Rural Development: A Farm Manager's Perspective

Rural development is often overlooked by farmers, agribusiness groups, and agricultural policymakers. When things are going well on the farm, these agricultural groups express concern over the well-being of the rural community. But when farm prices drop or the weather turns dry, attention will quickly be refocused on more immediate concerns. Rural development seems to be forever buried in the back of farmers' minds, well behind the primary concerns of production and prices and even the issues of pollution, conservation, and structure. This may not be the proper ranking on a farm policy agenda, and certainly it is not an appropriate position in the minds of farm managers. Rural development should be a primary concern of all farm managers.

What a Farm Needs from Its Community

Most farmers agree that it takes good weather and high prices to make a farm prosperous. These are probably the two most important factors in determining whether farming in general is prosperous. But farm managers should be focusing their attention on the relative factors what makes one farm successful and another one a failure. Most of the difference is the farm manager, but not all. The community in which the farm is located also has an impact on the likelihood of success. The days of the self-sufficient farmer have long since departed. A modern farm makes great demands on its community.

Supplies. Replacement belts for the combine, medicine for the calves, chemicals, fuel, seeds, feed the list of supplies needed to keep a farm running can seem almost endless, and most of it is purchased locally. If it is not available locally, the farm manager is faced with two options either plan ahead and carry the inventory on the farm or sacrifice timeliness and wait for the needed item to be brought in from a distant source.

Financing. Much of American agriculture is financed by local banks. The availability of local sources of financing is quite uneven. In Missouri, we currently have communities in which the bank is aggressively trying to make more quality farm loans and communities where the bank is trying to get out of farm lending entirely. There are also communities where the only bank in town has stopped operating. For large farms, having to deal with a distant lender may be only an inconvenience. For small farms, the lack of a local lender may be critical. Many lenders feel that the added cost of servicing and supervising a distant loan can only be justified on large loans. Trying to go outside your community to borrow $ 10,000 of operating money can be difficult.

Service. A great deal of the "products" farmers purchase are actually services. Everything from tractor overhauls to crop dusting to income tax preparation to veterinary services can be vital items the farm needs to purchase. The local availability of quality, affordable farm services can be a major factor in the success or failure of the farm business. Unlike supplies and financing, services imported from outside the community can be quite difficult to obtain. Bringing in services usually means bringing in people and that can be expensive. The alternative, settling for veterinary or tax service from local people who are not familiar with your type of farm, can be even more costly.

Personal Items. Farmers are people, too. In addition to all the products and services the farm needs, the farm family also needs things. The availability of household goods, recreational activities, health care, and quality schools will affect the degree of satisfaction the farm manager and farm employees will gain from being involved in the farming operation.

One result of the demand for goods and services from local communities is that agricultural commodities become more geographically concentrated and farms become less diverse. The dairy industry in Missouri is concentrated in the Ozarks region around Springfield. As an economist, I am hard-pressed to explain why dairy farms continue to expand in this area and decline in the rest of the State. Other parts of Missouri appear to have a cost advantage in producing the forages and grain that dairies need. The factor that seems to tip the scales in favor of the Ozarks is the advantage of operating a dairy farm in a community that is composed largely of dairy farms.

Experts in retailing have pointed out that the best place to locate your store may be right next door to your competition. The result can be seen in the cities of rural America. Every fast food restaurant in the area will be located along a half-mile stretch of the "main drag." In addition to the incentives for the concentration of farm type provided by climate and soil type, community services and support also move farm type in the same direction.

Money and Jobs for Rural Communities

The interaction between the farm and the local community is so strong that the economic condition of one can have a major impact on the well-being of the other. Prosperous farms mean money and jobs for their communities not only jobs on the farm, but also jobs in agribusiness (the myriad firms selling inputs to the farm and buying farm produce), jobs in nonagricultural firms such as furniture stores and car dealerships that sell goods to farm families, and jobs in government as farm sales generate tax dollars to support everything from roads to schools to hospitals.

The sudden absence of farm profits can have a devastating impact on the economy of rural communities. As rural America discovered in the 1980's,the lack of farm income can migrate through the local economy as first the agribusinesses then the retail and service businesses feel the decline in sales. Eventually, the governmental sector is affected as declining sales, declining property values, and a declining population produce lower tax revenues.

Security for Local Farmers

Most farmers are aware of how the economic health of agriculture affects the well-being of rural communities. Fewer understand that the reverse is also true. A prosperous community can be supportive of a lagging farm economy. Missouri agriculture was hard-hit by the tough financial conditions of the early 1980's. The result was devastating to many rural communities, especially North Central Missouri towns like Princeton, Trenton, and Unionville which had economies based heavily on agriculture. Communities such as Auxvasse, where I live, fared much better. Located within commuting distance of the growing nonagricultural economy of Columbia, MO, farm families in this area were able to supplement their farm incomes by having one spouse take a full-time or part-time job in town. The results of this infusion of off-farm income were fewer bankrupt farmers and less of a drop in local land prices.

Establishing a farm business near a thriving community that does not depend on agriculture can cushion the fall from a collapse in the farm economy. Working to diversify the economy of agriculturally dependent communities can accomplish the same result.

Symbiosis The Farm-Community Ideal. Symbiosis is the process in which two organisms live in a close, mutually beneficial relationship. Rhizobia bacteria live in nodules on the roots of alfalfa plants. The alfalfa provides shelter and nourishment to the bacteria. The bacteria transform atmospheric nitrogen into a form usable to the alfalfa plant. Each is better off because of the presence of the other. A symbiotic relationship between farm and community should be the goal of farm managers selecting a location for their farms, of rural community leaders trying to shape their communities, and of policymakers trying to implement legislation that is beneficial to society.

Ronald L. Plain, Associate Professor of Agricultural Economics, University Of Missouri-Columbia, Columbia, MO.