Map of the Agriculture Dependent Counties in the United States & Future of Rural Area Economies

This post includes material from the report on the July 2014 Federal Reserve Bank of Kansas City’s symposium, “Structural Transitions in Global Agriculture.”

The subject is the lack of growth and decline of population in the rural areas of the U.S. which used to be much more reliant upon agriculture.

Although we have heard repeatedly from Secretary of Agriculture Tom Vilsack and people like RFS lobbyist Bob Dinneen about how great ethanol has been for the rural areas, when we look at the data, it shows us quite the opposite. One of the reasons for this is that the farms that grow monoculture crops like corn keep getting bigger, which means depopulation and lack of support for the small rural communities.

Changes in agricultural markets have raised questions about the future for rural America. Throughout the United States, rural populations are barely growing, or even dwindling, despite the recent agricultural commodity boom. Though rural America has historically been inextricably linked to agriculture, a smaller share of the country today is considered farm dependent. […] However, the nature of rural America has fundamentally shifted over the past 50 years. Citing USDA data, Partridge showed that in 1950, virtually all of rural America was farm dependent. By 2000, however, less than 20 percent of America’s rural (nonmetropolitan) counties were considered farm dependent.

.
In addition, a disturbing graph from the USDA shows us that since the financial crisis, the urban area economies are recovering rather well when we look at employment numbers, but the rural economies have barely come up at all. The featured time span happens to coincide with the ramp up in ethanol production due to the federal mandate.

I have written about rural demographics and trends a number of times before, and there are many factors that are contributing to sobering declines in rural statistics. Just last week I learned that the rural grade school that I went to in Nebraska is shuttering its doors because there are no rural children left in the area. They waited until they were down to three students. When I went, there were around 70.


Sources:

Structural Transitions in Global Agriculture: A Summary of the 2014 Agricultural Symposium – By Nathan Kauffman, Assistant Vice President and Omaha Branch Executive.

http://kansascityfed.org/publicat/mse/MSE_0314.pdf

Rural America at a Glance – 2014 Edition

http://www.ers.usda.gov/media/1697681/eb26.pdf

Pie Graphs of Top Global Pork Importers and Consumers & Livestock Trade

This post is from the report on the July 2014 Federal Reserve Bank of Kansas City’s symposium, “Structural Transitions in Global Agriculture.” The subject is the changing dynamics of global livestock trade.

Echoing the sentiment of other agribusinesses, meat producers and processors pointed to export markets as the key to long-term success. Dhamu Thamodaran, executive vice president and chief commodity hedging officer at Smithfield Foods, explained that meat consumption in the United States has declined over the past 20 years. Assuming this pattern holds, growth is export dependent. Derrell Peel, professor of Agribusiness in the Department of Agricultural Economics at Oklahoma State University, showed that global pork exports have, in fact, increased 37 percent since 2005. Global beef exports have risen approximately 30 percent over the past decade.

Export markets may be the key for the livestock sector to sustain its recent resurgence, but export markets do not come without challenges. One challenge is competition. Thamodaran pointed out that, although the U.S. produces feed relatively inexpensively, the U.S. no longer is the best at raising hogs. Places like Poland and Romania, although they lag in other economic measures, have made dramatic improvements in hog production. Another challenge is currency exchange rates. Although some currency risk can be hedged, it adds a level of complexity and required focus to any organization wanting to expand globally.

[…]

Sustainable long-term growth for the livestock sector, therefore, is likely to depend on the strength of export markets. As echoed by agribusinesses at the symposium, Peel noted that China is perhaps the pre-eminent factor underlying the future strength of export markets. Although China is the largest pork producing country, and produces more than the rest of the top 10 producing countries combined, its imports have also grown rapidly. Peel explained that the growth in Chinese imports could quickly lead to China also becoming the largest importer of pork worldwide.


Source: Structural Transitions in Global Agriculture: A Summary of the 2014 Agricultural Symposium – By Nathan Kauffman, Assistant Vice President and Omaha Branch Executive.

http://kansascityfed.org/publicat/mse/MSE_0314.pdf