties. These hardships are resulting in an increasing willingness of farmers to sell their land. There are also fewer young people willing to work in the agricultural field and the average age of farmers is increasing. Several primary challenges exist for farmers. These include low prices for crops, high prices for land and equipment, and financing difficulties.

The price of farmland seems to be largely influenced from within the farm sector. Returns to agricultural production impact the price of the land, while the opposite does not occur. If nonfarm returns were an important factor, such a land-price influence would be expected. The greatest power over the price of farmland seems to be commanded by the agricultural field, specifically the returns to farming. Therefore, crop prices and the cost of inputs have a large impact on the willingness of farmers to sell their land.

The comparatively small size of farms in Pennsylvania compounds the difficulties that their owners experience regarding low returns for the sale of their products. Despite the great importance of agriculture to the Cumberland County economy, the majority of its farms are categorized as small scale operations and have sales under $10,000. This problematic because the prices of many agricultural products are set nationally. Nation-wide crop prices are therefore applied to farms of all sizes. The smaller Pennsylvania farms, unable to take advantage of economies of scale to improve efficiency, must therefore sell their products at the same price as the large agricultural producers of the Midwest.

A second threat to the agriculture industry is the rising cost of inputs—primarily land. Seventy-seven percent of farmers in Cumberland County reported that increasing land prices were endangering the survival of their farms. The greater funds available to developers enable them to purchase this land instead of those intending to use it for farming.

Many state and local governments have begun to purchase the development rights for farmland in order to keep this land from being developed and help ensure that land is available for agricultural producers entering the market. The Pennsylvania Bureau of Farmland Preservation has protected more farmland than any other equivalent state agency.

Relinquishing the ability to develop this land would seem likely to greatly lower its value. However, a study of the Maryland farmland market found that, while a slight price decrease did occur, no significant change took place. This unexpected result is probably due to a belief that the current restrictions imposed by the government programs will not be in place in the future. Another result of this lack of drop in the prices of preserved farmland is that newly entering producers cannot purchase the land at the agricultural use value. Inability to obtain land at this price will discourage new farmers from entering the market. While these farmland preservation programs are managing to secure some agricultural land from development, they have been largely unsuccessful in keeping land prices affordable to farmers. This failure may be gradually corrected if these easement programs continue to operate, since the likelihood of their discontinuation would diminish.

The difficulty of obtaining financial aid is the third major threat to agriculture. Securing capital is essential in order to counter the rising costs involved with farming. Lower agricultural returns exacerbate this problem for farmers already in operation who are seeking to gain additional equipment or land. But these financing problems are most troublesome for those seeking to enter the agricultural production market. Lack of financing is a great deterrent to potential farmers as well as a source of problems for already existing producers.

Why Developers are Buying

Population growth has necessitated increasing development. Land is needed for this development. There are several factors influencing why farms are chosen for this change in land usage and which ones are considered more desirable.

The fact that most farmland is flat and well drained makes it ideal for developmental purposes. Farmland is also more desirable to developers because it is lightly populated and separated from established urban centers. While a grouping effect is seen in the establishment of industrial and commercial centers, residential development is much more fragmented and spread out, demonstrating a preference for utilizing less densely populated areas for residential development. Thus, the desirability of farmland for conversion to residential land-use increases due to its sparsely populated and more isolated nature as well as several characteristics of the land itself.

The relationship of a piece of farmland to its surroundings—particularly cities—alters its desirability to developers. Urban sprawl influence on the farmland market can be explained through a gravity-like model. The distance of a piece of farmland from an urban center, squared, has an inverse relationship to the price of that land. Thus, if the distance decreases due to the spread of that urban area or a change in infrastructure the price of the surrounding farmland will increase. This change will be less dramatic at greater distances. Similarly, the population of an urban center has a direct relationship on the value of the surrounding farmland. An increase in the size of the city will cause an increase in farmland prices.

Economic Impacts of the Shifting Agricultural Landscape

The U.S. food and farming system contributes nearly $1 trillion (13% of GDP) to the US economy. It also employs 17% of the national labor force. As stated by the Why Save Farmland document, "With a rapidly increasing world population and expanding global markets, saving American farmland is a prudent investment in world food supply and economic opportunity."

Agriculture is the leading industry in Pennsylvania and Cumberland County ranks 10th in the state for total farm products sold. Specifically, the agriculture industry in Cumberland County employs over 1,400 workers and generates nearly $130,000,000 for the local regional and state economy. Forty percent of the County land area is sitll devoted to agriculture.

In conclusion, the reduction of agricultural land will drastically effect the economic wealth of Cumberland County, Pennsylvania, and the nation.

Environmental Impacts of the Shifting Agricultural Landscape

With nearly 1 billion acres of land in farm use, agriculture is America's dominant land use. Therefore, by changing the agricultural landscape there is the potential for widespread ecological consequences.

Furthermore, productive agricultural land is a finite resource and cannot be manufactured. Once a farm is developed, agricultural land cannot be replaced in a place where the soil is not suitable to farming. On top of this, farmland does not generally reclaimed after becoming developed land. Even if farmland were to be reclaimed, the land would not be as productive due to the compaction of the soil due to development.

Development can lead to the loss of wildlife habitat, pollution of air and water, increased risks of floods, decreased ability for groundwater recharge, loss of wetlands, and a decrease in carbon sequestration. Development specifically fragments and destroys wildlife habitat. This fragmentation is considered a principal threat to biodiversity. Therefore, privately owned agricultural land (in the east especially) is essential for wildlife because most of the public national parks, forests, and wildlife refuges that cannot be developed are located in 11 Western States.

Water pollution from development is mainly due to stormwater pollution. Stormwater pollution is rainwater/snowmelt that does not get absorbed into ground, flows over the land picking up pollutants, and then flow down stormdrains which drain directly into local streams, rivers, and oceans. Common pollutants that are carried to streams as a result of stormwater runoff are sediments, heavy metals, road salt, car oil, and lawn chemicals. This pollution is known to harm aquatic organisms and decrease biodiversity.

Additionally, because less water is absorbed into the ground in developed areas (as a result of impervious surfaces) there is a low recharge rate of aquifers. What is absorbed contains pollutants and contaminates drinking water.

Urban development is also a significant cause of wetland loss. Between 1992 and 1997, NRI showed that development was responsible for 49 percent of the total loss.

Reducing the development of farmland can help prevent many of these negative environmental impacts. Farmland also provides important buffers to streams, rivers, and tributaries from pollution from already developed areas.

Conclusion

We recommend the preservation of farmland and decreasing urban/suburban sprawl.

Ways to preserve farmland are through preservation programs that include tax-breaks and land conservation easements.

An example of a tax break program is the Clean and Green program in Pennsylvania. The program gives a land owner a tax-break if he agrees to keep the land in farmland, woodland, or pasture.

Land conservation easements are practiced in Pennsylvania as well. With conservation easements, the local government can purchase the land's development rights. For example, a farmer would still own the land and could continue to farm, but he could not convert the land to a non-farm use.

We also found that financial assistance to young farmers is very important for maintaining farmland. Without financial assistance to young farmers it is hard for them to get started and make a profit. This factors into why there is a decreasing amount of farmers in the United States.

Another essential component to saving farmland is education. By promoting agricultural education to the younger generation, more youth are likely to become interested in agriculture. This would help to increase the current number of farmers and would help to save farmland. Education can also be used to promote the benefits of preservation to landowners and the general public.

Financial assistance and education can also help to sustain family farmland. Children of farmers have previously been inclined to sell their land to developers. With outreach efforts, hopefully this trend will begin to slow.

References

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Central Pennsylvania Conservancy. "Conserving for Tomorrow... Today." 2006-2008. http://www.centralpaconservancy.org/CPC_PowerPointPresentation.ppt (accessed December 7, 2008).

Cumberland County Pennsylvania. "Chapter Five: Farmland Preservation." 2008. http://www.ccpa.net/DocumentView.asp?DID=750 (accessed December 7, 2008).

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Phillips, Jason K. and Diane M. Phillips. "An Investigation Into the Needs and Concerns of Young Pennsylvania Farmers." June 2007. Center for Rural Pennsylvania. http://www.ruralpa.org/young_farmers.pdf (accessed December 7, 2008).

Phipps, Tim T. "Land Prices and Farm-Based Returns." American Journal of Agricultural Economics 66, No. 4 (November 1984): 422-429.

State Wildlife Management Agency. "Pennsylvania’s Wildlife Action Plan (PA-WAP) PART IIB: 20.1 Farmland Habitats." November 4, 2005. Pennsylvania Game Commission. http://www.pgc.state.pa.us/pgc/cwp/view.asp?a=496&q=166106&pp=12&n=1 (accessed December 7, 2008).

Shi, Yue Jin, Timothy T. Phipps, and Dale Colyer. "Agricultural Land Values under Urbanizing Influences." Land Economics 73, No. 1 (February 1997): 90-100.