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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