Trampled Dreams: The Neglected Economy of the Rural Great Plains

Small Towns
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"Trampled Dreams: The Neglected Economy of the Rural Great Plains" describes the economic conditions of small agricultural communities as compared to other urban and metropolitan areas in a six-state region comprised of Iowa, Kansas, Minnesota, Nebraska, North Dakota and South Dakota.

Based on the United States Department of Agriculture county typology system, we identified 261 counties (of 503) throughout this region that have an agricultural based economy (20 percent or more of county income from agriculture). Of these agricultural counties, 185 are very rural, with no population center of 2,500 or more. We have designated these counties as “Rural Farm.” Another 76 counties are classified as “Urban Farm,” agricultural based with a population center of between 2,500 and 19,999. Together, these agricultural counties comprise 52 percent of the counties in this six-state region and 14 percent of the region’s population. The other county groups are non-agricultural, non-metropolitan counties, referred to as “Nonfarm” (192 counties) and metropolitan counties (50 counties).

It is important to note that counties classified as agricultural are not populated solely by farmers and ranchers. In fact, less than one-fourth of the jobs in these counties are agricultural in nature (whether proprietorships or wage and salary). Despite the fact that the economies of these counties are largely built upon agriculture, more than three-fourths of the jobs are in the nonfarm sector.

The analyses for this report are based on United States Census data for 1989 and 1995 and annual data from the United States Bureau of Economic Analysis, Regional Economic Information System for the years 1988 to 1997. It is important to note the 1988 to 1997 period generally does not include the 1980s farm crisis years or the current farm crisis.

The following is a summary of the findings of this study on the economic characteristics of agricultural communities in the Great Plains, with special emphasis on rural farm counties.

  • Population Decline. Agricultural counties lost 4 percent of their population from 1988 to 1997 while the region as a whole gained 6 percent in population, primarily due to strong growth in metropolitan counties. Population loss was most acute in rural farm counties, declining by 5 percent during the period.
  • Greater Poverty. The percentage of people living below the poverty level in rural farm counties is more than 50 percent greater than in metropolitan counties (14 percent vs. 9 percent). Child poverty in rural farm counties is 50 percent greater than in metropolitan counties (18 percent vs. 12 percent). Poverty rates in urban farm counties also are greater than in metropolitan counties.
  • Widespread Poverty. Poverty in the agricultural communities of the region is not found in isolated pockets. Rather, the poor represent the tail end of a large group of low-income households. Over one-third of households in agricultural communities had 1989 incomes of less than $15,000: 38 percent in rural farm counties, 31 percent in urban farm counties. About one in five metropolitan households had such low household incomes. At the other end, metropolitan households were twice as likely as farm county households to have 1989 incomes of $50,000 or more.
  • Low Income and Earnings. Income and earnings in rural farm communities are substantially lower than in metropolitan counties. The annual per capita income in rural farm counties is 83 percent of that in metropolitan counties. The gap increases when earned income alone is considered. Annual per capita earned income in rural farm counties is about two-thirds that of metropolitan counties; urban farm counties’ earnings are 80 percent of the metropolitan county average.
  • Reliance on unearned income. Agricultural communities have a significant dependence upon unearned income (e.g., Social Security), with over 40 percent of annual per capita income from unearned sources: 45 percent in rural farm counties, 41 percent in urban farm counties. In general, we found that as county population size increased the dependence on unearned sources of income decreased.
  • Persistent low earnings. Despite volatility in the agricultural sector of the economy, earnings in rural farm counties were persistently low and, in every year from 1988 to 1997, substantially trailed those of other counties. Rural farm counties also did not follow the trend of steady upward earnings found in metropolitan and nonfarm counties. It is important to note that these figures represent a period of time between the farm crisis of the 1980s and the current farm crisis.
  • Entrepreneurial Character. We found agricultural communities to be extraordinarily entrepreneurial in character. In rural farm counties, 43 percent of the jobs are proprietorships as are 33 percent in urban farm counties, but only 20 percent of jobs are proprietorships in metropolitan counties. Of course, that is to be expected in counties where there are still significant numbers of farmers and ranchers. Yet, it is important to note that nonfarm proprietors outnumber farm proprietors in farm counties. Nonfarm proprietorships are where much of the job growth is occurring in agricultural communities. Despite population declines, nonfarm proprietorships grew at nearly the same rate in farm counties as in metropolitan counties.

While this report does not present a comprehensive review of either state or federal economic and rural development policies, it does draw a number of implications and makes recommendations for pubic policy that are derived from work in the small agricultural communities in this region and from the data presented in this report:

  • Develop comprehensive development policy at the state level for rural and agricultural communities. This policy would include a paradigm shift from competitiveness to cooperation, greater regional collaboration, establishment of a specific public philosophy of sustaining these communities, and establishment of greater research capacity to address the needs of these communities.
  • Establish federal and state Family Farm and Ranch Retooling Initiatives to prepare family farmers and ranchers to compete in the 21st century and to increase the farm and ranch share of the food system profit.
  • Increase support, particularly by states, of “New Generation Agriculture.” This model of agriculture is rooted in family-scale farming and ranching, and includes strategies and activities seeking to re-establish the link between farmers and ranchers and consumers by providing food and fiber more directly to consumers through cooperatives, community-based value-added activities, and direct marketing.
  • Cultivate a new generation of farmers and ranchers through federal and state initiatives that provide incentives to people to enter farming and ranching and provide beginning farmers and ranchers access to agricultural assets.
  • Improve targeting of federal agricultural programs to small and moderate farmers and ranchers so that they may remain on the land.
  • Increase support, particularly by states, of programs that provide lending capital and technical assistance to microenterprises and small businesses.
  • Integrate conservation programs and community development so as to provide an opportunity for communities and landowners to realize economic advantage from a resource advantage.
  • Provide incentives to private investment in agricultural communities in order to realize economic advantages from the large amount of passive income there.
  • Provide economic opportunities in the new economy by assuring rural communities access to electronic commerce technology.
  • Strengthen inter-local cooperation programs to improve the development capacity of communities.
  • Base federal rural development policy at the regional rather than national level so as to address the unique issues, challenges and opportunities in the agricultural communities of this six-state region.

This report updates some of the analyses presented in the Center for Rural Affairs’ 1989 report, "A Socio-Economic and Demographic Profile of the Middle Border," and in its 1990 rural economic policy report, "Half a Glass of Water." Those reports reviewed the economic conditions of agricultural communities in this six-state region, and analyzed state economic development policies that impacted them. The following characterization of agricultural communities presented in "Half A Glass of Water" is just as valid today as it was in 1990:

“They (small, agricultural communities) are substantial communities with strong traditions and values, and they suffer from the same development problems. But it is important to recognize that those problems are fundamentally different from the problems of the urban communities and trade centers in these states. Like Appalachia, they constitute a region in distress, but one with unique and important characteristics. They are a resource these states share, but one that presents a special challenge and a special opportunity to the states.”