Charles W. FluhartyVice President, Policy ProgramsRural Policy Research Institute
http://www.rupri.org
The U.S. Rural Development Framework: Comparative
Context & Change DynamicsPresented to the
European Union Rural Development Conference
Brno, Czech Republic
June 9, 2009
Four Considerations
I. U.S. Rural Development Overview
II. Lessons Learned from European Rural Development Policies & Programs
III. Comparative Comments
IV. The Way Forward, From a U.S. Perspective
Why Rural Development Investments are Critical to
the Future of America’s Farm Families:
Seven Considerations forCommittee Review
Presented to the Senate Committeeon Agriculture, Nutrition and Forestry
October 3, 2007
100
200
300
400
500
600
700
800
900
1000
1970 1975 1980 1985 1990 1995 2000 2005
Index (100 = 1970)
Nonfarm Earnings
Farm Earnings
Data Source: Bureau of Economic Analysis, Regional Economic Accounts
1. Farming remains a strategically significant sector of the national economy. However, on many measures, farming’s impact is declining in all regions of the United States.
• Farm earnings have remained relatively steady over the last 30 years, while non-farm earnings have increased three-fold.
•Agriculture’s contribution to total U.S. gross domestic product (GDP) has also remained relatively constant over the past decade, while GDP overall has increased by nearly two-thirds.
Data Source: Bureau of Economic Analysis, Regional Economic Accounts
-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Tot
al G
DP
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
AgF
FH
GD
P
Total GDP
Ag, Forestry, Fishing, Hunting
• Even in nonmetropolitan America, farm employment has fallen from just over 14 percent of the total in 1969 to 6 percent in 2005. The number of counties with farm employment accounting for 20 percent or more of total employment has shrunk dramatically from 1,148 in 1969 to 348 in 2005.
92.4%
30.0%
82.0%
49.9%
16.1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Farming Occupation /Lower-sales
Farming Occupation /higher-sales
Large Family Farms Very Large FamilyFamrs
All Farms
Percent of Farm Household Income from Off-Farm Sourcesby ERS Farm Typology, 2005
Source: USDA, ARMSData not presented for limited resource, retirement, and residential type farms
2. Farming is no longer a stand-alone economic activity. Farm families depend on healthy local and regional economies for their very survival on the land.
• Nationally, 82% of all farm household income comes from off-farm sources. Even large family farm operators rely on off-farm sources for up to 30% of their household income.
• The FY2008 USDA Budget Outlays include 19% to Farm & Commodity Programs, 11% to Conservation & Forestry, and just 3% to Rural Development (up from 2% in FY2007).
3. Federal expenditures on farming and rural economic development fail to address these realities.
Food Assistance59%
InternationalPrograms
2%
RuralDevelopment
3%
Research, Inspection & Administration
6%Conservation & Forestry
11%
Farm & Commodity Programs
19%
Source: USDA
USDA FY 2008 Budget Outlays
4. Farm payments continue to be highly concentrated, by crop and geography.
• In 2005, 43% of farms received government payments; about 10% of farms received almost 60% of these payments (USDA/ERS).
• Direct payments to farmers tend to be concentrated in the Heartland, Mississippi Valley, and California.
• Specialty crops, which now represent almost half of the U.S. farm crop value and continue to grow in value, are not similarly supported by these subsidy programs. (USDA)
5. Farm payments have limited impact on the broader rural economy.
• Counties receiving the most farm payments (direct payments) significantly lag other nonmetropolitan counties in employment growth.
0.0
0.5
1.0
1.5
2.0
2.5
Annualized Employment Growth(Percent Change) 1980 to 2005
Top 500Direct Payment
Recipient Counties
RemainingNon-Metro
Counties
RemainingMetro Counties
Source: BEA, REIS; Environmental Working Group
The U.S. Rural Development Framework
Federal / State Regional Commissions
U.S. Regional Planning & Development Organizations
Emergent Federal Initiatives
Micropolitan Designations
U.S. Regional Commissions
Current Regional Commissions
Appalachian Regional Commission (1965)
$65.4 million, plus $490 million for highway systems
Denali Commission (1998) $50 million
Delta Regional Authority (2000) $12 million
South East Crescent Authority Southwest Regional Border Authority
The U.S. Rural Development Framework
Federal / State Regional Commissions
U.S. Regional Planning & Development Organizations
Emergent Federal Initiatives Micropolitan Designations
Regional Planning & Development Organizations
National network of 500+ sub-state planning and development organizations; 320 RDOs primarily serve small metro and rural America
Governed and owned by local governments, with increasing private sector involvement
Primary roles: Promote regional cooperation of local officials Develop professional planning & program
expertise Package and administer complex grants &
projects
U.S. Regional Development Organizations
The U.S. Rural Development Framework
Federal / State Regional Commissions
U.S. Regional Planning & Development Organizations
Emergent Federal Initiatives
Micropolitan Designations
The U.S. Rural Development Framework
Federal / State Regional Commissions
U.S. Regional Planning & Development Organizations
Emergent Federal Initiatives Micropolitan Designations
U.S. Micropolitan Areas
U.S. Moving Toward “Regional Rural Innovation Systems”
Moving from attraction strategies to entrepreneurship
Identifying and encouraging “functional economic regions”
Asset-based development Higher education institutions
anchoring and/or supporting new regional compacts
New rural governance New regional intermediaries
Place-based policies are WTO-compatible, non-trade distorting.
This approach is consistent with the fact that national competitiveness is increasingly determined by regional actions.
Enables a rethinking of core missions and a leadership renaissance across all governments.
Improves potential to retain existing funding baseline for Ag Committees, and continuing Ag Committee responsibility for rural development.
The Promise of a Regional Rural Innovation Policy
Concerns and Considerations Assuring community, culture and
landscape considerations remain central to new regional frameworks
Defining our “being, purpose and knowledge framework”
Avoiding devastating defaults: Homogenization
Commoditization
Urbanization
Colonialization
II. Lessons Learned from European Rural
Development Policies & Programs
III. Comparative Comments
Comparative Strengths & Weaknesses
Future Policy Direction & Considerations
IV. The Way Forward,From a U.S. Perspective
Impacts of the Obama Presidency
New USDA Priorities
The Critical Importance of Continuing Transatlantic Dialogue
One Final Consideration
“All great truths begin as blasphemy.”
—George Bernard Shaw
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The Rural Policy Research Institute provides objective analysis and facilitates public dialogue concerning the impacts of public policy on rural people and places.