I made a farm and a copy of it in single player. In single player the following bug does not occur.
When i start it water travels 4 blocks in one direction (1 diorite, 3 dirt) and harvests 3 blocks of wheat. After doing the action the wheat dissapears into thin air including the seeds. An admin has reviewed the action and determined it is indeed a bug. I believe it has something to do with an item-stacking plugin of some sorts or dropped item management or bukkit directly. If you would like to experiment with it you can teleport to town SandCity. It has its spawn directly at the farm. Please do not make changes to the original setup. Oddly it depends on how much wheat i plant. When its fully planted it does not work. Please address this bug so i can continue to play on this wonderful server!
If you would like you can donate me 2 stacks of hoppers for me to finish the farm as a bug-finder reward and to make up for the money i spent on the bug in shopping all those seeds