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MAINSTREAMINGAGRICULTURAL-BASED ECONOMIC DEVELOPMENT

Nelson Bills - Agricultural, Resource and Managerial EconomicsEd Harwood - Cornell Cooperative Extension

Rod Howe - Cornell Cooperative ExtensionMaureen Maloney Robb- Cornell Cooperative Extension

R. David Smith- Cornell Cooperative Extension

The mainstreaming of agriculture with other eco-nomic development can increase profit making op-portunities, increase financial and community sup-port for agriculture and engender a positive outlookfor the industry. However, there are key words to belearned, issues to be reframed and an altered im-age required to mainstream agriculture into currenteconomic development efforts.

What is economic development? Economic devel-opers are jobs driven. If it is not about creating jobs,retaining jobs or attracting the businesses or peopleto ensure jobs, it is not attractive to economic devel-opment. Some perspective is helpful. Whenmanufacturing left the state taking jobs with it andleaving workers behind, the emphasis of economicdevelopers was on securing new businesses, es-pecially those with large numbers of jobs. As thesebusinesses have been developed, emphasis hasbeen placed on retaining existing businesses and

supporting what adds to their capacity to retain jobs.Because agricultures power to create jobs is un-known, our focus should be on what the agriculturalindustry can bring to the retention of current jobs.

What is meant by agricultural-based industry? Agri-culture is viewed by those involved in economic de-velopment as all functions falling between produc-tion and the consumer. Agriculture-based industriesalso include tourism, processing and the infrastruc-ture that supplies and serves agriculture.

Economic developers appreciate the contributionthat agriculture makes to the rural setting. It waspointed out that retaining jobs depends in some de-gree on living in a view created by agriculturesbuildings, animals and crops. A real benefit of agri-culture derives from the attractive landscape it cre-ates.

Value Added (VA) - Simplystated, it is the the differ-ence between value ofsales and value of pur-chases to make the salesor in economic terms it isthe gross sales of a busi-

ness less the cost of thegoods sold. VA is a goodway to present the impor-tance and contribution of abusiness.

Critical Mass - Criticalmass is the minimumquantity of suppliersneeded to justify continuedsupport. If conditions cre-

ate a smaller number ofcustomers for a business,owners reduce invest-ments and often leave.Economic developers -Each community or regionhas a number of agenciestht work together to pro-mote and support efforts toenhance, develop or retainemployees, businesses

and infrastructure. Theseefforts frequently target theenvironment and econmicclimate to support busi-nesses.

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Successful economic development in agriculture according to economic developersis exemplified by the value-added by a winery. What is value-added? In economicterms it is the gross sales of a business less the cost of the goods sold. The activi-ties that contribute to both gross sales and cost of goods include the grape produc-tion, wine making, bottling and sales. Each segment contributes to jobs, tourism andattractive landscapes. They are continually supporting the issues of this industry be-cause it smells like and looks like economic development. It creates jobs and attrac-

tive landscapes. Food processing, especially for niche markets has appealing ele-ments for economic development, including job creation and retention. Food proc-essing uses the tools of economic development, such as loans and cooperatives. Italso demonstrates the compatibility of agricultural-based industry and other indus-tries.

So why is the production sector of agriculture not on the agenda as solidly as wemight like? Much of it is a view, one that we have created. We have told so manypeople that our work is hard, our industry is dying and that we are about preservingrural landscapes indeed, we are perceived as so defensive that we are expected toleave the table in a huff when any economic development strategy is merely sug-gested. Note that even our terminology is defensive, farm land protection. In order

to change this, agriculture should consider a number of changes to the ways it thinksand speaks about itself. These may include:

Stop saying how big agriculture is and say instead why it is important to the eco-nomic fabric of the state. When claims are made that agriculture is the largest in-dustry, most people smile and move on. Agriculture cannot hang its hat on sizebecause it would be a small hat and because size is not a compelling argument.

Use positive terms and presentation. Wherever possible use less defensive ter-minology and leave out the standard complaints.

Be at the table where economic development is discussed and planned. Look for

the mutual wins. Be open to concepts of intelligent growth management.

Come to the economic table with a business plan not just an idea. If we guess, itis about 3-5% of the businesses in agriculture that have a business plan.

Come as an industry. The citizenry does not care about our infighting over sizeand who is a farmer.

Look at the critical mass that is required to support the industrys infrastructure.How many dairies are needed to support not only the current processing plant butthe multi-million dollar investment required in the future to keep it competitive.

Supply ready to go projects where there is a plan that outlines costs, timelines,what the dollars will be used for, why these results matter and what results are ex-pected.

Stop talking about agricultural decline (loss of farms, loss of profitability) and talkabout the agriculture evolving, changing indeed, thriving.

Refine the open space concept to advance concepts of working landscapes andattractive landscapes

To develop, enhance and retain agriculture one needs to answer the following:

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What percent of the local economy is supported by farm income

What is the current and future market(s) for the goods produced

What is the profit margin

What is the production capacity

What will the economic impact be of losing the industry, locally, regionally, nation-

ally?

Agriculture needs to position its arguments carefully. The arguments are frequentlyambiguous. Agriculture claims a positive benefit via more taxes paid than services re-ceived and then complains about paying such high taxes. Agriculture claims openspace preservation is what people desire when studies show it is attractive land-scapes. Agriculture tells visitors that it is dirty, drudgerous and dangerous businessand then complains about the quality of the labor available to employ. Agriculturewants to claim contributions to economic development and then argues to have ac-cess to foreign labor.

Research that would further the role of agriculture in economic development should

include:

Agribusiness firms who supply farm inputs and provide support for farm and foodproduct handling and marketing need a critical mass of local farm and food pro-duction to maintain a minimum level of local service. Conversely, if local farmsand food firms lose this infrastructure, they become a higher cost producer.

What is the job-making potential of food and agriculture.

Considering both job-making and income enhancement, what power does agri-culture have to improve the economy, locally and regionally.

What market channels exist for agricultural products and which ones can be ex-ploited by farm and food businesses.

What ethnic or other niche market opportunities exist and how can NYS agricultureand food firms substitute local production for imports from other states and re-gions.

High on the agenda of some mainstream economic developers is business reten-tion. A second high priority is work force development. Farmer and food producerswant to stay in business and will always need workers. Seems like a pretty goodmatch.

Size of NYS agriculture - In 1991 total NYS employment was 9.5 million ofwhich 140,000 jobs were in agriculture (production, manufacturing and asso-ciated infrastructure) . In 1991 NYS agriculture contributed $20.7 billion to theeconomy of a total of $724.9 billion from production of goods and services.Services in other sectors, FIRE (finance, insurance and real estate) andmanufacturing of non-food products were $160.5, $158.3 and $143.2 billion,respectively. Construction was more than twice agriculture and food systemscontributions. In 1999, Governor Pataki had a little more than $20 billion in dis-cretionary spending. Agriculture is important but not the largest industry in thestate.