Agriculture and Energy: Powering Pa.’s Economy

The 99th annual Pennsylvania Farm Show – “the largest indoor agricultural exposition in the nation, with nearly 6,000 animals, 10,000 competitive exhibits and 300 commercial exhibits” — kick offed this weekend in Harrisburg with much fanfare.

This event showcases the Commonwealth’s deep and rich agricultural history. And thanks to safe and responsible shale development, farmers are receiving are a huge boost. A recent Pittsburgh Tribune-Review column notes that “In addition to the billions in royalties paid to landowners and farmers, the natural gas boom has benefited all Pennsylvanians with cheaper energy.”

In fact, a National Agriculture and Rural Development Policy Center (NARDeP) study — titled Shale Gas Drilling And Farm Real Estate Valueshighlights these benefits as well. To be sure, shale development presents new opportunities for farmers to make upgrades, has added $130,000 in wealth to the average Pennsylvania farm, lowered overhead costs, added billions of dollars in royalties each year to their pocketbooks, and actively supports farmland preservation. Taken together, these factors along with scores of others, allow these locally- and family-owned farms to thrive.

Here are the study’s key takeaways:

  • In parts of Texas and Pennsylvania, farm real estate appreciated when land was leased prior to drilling, with greater appreciation in Pennsylvania where farmers are more likely to own the rights to the subsurface. There, appreciation added $130,000 in wealth for the average farm.
  • In 2002 the total value of farm real estate in the three border counties in Pennsylvania was about $1.67 billion. The 28 percentage points in greater appreciation for Pennsylvania farms implies the creation of about $466 million in total wealth for farmers in the three counties, about $130,000 per farm.
  • This wealth increase may help farmers upgrade equipment and technology to improve the profitability of their operations.
  • To the extent that many natural gas rich properties are sold without the oil and gas rights, shale development should not make it substantially more costly for beginning farmers to buy land.
  • The large increase in farm real estate values in Pennsylvania most likely did not translate into increased property taxes for local schools and governments.
  • Much farm real estate in the State is valued at its agricultural use value, which drilling should not have affected.

If you’re heading to the Pa. Farm Show this week, please stop by the Pa. Department of Environmental Protection’s (DEP) exhibit [MF5580] in the Main Hall which features a new educational video, “Pennsylvania’s Unconventional Drilling Process.” The animated video explains the tightly-regulatory process of shale development as well as compliance with strict environmental standards. And join the conversation online by using the hashtag #PAFarmShow.