Good morning. My name is Guy Donaldson. I am a fruit grower and direct retail marketer of produced fruit. My fruit farm and store are located near Gettysburg, Adams County, Pennsylvania. I currently serve as President of Pennsylvania Farm Bureau. Pennsylvania Farm Bureau is a statewide general farm organization with a membership of over 27,000 farm and rural families. On behalf of our organization and our membership, I want to thank the Committee for the opportunity to express our views on legislation to provide additional federal funding of state programs to preserve farmland through conservation easement purchases.
I thought it would be helpful to the Committee to begin my remarks by giving you some background on Pennsylvania's experience in farmland preservation. Today, our Commonwealth implements a coordinated statewide program of farmland preservation through state and county purchases of agricultural conservation easements (also referred to as purchases of development rights) from farm owners.
The opportunity for establishing state and local farmland preservation programs was first provided in 1981, with the passage of state legislation known as the Agricultural Area Security Law. This Law authorized Pennsylvania counties to create agricultural conservation easement purchase programs to preserve productive farmland in localities throughout the Commonwealth. Yet, from 1981 through 1988, our counties virtually ignored the authority given to them under the Law to establish farmland preservation programs. The clear reason for counties' unwillingness to participate was the absence of any meaningful source of available funding. While the 1981 Law provided counties with the legal authority to preserve farmland through ag conservation easement purchases, it failed to provide counties with financial resources necessary to implement any effective preservation program. Counties, whose source of revenue primarily consisted of local tax dollars, had little financial opportunity at that time to place farmland preservation very high on their list of program activities.
In 1988, Pennsylvania began to provide a meaningful source of funding to counties for farmland preservation. With the referendum approval of Pennsylvania's voters in 1987, our Commonwealth provided $100 million in state bond monies for ag conservation easement purchases. This seed money prompted much enthusiasm among counties to establish farmland preservation programs and commit monies from county sources, as well as state funds, for easement purchases.
Appendix 1 provides you with data on conservation easement purchases that have taken place since 1987. The results have been impressive. 46 of Pennsylvania's 66 counties that are eligible for state funding have established ag conservation easement purchase programs. 41 counties have made purchases of conservation easements. These programs have resulted in the preservation of 1090 farms totaling more than 136,000 acres of farmland in Pennsylvania.
Farmers have also appreciated the opportunities that our Commonwealth's farmland preservation program has provided. As a whole, Pennsylvania farmers are
proud of their profession. We like farming, and want to continue to farm for a long time. At the same time, we realize that agriculture is a tough profession to be economically successful. Many farmers look upon their farm assets as their means for retirement security.
The program has allowed farmers to receive reasonable compensation for their land, while allowing them to continue in agriculture. The proceeds from ag conservation easement sales may be used to purchase additional farmland or farm equipment, or may just be used to provide that retirement nest that we all seek. But, any event, sales of ag conservation easements have provided Pennsylvania farmers a greater opportunity to be financially secure and continue in their profession for years to come.
Pennsylvania's farmland preservation program has also provided the opportunity for farm families and for citizens of the Commonwealth to secure the continuation of farm production for succeeding generations. Although the compensation provided from ag conservation easement sales is appreciated, it is not the only reason why farmers participate in the program. If money were the only motivator, farmers would sell their properties outright on the open market, and would likely receive a substantially greater price for their farm than what they receive under the preservation program.
Appendix 2 illustrates the point. This Appendix shows the average market value per acre of farms reported in the Agricultural Censuses for 1987, 1992 and 1997 for those counties in which ag conservation easements have occurred under the state farmland preservation program. The first year that each individual county was able to purchase easements under the state farmland preservation program is indicated next to the name of the county. When you compare the average per acre price received by farmers from ag conservation easement sales indicated in Appendix 1 with the average per acre values indicated in Appendix 2, you see that in the overwhelming majority of counties, farmers received less for their easements than the average per acre market value of farms for the corresponding periods in which the sales took place. For many counties, prices received by farmers for easements were lower than average per acre values indicated for 1987.
Why would farmers settle for less than full price for their farms? I believe the answer is simple. While farming is a business, farmers do not make decisions on their farm operations strictly on the basis of dollars and cents. Farmers see a real value in the preservation of their farm and farming business for future generations. Farmers want to see their children continue the farming business, or if not their children, individuals in succeeding generations who are as committed in continuing and improving the farm business operation as they are.
The reduction in the residual market value of the farm which results from a sale of an ag conservation easement makes it much easier for farms to be transferred to succeeding generations without placing the recipient of the farm in prohibitive debt. Since succeeding generations will not be incurring such a debt load when they receive the farm, they will be better able to viably operate the farm, which will better ensure that the legacy of the farming business began by farm families or their ancestors will live on.
Pennsylvania's farmland preservation program has been a successful one, but it has not been a small investment. As you can see in Appendix 1, nearly $265 million of state and county monies have been spent in purchasing ag conservation easements. Still, for numerous counties, the number of farms that counties have determined to be worthy of preservation substantially exceed the number of farms whose easements counties are able to purchase with available funds. Insufficient funding has created a waiting list of more than 1500 farmers willing to sell ag conservation easements to another 100,000 acres of farmland. Even with Pennsylvania's success in farmland preservation, much more needs to be done to not only preserve farmland but to preserve the economic integrity of viable agricultural areas.
From 1996 through 1998, Pennsylvania's program has received approximately $2.25 million in federal monies for use in state ag conservation easement purchases. Although federal funds provided for the program are small, when compared with the amount of state and county monies committed, federal funding has been a help in stretching the program's purchasing dollar. Appendixes 3, 4 and 5 indicate the allocation of federal funds to Pennsylvania state ag conservation easement purchases occurring between 1996 and 1998, as reported by the Pennsylvania Department of Agriculture's Bureau of Farmland Protection. Based on these purchases alone, federal funding has allowed the Commonwealth to preserve an additional 1262 acres.
Pennsylvania continues to search for ways to fund the farmland preservation program. Since July 1993, the state has instituted a 1% cigarette sales tax which has generated approximately $120.6 million committed for use in ag conservation easement purchases. Most recently, our legislature has appropriated $43 million for use in easement purchases during this coming fiscal year. This will relieve some of the backlog of worthy easement purchases which has been recently experienced in a number of counties.
Pennsylvania's farmland preservation program has sustained strong public support for the 12 years that state funding has been provided. Rural and nonrural citizens have appreciated what the state program provides to the economic welfare of agriculture, the preservation of viable agricultural areas, and the conservation of the Commonwealth's natural resources.
Pennsylvania Farm Bureau strongly supports Congressional efforts to substantially increase federal appropriations to state-administered farmland preservation programs for purchases of agricultural conservation easements on farms.
I emphasize that federal appropriations to be made available should be directed to state-administered farmland preservation programs. Some may feel federal funding should also be made available to preservation programs that would be administered by private preservation organizations. We would not favor such action. Private organizations attempting to preserve farmland may also be attempting to preserve other lands as well. The purposes and objectives of these private organizations to preserve lands may be much broader than the objectives of preserving farmland and the future integrity of agriculture in geographic areas where farming has been the mainstay of local communities. Sometimes the objectives and actions of private preservation organizations can conflict with agriculture and can impede farmers' need to be adaptable in order to maintain economic viability.
The primary objective of farmland preservation programs should not just be to preserve land. It should be to preserve farming businesses and maintain those characteristics which will assure the continued economic viability of farming businesses in the future. We feel farmland preservation programs that are state-administered will best ensure this important objective of preserving farms will be accomplished, and other objectives not related to preserving farms will not be considered.
It is our hope that this Committee will be willing to lead these efforts to provide meaningful assistance to state-administered farmland preservation programs.
Thank you again for the opportunity to share with you our views.