Oregon has struggled to make money off of rangeland
Capital Bureau
SALEM — The nearly 600,000 acres of state rangeland leased to ranchers to graze livestock have struggled quietly to generate a profit for decades, even as similar management issues involving the Elliott State Forest are a higher priority and have erupted in public controversy.
But state lands officials say they continue to explore strategies to yield larger returns on eastern grazing lands.
In the 2016 fiscal year, it cost the state $1.2 million more to manage its rangeland — a term that can denote grasslands as well as Eastern Oregon’s iconic stretches of sagebrush — than it realized in revenues.
The state holds a variety of trust lands, including forests, mineral resources and agricultural land. They’re required to generate revenue for the Common School Fund, an endowment for public K-12 education. Rangeland is the largest trust land segment.
Environmental regulations have restricted logging on state forests, causing the forests to operate at a loss. So the state land board — which oversees state trust lands — has been considering selling the Elliott, an 82,500-acre swath of forest near the southwestern Oregon coast.
The possible sale of the Elliott galvanized the state’s environmental activists, though, who spoke of the state’s duty to protect public lands from privatization, turning the debate political in heavily-Democratic Oregon. In May, the board — the governor, secretary of state and treasurer — decided to pull out of its planned sale to a timber company.
By contrast, the state’s rangelands, concentrated mostly in southeastern Oregon, haven’t received much public attention.
Returns from the rangeland have varied.
Between 2013 and 2015, each acre of rangeland generated an average profit of only four cents. That means that rangelands did generate positive net revenues some years, but the margin is thin. The state’s trust agricultural land had an average per-acre profit of $18.84 in that period.
Much of last year’s losses were due to the costs of fighting wildfires. Fires cost the department $1.8 million in 2016, Department of State Lands Director Jim Paul said.
The risks that trust rangeland pose to the Common School Fund are not new. In the early aughts, the problem caught the attention of Oregon’s chief public auditor.
Back in 2004, after finding that state rangelands had lost money as far back as 1987, an audit by the Oregon Secretary of State’s Office made three main recommendations: that the state lands department sell some or all of the rangeland in a competitive bidding process, exchange it for a “better performing asset,” or get market rates for leases.
More than 10 years later, though, the state’s rangeland holdings remain relatively intact. In 2004, the state held 613,000 acres of trust rangeland. In 2016, it held 596,784 acres.
The department says the size of its holdings complicates the sale of rangelands. Putting a large share of it on the market could depress prices, meaning that sales have to be spread out over time.
And the state’s trust forests, such as the Elliott, which are consistently losing more money more quickly, have presented a more immediate problem, Paul said.
“The bigger picture is just around the issue of prioritization and where do we need to focus now, versus which things are sort of in process and are going to take longer,” Paul said.
He said you can look at the state’s trust lands like an investment portfolio.
“An individual one-year loss or one portion of the fund that’s doing poorly isn’t necessarily the trigger,” Paul said. “It’s, are you tending to the whole and getting the performance that a prudent investor would with that kind of asset?”
And since the 2004 audit, Paul said, the department has increased its lease prices, which means the department has brought in more revenue.
The department’s most recent annual report on its trust lands also seems to indicate that the department wants to find other uses for rangeland, such as installing irrigation to convert it to agricultural use, which could improve the land’s money-earning prospects.
It’s also still possible that the Legislature might come up with another plan for trust lands. A bill under consideration would give the land board the authority to develop a list of trust lands with limited performance potential, and a process for transferring them to another entity better equipped to manage it, whether that’s a state or federal agency, or an American Indian tribe.