|
SUSTAINABLE
AGRICULTURE
AS A RURAL ECONOMIC DEVELOPMENT STRATEGY
John E. Ikerd University of Missouri Posted on Cacapon Institute website with author's permission A Historical Perspective
on Rural Economic Development The fundamental purpose of
economic development in "rural" areas has been realization of private
and social benefits from the use of geographically fixed resources. People and
money can move from one location to another in response to economic or social
incentives. Thus, human and financial resources need not be developed or
utilized in any specific geographic area, although very substantial relocation
costs are often ignored. On the other hand, natural resources such as land,
timber, minerals, landscapes, and climates must be utilized, at least
initially, in their specific geographic location. The historic purpose of
most rural community development in the U.S. was to realize the potential
economic value of agricultural land. Historical settlement patterns reflect
historical land uses. The numbers of farmers or ranchers needed to manage the
land resource largely determined rural population densities. The range lands of
the West were sparsely populated because one rancher could manage a herd of
cattle roaming over hundreds or even thousands of acres. Areas suited for truck
farming or vegetable production, on the other hand, were more densely populated
because of the high human input requirement for those enterprises. The Midwest
was most suitable for diversified farming, resulting in rural settlement
patterns characterized by scattered family farms. Non-farm activities in
rural communities also were closely related historically to numbers and types
of farms. More economic services – mercantile, blacksmiths, banks, and saloons
-- were needed in areas with larger farm populations. More people also needed more
doctors, schools, churches and other social services. The distance between
towns is said to be related to the distance that could be traveled by horse and
wagon in a day. However, the sizes of these towns were related to the number of
families needed to utilize the natural resources within horse and wagon
distance. Changing Perspectives of
Rural Economic Development The initial phase of rural
development in much of the U.S. might be characterized as resource
exploitation. Resources were treated as stocks of potential economic wealth to
be transformed into products of market value. A sufficient number of
lumberjacks, miners, or farmers moved into a region to exploit the natural
resource base, whether it was standing timber, minerals below the ground, or
productive agricultural soils. Farming practices of the 1800s were little
different in concept from logging or mining. Land was cleared, plowed, and
farmed until its productive ability was depleted. Farmers then moved on to new
frontiers, leaving spent land to be restored by nature. Boom towns became ghost
towns as the natural resource base was used up and the people moved on. Farming methods in the
early 1900s utilized livestock wastes and legume-based crop rotations to retain
soil fertility, allowing farmers to keep land fertile long after continuous
cash cropping might have depleted its initial productivity. Thus, many rural
settlements survived to become more stable farming communities as farmers began
to learn to sustain productivity from the land. However, soil erosion, by both
water and wind, continued to be a major problem, culminating in the dust bowl
days of the 1930s which drove the "Okies" to California and created
ghost towns on the Great Plains. A second wave of rural
development might be characterized as resource substitution. This was the
industrial era in agriculture of the mid-to-late1900s. New life was breathed
into some declining rural communities by emerging agricultural technologies.
Commercial fertilizers, for example, could be substituted for inherent
fertility in the basic land resource. Irrigation could offset lack of rainfall.
Weeds and insects could be controlled by pesticides in climates where they
otherwise would have thrived. Terracing, conservation tillage, and wind breaks
reduced soil loss. New technologies and inputs appeared to be effective
substitutes for natural resources. Rural community development became less
constrained by the inherent fertility of the local land resource. Specialization,
mechanization, and economies of scale, the trademarks of industrialization,
were the hallmarks of increasing agricultural productivity. Commercial
fertilizers and pesticides allowed farmers to break away from crop rotations
and diversified crop and livestock farms. They could now specialize in crops,
or livestock, or even in single crops, or single phases of the livestock
business. By doing fewer things better, each farmer could do more.
Mechanization and inexpensive fossil fuels allowed farmers to farm more acres
or produce more livestock, and thus, achieve greater economies of scale.
Input-intensive, industrial farming systems eventually dominated U.S.
agriculture and became the model of efficient food production for the World.
The Growing Costs on
Industrialized Agriculture Industrialized farming
systems, however, have begun to raise significant economic, environmental, and
social concerns. First, there are growing indications of declining
effectiveness of the inputs and technologies that supports specialized systems.
Increased concentration of single crops within specific geographic regions
increase pest pressures. In addition, many insects and weeds have become
resistant to pesticides and require higher rates of application or new, more
costly pesticides for control. Previously fertile soils in
some areas have lost organic matter and natural fertility through
mono-cropping, conventional tillage, and removal of crop aftermath year after
year. Lower organic matter has meant less microbial activity, less ability to
hold water, and less availability of nutrients in root zones, meaning lower
yields from a given level of water and fertilization or higher fertilizer and
irrigation costs to maintain yields. Water tables in some of the
major irrigated areas are declining as rates of irrigation surpass rates of
natural regeneration of aquifers, and irrigation supports some of the largest
of the large farming operations. Salinization of soils is occurring in some of
these areas as a consequence of continuous irrigation. Soil conservation rose to
the top of the political agenda in 1980s, primarily because of rising soil
erosion rates. Soil losses went up as farmers abandoned forage, grass, and
legume based crop rotations in the 1960s and rose still further as farmers
intensified row crop production for growing export markets during the 1970s.
Other costs of increasing
specialization began to show up in the environment of farm families, farm
workers, and rural residents. Health risks in handling pesticides, for example,
have become a major issue in farm safety. Chemical contamination of farm and
rural water supplies and risks of pesticide residues in food supplies are
additional concerns. Nitrate leaching into groundwater may be attributed as
much or more to organic sources, such as livestock waste and crop residues, as
to the use of commercial fertilizer. However, this issue, as much as any other,
increased awareness in rural areas of the potential environmental hazards of
chemically dependent farming. The industrialization of
agriculture has also changed rural landscapes. Farmers planted "fence row
to fence row" during the 1970s and many tore down the fences and plowed
out the fence rows. Farming areas were no longer patchworks of fields, meadows,
grassy hills, and valleys separated by rows of trees. Rural landscapes became
field after field of corn, soybeans, wheat, and cotton across the hills and
valleys. Timber was cleared to make room for cow herds. Livestock feeding and
poultry production became concentrated into large confinement feed operations
-- animal factories. Larger, more specialized
farming operations have meant fewer farming families. The number of farmers
declined from about 6.5 million in the mid-1930s to less than 2 million by the
mid-1990s. The only notable exception to the downward trend was during the
export boom years of the 1970s. Fewer people are needed on farms with
industrial farming technologies. Not only have purchased inputs been
substituted for land and climate, but also machines have been substituted for
labor, and technology has been substituted for management. The unneeded human
resources have been squeezed out of agriculture as a natural economic
consequence of substitution of capital and technology-based inputs for human
resources. Technological advances reduced costs of production and provided
incentives for expanded production which, in turn, reduced market prices and
ultimately reduced profits per unit or production. The profits went only to
those farmers who adopted new technologies first. Those who lagged behind were
forced to adopt in order to survive. As profit margins
continually narrowed, survival required more farmers simply remaining cost
competitive. It simply took more and more acres and larger and larger
investments just to generate a decent income for a family by farming. Those who
couldn't adopt and expand quickly enough were forced to sell out to their more
progressing or lucky neighbors. The continual repetition of this process kept
numbers of farms declining, and ensured that incomes of those who survived were
kept below incomes in economic sectors with growing employment. Rural communities are as
much the victims of a more productive agriculture as are displaced farm
families. Rural America has consistently had lower levels of income, education,
employment, health, nutrition, and community service than has urban America
(Hyman). The agricultural technology treadmill has been a major contributor to
chronic depression in many rural communities. Historical trends would
seem to justify the prevailing view that farming is no longer a positive factor
in the economy of most rural communities. But the problem is not necessarily
with agriculture in general but with industrialized, input-dependent systems of
farming. And the sustainability of large-scale, specialized, industrial farming
systems is being seriously questioned by society. The future of agriculture and
of rural communities may be significantly impacted by the ways in which society
addresses the sustainability questions. Toward Sustainable Rural
Community Development For a rural community’s
development process to be sustainable, it must be linked to realization of
values inherent in its geographically fixed resources. These resources
represent the link between developmental purpose and place. Sustainable rural
development must conserve non-renewable resources, protect the physical and
social environment, provide an acceptable level of economic returns, and
enhance the quality of life of those who work and live in rural communities.
Many communities may be
overlooking the development potential of a significant agricultural resource
base because they are operating with a conventional, industrial agricultural
paradigm. The conventional wisdom is that fewer, larger farmers will continue
to buy fewer inputs from local suppliers and will sell fewer commodities to
local marketing firms and processors. This type of development will support
fewer and fewer people in rural communities. The alternative,
sustainable agriculture paradigm is one based on substitution of internal
resources, including labor and management, for externally purchased inputs.
Sustainable farms systems will rely on management strategies such as crop
rotation and integration of crop and livestock enterprises. Sustainable farming
systems may require more farm operators, more farm labor, and more farm
families than do conventional farming systems. In addition, operators of
sustainable farms are motivated by environmental and social, as well as
economic objectives. Thus, they may show a preference for local markets and
local input supply sources if this preference does not threaten their economic
survival. Substitution of management and labor for land and capital would
reverse the industrial trends of the past. Thus, a sustainable agriculture may
help reverse past rural population trends by supporting more, rather than
fewer, people in rural communities. Community Impacts of
Alternative Agricultural Systems Specific management practices
associated with sustainable agriculture include: more incorporation of
"natural" processes such as nutrient cycling, nitrogen fixation, and
pest-predator relationships; reduction in off-farm inputs with greatest
potential environmental risks; greater reliance on biological and genetic
potential of plants and animals; improved matching of farming activities with
resource limitations; and improved management and conservation of soil, water,
energy, and biological resources (NRC, p. 4). From a community economic
standpoint, the shift toward the goal of sustainability is a shift from
reliance on inputs external to the community, such as commercial fertilizer and
pesticides, to reliance on resources that are internal to the community, such
as labor and more intensive management. The fundamental question is whether
this shift will result in significant increases in local employment and other
economic activity. "Arguments can be made
in both directions regarding whether an agriculturally dependent community
benefits more from a high production, high input system or from a comparably
profitable reduced input system" (Lockeretz p. 75). Heffernan points out
that the net impact of substituting local resources for external inputs will
depend on the nature of the substitution. Reductions in the use of purchased
inputs such as pesticides and fertilizers, for example, will reduce local
business activity and employment. However, increases in returns to labor and
management will increase local incomes and employment. The fundamental question
is, which impact is larger? Few commercial farm inputs
are manufactured in rural communities. Local economic impacts of locally
purchased inputs, in most cases, are associated only with the functions of
wholesaling and retailing rather than manufacturing. The value added to
pesticides and fertilizers by these local merchandising activities is typically
only a small fraction of total purchase costs. In addition, local employment
and income of local residents may account for only a fraction of the marginal
value added locally. On the other hand,
increased returns to farmers in their managerial roles represent
dollar-for-dollar increases in farm incomes that can be spent to generate
additional non-farm income in the local community. Larger returns to labor
provided by farm operators, family members, and locally hired workers may have
similar dollar-for-dollar impact on the local economy. The full value of
returns to management and labor, not just a fraction of the margin of value added
locally, accrues as expendable income to residents of the local community.
Previous Research on
Community Impacts Sustainable agricultural
systems must be (1) economically viable, (2) ecologically sound, and (3) socially
responsible (Ikerd, Devnio, and Traiyongwanich). All three conditions are
necessary and none alone or in pairs is sufficient to ensure sustainability.
Most previous studies of community impacts have been based on analysis of
alternative scenarios, focusing on the economic comparisons of
"conventional" and "alternative" systems of farming.
"Alternative" scenarios have been developed to reflect farming
systems that logically would be more ecologically sound and socially
responsible than "conventional" systems. The economic consequences of
the various scenarios are then compared to determine if the more ecologically
sound and socially responsible systems are also more economically viable.
Most previous studies of
the relationship between community economic impacts and sustainability have
yielded inconclusive results. For example, Lockeretz compared the economics of
high input conventional cropping systems with lower input alternatives in an
attempt to draw conclusions regarding their impacts on local communities
(1989). The underlying assumption was that lower input systems were more
ecologically sound. Thus, lower input systems would contribute more to
sustainability, if they made equal or greater contributions to the economic
viability of the local community. The results from five regional comparisons
were inconclusive with respect to overall sustainability. In general, the lower input
systems were found to contribute less per acre to the local economy than did
the higher input systems, resulting in a conflict between the relative economic
and ecological performance of the two types of cropping systems. This conflict
was addressed through questions regarding the long run sustainability of higher
input systems of farming. No attempt was made to assess quality of life or
social responsible indicators such as farm size, self-employment, or viability
of family farms in the local community. A South Dakota study went
beyond the work of Lockeretz in evaluating impacts of alternative farming
systems on consumer spending and marketing services in addition to business
spending for production inputs (Dobbs and Cole, 1992). The study paired five
farms classified as "sustainable" with five "conventional"
farms representing different regions of South Dakota. Data for the
"sustainable" farms were gleaned from on-farm interviews, but four of
the five "conventional" farms were "synthesizes" from
various sources. The "sustainable" farms were virtually
"organic" farms in that none used inorganic fertilizer and only one
farm reported appreciable use of commercial pesticides. First-round economic
impacts on local input purchases and marketing services were clearly negative
for the "sustainable" farms. Not only did the organic farms purchase
fewer inputs and market fewer products per acre, but they also purchased more
of their inputs and marketed more of their products outside the local
community. Organic "inputs" and premium prices for organic products
simply were not available locally. First round effects on
incomes of farm households clearly depended on whether organic premiums were
included or excluded from the analysis. Without organized premiums, four of the
five "conventional" farms produced more income per acre, but with
premiums included, three of the five "sustainable" farms produced
more income per acre. With organic premiums included, three of the five organic
farms appeared to be more economically viable than their conventional
counterparts and contributed as much or more than their conventional
counterparts to the community -- including impacts on farm and non-farm incomes
of local residents. The authors questioned the
sustainability of organic premiums, which would also seem to put in doubt the
sustainability of organic farming. However, their more serious problem in
drawing conclusions regarding sustainability is that the study omits any
consideration of the social, or quality of life, dimension of sustainability,
such as differences in size between conventional and sustainable farms. A Case Study of Thirteen
Missouri Counties Development of
Alternative Scenarios.
The study that is reported in this paper was developed to evaluate alternative
impacts of "conventional" and "alternative" agricultural
systems on rural economies. A "conventional" farming system scenario
was designed to reflect farming methods currently typical of Missouri farms and
of current spending patterns of local farmers and county residents. "Alternative"
farming scenarios were developed to reflect more sustainable systems by
utilizing increased use of crop rotations, more intensive input management
strategies, and reduced tillage methods for cropping systems. Alternative
livestock systems utilized more management-intensive grazing systems for beef
cattle production, and assumed similar management options were possible for
other types of livestock. The alternative farming
scenario was designed to achieve a balance of economic, ecological, and social
benefits. An attempt was made to achieve ecological advantages over
conventional farming systems while using the land in ways that would be
profitable to local farmers and supportive of the local community. In other
words, the alternative scenario was designed to reflect farming systems that
might be more sustainable for the local community as well as for farmers. All
farming systems were "synthesized" using secondary data from a
variety of sources and opinions of individuals knowledgeable of farming in the
state. Detailed descriptions of the two farming scenarios, methods of analysis,
and the research base supporting production assumptions may be found in a 1994
Masters thesis by Traiyongwanich. The alternative farming
scenario represents a modest departure from conventional systems of farming in
Missouri. For example, many sustainable agriculture advocates may view the
alternative scenario’s 50 percent reduction in commercial herbicide as little
more than fine-tuning of conventional farming. However, the objective of this
study was to evaluate alternatives that would be viewed as reasonable, not radical,
departures from common farming practices. No claim is made that the alternative
systems are truly sustainable, only that such systems might be expected to move
farming in the direction of sustainability. The alternative system of
cattle production was represented by a management-intensive grazing system with
24 paddocks based on data from the Forage Systems Research Center (FSRC) in
North Missouri (Moore, 1994). Conventional livestock production was represented
by a three paddock grazing system, which likely overestimates the intensity of
management of typical Missouri livestock operations. The alternative system
would allow farmers to stock more than 50 percent more livestock on the same
number of acres than would the conventional system. This assumption is
consistent with historic results of research at the FSRC (Moore, 1994) and with
on-farm experiences of farmers who have adopted similar systems in North
Missouri. The criteria used for
ecological soundness in developing scenarios for this study were natural
resource conservation and environmental protection. Indicators of increased
resource conservation were reduced soil loss and lower energy use for the
alternative systems. Indicators of greater environmental protection were lower
agricultural chemical use and greater cropping diversity. The single economic
criterion used was farm income. The indicator used for farm income was the
difference between direct costs of production and market value of farm
products. Direct production costs included purchased inputs for crops and
livestock and interest costs associated with animal ownership for livestock
operations. The difference between market value and production costs was termed
"direct farm income" to minimize confusion with other more familiar
measures of farm income. Criteria for social
responsibility used in developing scenarios were employment opportunities, and
utilization of local natural and human resources. Indicators of social
responsibility were non-farm employment, and number of households, farm and
non-farm, supported by farming. Methods of Analysis
Conventional and
alternative farming scenarios were developed for 13 Missouri counties. Four
clusters of counties were selected, with each cluster representing a different
geographic area of the state. Three clusters of three counties each were
selected from the southeast, southwest, and west central regions. A four-county
cluster was selected from northeast Missouri to coincide with the geographic
boundaries of an ongoing sustainable community development project. The conventional or base
scenario for each county was based on 1992 USDA Census of Agriculture data. The
underlying assumption was that very few farmers in Missouri would have been
using farming methods that were identified with the "alternative"
farming scenario as early as 1992. Thus, county level farm data for 1992 were
used to reflect "conventional" farming practices. Market values of
agricultural products sold; crops, including nursery and greenhouse products,
livestock, poultry, and their products; were used to represent total direct
farm income. Total farm production expenses, itemized by census expense
categories, were used to represent direct cost of production. Direct farm
income estimates were calculated as differences between market value of
products sold and farm production expenses. Direct farm income may differ from
census data for net farm income, in that the net farm income includes return
and cost items other than market value of products and farm production expenses.
These other items would not likely be significantly affected by differences
among scenarios in this study. Census data for government
payments, other farm-related income, and direct sales to individuals were added
to direct farm income to estimate total net farm income. Data for average
household income, for all county households, were taken from the U.S. Census of
population. Total net farm income was divided by average income per household
to estimate the number of households supported directly by farming. Data for
numbers of farms per county were also taken from the 1992 USDA Census of
Agriculture. Estimates of households supported by farming in a county were
typically significantly smaller than total number of farms in a county,
reflecting reliance of farm households on non-farm as well as farm income
sources. A micro-computer-based,
community impact assessment program, developed specifically to assess impacts
of changes in farming systems, was utilized to estimate the impacts of both
conventional and alternative farming systems for each of the 13 counties (Love
and Ikerd). The program translates farm income, costs, and net income data into
community impacts in terms of total farm and non-farm household income and
numbers of households supported by farming in the community. Changes in direct farm
income were treated as the first round effect, or "Direct Impacts,"
of farming on the local economy. "Indirect Impacts" occur as a
consequence of farmers buying production additional inputs or services. Each dollar
spent within the local community for feed, chemical and fertilizers suppliers;
equipment dealers, lenders, other farmers, farm laborers, or for any type of
production cost adds to the local economy. Farmers’ purchases of production
inputs create employment in the local agribusiness sector that in turn creates
income to support local non-farm households. Thus, increased non-farm
employment is considered an "indirect" or second round impact.
Substantial leakages typically
occur between farmers’ total cost of production and indirect income and
employment impacts on the local community. A large portion of total production
inputs and services may be purchased from sources outside the local community.
In addition, only a small proportion of total cost may be retained in the local
community, even when items are purchased locally. For example, only the
"difference" between the price a local farmer pays a chemical dealer
for pesticides and the price the dealer pays the outside manufacture is
available to add anything to the local economy. Additional indirect effects
occur when local suppliers or service providers buy their materials or
services. However, additional leakages occur because a large portion of
suppliers’ purchases may be made outside the community, and those goods and
services bought inside the community may have been manufactured or assembled
elsewhere. Additional leakages occur with each round of spending until
additional impacts resulting from a given initial transaction eventually become
negligible. The ratio of the ultimate total effect on local income divided by
the initial local spending for production inputs is called an indirect impact
multiplier. Sales of farm commodities
may also create indirect effects on the marketing, processing, or value-added
sector of the local economy. Commodities sold locally generate sales
commissions and other types of income for local marketing firms. Marketing
firms may purchase supplies or employ local residents, resulting in indirect
economic impacts similar to those associated with input purchases. As in the
case of purchases, leakages occur at each round of activity, and eventually any
additional impact from a given marketing transaction becomes negligible.
Unfortunately, marketing costs associated with commodity sales are not reported
in the Census of Agriculture. Marketing costs associated with procurement
presumable are included as a portion of production expenses. "Induced impacts"
result whenever people spend money they earn from participating in the local
economy. Obviously, those earning income from agricultural transactions include
farmers and farm workers. Local consumption expenditures by farmers make up a
major component of induced spending associated with farming. However, employees
of local suppliers of agricultural inputs and other service providers also earn
income linked to local agricultural transactions. As in the case of indirect
impacts, initial consumption expenditures have second, third, and higher round
impacts. Those who work for local retailers spend part of their incomes for
local goods and services, which in turn generates income for local residents
who provide those goods and services. But, as in the case of indirect impacts,
leakages at each round of consumption spending eventually reduce additional
impacts from a given retail transaction until they become negligible. The ratio
of the ultimate total effect on the local community divided by the initial
local consumptive spending is called an induced impact multiplier. The direct, indirect, and
induced impact multipliers of interest in this particular study were those
associated specifically with personal or household incomes. Thus, percentages
of total farm production inputs and services purchased and produced locally
were estimated and then translated into estimates of income generated for local
residents. To accomplish this, estimates were made for each production input or
service: (1) the percentage "purchased" from a local supplier and (2)
the percentage "produced," manufactured, or otherwise generated from
a local source. These and other percentage
estimates used in this study were solicited from panels of local experts and residents
who collaborated in the study. No published data exists for the percentage of
purchases made by farmers in a county that are made from suppliers within the
county or the percentage of farm inputs or services that are produced or
otherwise originate within the county where they are utilized. Neither is there
any reliable data on consumptive spending of farm and non-farm residents within
and outside of the counties where they live. However, there is a great
deal of general community knowledge among the people who live in rural
communities. People who are involved in their communities know where farmers
buy their feed, seed, fertilizers, fuel and chemicals. They know where farmers
borrow money, hire workers, and rent land. Community-based Extension Specialists
assembled groups of "local experts" to estimate the necessary
percentages for local input procurement and consumptive spending patterns for
each of the 13 counties. They used a variety of solicitation methods ranging
from one-on-one interviews, to focus groups, to surveys. All data were then
checked for internal consistency to ensure that each group of experts was using
a common interpretation of the data needed for the study. The local experts developed
the estimates of the following for each county: (1) percent of each production
expense item purchased locally, (2) percent of each production expense item
produced locally, (3) percent of local purchases resulting in personal income
of local residents, (4) percent of local production resulting in personal
income of local residents, (5) percent of direct farm income going to local
farmers – rather than landlords of others outside the county, (6) percentage of
government payments going to local residents, (7) percentage of other farm
related income going to local farmers, (8) percentage of direct sales for
consumption sold to residents of the county, (9) percentage of farm income from
all sources spent within the county, (10) percent of farm income spent locally
resulting in personal income to other local residents, (11) percent of non-farm
local personal income spent within the county, and (12) percent of local
personal income resulting in personal income to other local residents. These percentages were used
to estimate the appropriate multipliers to translate farm production expenses
and direct farm income into indirect income effects, through spending for farm
inputs and services, and induced income effects, through consumptive spending
of farmers and local employees of input and services suppliers. The sum of
direct farm income effects, indirect income effects, and induced income effects
provides estimates of the total impact of the farming sector on local incomes,
and indirectly, on number of local households supported by farming. A community
impact program template with sample county data is included as an appendix.
Results: Comparisons of
Alternative Scenarios Conventional Scenario: The conventional or base scenario
was based on data reported in the Census of Agriculture for 1992. Census data indicate
total value of marketing of farm products of $477 million for the thirteen
counties included in the study. Total farm production expenses were reported at
$383 million, resulting in total direct farm income of $94 million (Table 1).
The 13 counties accounted for just over 10 percent of total farm value of
agricultural production for the state of Missouri. Table 1. Alternative
Scenarios: Initial Impacts on Farm Costs and Returns and Patterns of Local
versus Non-Local Purchases
Direct farm income in the 13
counties was sufficient to support nearly 4,900 farm households at county
average levels of income per household (Table 2). Total number of farms in the
13 counties was nearly 12,000, indicating that well over half of total income
of farm households in these counties came from non-farm sources. Missouri
reported a total of 98,000 farms in the 1992 census. Comparisons among
scenarios were all based on "households supported" by farming, rather
than number of farms, as a means of dealing with the off-farm income issue.
Indirect and induced income
effects reflect salaries, wages, and profits of non-farm households earned as a
consequence of farm production inputs and consumption purchases. Estimated
indirect and induced income effects within the 13 counties were sufficient to
support nearly 4,300 additional households at county average levels. Thus,
nearly 9,300 households were estimated to be either directly or indirectly
supported by farming in the 13 counties under the 1992 base situation -- the
conventional farming scenario (Table 2). This total estimate was
derived using estimates for individual county including percentages of
production inputs and services purchased locally, percentages of consumption,
purchases made locally, and local income generated as a consequence of
production and consumption expenditures. The resulting total employment
multiplier was 1.9, indicating that each household supported directly by
farming resulted in 1.9 households in total supported by farming. For example
10 farming households would be expected to support themselves and 9 non-farm
households. Table 2. Alternative
Scenarios: Number of households Supported, Directly and Indirectly, by Farming
Individual county
multipliers ranged from nearly 2.3 down to less than 1.4. Counties with higher multipliers
were those with larger percentages of production inputs produced and purchased
within the county and larger percentages of incomes spent with local retailers.
The overall "within county" multiplier of 1.9, as expected, was
smaller than "within state" multipliers, which are generally assumed
to be in the 2.2 range for farming in Missouri. The difference reflects
economic activity that takes place outside the local county but still within
the state. Sustainable Farming
Scenario: The only difference between the conventional and "sustainable
farming" scenarios were those related to differences in systems of
farming. All percentages related to local input purchases, local production of
inputs and services, and farm and non-farm consumption spending were the same
in the conventional and sustainable farming scenarios. For the sustainable
farming scenario, total market value of farm production and total costs of
production inputs were adjusted from the 1992 conventional base levels to
reflect differences between the conventional and sustainable farming scenarios
outlined above (See Traiyongwanich for details of the process.). Separate
calculations were made for livestock and crops to derive alternative levels of
total revenue, total cost, and direct farm income for each county. Total value of production
sold was estimated at over $660 million for the sustainable farming scenario,
an increase of 39 percent over the conventional scenario. Nearly all of the
total was accounted for by increases in livestock sales as a consequence of
higher stocking rates for cattle, made possible my management intensive grazing
systems. Total market values of crops were essentially unchanged, but costs of
inputs for crop production were substantially lower for the sustainable farming
scenario. Total production expenses
were 35 percent higher for the sustainable scenario. Higher costs associated
with higher stocking rates for livestock overshadowing lower production costs
for crop production. One might logically question whether livestock other than
beef could experience similar increases in production per acre under
sustainable farming scenarios. More management intensive options exist for
other species of livestock and for poultry, but are less well documented than
is management intensive grazing. Beef was the dominant livestock enterprise in
most counties included in this study, which further strengthens the assumption
that data from beef production studies indicate potential for changes in
livestock systems in general. In general, one would
expect an increase in direct farm income, due either to a reduction in
production expenses, increase in value of production, or both, as a consequence
of moving toward more sustainable farming systems. Total economic profit, after
accounting for opportunity costs of the farm operator’s and family labor and
management, may or may not be greater under more sustainable farming scenarios.
However, direct farm income reflects total returns to operator and family labor
and management and profits combined, which would be expected to be greater for
any system that effectively substitutes labor and management for land and
capital. The number of farm
households supported by farming under the sustainable scenario was nearly
7,000, an increase of more than 2,100 or 43 percent over the conventional
scenario. This result is similar to those of a 1994 Nebraska study comparing
detailed economic data provided by 28 farmers, half of which were classified as
"conventional" and the other half as "sustainable" (Kleinschmit,
Ralston and Thompson, 1994). The "sustainable" farms were only about
one-half as large, in terms of acres farmed, head of livestock and total sales,
as those called conventional. However, the "sustainable" farmers
actually reported a higher average farm income, or return over direct costs per
farm, in spite of their smaller size. A total of 169 people were
supported on the 28 farms included in the Nebraska survey. It was estimated
that 44 additional people could have been employed on the same number of acres
with at least as high a per capita income if all farms in the survey area had
been of the same average size as the "sustainable" farms. If all
farms had been "conventional" the number supported would have been 22
less than the 169. Thus, their "all sustainable" scenarios would have
supported about 45 percent more people than would have an "all
conventional" scenario. The Nebraska study did not
address the issue of indirect and induced non-farm impacts. For the 13 Missouri
counties, the number of non-farm households indirectly supported by farming
increased from less than 4,400 to over 6,100, an increase of 1,700 or 40
percent over the base scenario. The percentage for non-farm households was
smaller only because of increase economic impacts by the farm sector reduces
the "relative" impact on the non-farm sector. Total of farm and
non-farm households supported by farming increased from less than 9,300 up to
over 13,000, an increase of 42 percent. The total employment multiplier dropped
slightly from 1.90 to 1.88, due to the larger relative impact of the farm
sector under the sustainable farming scenario. Sustainable Community
Development Scenario:
The third scenario was labeled sustainable community development (SCD) because
it assumed both changes in farming systems and changes in percentages of local
purchases and of local production of inputs and services. Percentages
associated with local consumption expenditures were unchanged for all five
scenarios. Percentages of production inputs purchased locally were assumed to
increase by amounts equal to half the distance between current levels and 100
percent. For example if base estimates indicated that 50 percent of production
expenses resulted from purchases in the local county, the SCD scenario assumed
that 75 percent were local purchases. Local production of inputs
and services was assumed to have lower ceiling levels than did local purchases
of inputs. For example, inputs such as fuel, some fertilizers, and agricultural
chemicals are not likely to be manufactured in rural Missouri counties, even
though such inputs are commonly purchased in rural counties. Even if reliance
on commercial inputs from outside sources is reduced, it is unlikely to
approach elimination. The SCD scenario assumed that local production of inputs
was increased to a level halfway between the base levels and 75 percent. For
example if the base percentage was 35 percent, the SCD percentage would be
raised 55 percent. Increases in local
purchases of inputs are logically consistent with shifts to increased numbers
of smaller farming operations that are less reliant on commercial inputs. For
example, an evaluation of detailed purchase records of 30 farmers in southern
Minnesota in 1993 indicated that large farms tend to buy a smaller percentage
of their inputs in local markets (Chism, 1993). The study also confirmed that
more diversified farms with livestock as well as crops tend to spend more
locally, at least up to a point. The smaller livestock operations
bought as much as 80-90 percent of their production inputs locally whereas
larger operations bought only 30-40 percent of their production needs from
local suppliers. The smaller operations were more likely to be diversified
family farms. The Minnesota study found little difference in local versus
non-local spending between smaller and larger crop farms, but the study did not
attempt to differentiate between those with low-input and high-input farming
operations. For the 13 Missouri
Counties, the Sustainable Community Development scenario resulted in a total of
just under10,000 non-farm households supported by farming. This compares with
less than 4,500 under the conventional scenario, an increase of 127 percent.
The number of farm households was the same as for the sustainable farming
scenario, 7,000 compared with 4,900 for the conventional scenario. Thus, total
households supported by farming rose to nearly 17,000 compared with 13,000 for
the sustainable farming scenario and 9,000 for the conventional scenario, an
increase of 83 percent over the base scenario. The total local employment
multiplier for the SCD scenario was 2.43 compared with about 1.9 for the two
pervious scenarios. More than 1.4 non-farm households were employed indirectly
somewhere in the county for each farm household employed directly by farming.
With the higher multiplier,
the potential positive impacts associated with changes in local versus
non-local spending patterns were approximately equal to the potential impact of
changing from conventional to more sustainable farming systems. However, the
two types of impacts are but two aspects or dimensions of the same phenomena –
a change in philosophy or approach to earning a living from farming. The
substitution of labor and management for land and capital associated with
sustainable agriculture would result in smaller, more diversified, more locally
connected farms. In general, operators of smaller, diversified farms would be
expected to spend a larger proportion of whatever they spend for production
needs in the local community. Transition Scenario: The fourth scenarios represent an
intermediate level of change, with resulting impacts between those of the
conventional and sustainable community development scenarios. Results were calculated
by assuming that half of each counties agricultural production would remain
conventional while the other half shifts to sustainable farming approaches.
Likewise, changes in percentages of local versus non-local purchases were
assumed to be half way between those used in the conventional and SCD
scenarios. Thus, the fourth scenario is labeled a "transition
scenario." The increase in households
supported directly by farming was half as large as for the two pervious
sustainable scenarios, by nature of the transition assumption -- an increase of
21 percent over the conventional scenario. The increases in non-farm households
supported indirectly increased by 57 percent over the conventional scenario.
This increase over conventional is compared with 40 percent for sustainable
farming and 127 percent for the SCD scenario. Total households supported both
directly and indirectly by the transition scenario was about 12,800. This was a
38 percent increase over the conventional scenario and compares with a 42
percent increase for the sustainable farming scenario and 83 percent for the
SCD scenario. Experts Expectations
Scenario: The final
scenario was based on estimates of the magnitude of changes in farming systems
that the local "experts" thought might be experienced within the next
five years. The experts’ estimates of potential changes on a county by county
basis resulted in total of almost 5,700 farm households supported by farming,
an increase of 16 percent over the conventional scenario. This compares with a
21 percent increase for the sustainable farming scenario. Percentage for local
purchases and locally produced inputs were chosen to reflect similar
relationships relative to conventional and sustainable farming scenarios. The
result was an estimate of just over 6,200 non-farm households supported by
farming, 700 less than for the transition scenario, but 1,800 more than for the
conventional scenario. The resulting total numbers of households supported by
farming, including both direct farm and indirect non-farm, were nearly 12,000
-- about 800 less than for the transition scenario, but more than 2,500 more
than the conventional scenario. Total employment based on the expert’s
estimates of change within the next five year showed a 16 percent increase in
farm households, a 41 percent increase in non-farm employment related to
farming, and an increase of 28 percent in total local employment related to
potential changes in agriculture. Summary and Conclusions
The industrial era of the
twentieth century has left many rural communities seemingly without a viable
economic purpose for being. Many rural communities were settled to support
mining, logging, or farming operations in the surrounding countryside. With the
minerals depleted, the timber gone, and farms continuing to grow larger and
fewer in these numbers communities are searching for new economic opportunities
to help define their purpose for the future. Some have become bedroom
communities for nearby urban areas. Others captured the value of local climate
and landscapes to become tourist recreation areas. But, most have been left
with far less desirable economic options. Their options are mostly low-skill,
low-pay jobs and enterprises others don’t want -- such as prisons, waste dumps,
and factory livestock and poultry operations. Many rural community
leaders consider farming as an important part of their past, bur few see
farming as a key development strategy for their future. Previously farming
dependent communities are unlikely to see a return to agriculture as a dominant
role in local economy. Future rural economies likely will be much more diverse
than those of the past. However, agriculture can be a key component of that
future diversity for many rural communities. The conventional wisdom is
that farms will continue to become larger and larger and fewer and fewer in
numbers. If the conventional wisdom is true, then farming quite likely will be
more of a liability than asset to rural community development. However, the
conventional wisdom is being seriously challenged by the questions raised by
the emerging sustainable development movement, of which sustainable agriculture
is a part. Sustainable development will require economic development strategies
that conserve and protect the local natural and human resource base.
Sustainable agriculture will require the substitution of labor and management
for land and capital – reversing the industrial trends of the past. The trend
toward a sustainable agriculture will require more, smaller, more management intensive
farms. Sustainable agriculture challenges the conventional wisdom. Thus,
sustainable agriculture may be a key component of logical sustainable community
development strategies in many rural areas. No attempt is made in this
study to prove that sustainable agriculture is a viable alternative to
conventional agriculture. The proof of that proposition is reflected in changes
that are taking place on thousands of farms across the country and around the
world. The transition is in its very early stages and still represents a very
small fraction of total farming operations and an even smaller fraction of
total agricultural production. But the possibilities for farmers to earn a
better living by farming less land with fewer capital inputs, by managing more
intensively, are real. This study does not attempt
to answer the questions of if, how quickly, and to what extent sustainable
farming will become significant and then dominant. The purpose of this study
was to examine the potential impacts of such changes on rural communities, and
thereby, to evaluate the potential of sustainable agriculture as a rural
community development strategy. The speed and extent of the shift toward
sustainability may well depend or whether or not people see its potential for
tangible, immediate benefits in their lives. The results of the study
indicate that sustainable agriculture may be a viable rural economic
development strategy for many rural communities, in Missouri and elsewhere. The
thirteen Missouri counties included in this study were all classified as rural,
but varied widely in their dependence on farming and reliance of local farmers
and consumers on local suppliers and retailers. On a weighted average basis,
weighted by value of farm production, farming supported just under 400 farm
households per county in 1992. Another 370 non-farm households per county were
supported indirectly by farming, for an average county total of just under 770
households. A complete shift to the
sustainable farming scenario would provide support for more than 165 additional
farm households per county and more than 300 additional farm and non-farm
households in total. The sustainable scenario used in this study reflects only
very modest changes from current farming practices – primarily conservation
tillage and better input management for crops and management intensive grazing
systems for livestock. Nothing in the scenario would be considered a radical
change for most Missouri farmers. Few community leaders would ignore the
potential for creating 165 new self-employment opportunities and the means of
supporting 300 new households in total in their counties. A shift to a sustainable
community development scenario would have even more dramatic impacts on the
local economy. Changes in local versus non-local spending patterns magnify the
indirect and induced impacts of changes in the farming sector of the economy. A
successful SCD strategy could add 300 more non-farm households for a total
increase of more than 600 households per county over the conventional scenario.
It should be pointed out that added households in this study add far more than
minimum wage or low pay jobs. Each household in the study is supported at the
average household income level for the county. In many cases, current
households may be supported by more than one full or part time job. Obviously, the shift to
more sustainable farming and community development strategies will take time,
even under the most optimistic of scenarios. One reason industry hunting
appears so attractive as an economic development strategy is that announcement
can be made that "x" number of new jobs will be created within the
next "y" period of time by the new industry coming to town. Sustainable
development is a more long term strategy that must be based on enhancing the
inherent productivity capacity of the people within the community rather than
providing jobs from outside. New industries can and do leave town just as
suddenly as they arrive, leaving people with no marketable skills behind.
Development that is achieved be the people, one-by-one over time, if far more
likely to multiply than it is to subtract over the long run. The transition and expert
expectations scenarios provide insights to possible impacts over time periods
similar to those that might be required for industry recruiting. The transition
and expectations scenarios would each add about 300 households to the average
county, on a weighted average basis. At first glance it might
appear that the experts, in this study, expect little more than a half-step
toward sustainable farming – even in the very modest sense that it is
represented here – to occur within the next five years. But, it is highly
significant that the experts expectations reflected an increase, rather than
decrease, in numbers of households supported by farming. Obviously, if
sustainable agriculture and sustainable community development became proactive
strategies common among Missouri’s rural communities, changes could come much
more quickly and be much more dramatic. The results of this study
point the potential for agriculture to become a key element in strategies for
sustainable community development in many rural counties across Missouri and
across the country. The first step in realizing that potential may be to
recognize that it exists. REFERENCES Chism, J. W. 1993. Local spending patterns of farm businesses in southwest Minnesota, Unpublished Masters Thesis, Dept. of Agricultural and Applied Economics, University of Minnesota, St. Paul, MN. Dobbs, T. J. Cole. 1992.
"Potential effects on rural economic conversions to sustainable farming
systems," American Journal of Alternative Agriculture, Vol 7, Numbers
(1&2) (pp. 70-80). Heffernan, W.D. 1986.
Review and evaluation of social externalities, new directions for agriculture
and agricultural research, K.D. Dahlberg (ed.), Rowman and Allenheld, Totowa,
NJ, pp. 190-220. Hyman, Drew. 1990.
"Rural Development Challenges of the 1990s," Farm Economics, College
of Agriculture, Pennsylvania State University, January/February, 1990. Kleinschmit, L. D. Ralston,
and N. Thompson. 1994. Community impacts of sustainable agriculture in northern
Cedar County, Nebraska. Special report of Center for Rural Affairs, Walthill,
NE. Lockeretz, W. 1989.
"Comparative local economic benefits of conventional and alternative
cropping systems," American Journal of Alternative Agriculture, 4:75-83.
National Research
Council/National Academy of Science. 1989. Alternative Agriculture, National
Academy Press, Washington, DC. Moore, K. C. 1994.
"Management incentive grazing: A look at the economics," University
of Missouri-Columbia, Department of Agricultural Economics, Extension Paper.
Traiyongwanich, S. 1994.
Post-CRP land use alternatives for Putnam County, Missouri, Unpublished Masters
Thesis, Dept. Of Agricultural Economics, University of Missouri. |