Charles W. Fluharty Vice President, Policy Programs Rural Policy Research Institute The U.S. Rural Development Framework: Comparative Context & Change Dynamics Presented 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 for Committee Review Presented to the Senate Committee on Agriculture, Nutrition and Forestry October 3, 2007

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, Total GDP - 100, , , , , , , , ,000 1,000,000 AgFFH GDP 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 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.

Percent of Farm Household Income from Off-Farm Sources by ERS Farm Typology, 2005 Source: USDA, ARMS Data 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 Assistance 59% International Programs 2% Rural Development 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 Annualized Employment Growth (Percent Change) 1980 to 2005 Top 500 Direct Payment Recipient Counties Remaining Non-Metro Counties Remaining Metro 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

Rural Policy Research Institute 214 Middlebush Hall Columbia, MO (573) Fax: (573) The Rural Policy Research Institute provides objective analysis and facilitates public dialogue concerning the impacts of public policy on rural people and places.