Transcript Natural Resources - APDesign | Kansas State University

Natural Resources
Rural Development in the United States: Connecting Theory, Practice and
Possibilities
By William A. Galston and Karen J. Baehler
Chapter 5 pg 83-116
The following are the main points of natural resources’ role in rural
development.
Natural Resources
1. Although more than half of all natural resources related employment is located in
the urban areas, rural America depends heavily on income from this sector
Employment
6% Agriculture
<2% Forestry and Wood Products
.6% Energy Industries
.2% Mining (non-energy)
Natural Resource County
1 in 9 US Counties have >20% of their annual income from natural resource
related enterprises
25% of all rural counties specialize in Agriculture
1990 Study on Farming and Food processing states
Farm production concentrated in 10 states of upper Midwest and Great Planes
Food Processing concentrated in Sunbelt, Great Lakes, and Northwest Region
Only state that is in both categories is Wisconsin
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2. Natural Resources is a shrinking sector in the US and many other
industrialized nations in both employment and contribution to GNP.
Much of the value once added by the primary goods industries is now
captured in downstream activities such as processing and
manufacturing, packaging, marketing and advertising, and retailing.
Gross National Product
1950 12% raw materials and energy
1984 Dropped to 9%
*Note: The quadrupling of oil and gas prices in 1973 mask true extent
of the structural shift of the GNP.
Forestry and Wood Products Timeline
1979-1985
Pacific Northwest income fell by 25% and production
went down by 13%
1976-1985
Unemployment in Pacific Northwest was above Nat’l
average
1985 Produces 90% of 1979 output with 80% of 1979 employment
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Agriculture Timeline
1970’s
Low interest rates lead to high debt for farmers
1880-1982
Worldwide recession lowered demand for everything
1987 Bounce back with record high net income levels and fewer farms
1991 Livestock profits created greater earnings
Now Relatively stable
Things that Changed
Large Farms (sales of $500,000 or more)
Proportion doubled
Output rose from 25% to 40%
Small-to-Medium Farms (sales $10,000 to 99,000)
Dropped from 43% to 37% of all farms
Very Small Farms (sales less than $10,000)
Remained Steady
1950
1987
5.6 million farms
2.1 million farms
Average size of 213 acres
Average size of 462 acres
15% of all Americans
Less than 2% of all Americans
40% of all Rural Americans
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Energy Timeline
1973 Price hike after Arab oil embargo
1980’s
Price drop due to lower demand and instable OPEC
cartel
1976-1985
Unemployment rates higher than Nat’l average
1970’s
1980’s
1972-1985
Since 1985
By 2000
Coal benefited from higher energy prices
Patters shifted toward electricity (coal fired plants)
Coal use increased 8%
Demand for coal increased 30%
Predict 26% rise in coal output
Copper (Mining) Timeline
1969-1985
Decline in employment by 1.5% per year &
unemployment rates above Nat’l average
1973 Prices went down 40-50%
1981-1983
42% of work force was laid off & industry lost over $1
billion
1986-1988
Prices doubled
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3. Rural areas find themselves at a disadvantage in attracting the
downstream activities; particularly those that require close proximity
to large markets, access to sophisticated communications systems,
or pools of specially skilled workers.
Three main reasons for failure:
It costs the winners of the bidding war who often have promised generous
tax breaks and public expenditures for infrastructure improvements,
free job training, and other inducements that cancel out at least
some of the economic benefits of the newly created jobs.
This strategy trades long-term instability for a big employment payoff up
front, because recruitable companies and plants are notoriously
footloose: What’s to keep the new plant in town from moving
elsewhere in five years when a better incentive package comes up?
There simply are not enough mobile jobs to make this approach pay off for
more than a handful of communities each year.
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4. Still, strategies are available for rural communities interested in natural
resources based development. These include creating entirely new
agricultural, timber or other commodity based products; developing new
uses for old products; upgrading production techniques to increase
efficiency and quality; and applying emerging technology to production.
5. Traditional value added strategies that focused on recruiting food
processing, timber processing and other natural resources related firms
have brought mostly disappointment. New, more refined definitions of
the value added approach focus on improving the competitive position
of existing secondary industries through technical and financial
assistance, access to information, worker training and other means.
Although these activities have not been evaluated rigorously, they hold
some promise for long-term benefits.
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6. Institutions can play and important roll in increasing the value added by
existing primary and secondary producers in rural areas. Industry
associations and cooperatives in agriculture or timber, for example, can
serve as networks for exchange of information, provision of services
such as technical assistance, and better coordination among growers,
processors, shippers, marketers, and distributors.
Washington is developing a network of lumber and wood products agents
who visit small lumber mills and other producers to provide needed
technical assistance and information about national and international
market trends.
Oregon is studying the feasibility of setting up flexible manufacturing
systems in wood processing plants.
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7. Traditional natural resources industries have a reputation for creating
dangerous, low paying jobs. Some of the newer, values added,
competitiveness approaches to agriculture and timber development are
expected to increase wages and skill levels for local workers, even
though some loss of jobs due to higher productivity.
Food production is still one of America’s most dangerous industries, with
the second highest rate of occupational injuries and illnesses per fulltime worker.
September 3,1991 fire in a poultry plant in Hamlet, North Carolina killed 25
people. It was later discovered that the plant had not been inspected in
11 years.
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8. Even where communities face the dismal choice between low wage jobs
on the one hand and high unemployment and depopulation on the
other, efforts can be made to compensate for and increase wages and
to pressure employers for improvements in job quality.
9. Natural resources development also involves difficult trade-offs between
environmental conservation and economic growth. Examples of
compromises struck during the past several years in the areas of
farming practices and clean air illustrate how consensus can be
developed and implemented at the policy level.
Problem: Missoula Valley, Montana had a problem with air pollution due to
residential wood burning stoves and several struggling small sawmills.
Solution: Create a revolving loan fund to help homeowners buy clean
burning wood pellet stoves and local mills could increase productivity
and profitability by using sawdust to locally make wood pellets for the
wood stoves.
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10. Decisions about tensions inherent in some natural resources
development strategies should be passed on public deliberation and
choice.