11a. WHAT ARE THE KEY RURAL POLICY ISSUES? Larry D. Sanders Fall 2005 Dept. of Ag Economics Oklahoma State University

INTRODUCTION Purpose: to become aware of rural policy issues & options Learning Objectives: 1. Become aware of the status of Rural Oklahoma. 2. Become aware of rural policy issues. 3. Understand key rural issues, options & consequences.

TRADITIONAL VIEW OF FARMING & RURAL LIFE WELL-BEING RURAL COMMUNITY WELL-BEING

ALTERNATIVE MODEL OF FARMING & RURAL LIFE WELL-BEING RURAL COMMUNITY WELL-BEING RURAL NONFARM ECONOMY

Rural Development Issues Population--Concentration vs. Dispersion Diseconomies of Distance & Diminished Tax Base Access to Public Services Program Targeting Safety Net? People or Places? Business Subsidies/Incentives? Physical vs. Social Infrastructure

Rural Population Changes: The Nonmetro Turnaround of the 1990s* Most nonmetro counties in 1990s (highest in mountain West, lowest/nonexistent in Great Plains, Corn Belt) increased population growth rate, or increased population, or decreased at a slower rate. Result of more inmigration from urban areas less outmigration from rural areas poor urban economies rural quality of life *C. Beale, ERS, USDA, 2000.

Ag & Mining Counties on the Decline . . . High proportion of older people (deaths > births) Land-based tax system stresses remaining farmers Results in lower tax revenue for public infrastructure (hospitals, schools, roads, utilities) But: Rural/nonmetro systems that are on an up trend “are able to obtain development in services-oriented industries that are propelling the metro economy.” --C. Beale, 2000

Disturbing Trends for Rural/Ag OK* 1974 1998 Total personal income from farming >6% <1% Off-farm income as % of total personal income <94% >99% Per farm net income $5,000 $6,500 Direct govt. payments as % of total cash receipts <1% >7% *Woods, Sanders, et al., research in progress, 2000.

“New Hurdles” for 21st Century Rural Economy* Globalization Need to meet global standards & competition (in face of consumer sovereignty and price matter) Workforce Attracting skilled workers (in face of outmigration, brain drain, aging) Infrastructure Investing in upgraded utilities, including technology access (in face of crumbling infrastructure and weakened tax base) Commoditization Process/transform commodities to value-added products * M. Drabenstott, Center for Study of Rural America, Federal Reserve of Kansas City, 2000

“New Horizons”* Tapping the digital economy “Tele-tech promises a new paradigm--Knowledge industries locate anywhere.” Broadband infrastructure Skilled entrepreneurs Skilled workforce High quality of life Energizing entrepreneurs--need for capital, support Leveraging “new agriculture”--supply chain integrators Selling scenery & space * (M. Drabenstott, 2000)

Rural Policy Options Business/Job Development Education Rural Health Rural Poverty Farm Labor Development Planning/Financing

FAMILY & COMMUNITY POLICY GOAL: Maintaining/improving family/ community stability & growth OPTIONS: 1. Free Market 5. Credit 2. Price Supports/Target Prices/ 6. Technology ARP/Other Farm Programs 7. Infrastructure 3. Employment/training 8. Buffalo Commons Programs 9. Other??? 4. Alternative Economic Support Programs

SUMMARY Farm policy alone will not solve rural problems Migration patterns are cyclical, but trend is for urban-suburban concentration Rural problems are largely economic Diseconomies & market failure require either: Acceptance of some rural community failure, or Some government intervention Sources: text guest instructor Browne, et al. Sacred Cows & Hot Potatoes

Sources C. Beale, “Changes in Population Characteristics: Implications for What’s Ahead for Rural America”, National Public Policy Education Committee Annual Conference Proceedings, Albany, NY, ERS, USDA, 2000. Browne, et al. Sacred Cows & Hot Potatoes M. Drabenstott, “New Hurdles, New Horizons: The Rural Economy in the 21st Century”, Center for Study of Rural America, Federal Reserve of Kansas City, National Public Policy Education Committee Annual Conference Proceedings, Albany, NY, 2000. R. Knutson (see course text). M. Woods, guest lecture, 31 Oct 2002. Woods, Sanders, et al., research in progress, 2000.