Friday, November 03, 2006

Ag’s Impact on Rural Economic Growth

“Agriculture in the last half of the 20th century was not sustainable and had a negative impact upon rural economic growth,” Dr. John Miranowski of Iowa State University was one of the speakers with me at the Federal Reserve of Chicago’s Expanding the Rural Economy: Through Alternative Energy, Sustainable Agriculture and Entrepreneurship. I was there speaking on the importance of entrepreneurship in rural America. Another comment he made solidified something that has concerned me about the lack of young, starting farmers, “Farmers who rent land don’t really benefit from all of the government programs because the subsidies get factored into land values, increasing rents. When we started farming government programs we lost a lot of entrepreneurial talent in agriculture.”

Farmers have the second highest median age, following only draw-bridge operators. Miranowski had some graphs which showed the change in age demographics over the past 15 years. In 1987, farmers under 35 and over 65 years of age accounted for 36% of the overall farm population, the same as in 2002. In 1987, 55 out of 100 of those farmers in those two age groups were under 35 years of age. In 2002, it was down to only 3, with 97 of 100 being over the age of 65. Scary!

Another startling statistic that Miranowski cited was, “90% of farmers either work off of the farm or are over 65 years of age.”

Miranowski has researched a number of factors impacting all of the rural counties in IL, IA, MO, KS, NE, SD, MN and WI. Some of his findings were that government programs have crowded out alternative crops, livestock and other value-added agricultural activities. Of the sixty wineries owned in the state of IA, only two are owned by traditional farmers and they are both semi-retired. Another of his findings was that counties with greater recreational amenities were ones that were doing much better than those without. The impact of renewable energy also excited him, “I am the most excited that I’ve been since I started studying the subject as an undergrad in 1962, because of renewable energy’s impact upon rural America.”

I’m convinced that we can do much better with agriculture in rural America, but we’ve got to take a fresh approach to how we change the industry in this new century.

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