Hood RIver County nears decision on Packer Orchards’ farm stand permit

The permit, which has yet to be finalized pending staff review, reignited a local debate over the economic viability of growing within Oregon’s unique land use framework, where some see supplemental income steams as critical given the reality of rising labor costs, snap freezes, lack of price control and other factors, while others view relaxed regulations on land zoned exclusive farm use (EFU) as jeopardizing the industry’s future.

It was effectively a microcosm of the same controversy that embroiled Oregon’s Department of Land Conservation and Development last summer. As directed by legislators and Gov. Tina Kotek, the department convened a committee meant to clarify rules related to farm stands, but the working document, which wasn’t even a draft and still needed public input, generated so much backlash that Kotek spiked the entire process.

And now, the Oregon Property Owners Association (OPOA) sponsored a new law, House Bill 4153, that’s currently working its way through the legislature. Environmental groups argue it’s a dramatic expansion of the changes sought in HB 3133, OPOA’s bill that originally instigated the farm stand rulemaking.

Conditions changed

As previously reported by Columbia Gorge News, Tammi and Larry Packer contested seven out of the 28 conditions of approval outlined by the county’s planning department and supported by Thrive Hood River, a land-use advocacy nonprofit, along with one adjacent neighbor on Thomsen Road. Under existing law, income from fee-based activities, retail sales and certain food products can’t exceed 25% of the farm stand’s annual income, and any structures must promote the sale of farm crops and livestock — the entire purpose of such operations.

“All of these regulations are intended to keep farmland in farm use … Once you start putting commercial uses on it, you’ve blown up the whole theory of a planning and zoning system,” said Chris Robuck, co-president and treasurer of Thrive. “Our goal is to see that the law is enforced and maintained, that the principles and the specific regulations that make those principles work are adhered to.”

Defining what food products fall into that 25%, or incidental sales, category was a core issue. Selling fresh apples or pears clearly aligns with the stated purpose, but what about processed items like jams, pies, ciders, cookies and empanadas?

All parties agreed that products made with ingredients (over 50% by volume) sourced from beyond the local area should count as incidental. As the law aims to prevent farm stands from becoming de facto restaurants, however, Community Development Director Eric Walker proposed that all processed yet locally produced items should be counted as incidental, too, unless sold in bulk (a whole pie versus a slice of pie) to discourage on-site consumption.

Countering, legal counsel for Packer argued that processed products packaged in compliance with state health standards, regardless of quantity, demonstrate the farm stand’s intent to avoid immediate consumption and should count toward the 75% sale category. Not wanting to choose an arbitrary number that qualifies as bulk, or trying to predict what a customer does after a purchase, commissioners sided with Packer.

Likewise, commissioners allowed Packer to keep their play equipment and provide casual open seating for customers. State law prohibits farm stands from having structures for the sole purpose of entertainment, but commissioners saw the playground more as promotional, especially since it’s not the primary attraction. And, for them, picnic tables didn’t rise to the level of restaurant or buffet-like seating.

In the only substantial instance that evening, commissioners agreed with the county on event admission fees. Even if paired with a farm product, like a bouquet of tulips, they ruled that it should be counted as incidental.

“We are so happy to have this, I hope, be complete,” said Tammi Packer. “It really does change nothing for us. We get to continue operating as we have always been operating, and we know deep down that what we were doing was not wrong and it was not illegal.”

With several slight modifications, and apart from one condition, commissioners unanimously approved the language presented by Packer. During their next meeting on March 11, commissioners will hold a final vote on the permit, after county staff has a chance to review and incorporate the new text.

“The planning commission was very thoughtful,” said Walker. “There’s a lot of complexity and a lot of emotion wrapped into it, and so they definitely did their homework. I was really proud of them for elevating to the task and making good, justifiable reasonings for their decision.”

Thrive was unable to immediately comment on the decision, or whether they plan to challenge it.

‘Our goal is to keep our family farming’

With the record closed, last Wednesday’s hearing didn’t draw a large crowd like the first one on Dec. 10. Beyond locals who feared losing the Packer’s annual Sunflower Days or the opportunity for their children to learn about agriculture, growers from Oregon, Washington, California and even Kansas emphasized a relatively simple message: modern-day farming is becoming less and less viable, so we need other options. 

Between their two properties, the Packers have 140 acres of primarily pears, but also sweet cherries, apples, peaches, pumpkins and a few other crops. No land was converted for the farm stand, and Packer estimated that less than 10% of their total yield goes toward items sold at the seasonal operation. But that small portion generates more income than the rest of their production crop.

“Our goal is to keep our family farming,” she said. “Orchardists are the last ones on the chain. We grow it and we sell it. Then, we wait to get paid, and we never know what our price is going to be.”

In years where the orchard brings in next to nothing — or results in a bill — the Packer’s farm stand provides a backstop. It also offers a marketing opportunity for other small growers, who lack the scale to get their products shelf space in big name grocery stores.

“They helped build my business for me in a lot of ways,” said Jonathan Quigley, a partner at White Salmon’s Organic Orchards and a member of the American Farm Bureau Federation’s Young Farmers and Ranchers Committee. “I really feel that I owe quite a bit of credit to them.”

Along with Packer, two other farm stands took a chance on Quigley’s Martinelli-esque, light pink, sparkling apple cider made from the new Cosmic Crisp variety, and with that exposure, he launched at New Seasons Market, a neighborhood chain in Portland. Organic Orchards also sells fresh fruit boxes, but Quigley said the owner is making fewer dollars per box today than when he began selling them in 1995.

“Now, organic does not mean small — it means you’re competing with people who have Wall Street investors behind them,” he said. “Safeway, Kroger, Walmart and other corporate entities, I hate to be discouraging, but they don’t care about the quality of fruit. They care about price, and they’ve locked everyone else out of the market.”

Thrive doesn’t deny the increasingly harsh economic reality that growers face, and neither does Jim Johnson, the working lands policy director for 1000 Friends of Oregon. But Thrive and Friends are wary about any non-farm use on precious agricultural soils, because once that ground gets paved over or converted, it almost never returns.

“How far do you go before you start to implicate the ability to farm out there, the capability of the land, the ability of farmers to conduct farming operations? For every farmer that wants to do agritourism, I’ll show you 10 that don’t want to farm next to it,” said Johnson. “Friends is not opposed to farm stands, but we need to make sure that’s what they are — that they’re farm stands, not rural grocery stores.”

Farm stands and land value

In 1973, when Oregon formally codified its EFU zoning system through Senate Bill 100, very few non-farm uses were permitted on that land, but there are more than 60 today. Inevitably, Johnson worried, those non-farm uses inflate the value of EFU land, potentially pricing out future farmers, but how much do farm stands influence that relationship?

Enter Dr. Daniel Bigelow.

He’s an assistant professor in the Department of Applied Economics at Oregon State University (OSU), and his work revolves around how land is used, valued and regulated. For an abundance of data on farmland value, most turn to the 2022 Census of Agriculture, but Bigelow cautioned against relying too heavily on survey data that’s self-reported and doesn’t reflect actual transactions.

Instead, OSU purchases real estate data from a private company, and Bigelow filters it according to several variables.

Based on census numbers, the value of Oregon’s farm real estate jumped 23% from 2017 to 2022, a “gigantic” leap that Bigelow believes is overstated because some of the lowest-value farmland was excluded from the latter version. And while farmland in Clackamas County had the highest per-acre value, Bigelow’s analysis shows that Hood River topped the list — and it isn’t close.

Of transactions larger than 10 acres, county farmland sold for an average of $34,000 per acre, with Deschutes County coming in second at $27,000 per acre. Bigelow attributed the disparity to Hood River’s relatively small size and orchard fruit being particularly lucrative. For comparison, the statewide average is about $6,000 per acre.

As for farm stands, Bigelow said that land value fundamentally reflects the income one can earn from it. Unfortunately, though, there’s very little reliable data on the scale of farm stands across Oregon, or agritourism more broadly.

“To the extent these things would increase the income potential of the land, then it should put an upward pressure on its value,” Bigelow said. “But it gets really hard to disentangle what role all of these competing factors might be playing.”

Those include institutional investors scooping up farmland as an asset, solar energy development in rural areas, occasional expansions of urban growth boundaries (look no further than Hillsboro’s current dilemma), among others.

With about 25 permitted farm stands across Hood River County, varying greatly in size, in addition to nine wineries on EFU land and a much higher number of replacement dwellings, which can see homes rebuilt to a larger size, the picture locally is certainly more complicated.

House Bill 4153

That could become more clearcut, however, if the Oregon Property Owner’s Association newest proposal becomes law. Supported by Packer Orchards, the bill would allow farm stores up to 10,000 square feet in size on EFU land and eliminate the 25% rule.

As currently stipulated, it requires that a certain amount of farm property be in farm use when permitted, and states that no more than 25% of the farm store’s internal floor space be devoted to non-farm retail sales. But there isn’t a provision ensuring that the remaining space be used for farm products, or ones produced locally, and the rules would be uniform across every county.

“The hardest thing we’ve dealt with here, and one of the very things this bill will help alleviate, is that every county could make their own decision and their own interpretations of the law,” said Tammi Packer.

While traditionally permitted through separate pathways, HB 4153 also authorizes agritourism events (like farm-to-table dinners) at farm stores without carrying over any of the guardrails (like an analysis of impacts on the surrounding areas, caps and limits on events, etc.) that are designed to protect agricultural areas, but also place more burden on the folks running them.

“It would destroy exclusive farm zoning,” said Chris Robuck of Thrive, which believes that land use changes deserve more consideration than what’s available during a short session.

Of 1,589 written testimonies submitted statewide regarding HB 4153 as of Feb. 13, about 70% were in opposition. Alongside Thrive, 1000 Friends of Oregon, Central Oregon LandWatch and Friends of Family Farms oppose the legislation.

According to OPOA, the Oregon Farm Bureau, the Association of Oregon Counties and Kotek are in support. A work session was scheduled for Feb. 16, after press deadline.

Moving forward

Most people that Columbia Gorge News spoke to who were involved with farm stand policy agreed that something needed to change. Many view the code as clunky and confusing, and there are differences in how rules are applied across counties.

Hood River County Community Development Director Eric Walker participated in last summer’s rulemaking process through Oregon’s Department of Land Conservation and Development. He explained what it was like in the initial stages, when the group was talking about how to refine the language or make it easier to implement.

“It was interesting to just see how other jurisdictions responded,” Walker said. “There were a couple of instances where I thought to myself, ‘I don’t think that’s right,’ because either there’s case law or we’ve just had more experience over time trying to interpret that.”

Johnson, with 1000 Friends of Oregon, also viewed the rulemaking discussions as productive and was disappointed that they got shut down so early. But he doesn’t field many complaints about farm stands that genuinely stray away from agritourism, and apart from HB 4153, his focus is elsewhere.

“There’s a lot bigger issues in agriculture that are impacting the ability of farmers to be successful than farm stands,” Johnson said. “It’s a whole myriad of non-farm uses that are, that are upping the speculative value of land that farmers can’t compete with.”