Agriculture in Cumberland Co Fa 08

Environmental Economics Fa 08 | DDT Fa 08 | Trade and the Environment Fa 08 | Local Water Quality Fa 08 | Agriculture in Cumberland Co Fa 08 | LEED, Efficiency Standards, and Risk Fa 08 | Fisheries Management Fa 08 | Food and Pesticides Fa 08

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.

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 plan to continue this initial ethnographic research to complete a more comprehensive report on the effect of developmental pressures on agricultural land allocation. Our project design is outlined below:

Proposed Project Design

We will be considering general trends—historical and current—in the changes to agricultural land (especially in Cumberland County) due to pressures from development. Our research will include consideration of the factors affecting the price farmers are willing to accept for their land. For example, the impact on farmers’ willingness to accept due to changes in the market for their crops will be included in the analysis. Also, changes in the land market in which developers are purchasing their land will be looked at, including the costs and benefits of farm land compared to land allocated for other uses.

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

A combination of factors flowing from both the agricultural and development sectors are combining and resulting in the usage of greater amounts of farmland for development.

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 the past and expected future returns from farming and pressures from urban development (Shi, Phipps, Colyer). 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 play a role in this equation along with the regional factors (Moss 1997; Just and Miranowski 1993).

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 (Phillips and Phillips 2007). 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 (Cumberland County Pennsylvania 2008 [1]). 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 (Phipps 1984). Returns to agricultural production impact the price of the land, while the opposite does not occur (Shi, Phipps, Colyer 1997). 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.

Compounding the difficulties that Pennsylvania farmers are experiencing regarding the low returns for the sales of their products, is the comparatively small size of farms in this state. Despite the 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 (Cumberland County Pennsylvania 2008). This is a problem because the prices of many agricultural products are set nationally. These nation-wide crop prices are therefore applied to farms of all sizes. The smaller Pennsylvania farms, unable to take advantage of economies of scale, must therefore sell their products at the same price as the large farms 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 (Cumberland County Pennsylvania 2008). 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 for agricultural producers entering the market. The Pennsylvania Bureau of Farmland Preservation has protected more farmland than any other equivalent state agency (Pennsylvania Department of Agriculture 2008 [2]). 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 (Nickerson and Lynch 2001). 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.

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 business seeking to gain additional equipment or land. But these financing problems are most problematic for those seeking to enter the agricultural production market. The lack of funding is a great deterrent to potential farmers as well as a source of problems for already existing producers (Phillips and Phillips 2007).

Why Developers are Buying

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

The fact that most farmland is flat and well drained makes it ideal for developmental purposes [cite?]. 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 in residential development (Carrión-Flores and Irwin 2004). Thus, the desirability of farmland for conversion to residential land-use increases due to its sparsely populated and more isolated nature as well as the nature 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 (Shi, Phipps, and Colyer 1997). 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.

Environmental Impacts of the Shifting Agricultural Landscape

With nearly 1 billion acres of land in farm use, agriculture is America's dominant land use.

References

Research

Pennsylvania Game Commission- Reduction of Farms and Crop Production: http://www.pgc.state.pa.us/pgc/cwp/view.asp?a=496&q=166106&pp=12&n=1

Governor Rendell Discusses Farmland Preservation Plan During Cumberland County Visit: http://www.agriculture.state.pa.us/agriculture/cwp/view.asp?A=390&Q=131148

Pennsylvania County Data - Farm Numbers: http://www.nass.usda.gov/QuickStats/PullData_US_CNTY.jsp

Research Paper- Why young farmers don't want to farm

http://www.ruralpa.org/young_farmers.pdf

NY Times Article- Farms are disappering in PA, Gov. bond to make them stay

http://query.nytimes.com/gst/fullpage.html?res=9B0DE2DC123FF932A35752C1A961948260