Professional Documents
Culture Documents
hree
T hr GAO
ee GA re
O r port
eports
The United States General Accounting Office (GAO) recently issued three analyses
warranting attention in the agricultural law community: U.S. Gen. Accounting Office,
Packers and Stockyards Programs: Actions Needed to Improve Investigations of Com-
petitive Practices (GAO/RCED-00-242, Sept. 2000); U.S. Gen. Accounting Office, Sugar
Program: Supporting Sugar Prices Has Increased Users’ Costs While Benefiting Pro-
ducers (GAO/RCED-00-126, June 2000); and U.S. Gen. Accounting Office, Farm
Programs: Observations on Market Loss Assistant Payments (GAO/RCED-00-177R,
Correspondence to the Hon. Dan Glickman, June 30, 2000). These and other reports
IN FUTURE of domestic sugar through loans and tariff-rate import quotas that restrict the supply
Continued on page 2
I SSUES ennsylvania’
P ennsylv
conserv
conser
ania’s
ania’ seexper
xperiences
xperiences with
vation easements
This is the second of a two-part article that examines Pennsylvania’s experience with its
• New water quality Purchase of Agricultural Conservation Easements (PACE) program, the Commonwealth’s
regulations raise most visible farmland preservation program, placing the PACE program in the context
of other farmland preservation methods before looking at some lessons from Pennsylvania’s
questions about EPA experience and future program directions.
influence over
agricultural practices Farmland preservation techniques
Purchase of conservation easements for farmland preservation is sometimes referred
to as a third generation preservation technique. Zoning is a first generation technique.
Continued on page 2
GAO/CONTINUED FROM PAGE 1
of imported sugar that can be imported at Bruce Ingersoll, U.S. Offers to Give Gov- vided a 100% “supplement” to PFC pay-
a low tariff rate. As a result, domestic ernment Sugar To Farmers Who Destroy ments. In other words, in fiscal years 1999
sugar in 1998 was priced at more than 10 Part of Crop, Wall St. J., Aug. 3, 2000 at and 2000, a farm that received $40,000 in
cents per pound higher than the world A6; FSA Notices SU-60 and SU-61. PFC payments also received $40,000 in
price. In 1998, the program produced wel- In its report on market loss assistance MLA payments.
fare gains to sugar beet and sugar cane (MLA) payments, the GAO found that To receive PFC payments, however, an
producers and processors in excess of one farmers were both “over-paid” and “un- eligible person does not have to produce
billion dollars. However, losses to sweet- der-paid,” depending on whether they ac- wheat, feed grains, cotton, or rice. In fact,
ener users and to the national economy tually produced the commodities for which no commerical crop need be planted on
resulting from production and consump- the payments were made. Since 1998, PFC acreage. See, e.g., 7 C.F.R. §
tion inefficiencies and transfers to foreign Congress has authorized MLA payments 1412.401(c). Nonetheless, MLA payments
countries approached two billion dollars. for wheat, feed grains, cotton, and rice. See for wheat, feed grains, cotton, and rice
Thus, the sugar program, while benefit- Omnibus Consolidated and Emergency were directed to the farms owned or oper-
ting only from 8,000 to 12,000 sugar cane Supplemental Appropriations Act of 1999, ated by these persons irrespective of their
and sugar beet farmers, cost the national Pub. L. No. 105-277, tit. XI, § 1111, 112 actual plantings. As a result, according to
economy about $900 million in 1998. More- Stat. 2681, 2681-44-2681-45; Agriculture, the GAO, in 1999 “about 27 percent of the
over, it contributed to an over-supply of Rural Development, Food and Drug Ad- $4.5 billion in ad hoc MLA payments in-
domestic sugar this year. Id. at 6-22. As a ministration, and Related Agencies Ap- cluded in our analyses went to farms that
result, the USDA spent $54 million in propriations Act, 2000, Pub. L. No. 106- would not have received this assistance if
June 2000 to purchase sugar in an effort to 78, tit. VIII, § 802, 113 Stat. 1135, 1176; the payments had been based on current-
prop up the domestic sugar price. Because Agricultural Risk Protection Act of 2000, year plantings.” Observations on Market
these purchases failed to markedly im- Pub. L. No. 106-224, tit. II, § 201(b), 114 Loss Assistance Payments at 2. Specifi-
prove prices, the USDA is now implement- Stat. 358, 398. These payments were os- cally, the GAO found that “about 893,000
ing a sugar payment-in-kind program that tensibly intended to help offset the de- farms received about $1.22 billion more
is paying sugar beet producers up to clines in market prices for these commodi- than they would have received” had MLA
$20,000 per person to forego harvesting ties. The MLA payments, however, “fol- payments been based on current-year
their sugar beet acreage. See generally lowed” production flexibility contract plantings. Id. On the other hand, in the
(PFC) payments. In other words, MLA same year “about 400,000 farms adversely
payments were paid only to persons who affected by falling prices would have re-
received PFC payments, and the MLA ceived about an additional $300 million in
payments were paid in proportion to the MLA plantings if the payments had been
PFC payments a farm received. In fiscal based on that year’s plantings.” Id.
year 1998, MLA payments “supplemented” —Christopher R. Kelley, Asst. Prof. of
PFC payments by about 50%. In fiscal Law, University of Arkansas, Of Counsel,
years 1999 and 2000, MLA payments pro- Vann Law Firm, Camilla, GA
VOL. 17, NO. 11, WHOLE NO. 204 October 2000
PENNSYLVANIA/Continued from page 3 IPA has several potential advantages for must aggressively deal with protecting this
the funds to purchase a conservation ease- the program. For the same amount of annual region. To merely amass large quantities of
ment are committed at the time of purchase; authorized funding, the amount of farmland eased farm acres, but not protect the valu-
the full dollar amount of the easement is that could be eased would be greatly in- able farm region in southeastern Pennsylva-
encumbered up-front. Once a county’s an- creased. The long-term income stream po- nia, will be an empty victory.
nual allocation is committed, it must wait for tential may help attract younger farmers to To some extent the state formula for dis-
the next funding cycle to buy more ease- PACE. Paying for easements over time, in- tributing program funds addresses this need
ments. The longer interested farmers must stead of up front, should make limited pro- since it uses, in part, real estate activity as a
wait for PACE, the greater the likelihood gram dollars go farther and reduce the frus- factor. Even so, consideration should be given
they will accept alternative opportunities to tration of farmers who must wait their turn to strengthening the targeting of funds to the
sell. to sell easements. How farmers will accept Commonwealth’s most vulnerable farm-
One way limited funds have been stretched this new arrangement is unclear, but county lands.
is by placing a cap on the per- acre maximum program scoring could be adjusted to reward
dollar amount of an easement. This is insti- farmers who take advantage of it. The agricultural industry
tuted at the state level, and many counties PACE protects the land from develop-
have followed suit by instituting their own, Protecting eased farmland ment but does nothing to help the farm
usually lower, caps. In order for farmers to Even though farm easements are pur- business itself survive. More direct attention
participate in the program and sell their chased, the value of the easements can be to the participating farm operations them-
easements, a relatively high percentage of destroyed if they are not protected from selves is important in the long run, if only to
recent sales are so-called “bargain sales;” nearby non-farm development. Neighboring insure that the farms themselves remain
that is, the seller accepted less than 100% of eased farmland is desired by residential economically viable. Some suggest directly
the easement value. Some of this loss may be development because it provides permanent linking program participation with farm
returned to farmers in the form of a tax open space and buffering to homes. The management assistance as a way of helping
benefit. citizens of the Commonwealth create this farm operations on the preserved land stay
Another way of stretching limited funds amenity through their tax dollars, but homes in business. Protected land must be part of
will soon be possible. In 1999, Act 15 autho- that benefit from it may, at some time, begin an integrated approach to farm and farm-
rized long term installment purchase agree- complaining about farm noises, odors, and land preservation, complemented by other
ments (IPA) as an alternative payoff method traffic, thereby causing distress and incon- business assistance and preservation
to acquiring conservation easements. Long venience to farming operations. In extreme techniques.Purchase of conservation ease-
term installment purchases can “leverage” situations farms may be forced to cease op- ments must be part of a balanced, compre-
annual program funds by deferring the prin- erations, thereby defeating the purpose of hensive program of preservation, not a stand
cipal payout until the end of the contract purchasing the farm easements. alone program. Other preservation tech-
period. During the installment contract pe- Effective agricultural zoning should be an niques, such as zoning and agricultural se-
riod the seller would receive an annual in- important part of an overall agricultural curity areas, complement PACE by helping
come stream, and taxes on the outstanding land preservation program. Such zoning farms remain viable.
principal are deferred. The IPA contract helps protect the public investment when
could be sold or liquidated before the end of easements are purchased. However, zoning Though Pennsylvania’s program has been
the term, and it could be transferred to heirs. is not a required program element at the active since 1989, it is an evolving one. Sig-
In effect, such long term installment con- state level, and effective agricultural zoning nificant refinements, particularly in evalu-
tracts may net the seller more than a cash is not in place in most localities. Protecting ating eligible farm parcels, have been made
sale. the public’s investment through effective since the program’s inception. The scale of
This financing method uses general obli- agricultural zoning should be a state and participation and the speed at which the
gation bonds, which are relatively inexpen- county requirement for participation in the program is operating is beyond the expecta-
sive to purchase at the time of easement sale easement purchase program. tions of the originators of PACE. While by
and cost a fraction of the face value of the most measures PACE can be judged a suc-
easement. The easement seller receives an- Concentrating purchases cess, it is still too early to tell whether the
nual interest payments, and then gets a The Commonwealth’s most valuable farm- land saved in Pennsylvania will translate
lump sum when the bond matures. Basi- land is in the southeast and south central into preserving agriculture in the Common-
cally, IPA shifts the financing burden from regions, which is the area most severely wealth.
the “front end,” when the sale is made, to the threatened by urban development. For the — Timothy W. Kelsey and Stanford M.
lifetime of the installment contract. PACE program to really be successful, it Lembeck, The Pennsylvania State Univ.