How to cultivate a new rural economy

Friday, December 24, 2004

While much has been made of the societal benefits of a bio-based economy that increases our energy independence, our farmers and rural communities may be the primary benefactors.

In fact, bio-based production has perhaps the greatest potential for revitalizing rural America.

Early in our country's history, agriculture and forestry provided the capital and motivation for expanding our infrastructure and boundaries, the food for a burgeoning population, and much of the power for our growing manufacturing sector.

With the advent of the new bio-based economy, we have the opportunity to turn once again to farms and rural communities for a significant portion of the renewable resources that we need to feed, fuel and run the industries of the nation.

For farm communities, which have been in decline for much of the last 50 years, this "new" approach could supply the spark long needed to revitalize the rural economy and agricultural sector by providing new and diversified cropping and income opportunities.

The primary benefit that the bio-based economy provides farmers and rural communities is a growing market for multiple agricultural crops and farm products.

The main commodity crops of the Midwest landscape, corn and soybeans, have traditionally gone to low-value uses such as animal feed. We typically export up to one-third of these crops as raw commodities, not receiving any value-added processing benefit.

The good news is that these crops are now increasingly utilized for fuel, materials, and other bio-based applications.

The bio-based market has also increased demand for alternative farm crops and products.

This new diversification is critical for farmland that is suffering from decreasing soil quality due to intensive corn/soybean production.

For the bio-based market, farmers are being asked to grow crops suited for high oil production (hazelnuts), perennial grasses that produce high amounts of biomass (switchgrass), and plants from which cosmetics and essential oils may be derived (lavender). Many of these crops provide more ground cover, better root structure, and reduced erosion compared to traditional row crops.

To achieve such multiple results, however, requires more than just a successful bio-based industrial sector.

For farmers, rural citizens and the environment to benefit, supportive state and federal policies must promote the community and environmental aspects as well as economic goals.

Some policies that should be adopted include:

* Bio-based Procurement Standards -- The U.S. government is in the process of implementing a federal bio-based procurement standard, which, if implemented successfully, should help to significantly broaden the bio-based market, and reduce the financial risk of introducing these products. States and local governmental entities should follow the federal government's lead in giving preference to bio-based products.

* Tax and Incentive Programs -- Building the bio-based sector in a sustainable manner will require incentives that are rooted in rural communities.

An industry has a much greater chance of succeeding -- as well as providing sustainable rural economic development -- if policies promote companies that are competitive, flexible, and locally owned.

Programs like the Minnesota ethanol program, which favor smaller, farmer-owned facilities, is one example of how governments can spur development in order to achieve multiple goals.

* More Funding for Biomass Crop Research -- While corn and soybeans have many bio-industrial uses, there are other crops that hold great promise and need to be evaluated. More funding and research is needed to look at alternate crops and to help speed their introduction on the land and use in factories.

* More Stewardship Incentives -- Programs like the Conservation Security Program that provide payments for sound environmental management can help farmers transition to new cropping systems and production methods. Such programs that reward sound management need to be broadened and supported if we want to return diversity to the landscape and farmers' pocketbooks.

America initially prospered as a nation based on its agricultural and natural resource production.

That can happen again. For farmers and rural communities, which have long been depressed, the emerging bio-based sector offers new markets and value-added opportunities that can help revitalize the countryside.

Whether it's bio-based fuels, plastics, building materials or textiles, a new economy can be developed that is based on clean, renewable resources.

-- Jim Kleinschmit is a Program Associate at the Institute for Agriculture and Trade Policy, Minneapolis, Minnesota. The Institute for Agriculture and Trade Policy's, headquartered in Minneapolis, is a policy research center committed to creating environmentally and economically sustainable rural communities and regions through sound agriculture and trade policy.