Natural Resources

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Natural Resources

• Rural Development in the United States
  Connecting Theory, Practice and Possibilities
• By William A. Galston and Karen J. Baehler
• Chapter 5 pg 83-116
• The following are the main points of natural
  resources role in rural development.

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Natural Resources

• 1. Although more than half of all natural
  resources related employment is located in the
  urban areas, rural America depends heavily on
  income from this sector
•  
• Employment
• 6 Agriculture
• lt2 Forestry and Wood Products
• .6 Energy Industries
• .2 Mining (non-energy)
•  
• Natural Resource County
• 1 in 9 US Counties have gt20 of their annual
  income from natural resource related enterprises
• 25 of all rural counties specialize in
  Agriculture
•  
• 1990 Study on Farming and Food processing states
• Farm production concentrated in 10 states of
  upper Midwest and Great Planes
• Food Processing concentrated in Sunbelt, Great
  Lakes, and Northwest Region
• Only state that is in both categories is
  Wisconsin

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Natural Resources

• 2. Natural Resources is a shrinking sector in the
  US and many other industrialized nations in both
  employment and contribution to GNP. Much of the
  value once added by the primary goods industries
  is now captured in downstream activities such as
  processing and manufacturing, packaging,
  marketing and advertising, and retailing.
•  
• Gross National Product
• 1950 12 raw materials and energy
• 1984 Dropped to 9
• Note The quadrupling of oil and gas prices in
  1973 mask true extent of the structural shift of
  the GNP.  
• Forestry and Wood Products Timeline
• 1979-1985 Pacific Northwest income fell by 25
  and production went down by 13
• 1976-1985 Unemployment in Pacific Northwest was
  above Natl average
• 1985 Produces 90 of 1979 output with 80 of
  1979 employment

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Natural Resources

• Agriculture Timeline
• 1970s Low interest rates lead to high debt for
  farmers
• 1880-1982 Worldwide recession lowered demand
  for everything
• 1987 Bounce back with record high net income
  levels and fewer farms
• 1991 Livestock profits created greater earnings
• Now Relatively stable
•  
• Things that Changed
• Large Farms (sales of 500,000 or more)
• Proportion doubled
• Output rose from 25 to 40
• Small-to-Medium Farms (sales 10,000 to 99,000)
• Dropped from 43 to 37 of all farms
• Very Small Farms (sales less than 10,000)
• Remained Steady
• 1950 1987
• 5.6 million farms 2.1 million farms
• Average size of 213 acres Average size of 462
  acres
• 15 of all Americans Less than 2 of all
  Americans

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Natural Resources

• Energy Timeline
• 1973 Price hike after Arab oil embargo
• 1980s Price drop due to lower demand and
  instable OPEC cartel
• 1976-1985 Unemployment rates higher than Natl
  average
•  
• 1970s Coal benefited from higher energy prices
• 1980s Patters shifted toward electricity (coal
  fired plants)
• 1972-1985 Coal use increased 8
• Since 1985 Demand for coal increased 30
• By 2000 Predict 26 rise in coal output
•  
• Copper (Mining) Timeline
• 1969-1985 Decline in employment by 1.5 per year
  unemployment rates above Natl average
• 1973 Prices went down 40-50
• 1981-1983 42 of work force was laid off
  industry lost over 1 billion
• 1986-1988 Prices doubled

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Natural Resources

• 3. Rural areas find themselves at a disadvantage
  in attracting the downstream activities
  particularly those that require close proximity
  to large markets, access to sophisticated
  communications systems, or pools of specially
  skilled workers.  
• Three main reasons for failure
• It costs the winners of the bidding war who often
  have promised generous tax breaks and public
  expenditures for infrastructure improvements,
  free job training, and other inducements that
  cancel out at least some of the economic benefits
  of the newly created jobs.
• This strategy trades long-term instability for a
  big employment payoff up front, because
  recruitable companies and plants are notoriously
  footloose Whats to keep the new plant in town
  from moving elsewhere in five years when a better
  incentive package comes up?
• There simply are not enough mobile jobs to make
  this approach pay off for more than a handful of
  communities each year.

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Natural Resources

• 4. Still, strategies are available for rural
  communities interested in natural resources based
  development. These include creating entirely new
  agricultural, timber or other commodity based
  products developing new uses for old products
  upgrading production techniques to increase
  efficiency and quality and applying emerging
  technology to production.
• 5. Traditional value added strategies that
  focused on recruiting food processing, timber
  processing and other natural resources related
  firms have brought mostly disappointment. New,
  more refined definitions of the value added
  approach focus on improving the competitive
  position of existing secondary industries through
  technical and financial assistance, access to
  information, worker training and other means.
  Although these activities have not been evaluated
  rigorously, they hold some promise for long-term
  benefits.  

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Natural Resources

•  6. Institutions can play and important roll in
  increasing the value added by existing primary
  and secondary producers in rural areas. Industry
  associations and cooperatives in agriculture or
  timber, for example, can serve as networks for
  exchange of information, provision of services
  such as technical assistance, and better
  coordination among growers, processors, shippers,
  marketers, and distributors.  
• Washington is developing a network of lumber and
  wood products agents who visit small lumber mills
  and other producers to provide needed technical
  assistance and information about national and
  international market trends.
•  
• Oregon is studying the feasibility of setting up
  flexible manufacturing systems in wood processing
  plants.

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Natural Resources

• 7. Traditional natural resources industries have
  a reputation for creating dangerous, low paying
  jobs. Some of the newer, values added,
  competitiveness approaches to agriculture and
  timber development are expected to increase wages
  and skill levels for local workers, even though
  some loss of jobs due to higher productivity.  
•  
• Food production is still one of Americas most
  dangerous industries, with the second highest
  rate of occupational injuries and illnesses per
  full-time worker.
•  
• September 3,1991 fire in a poultry plant in
  Hamlet, North Carolina killed 25 people. It was
  later discovered that the plant had not been
  inspected in 11 years.

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Natural Resources

• 8. Even where communities face the dismal choice
  between low wage jobs on the one hand and high
  unemployment and depopulation on the other,
  efforts can be made to compensate for and
  increase wages and to pressure employers for
  improvements in job quality.
• 9. Natural resources development also involves
  difficult trade-offs between environmental
  conservation and economic growth. Examples of
  compromises struck during the past several years
  in the areas of farming practices and clean air
  illustrate how consensus can be developed and
  implemented at the policy level.  
• Problem Missoula Valley, Montana had a problem
  with air pollution due to residential wood
  burning stoves and several struggling small
  sawmills.
•  
• Solution Create a revolving loan fund to help
  homeowners buy clean burning wood pellet stoves
  and local mills could increase productivity and
  profitability by using sawdust to locally make
  wood pellets for the wood stoves.

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Natural Resources

• 10. Decisions about tensions inherent in some
  natural resources development strategies should
  be passed on public deliberation and choice.