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Permit Value: A Hidden Key to the Public Land Grazing Dispute CHAPTER 4Permit Value as a Factor of Ranchers' Politics: How Important Is It?
This chapter attempts to characterize how important permit value is to ranchers with allotments, and to identify its significance to other ranchers, environmentalists, academics and public land managers. This discussion and the results of the informal survey that are presented, clearly are not and are not intended as a wide-scale sociological study or survey of this issue. Instead this chapter will only attempt to reveal the wide variety of insights and reactions of individuals close to the issue, through their own words and explanations. The hope is to illustrate the range of both emotional and intellectual responses to permit value, and to some degree, to the wider issues in the continuing controversy over managing public land grazing. My theory is that an unbiased presentation of these beliefs may help expedite reform efforts. It must be understood that the survey conducted as part of this thesis is informal in nature, due to the following two factors. The first is the sample size. Although the total number of interviews (43) approaches a significant sampling, the results are broken down and interpreted by category (i.e. academic, land manager, etc.), and the sample size in each category is clearly not large enough for clear numerical results from a statistical analysis. Why bother with a survey that does not produce clear numerical results? For the purpose of this thesis, there are three reasons. First, one of the principle aims of this work is to show that permit value is an important factor in ranchers' political motivations, and thus any positive responses indicating its importance are significant, even if they are subjective. Second, this survey was always intended to be used along with the specific economic and historical evidence presented in the earlier chapters and not intended to stand on its own. Finally, the process of conducting the surveys was an important tool to open up the discussion about permit value with the interviewees and put it in the context of the larger debate over public land grazing. The other factor that makes this survey informal is the discussions between the author and the interviewees. Although the complete intent of the survey was not revealed, the interviewees did not go into the survey completely "blind." For most, in order to get them to take the survey, they had to know something about me and the topic. Also, while each question was asked in a specific order, and specifically worded, during the interviews some of the questions needed further explanation for some of the interviewees. Also, between answers other issues were sometimes broached and discussed before returning to the survey questions. The questions used in the survey are presented in Appendix A. There are three sets of questions, each posed to different groups. The questions in each set are grouped into six sections, with each section containing one or more specific questions. The questions in the first four sections sets vary to reflect the group they are addressing. The questions in the first three sections in each set cover issues not directly related to permit value and are not collated. The results of the last three questions are specific to permit value and are shown in Tables 4-6. The questions in Section One were designed to elicit the background of the interviewees and their experience with ranching. For permittees, Section Two asks for background on their allotments, and for ranchers without allotments, whether they ever had an allotment. This is followed by Section Three that asks for the ranchers' perception of the allotment system. For all other groups, it is Section Two that asks for their perception of the allotment system and Section Three that asks for suggested changes to the allotment system. The questions in Section Four seek to confirm the existence of permit value and to get an estimate from each interviewee of the permit value of a federal allotment AUM. For ranchers with allotments, they are asked the value of their allotments' AUMs. For all other groups the question is not asked of a specific allotment. All groups are then asked whether permit value is increasing or decreasing. Section Five asks the question at the core of this thesis, "How big of an influence do you feel the real estate value of grazing permits is in the resistance of ranchers to cuts in their AUM levels?" This question was chosen because the resistance to AUM cuts takes place on local, regional and national levels. It can be seen in the permittees' interactions with the agencies during the development of AMPs, which are often developed in part through negotiation with agency officials. The resistance often becomes more apparent if an AMP is appealed up the ladder of agency decision-makers. These appeals can end up in Washington D.C., or occasionally in the courts. This resistance comes from individual ranchers, various ranching associations, and sometimes banks or politicians. The resistance is also reflected in proposed national legislation. Section Six assumes that much of ranchers' resistance to AUM cuts is financial, and asks for reactions to two possible measures that would mitigate some of that financial impact. Section Six originally had two questions: "How would you feel about a system that compensated ranchers for forced AUM reductions?" and "How about a system that allowed a willing rancher to retire an allotment for compensation?" After about a dozen interviews the first question was split into two questions after it became clear that the answers to it varied depending on why the reductions were called for. The two questions distinguish whether the reductions were due to the prioritization of other uses, or due to overgrazing. The interviewees who were not asked both questions had their answers tabulated only with the answers to Question 6a. During the interviews, the question arose as to whether a retired allotment would ever be grazed again, as some of the interviewees were afraid that the flora in allotments that are not grazed would become decadent, as it got overgrown, dried out and fail to re-seed, thus becoming a potential fire hazard. When these issues came up, the question was clarified to allow for the possibility that the area could be grazed under agency prescription for ecological considerations. In selecting individuals to be interviewed, there were four basic criteria that influenced the process: regional diversity, diversity of background, familiarity with the issue, and a willingness to undergo the survey. Academics, officials, environmentalists, the reporter and farm credit bureau employees knowledgeable and willing to discuss permit value were not difficult to find. Academics were chosen who had published articles focusing on permit value or related issues. I made contact with many of the environmentalists at a grazing conference sponsored by the National Wildlife Federation. Most of the officials were found through phone calls to various agency offices. During the interviews with members of the previous groups, I asked them for contacts with ranchers who might be willing to talk about permit value and take the survey. Approximately half of the ranchers and the banker were found through this process. Three others were found through a personal contact who came from a ranching family in Montana. Five other ranchers were found through contacting various cattlemen's associations for references. Initially, I hoped to get at least five interviewees in each category. As the interviews were taking place I decided to do more than five to help provide more regional diversity, as many of my initial contacts were in Montana. Remarkably, all but one of the individuals that I asked agreed to be interviewed. During the process it also became clear that the interviewees' knowledge of permit value varied. The individuals who were interviewed, along with their city of residence, are listed in Appendix B. The interviews took place from May to August of 1997. The original intention was to conduct most of the interviews in person, during a trip around the West. Ultimately it became clear that would be impossible due to limited time and resources, so all except five interviews were conducted over the phone. One of the in-person interviews was conducted on the campus of the University of Montana, and three were at the homes of ranchers near Ennis, Montana. During an initial phone contact, one interviewee requested to receive the questions over e-mail. This was done and he responded in kind. In my attempt not to influence the result of the survey, the interviewees were initially told very little about either me or the survey. They were told that I was a graduate student from the University of Montana, who was working on issues in grazing economics and seeking to move the grazing debate forward by creating new options in public land management. Most did not know what department I was in, although I did tell them if they asked, and a few knew through previous contact. They were also told that the survey was about permit value and that they would be told more about the intention of the survey and given a chance to ask questions after it was over. During the survey, many of the interviewees needed clarification as to what specifically was meant by permit value, as some had difficulty splitting up the year-to-year economic benefits of allotment from the real estate value of allotments. Most of the answers to the last three questions have easily interpretable yes, no, or maybe answers. Two others, Questions 4b and 5, did have a range of answers that presented some difficulty in categorizing. Also, many of the interviewees did not give specific answers for Questions 4b and 4c. The answers to Question 4b were sometimes presented in a range, which was averaged for the survey results. Others had more than one answer, specifying different permit value levels for different regions. Since there were so few total answers, these extra answers were included in the results. The answers to Question 5 were the most difficult to interpret. The results are presented in the categories, Major, Very, Somewhat, and, Minor/None. Not all of the answers fit exactly into these categories. Some of the other answers included, "The Biggest" or "THE Influence," which were included under "major." Others included, "One of the biggest," and, "It's significant, up to 50%," which were put under, "Very." The responses, "Some," "Significant," and, "It runs the gamut," where put under "Somewhat." "Not much," and "It's more the year-to-year operational value—that indicates whether they'd have to sell," were put under, "Minor/None." Generally if there was doubt, the rule that was followed was to put the answers in a category that indicated the lesser significance. The seven ranchers with allotments were generally happy with the allotment system, although two believed that it needed significant changes and others had various complaints. One thought that there should be more on-the-ground management and less time spent on planning. Others wanted more flexibility and security in the system, such as longer leases or easier ways to change allotment boundaries. Still others wanted more sidebars, i.e., a clearer system of allotment management standards from the agencies. The permittees were unanimous in believing that they paid something for their allotments, whether it was due to permit value, estate taxes, the cost of improvements, or simply, as one put it, "blood, sweat and tears." Of the seven, three believed that permit values were decreasing, including one who thought that his allotment had lost all of its value. The rancher who valued his AUMs at more than $100 each was predictably from the Southwest, where year-long grazing on allotments is prevalent. The permittees' reaction to the importance of permit value in resisting AUM reductions was mixed, covering the gamut from "none," to "the most important factor." Some of the comments that came with the answer to this question are revealing. One rancher thought that it was, "Not as big as it used to be. Most [permittees] have already devalued their AUMs." Another thought it was a "big factor with some ranchers, especially in the South[west]," and perhaps most revealing was the comment by Bud Eppers, President of the New Mexico Public Lands Council, that permit value's influence was, "Extremely big—depending on their level of [dependence on] federal land." Permittees also overwhelmingly (six to one) favored compensation for reduced AUMs if the reduction was a result of an agency decision to benefit other uses, although many clearly believed that there weren’t many cases in which such reductions were warranted, particularly if the reductions were the result of increased recreational use. Interestingly, however, the one who opposed this plan favored compensation if "the resource [forage potential] was actually damaged." Other permittees vehemently opposed giving compensation for AUM reductions that were required due to overgrazing. The permittees were evenly split over the possibility of developing a voluntary allotment retirement system. Those opposed had comments such as, "We shouldn't waste the renewable resource," or "the elk won't like it," and thought it would limit the opportunities for new ranchers to get started. Alternatively, some who favored the plan thought that there were many ranchers ready to retire, whose heirs did not want to go into ranching, but who continued only to prevent the ranch from subdivision. Another assessed the situation, stating, "Many allotments have gotten too expensive." One was OK with this plan, but favored a grassbanking system, which will be discussed extensively in the next chapter. The last wanted a "clear new system for economics of the area, and some sort of lease for new users." The one who was undecided believed, "Government shouldn't have to pay for everything," but was more supportive if the money came from local governments or private sources. The eight ranchers without allotments had various opinions of the allotment system, describing it as confusing, burdensome, and unfairly distributed. Half thought that it subsidized the permittees, and two thought the fees should go up. In describing permittees, one even said, "I've used the term, 'God's chosen people.' These ranchers have a competitive advantage. These ranches don't add much to the local economy." In contrast, another rancher noted, "I'd love to have seen the Sagebrush Rebellion. The feds should get out of land business...[and]...save on management and employees. These ranchers also consistently believed that allotments had permit value, but they had very little knowledge or opinion of its dollar value or trend. One noted, "Yes, they pay for them, but we own them, so they're paying for something that they don't own." The nonpermittees also had very little direct knowledge of the influence of permit value over the permittees' politics. Most, through contact with ranchers who had allotments, understood that it had some influence, but had difficulty in determining the extent of that influence, or realized that it varied extensively depending on individual circumstances. The nonpermittees were generally not supportive of compensation for forced reductions, disagreeing with any more government buy outs or subsidies, and they were completely unsupportive of any compensation for reductions that were due to overgrazing. One disagreed with a compensation system because, "The government can't pay someone to give up their way of life." Another who agreed with some forms of compensation believed, "It's much like a private right—even though it isn't really." The nonpermittees were evenly split over the possibility of compensation for the voluntary retirement of allotments and thus more supportive of it than of compensation for forced reductions. One compared the voluntary retirement plan to the dairy buy out. Those who did not support this plan generally did not support buy outs or subsides, or believed the government should not pay for something it owned anyway. The seven academic interviewees were generally agricultural economists or range ecologists. They had numerous suggestions for improving the allotment system, including the removal of base property requirements, increasing the option of taking "non-use" on allotments, and increasing data collection because too many decisions were being made only from "professional judgment." These issues will be discussed more extensively in the next chapter. One academic offered this insight into the social and political atmosphere of the ranching community:
These comments reflect some of the conversations that took place during the survey, where many ranchers either admitted or complained that there were poorly run allotments that made them all look bad. Some seemed to want the agencies to be stricter, but few, if any, were asking for that publicly. The academics were also unanimous in believing that permit value exists, but they generally believed it to be on average less valuable than ranchers did. The one who though its value was $100 or more was again for the Southwest. Four saw it declining in value over the last few years, compared to one who saw a recent resurgence. One noted that the decline was making, "bankers very nervous," as many of the permits were security on borrowed money. All of the academics believed that permit value had some significance to the resistance of AUM cuts, with four of them believing that it was a major or the biggest influence, and three thought it had some significance that varied with the rancher. One again tied permit value's influence to its collateral value, saying that it is, "The biggest single component, especially for ranchers with loans still out." He also noted, "The problems with federal assessment techniques is probably second." Another academic thought that, "Ranchers have more of a cash flow problem than an equity problem," and similarly, that the overall "economy of the operation is a much bigger factor." The academics were overwhelmingly in support of compensation plans, with the exception of reductions that were called for due to overgrazing or misuse. The one who supported compensation even for overgrazed land had an important insight, finding that overgrazing is, "so often OK'd by the agency that rancher shouldn't be blamed." Another who was wrestling with the idea of compensating for required reduction thought, "Compensation needs to be enough to replace forage." Yet another supported compensation despite noting that it, "hurts communities both in PILT [payments in lieu of taxes] and in general economic loss." The eight public land managers who where interviewed had a variety of opinions about the allotment system. Some thought it worked pretty well. One saw the "permit system [as] out-of-date—a closed system, [with] lots of permit related paperwork, and not enough focus on land management." Two others thought a competitive bidding system may be better. All agreed that permit value existed, but only half saw a trend for that value and only two put a dollar value on it. Most of the land managers thought that permit value had some influence in the resistance to AUM cuts, but many also believed that the lack of understanding and education about ecological issues was an important influence, as was the ranchers' general resistance to change. One official stated, "Some will take a voluntary cut, if the AUM levels stays the same," noting that his agency often had an easier time negotiating in-the-field changes in allotment season of use, as long as the total number of AUMs on face of permit were not changed. This allows the permit to retain its collateral and market value. One who believed that permit value was not significant thought, "Most don't think in those terms. They're not planning on selling." The managers also had a range of opinions on the compensation plans. They generally supported compensation for forced reductions. One supporter of the concept thought, "All carrots are positive," and another believed, "If it's based on benefits for the public good, than it's no different from other takings. It would ease the managers' job." Another who agreed with the idea thought, "Better to give them other range first." One manager was, "Not in favor, because that infers a property right." All but one of the managers were clearly against compensating permittees for reduction due to overgrazing. Their comments included, "I'd hate to see bad ranchers rewarded for poor management," and, "If it's based on the individual's poor management, stewardship, or lack of cooperation, than there is a problem." The widest range of opinions was on the voluntary compensation plan. While one supporter thought, "That would save the taxpayer millions of dollars. The compensation should be based on fair market," another thought it was, "better to take away allotments upon the transfer of land." Others were worried about what the land would be used for if not grazed, saying, "I wouldn't support it unless the next use was designated," or "No, it shouldn't be left up to the discretion of the rancher. It should be more based on ecological considerations." The seven environmentalists generally wanted to see some reductions in public land grazing levels and as least one wanted, "to see all livestock removed from all public land, or at least all high value land—[then] sell the other to ranchers." They also wanted stricter enforcement of existing regulations and better monitoring. One thought that the allotment system would be better if the maximum permit was approximately for 350 head, or 10% above economic requirement of what it takes to raise a family. Only one environmentalist wasn't clear as to whether permit value existed, but that activist worked exclusively in an area where the subdivision of ranches was by far the major problem and where private land values has skyrocketed, making permit value insignificant. The activists believed that in some areas permit value ranged higher than $100/AUM, but generally found permits to range from $25/AUM to $50/AUM, and were split on the trend of that value. The environmentalists' opinion of the significance of permit value had the broadest split, with five of the interviewees thinking it was a major force and two finding it relatively insignificant. Two activists clearly thought that the influence of the banks was a big part of permit value's political significance. One believed it to be the "driving force, [along with] the banks submitting appeals [on AMPs]. The pressure to make loan payments makes the ranchers run more cattle. There's $10 million [of collateral value locally] on 141 allotments—[making it] a force still bigger than year-to-year income value, especially in Southwest." One of the environmentalists who found permit value insignificant thought that philosophical resistance was more important, citing the case where for a number of years, someone had been offering ranchers $60,000 to give up their allotment, and had gotten no takers. Environmentalists favored compensation for forced AUM reduction four to two, with one uncertain. These numbers, however, do not reflect the sentiment of those who favored the plan nearly as much as one revealing comment: "Don't like it. We should kick 'em off and give them a bill, but politically I'd grit my teeth and do it, if these are permanent reductions." Environmentalists on both sides of this question did not believe that these reductions were "takings" and wanted any new rules to reflect that belief. The tables were turned on the question of compensation for overgrazed allotments, with four opposed, and two giving hesitant approval. One comment illuminates the reasoning of one of the two in favor. "My emotional side balks at it. The rational side says it will make it [restoring the land] easier. I've never really seen any other reason than poor management for any reduction." Another thought the plan did not go far enough, "I don't want to see it. If the allotment isn't viable, then the whole allotment should be bought out, and retired as a whole." Despite two who were undecided, activists overwhelmingly approved compensation for voluntary retirement. One who had disapproved of forced compensation was, "OK with that. [It is] more of an incentive." Another environmentalist’s sentiment echoed that of the land managers, as they had "mixed feelings, but the real question is how it is managed afterwards." Others had different reservations, "I don't want to see a property right, but if the [compensation] language works, then getting cows off is the priority. Whatever we have to do is OK if it is permanent." Another noted cases where ranchers had, "tried for years to close their allotments for habitat," without success. The six "other" interviewees, including a reporter, and assessor, a Realtor, a banker, and two Farm Credit Service employees, had a wide range of perspectives on what should be done with the allotment system. Two wanted significant changes with the agencies. "The Forest Service should have more confidence in ranchers... [they] should focus on true abusers and should back good stewards with less regulation." Another thought, the agencies' "biggest error is that they make decisions for the West as a whole." Two others saw much broader problems, one stating, "Some areas of the Southwest never should have been grazed," and another saw, "ranching as dying industry—more and more controlled by big money." All of these interviewees confirmed the existence of permit value, with the Realtor stating succinctly, "I know they do, because I sell them." As they had ties to the financial community, not surprisingly, all of the interviewees but the reporter had opinions as to both the level and trend of permit value, with four thinking the trend was upward, two believing it was downward, and on average they figured permits were worth between $50 and $100/AUM. These interviewees also has a wide range of opinions on the significance of permit value in the ranchers' resistance to AUM cuts. Some who thought it was important also brought up the issue of year-to-year operational value. Another thought, "One of the issues is that they need bigger operations. They need about 400 head to support a family. It's economy of scale. They must get bigger to survive, but permits are decreasing." One who saw permit value as insignificant believed that the last thing the rancher is thinking is, "I've got to replace the ranch." This set of interviewees was generally unsupportive of compensation for forced reductions. One supporter believed that the plan was needed simply because, "Wildlife is getting more and more AUMs allocated." In contract, another thought, "It would open a can of worms. [It is] too subjective, too variable. Land trades are better. It would be a cyanide-coated sugar pill." This group was also completely unsupportive of compensation for overgrazing, with one comment capturing their tone, "If land is beat, than no." The one who was undecided realized it might be difficult to clearly put the fault on the rancher. This group was split on the possibility of compensating for the voluntary retirement of allotments. Those who agreed with the plan did not have extensive comments. One who opposed it said that his "business is to finance agriculture. They want transition from generation to generation." Another would, "rather see reductions. In most cases in this area, they need to be grazed." A COMPARISON OF THE RESULTS FROM VARIOUS SECTORS Not surprisingly, there was a wide variety of concerns among the various groups interviewed. Fee levels, subsides, permit value, long-term economic stability, ecological and habitat concerns, recreation values, the demise of the ranching way of life, agency monitoring and bureaucracy, and the influx of subdivisions were all issues important to the interviewees. It is clear from the diversity of opinions on these issues that there will never be complete agreement on these issues even among individuals within each group surveyed, never mind among all the interests involved. Nevertheless, there was nearly unanimous agreement on the existence of permit value. There was, however, nearly an even split on Question 4c, whether permit value was increasing or decreasing. This could in part be because the question is not clear as to what year the increase or decrease should be measured from. Also, some of those interviewed might associate permit values more closely with land values than a careful economic analysis would. It is also likely that some of the answers reflect local trends (perhaps from the Realtor and bankers), while others where looking at the national trends (as the academics may have). On a local levels, it was generally believed that permit values decreased if it was thought that land managers were about to make some reductions, and increased somewhat after the reductions were made. On the larger scale, with the gradual trend towards AUM reductions, permit values would be in a gradual decline. The range of answers regarding the dollar value of allotment AUMs varied as expected, but was generally consistent with the variations found in regional economic studies done by agricultural economists. The responses generally hovered around $50-60/AUM for seasonal allotments and a bit over $100/AUM for allotments grazed year-round. It is important to note that many of the interviewees seemed to be guessing at these figures, or admitted they were answering with figures that they had heard from other sources. Some of the interviewees refused to come up with a generalized figure. Not surprisingly, however, the permittees all had a answer for permit value levels. The only other group that all responded to this question were the "others"—the bankers, Realtor and reporter. Both of these groups deal with permit values in their work. Table 4: Results from Interview Question 4 4a) Do you feel that ranchers pay for their allotments when they buy their ranch?
4c) Has that changed over the years?
Table 5: Results from Interview Question 5 5) How big of an influence do you feel the real estate value of grazing permits is in the resistance of ranchers to cuts in their AUM levels?
The results from Question 5 clearly indicated that permit value is an important issue, at least as a reason why permittees resist cuts in their AUM levels. Of the forty-one responses to this question, only 22% thought that permit value was not factor. The remaining 78% found it to be at least some significance. Almost half (46%) found it of very or major significance, and more than one-third (37%) thought it was a major influence in resisting AUM cuts. Most of the interviewees who thought it was a major influence believed that it was the most important factor in that resistance. The other issue that came up consistently as an important factor in that resistance was the effect AUM cuts had on the ranch's yearly operations and profits. Unexpectedly, more than half the interviewees responding to Question 6a supported compensating ranchers for forced AUM reductions that were required due to endangered species and habitat concerns. Of the forty-one responses, 59% supported the possibility, 24% opposed it, and 17% were uncertain. This result was not much different than the results of the fifteen ranchers, of whom 53% supported, 33% opposed and 13% were undecided. Many of the supporters specified that the compensation needed to be "fair," and some mentioned that it should be enough to find replacement forage. Not surprisingly, in Question 6b, 78% opposed compensating for AUM reductions due to overgrazing, and only 16% favored the possibility, with 6% remaining undecided. The results from Question 6c, on voluntary retirement of allotments, were similar the result of Question 6a. Of the forty-three respondents, 56% supported the possibility, 30% were opposed, and 14% undecided. This idea was not quite as favorable with ranchers, of whom seven supported it, seven opposed it, and one was undecided. Much of the opposition and indecision was due to the uncertainty as to what would happen to the land and how it would be managed. A few were more supportive of the idea if the retired allotment would be put into a grassbanking system. Table 6: Results from Interview Question 6
GENERAL remarks CONCERNING THE SURVEY RESULTS Permit value is clearly only one influence among many in ranching politics, but an important one in the resistance of ranchers to cuts in AUM levels. The overall degree of that influence is debatable, and its influence on a rancher's politics and motivations varies from rancher to rancher. Other influences include the loss of year-to-year income that is the result of lost AUMs, ranchers' philosophical and emotional attachments to their way of life, the permittees' desire to be left alone by the government and the general public, their desire to retain open space, and other issues less often mentioned and perhaps less important. The results of this survey clearly show that permit value is an element of the public land grazing debate that needs more attention. Both further study and debate over potential ways to address the issue are needed. Considering the results of this small survey, a larger survey is recommended, with a wider range of questions and clearly defined standardized answers that span a range of possibilities (i.e. from 1 to 5, or a similar system), that can more easily analyzed. If it becomes necessary to figure out the fair market value of allotments, I would not recommend surveying ranchers as a method, for fear that they might appraise allotment value too high if compensation was a possibility. In fact, most of the information needed is already available. During one of the interviews, it emerged that the Farm Credit Service has been doing its own regional evaluations of permit value for at least ten years. I suspect many agricultural banks have also done similar surveys. These, along with the studies presented in Chapter Three, could be systematically combined to find the fair market value of allotments in different regions and under the management of different agencies. Despite the diversity of opinions over these issues, there is some measure of agreement. Whether there is enough to find workable solutions has yet to be determined. Looking in more detail to the survey results, it is interesting to note that thirty-one of forty-three participants (72%) responded yes to either question 6a or 6c, and thirty-four (79%) responded either yes or maybe to one of the two questions. This compiled result lends itself to the conclusion that a properly and fairly designed compensation system could possibly get widespread support. One possible option for such a system, along with other possible grazing reform measures, will be explored in the next chapters. |
