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Past Blog Items on Economic Development

Saturday, May 26, 2007

Where do gas prices hit hardest? In places where people earn the least

A petroleum-market research service released data this week comparing county-by-county gasoline prices to median household income, revealing where high prices hit hardest. The county with the lowest income, and the highest relative gas prices, is Clay County, Kentucky, reports the Lexington Herald-Leader.

The Oil Price Information Service reported that people in the southeastern Kentucky county "shell out 14.78 percent of their monthly income to buy gasoline costing $3.156 a gallon, according to the index," the Herald-Leader reports. "The county's average monthly income of $1,423.67 is the lowest in the nation, the agency said. Compare that to San Juan County, Wash., where motorists pay the highest cost in the nation -- $3.926 a gallon -- but the bite on their pocketbooks is only 6.78 percent of their monthly income."

California has some of the highest gasoline prices, but also higher income. The other example cited by the Herald-Leader was San Mateo County, south of San Francisco, where residents "use only 3.72 percent of their $6,410.17 monthly income to pay for gas priced at $3.579 a gallon."

The index used by the newspaper is from The Best and Worst County Ranking Report, which OPIS promotes as a guide for fuel marketers, saying, "Find out which areas are ripe for expansion and which are dogs you want to avoid." A report for one state costs $2,495 and additional states are $500. The entire national report, for the 48 contiguous states, is $12,995. More information may be available from OPIS Retail Pricing Manager Glen Falk at 800-275-0950, extension 2538.

Tuesday, May 22, 2007

World's population becomes mainly urban tomorrow, researchers say

Scientists from North Carolina State University and the University of Georgia say they have pinned down a landmark date in human history, the first time the earth's population will be more urban than rural. It will happen tomorrow, they say.

"Working with United Nations estimates that predict the world will be 51.3 percent urban by 2010, the researchers projected the May 23, 2007, transition day based on the average daily rural and urban population increases in 2005-2010. On that day, a predicted global urban population of 3,303,992,253 will exceed that of 3,303,866,404 rural people," reports PhysOrg.com, a scientific news service.

The researchers acknowledge that the date is highly symbolic, and "advise avoiding the urge to interpret this demographic transition to mean that the urban population has greater importance than the rural," the news item says, paraphrasing Dr. Ron Wimberley, distinguished professor of sociology at N.C. State. "Urban and rural populations, they say, rely heavily on each other. Cities refine and process rural goods for urban and rural consumers. But if either cities or rural areas had to sustain themselves without the other, Wimberley says, few would bet on the cities."

PhysOrg.com adds, "Although rural natural and social resources are necessary for urban people and places, the researchers say rural people do not fare well relative to their urban counterparts. Maps of U.S. quality-of-life conditions show that poverty and low education attainment are concentrated in rural areas – especially the rural South – where the nation’s food, water and forest resources exist. Over much of the globe, rural poverty is much worse than in the United States." To read the whole story, click here.

Rural mail carriers being squeezed by record-high gasoline prices

Record-high gas prices are a big problem for mail carriers on rural routes, who have to provide their own vehicles and fuel, reports Steve Berg of Tulsa's KOTV. Amid sound bites from a carrier, Berg reports, "He says they get about 49 cents per mile from the Postal Service. But he says adjustments are only made every 3 months, and a lot can happen to prices during that time. . . . He says there's a shortage of carriers right now, and he believes it could have something to do with gas prices." (Read more)

Sunday, May 20, 2007

Phone companies may bring rural telecom redlining by selling land lines

Maine, Vermont and New Hampshire could be victims of “rural telecom redlining,” a growing national trend, if Verizon is able to sell $2.7 billion worth of local-access lines in the region, The Nation reports.

“Labor and consumer activists, joined by some public officials, are organizing against this move, in a high-stakes regulatory and political battle with consequences for the future of telecommunications in all of rural America,” Steve Early writes. “Everywhere it can, Verizon is trying to abandon ‘low value’ landline customers and is focusing instead on building its wireless customer base and investing billions of dollars in a new ‘FIOS’ service. FIOS provides voice, video and high-speed broadband connections on a single fiber-optic cable network, now being extended directly to homes and businesses in big cities and affluent suburbs.”

An economist for the Communications Workers of America has told the Federal Communications Commission that FairPoint Communications -- “a small, largely nonunion North Carolina firm,” Early notes -- is so heavy with debt that it would not be able to extend high-speed Internet service as quickly as Verizon could. Early explains the deal has tax advanatges for Verizon. (Read more)

“Only 60 percent of Verizon's 1.5 million customers in Vermont, New Hampshire and Maine have access to broadband Internet service -- a level of service that the telecommunications industry newsletter, DSL Prime, recently called one of the lowest broadband access rates in the developed world,” The Brattleboro Reformer noted in an editorial. “FairPoint has committed to beating Verizon's promise to extend DSL (basic high-speed Internet technology) to at least 80 percent of Vermont by 2010. With the recent passage of a bill in the Vermont Legislature requiring 100 percent access by 2010, can FairPoint deliver? Experts in the telecom field are saying that DSL -- which uses copper phone line technology that's been around for more than a century -- will be obsolete within a decade.” (Read more)

Monday, May 14, 2007

Gas prices can have an effect well beyond the wallet, researcher says

The surge in gasoline prices can have a disproportionate effect on rural areas, especially those who commute from them to jobs in metro areas. It's a story for rural news media, and a study by a Florida State University professor illustrates some points of examination you might not have considered.

Wayne Hochwarter, a professor of management in FSU’s College of Business, found that "60 percent of employees confirmed that the price of gas has significantly reduced the amount of money they have to spend on other things, while 45 percent reported the need to pay off debts more slowly or not at all . . . and 26 percent indicated that the cost of gas has necessitated going without basics such as heat or air conditioning, or even cutting back on food purchases," reports Newswise, a research-reporting service.

"Hochwarter found that those most affected by gas prices were prone to experience stress both on and off the job. Specifically, negative views of work and the company, sluggishness, antagonistic behavior, feeling overwhelmed and sadness were significantly higher for those indicating gas-price-related effects on spending behavior. . . . The research also indicated much higher levels of family conflict for those required to modify spending habits. . . . Hochwarter’s research is being prepared for presentation and publication."

Tuesday, Jan. 30, 2007

Ethanol also might disappoint as a cure-all for Farm Belt economies

Ethanol plants may have less direct benefit to rural communities than they once did. The plants have been seen as a way to keep rural profits local, but as the size of the plants increase, fewer are farmer-owned. Between 1995 and 2005, 70 percent of ethanol plants being built belonged to farmers; in 2006, only 10 percent were farmer-owned, report Nancy Novack and Jason Henderson of the Federal Reserve Bank of Kansas City. in The Main Street Economist. Growers of other crops have been tempted to switch to corn, likely to cause over-production in the future. The cost of animal feed has risen and livestock industries could be drawn out of other regions to the Corn Belt for easy access to the dried distillers grain s that are by-products of ethanol and make excellent livestock feed.

“Ethanol production may offer some bright opportunities for rural America,” write Novack and Henderson. “In reality, though, ethanol profits in the future will be highly variable, given the volatility of prices for corn, ethanol and other energy products. At the same time, its opportunities could quickly fade with changing markets, environmental policies, and technological advances.” (Read more)

Friday, May 11, 2007

A graying rural Virginia seeks to attract a younger workforce

As the population of rural America ages nationwide, the University of Virginia is looking at how to attract young people to come back to the rural areas of the state. Young people tend to move out of rural areas for education and more job opportunities, while older people stay in small towns or retirees move there for a more relaxed pace of life, reports Faiza Elmasry of Voice of America.

However, a younger working population is necessary to support these older people, reports Elmasry. “It is crucial because, as we know, older populations need more health care. They need more social services and all those are paid by the taxpayer's dollar. And if you have a small number of workforce, the younger ones are moving out, your resources are limited but your demands are high,” Qian Cai, a population studies expert at U.Va. told Voice of America.

Changing demographics are changing the nature of the economies of these rural areas, reports Elmasry. Affluent retirees are creating more demand for shopping, home-building, and other services in rural Virginia. Local communities are trying to attract young entrepreneurs with other innovative ideas such and wineries and breweries. The Internet may also help young people to work in small towns, allowing them to conduct business with other cities and the rest of the world. (Read more)

Friday, May 4, 2007

Crop insurance: Taxpayers take most risks, insurers make big profits

"Private companies are taking advantage of a poorly designed crop insurance program for farmers to reap 'excessive' profits while taxpayers absorb most of the costs and risks, investigators told a House committee yesterday. Republican and Democratic members of the House Oversight and Government Reform Committee reacted with calls for major changes in the insurance program," reports The Washington Post.

Reporters Dan Morgan and Gilbert Gaul were following up on some of their own work. They reported in October that the 16 government-approved firms writing crop insurance made $3.1 billion in profits in the past eight years, while the government lost $1.5 billion. The Government Accountability Office found that the companies "had rates of return averaging 30 percent in 2005 and 24 percent in 2006," compared with a 'benchmark' of 6.4 percent for property and casualty insurers, Gaul and Morgan report.

Here's a local angle for you: The Agriculture Department "paid the companies $6.6 billion to cover administrative costs in the past decade. Much of that has been passed on to local crop insurance agents -- some of them farmers -- who constitute an influential lobby that has fought changes in the program."

USDA sets premiums to insure crops against weather losses and falling prices, and "charges farmers only about a third of what it costs to pay the claims, and it covers most costs on policies for farms with the worst weather risk," the Post notes. "Congress expanded crop insurance subsidies in 2000, promising that the subsidies would end other 'emergency' farm payments. But last week Congress approved $3.4 billion in drought and weather relief, ignoring a White House veto threat." (Read more)

Thursday, April 12, 2007

Rural institutions should cooperate regionally for economic success

A new report outlines recommendations of what rural areas must do to survive in today’s global economy. “Unlocking Rural Competitiveness: The Role of Regional Clusters,” a federally funded study conducted by Purdue University, Indiana University and the Strategic Development Group Inc., says that rural decision makers should take advantage of nearby urban areas, cooperate within regions to group local industries into clusters and realize that more than agriculture drives their economies.

Rural business succeeds through creating industry clusters, “broad networks of companies, suppliers, service firms, academic institutions, and organizations in related industries that, together, bring new products or services to market,” according to the report. Through this system, educational institutions create knowledge, businesses use that knowledge to create services and products, suppliers provide necessary equipment to create them and marketing distribution brings the product to the consumer. The authors advise that contrary to how some think about rural areas, few are dependent on agriculture. Of 2,000 non-metropolitan counties, only 420 get 15 percent or more of their earnings or employment from farming.

“The researchers created a database, analytical tools and processes to help rural regions throughout the United States assess their economic competitiveness and create developmental strategies. The study also created the Index of Relative Rurality, a numerical value calculated for each of the nation's 3,108 counties. This value shows where each county falls on a rural-urban continuum and helps to identify locations where rural and metro areas connect,” said a press release. For the 227-page report, click here.

Monday, April 9, 2007

Biofuel boom looks likely to raise food prices, and not just corn and meat

The ethanol boom has driven up corn prices, raising the prospect of higher costs for meat and other foods for which corn is a feedstock, but less attention has been focused on a spike in prices for soybean oil, a key ingredient in many foods, including replacements for trans fat, and the source of a major alternative to diesel fuel. Also, "Economists say the diversion of acreage from soybeans to corn is shorting supply and raising prices," reports Alicia Karapetian of MeatingPlace.com, a news service for the red-meat industry.

"The price of soybean oil has shot up more than 50 percent since last fall. That, coupled with a dramatic doubling of corn prices during the same period, has left companies throughout the food chain feeling the pinch," Karapetian writes. "Prices for soybeans, wheat, cotton and rice will go up as we plant more and more acres out of those crops and into corn," Ron Plain, an agricultural-economics professor at the University of Missouri, told Delta Farm Press.

"Soybean oil is used in many cooking oils, including trans-fat-free oils now being used by some of the nation's largest restaurant chains, such as Louisville, Ky.-based KFC," Karapetian writes. Bob Evans Farms Restaurants Purchasing and Commodities Director Sam Cox told Karapetian that the company, which uses soybean oil for cooking and salad dressings, will have to charge customers more:"We won't be able to pass 100 percent of the price on, but we will have to pass some on soon." (Read more)

Friday, April 6, 2007

Most USDA Rural Development money goes to areas not really rural

More than half the $70 billion that the U.S. Department of Agriculture's "sprawling but little-known Rural Development program" has loaned or granted since 2001 "has gone to metropolitan regions or communities within easy commuting distance of a midsize city, including beach resorts and suburban developments," Gilbert Gaul and Sarah Cohen of The Washington Post report today.

Their object examples are the coastal resort of Provincetown and the island resorts of Martha's Vineyard and Nantucket, in Massachusetts -- all of which meet the department's definition of "rural." Provincetown (in Chamber of Commerce photo above) got grants and loans to refurbish a city dock and a historic home, and add space to a gallery. A business in the Vineyard got a loan to refinance and expand, and families in Nantucket who are priced out of the rental market by the island's strong tourist trade get housing subsidies.

Such aid was "originally intended for farmland and backwoods areas that were isolated and poor, struggling to keep their heads above water," the Post notes. Its investigation found that "More than three times as much money went to metropolitan areas with populations of 50,000 or more ($30.3 billion) as to poor or shrinking rural counties ($8.6 billion). Recreational or retirement communities alone got $8.8 billion. . . . An Internet provider in Houston got $23 million in loans to wire affluent subdivisions, including one that boasts million-dollar houses and an equestrian center."

Rural Development has more than 40 programs, with varying rules. "In some programs, awards are limited to towns with populations of less than 2,500. In others, it's 5,000, 10,000, 20,000 or 50,000. In still other cases, the USDA bases its decisions on individual streets or blocks, using census data." J. Gregory Greco, a business specialist in the Rural Development office in Harrisburg, Pa., told the Post, "Nobody understands it. I don't understand it." It's a long story, but worth reading. Click here. For a USDA release on Agriculture Secretary Mike Johanns discussing proposed changes in the program, in the Farm Bill, click here.

Saturday, March 10, 2007

Dozens of coal-fired power plants being built, scores more on the way

More than a dozen coal-fired generating plants are under construction, mainly in the Midwest, "and about 40 others are likely to start up within five years -- the biggest wave of coal plant construction since the 1970s," reports Steven Mufson of The Washington Post.

"The coal rush in America's heartland is on a collision course with Congress. While lawmakers are drawing up ways to cap and reduce emissions of greenhouse gases, the Energy Department says as many as 150 new coal-fired plants could be built by 2030, adding volumes to the nation's emissions of carbon dioxide, the most prevalent of half a dozen greenhouse gases scientists blame for global warming. . . . Utility executives say that the coal expansion is needed to meet rising electricity demand as the U.S. population and economy grow. Coal-fired plants provide half the electricity supply in the country."

Environmentalists worry that large coal plants, "built to last 40 to 50 years, will saddle the country with high greenhouse-gas emissions for decades. Peabody Energy, for instance, has proposed two giant 1,500 megawatt plants, one for western Kentucky and one for southern Illinois. . . . Environmentalists prefer integrated gasification combined cycle (IGCC) plants that they say will make it easier later to capture carbon dioxide and store it underground. Only a handful of those are being planned. But the IGCC plants can add as much as $200 million to construction costs; only two are operating today." (Read more)

TXU Corp. said yesterday it would use IGCC at two new Texas plants. The decision by the company, which shelved eight of 11 proposed plants in a buyout deal, "may signal a shift in the thinking of utilities that depend on coal to generate energy to try to develop a challenging technology that is accompanied by high construction costs," write Clifford Krauss and Matthew Wald of The New York Times. (Read more)

Tobacco migrating off mountains in N.C.; a local story in several states

The end of the federal tobacco program is concentrating production among large-scale growers and reducing the amount grown in hilly areas where large tracts are more difficult to assemble. That trend is illustrated by figures on production of burley tobacco in North Carolina and its Watauga County, reported by Scott Nicholson of The Watauga Democrat in Boone, N.C. This is a story that can be done by any news outlet in a tobacco-growing county, with data from the local office of the federal Farm Service Agency.

“Local tobacco production continued to decline even though last year the state had a historic high production of burley tobacco, the kind most often grown in the High Country,” Nicholson reports. “Statewide burley tobacco production totaled 6.46 million pounds last year, a 31 percent increase. Yield per acre averaged 50 pounds more than the 2005 crop, suggesting large-scale farmers were achieving more efficiency.” Those boys down East ... picked up the slack,” FSA man Bud Smith told Nicholson. “Burley just migrated off the mountain.” Eastern North Carolina production has been almost entirely flue-cured, but the end of federal quotas has allowed growers in the region to adopt burley, which is in higher demand by cigarette companies. Those growers were already large-scale, making it relatively easy for them “to find barns and other covered, dry buildings” for burley, which is air-cured, Nicholson explains, quoting Smith. “They’re not growing two or four or six acres like we did up here. They have 50 or 80 or 100 acres.” (Read more)

Thursday, March 8, 2007

Energy Department jump-starts six cellulosic ethanol plants with funds

Six biorefinery projects will split Department of Energy grants of up to $385 million as part of an effort to jump-start commercially viable ethanol made from cellulose, reports Agri-Pulse. The Rural Blog previously noted funding for Broin Companies of Sioux Falls, S.D., which will expand a plant in Emmetsburg, Iowa, to make ethanol from corn fiber, cobs and stalks. Here are the other grantees and their feedstocks:

Abengoa Bioenergy Biomass of Kansas, LLC of Chesterfield, Mo.- proposed plant in Kansas. Feedstock: corn stover, wheat straw, milo stubble, and switchgrass.

ALICO, Inc. of LaBelle, Fla.- proposed plant in LaBelle, Fla. Feedstock: yard, wood, and vegetative wastes and eventually energycane.

BlueFire Ethanol, Inc. of Irvine, Cal.- proposed plant in Southern California. Feedstock: sorted green waste and wood waste from landfills.

Iogen Biorefinery Partners, LLC of Arlington, Va.- proposed plant in Shelley, Ida. Feedstock: wheat straw, barley straw, corn stover, switchgrass, and rice straw.

Range Fuels (formerly Kergy Inc.) of Broomfield, Colo.- proposed plant in Soperton, Ga. Feedstock: wood residues and wood based energy crops.

UPDATE, March 30: Broin has changed its name to Poet, reports the Argus Leader of Sioux Falls.

Wednesday, March 7, 2007

FCC orders rural phone companies to connect calls using Internet

The Federal Communications Commission has ruled that rural telephone companies must connect calls for customers who use voice-over-Internet protocol (VoIP). The order was a victory for cable-TV operators who depend on VoIP for revenue, reportsBroadcast Engineering magazine.

"The decision breaks down of one of the last barriers preventing VoIP to fully compete with traditional phone carriers," letting them offer national phone service, BE reports." The commission ordered rural service providers in Nebraska and South Carolina to connect telephone calls made by customers of Time Warner's VoIP service.

State regulators had argued that because the FCC had not classified VoIP providers as telecom services, the local telephone companies did not have to honor their phone calls."

The National Telephone Cooperative Association, a lobby for rural phone companies, called the order "piecemeal regulation that gives VoIP providers a distinct competitive advantage by providing them with local-number portablity without requiring them to pay for the costs they impose on telecom networks," creating "an inequitable playing field that favors Time Warner and the cable industry." (Read more)

Monday, March 5, 2007

Railroad seeks big expansion to tap into Wyoming coal country

Dakota, Minnesota & Eastern Railroad wants to create the biggest U.S. rail expansion in decades in order to create easy access to Wyoming's Powder River Basin. The company proved unsuccessful in getting a $2.3 billion loan from the Federal Railroad Administration but is seeking out private investors. If it manages to expand, it would benefit the utilities of that region, creating another coal carrier for power plants, reports The Associated Press.

“It's been almost 10 years since DM&E, a regional carrier with an east-west line across Minnesota and South Dakota, said it wanted to add 260 miles of new track to extend its line into Wyoming coal country,” reports AP. DM&E had hoped to be hauling 100 tons of coal a year by now but have encountered difficulties in environmental and regulatory approvals.

“Much of the attention on DM&E has been focused on environmental issues and whether its tracks through Rochester are dangerously close to the Mayo Clinic,” reports AP. “But its financial impact would be major, too. Utilities are major buyers of coal from Wyoming's Powder River Basin, but two-thirds of coal's cost is transportation. And that is controlled by the Burlington Northern and Union Pacific duopoly on coal hauling there.” (Read more)

Thursday, March 1, 2007

$365 million in grants given for cellulosic ethanol; first commercial plant?

Six companies have received a total of $365 million from the U.S. Department of Energy to develop commercially viable distilleries that make ethanol from cellulose rather than corn. The process of extracting ethanol from fibrous plant matter is still difficult and expensive, but if perfected it would open vast opportunities for fuel sources, reports Ben Shouse of the Argus Leader in Sioux Falls, S.D.

Broin Companies of Sioux Falls will get $80 million for what it says will be the nation's first commercially viable plant to make cellulosic ethanol. “Broin's share will go toward a $200 million expansion of its existing corn-ethanol facility in Emmetsburg, Iowa,” writes Shouse. “It could start accepting stalks, leaves and cobs in addition to grain by 2009. And it could spawn similar plants as early as 2011, said Chief Executive Officer Jeff Broin.” The facility will still use corn but will utilize “stover and portions of the kernel that are currently wasted as feedstocks for the cellulosic process,” writes Peter Shinn of Brownfield Network.

Unlike corn, cellulose resists breakdown and has to be freed from a complex of other molecules. Hydrolysis, the process of breaking down cellulose into sugars with enzymes, has not yet been perfected and researchers are still working on the microorganisms used to ferment the sugar. The technology to harvest the materials is also under development. If the technology expands it could create revenue for farmers growing corn, who could then sell the waste parts of their corn in addition to the kernels, switchgrass or nearly any crop, Shouse reports.

Wednesday, Feb. 28, 2007

Pay and incentives increase as miners worldwide come into demand

“From the pits of Australia to the coal fields of Wyoming, mining companies . . . are hunting for people to address a dire shortage of workers,” reports The New York Times. “A decade ago, with prices slumping, the sense of mining as a sunset industry left it with a work force with a lot of gray hair under its hardhats. But these days the industry is struggling to meet rapidly growing global demand for iron, copper and other essential commodities.”

“Skills shortages have become a common feature of the global economy, particularly in aging countries,” write Wayne Arnold and Heather Timmons. “Nurses are scarce; engineers, too. What makes the mining industry’s shortages so severe is that the commodities boom caught it more or less by surprise… As commodity prices languished, students pursued better-paying careers elsewhere. Mining schools shrank. The average age of a production worker in mining crept up to 50.” However, growing countries with booming populations such as China and India have driven up demand for ore and other commodities.

“Mining recruiters say industry salaries have climbed 20 percent in the last two years,” the Times says. “Yet mines are so short of workers that projects are being delayed as production costs rise.” Need for skilled workers to run mining equipment has exacerbated the problem. Mining companies are offering scholarships to recruit employees. More women have entered mining, attracted by bigger pay, and guest workers are brought in on temporary visas. In Australia, miners who might be reluctant to live on remote sites in harsh weather work alternating weeks and are flown back and forth to their families at home. (Read more)

Saturday, Feb. 24, 2007

Farm wives supplement family income; 80 percent comes from off farm

Throughout the Midwest, women are supplementing their families’ agricultural incomes by taking off-farm jobs. “In an industry where income relies on unpredictable weather, harvest seasons and competing larger farms, a second paycheck can mean the difference between thriving and just surviving,” reports Reuters. For farm families, 80 percent of their income comes from off-farm employment, estimates the American Farm Bureau Federation, and women work off the farm more often than men, writes Dianna Heitz. According to the U.S. Department of Agriculture's 2005 Family Farm Report, their extra income averages about $30,000 per year.

Judith Wittner, a sociology professor at Loyola University Chicago, said competition from commercial farming has driven members farming families to enter the workforce. “Family farms have all but disappeared in this country, and farmers have been reduced to working for pay on their former land or working in available wage labor jobs in the area,” Wittner told Reuters. “This is especially true of women, who take work in factories and offices to make ends meet when farm incomes decline or disappear.”

Friday, Feb. 16, 2007

Rural cooperatives partner with for-profit utilities; takeover targets?

Rural electric cooperatives are not-for-profit, but may be attractive targets for those that are. “Some rural cooperatives are sitting in prime locations within a stone's throw from major metropolitan areas and within the grasp of the local investor-owned utility (IOU). And while there may be a strong argument to be made that a not-for-profit might become more efficient if it were owned by shareholders, the odds of that happening any time soon are quite small. While rural electrics are well equipped to fend off takeovers, many of them are entering into partnerships with the IOUs to procure long-term power contracts,” writes Ken Silverstein of EnergyBiz Insider.

The National Rural Utilities Cooperative Finance Corp. estimates that over the next five years there will be about $1.5 billion to $2 billion per year spent by the generation and transmission cooperatives to build new power plants,” writes Silverstein. “Other rural co-ops will form strategic alliances with wholesale power suppliers and specifically IOUs.… Critics of rural electric cooperatives say that they are inherently inefficient and that their business plans are outdated. IOUs, by comparison, don't just have greater economies of scale but they are also positioned to participate in debt and equity markets to gain the much needed capital for future expansion. The biggest cooperatives, they add, are on the periphery of major cities where private utilities could do a better job of serving customers and modernizing their infrastructure.”

Members of at least one rural electric co-op, in Louisiana, sold out to an IOU after the co-op performed poorly during and after a disaster. “The idea may sound good,” Tom Siegrist, a vice president with the consulting group EnerVision, told EnergyBiz Insider. “But rural electric cooperatives are not low-hanging fruit, and pursuing hostile takeovers is not a successful strategy. Co-ops are not-for-profit. They make a small margin and return that to the customers. Customer service levels are also much higher and much stronger. The trend now is for the two to partner.” (Read more)

Thursday, Feb. 15, 2007

Organic farming is small, but is growing fast, including livestock

“It’s still a small proportion of farm land, but organic farming continues to be one of the fastest growing segments of U.S. agriculture,” writes Sara Wyant of Agri-Pulse. “The U.S. had under a million acres of certified organic farmland when Congress passed the Organic Foods Production Act of 1990. By the time USDA implemented national organic standards in 2002, certified organic farmland had doubled, and doubled again between 2002 and 2005, according to a recent report by USDA’s Economic Research Service. For the first time, all 50 states in the U.S. had some certified organic farmland in 2005. California ranked first in terms of acreage, with over 220,000 acres and North Dakota came in second. U.S. producers dedicated over 4 million acres of farmland -- 2.3 million acres of cropland and 1.7 million acres of rangeland and pasture -- to organic production systems in 2005.”

“Many U.S. producers are embracing organic farming in order to lower input costs, conserve resources, capture high-value markets, and boost farm income, according to ERS,” writes Wyant. “However, the overall adoption level is still low — only about 0.5 percent of all U.S. cropland and 0.5 percent of all U.S. pasture was certified organic in 2005. ... Only a small percentage of the top U.S. field crops -- corn (0.2 percent), soybeans (0.2 percent), and wheat (0.5 percent) -- were grown under certified organic farming systems. On the other hand, organic carrots (6 percent of U.S. carrot acreage), organic lettuce (4 percent), organic apples (3 percent) and other fruit and vegetable crops were more commonly organic grown in 2005. Organic livestock was beginning to catch up with produce in 2005, says ERS, with 1 percent of U.S. dairy cows and 0.6 percent of the layer hens managed under certified organic systems.”

Tuesday, Feb. 13, 2007

A weak dollar can be a strong advantage for U.S. agricultural exports

American farm exports may benefit from a weak dollar and the prosperity of other nations, giving produce grown stateside a competitive advantage when pitted against those in other countries. “Between February 2002 and May 2006, the U.S. dollar depreciated almost 18 percent against foreign currencies. When the dollar appreciates against foreign currencies, U.S. exports cost more in foreign local currencies and thus demand for them declines. Conversely, a depreciation of the dollar increases U.S. agricultural competitiveness by lowering prices of U.S. products in foreign markets,” write Mathew Shane and William Liefert of Amber Waves, a publication of the Agriculture Department's Economic Research Service.

“The decline in the U.S. exchange rate since 2000 has helped boost U.S. agricultural exports to an all-time high of close to $70 billion per year,” write Shane and Liefert. “However, almost all of the depreciation is accounted for by appreciation of currencies in developed countries such as the European Union (EU), Australia, Canada, and South Korea.” U.S. agriculture exports lose out in the many developing countries that purposefully depreciate their currencies against the dollar to keep a trade advantage. “Developing countries’ commodities and goods have thus become particularly competitive in the U.S. market, while U.S. agricultural exports have become more difficult to market in those countries. As a result, these countries (mostly in Asia) have generated substantial trade surpluses mirrored by trade deficits for the United States.”

“Yet, other longer term factors can help boost U.S. agricultural exports,” write Shane and Liefert. “High income growth in developing countries is the most important. However, pursuing and maintaining high rates of productivity growth in U.S. agriculture is equally important. These two factors combine to create a strong potential for the future growth in U.S. agricultural exports regardless of how the exchange rate fluctuates in the short to medium term.” (Read more)

Saturday, Feb. 10, 2007

Railroads stressed by boom in ethanol, which can't go into pipelines

“Like the corn it's made from, ethanol is largely a product of the small-town Midwest, distilled in places like Nevada, Iowa, and shipped to market by train. Now, as ethanol producers ramp up production, they are straining railroads already taxed by burgeoning shipments of coal, containers and grain. And they worry that the transportation crunch could make it difficult for ethanol, despite its surge of support in Washington, to compete with energy rivals,” writes Ilan Brat of The Wall Street Journal.

“Unlike gasoline, natural gas and oil, ethanol attracts water and other chemicals, so it can't be sent through the long-established pipelines that move those fuels. That means the ethanol industry has been forced into a marriage with the already groaning railroads, Railroad executives say ethanol, though still a small part of their total freight traffic, promises to be a lucrative growth opportunity,” writes Brat. Ethanol shipments have almost tripled since 2001 and are projected to increase another third this year, says the Association of American Railroads. “Some railroads question the durability of the ethanol boom,” Brat notes. “Oil prices could drop, corn supplies could dwindle and alternatives could crop up.”

Many ethanol producers are struggling to upgrade their rail facilities, but “Many of the producing plants aren't large enough or lack the track and facilities to fill unit trains themselves,” writes Brat. “That is forcing the producers to shell out millions on tracks and equipment they hadn't planned to spend. Lately, large railroads have used their newfound market power to raise prices on many commodities they carry. For producers it comes at a time when high corn prices are squeezing their margins.”

Monday, Jan. 29, 2007

Ethnic veggies may open a new market with higher profits for farmers

“The explosion of immigrant populations is fueling the growth of ethnic vegetables like cilantro and bok choy, giving farmers new, and potentially more profitable, revenue streams to add to their American staples of corn, sweet peppers and tomatoes. They'll have less competition for this narrow niche, crops that an ethnic population would have consumed in their home country, now growing in small quantities in the U.S,” writes Janet Frankston Lorin of The Associated Press.

“Today's niche market is the future mainstream market,” Bill Sciarappa, a Rutgers University agricultural extension agent, part of a team helping farmers produce and market ethnic produce, told AP. “That's what gave me the idea 20 years ago when I saw farmers switch over to cilantro from parsley. It was the same growth pattern, same planting culture, same harvest procedures, but you got twice the money then. We see the cycle repeated over and over again,” he said, adding that ethnic veggies can be more profitable than regular ones, depending on market conditions. For example, eggplant averages $10 a box, but ethnic versions can go for $30.

“Farmers are getting help from agricultural experts at Rutgers, using a market-driven approach determined by census data, economic forecasting and bilingual surveys of consumers,” writes Lorin. “The plan is to create a blueprint that would develop a market along the East Coast -- including Connecticut, New Jersey, Florida and Georgia -- to link growers with ethnic markets. Farmers would produce potentially more profitable vegetables like bok choy, tomatillos and bitter gourd that can be successfully grown in their own local markets.”

Friday, Jan. 26, 2007

Cheap land, lack of zoning can attract unusual residents to rural towns

In Kansas and elsewhere, rural properties bought up by city dwellers and urban interests may create some unusual and unexpected neighbors for small-town residents. The downtown of Rexford, Kan., population 157, was purchased and turned into a religious conference center. St John, Kan., pop. 1,318, became the site of a national bounty hunting school. “That's the gamble small towns make when they offer what they have in abundance: cheap, attractive real estate. What they can get in return is city dwellers trying to escape crowds, crime and high prices -- city dwellers with different ideas and a different outlook on life,” writes Beccy Tanner of the Wichita Eagle.

“If you don't think real estate in small towns is a desirable investment, visit eBay,” writes Tanner. “These buildings pop up when you search for properties in Kansas: • A wooded homesite in Neosho Rapids, pop. 274, with a high bid of $152. • A restaurant that seats 60 in downtown LaCrosse, pop. 1,376, with a high bid of $30,000. • A 23,500-square-foot brick school building and 3.85 acres of land in Sylvan Grove, pop. 324, advertised for $188,000.”

“Often rural communities can't afford economic development directors," Tanner writes. "They may have little or no zoning regulation, and they usually have dwindling populations. That makes them extremely vulnerable, said Caleb Asher, director of communications and marketing for the Kansas Department of Commerce.” Kirk Schweitzer, director of the chamber of commerce of Hill City, Kan., pop. 1,604, told Tanner his job sometimes involves rejecting potential business. “Out here, even if I do an industrial park and give away the land for free, there is still no reason for them to be here when they can go down the road and for $500 an acre buy farmland with no zoning and put up an oil-field pipe business,” he told the Eagle.

Thursday, Jan. 25, 2007

Small, very light jets may improve dwindling air service in rural areas

The solution to sparse rural airline service may be a new model of tiny, affordable jet planes. The U.S. Department of Transportation is examining the use of “very light jets” which may help to counter the cut-backs of large carriers in smaller airports, reports Doug Cameron of Financial Times.

Andrew Steinberg, assistant secretary for aviation and transportation affairs, said that “reduced rural services had been one of the largest negative consequences of industry deregulation, with the DOT forced to boost subsidies and examine alternatives to operation by the large network carriers,” writes Cameron. Concerns arose after reviewing US Airways’ hostile takeover bid for Delta. Wednesday, senators discussed the “potential impact on air fares and consumer choice, and expressed widespread concern that deals between the largest carriers would lead to further service cuts.”

“New Mexico-based Eclipse Aviation, whose backers include Microsoft founder Bill Gates, has already secured more than 2,500 orders for its six-seat Eclipse 500 very light jet,” writes Cameron. “It delivered its first aircraft earlier this month, and a number of air-taxi and charter operators have placed orders for the Eclipse and rival VLJs targeted mainly at business flyers… The Eclipse 500 is the first of an array of very light jets, which utilize new engines, avionics and lean manufacturing techniques to produce small jets at a fraction of the cost of existing executive aircraft. Proponents of the emerging VLJ sector believe the low entry and operating costs will create a vast new market of personal and business users currently deterred by high prices.”

Thursday, Jan. 18, 2007

Study says rural areas would benefit from minimum-wage increase

As the Senate prepares to pass the first increase in the minimum wage in a decade, the Carsey Institute at the University of New Hampshire says the raise "would benefit rural, low-wage workers every bit as much, if not more, than workers in big cities," contrary to some policymakers' beliefs.

The House voted by a wide margin Jan. 11 to raise the minimum wage from $5.15 an hour to $7.25. The debate in the House "showed U.S. policy-makers tend to think of the minimum wage as applying mainly to unskilled young people who work in the fast-food industry in impoverished urban neighborhoods," but the Carsey Institute will release a study Friday morning that it says shows otherwise, it said in a news release.

Institute Director Mil Duncan and Senior Fellow William O'Hare will discuss the study in a teleconference Friday from 10:30 to 11 a.m. Eastern time. The number is 1-866-704-7500 and the passcode is 800585.

"Nearly 2 million low-wage workers in rural America would benefit from an increase in the minimum wage and more than half of them have children under age 18 in the household," O'Hare said in a the release. Duncan said, "Members of Congress need to understand the important impact an increase in the minimum wage will have on all of their constituents, including those in rural areas. The minimum wage is not just a big city issue. A higher percentage of rural workers will benefit from the proposed $7.25 minimum wage."

Monday, Jan. 15, 2007

World nears a milestone: Next year, most humans will live in cities

"Fifty years ago, most people lived in rural areas. But the world has changed. By some point next year, more than half of all people will live in cities, for the first time in history. So says the most recent estimate from the United Nations." So reports the Voice of America.

"City life is not always a bad thing, but many experts worry about this process of urbanization. A new report from the Worldwatch Institute says it is having a huge effect on human health and the quality of the environment. The environmental research group in Washington released its 2007 State of the World report last week." (Read more)

Thursday, Jan. 4, 2007

New study details promise and limits of biofuels for the rural economy

Biofuels, mainly ethanol distilled from corn and diesel fuel from soybean oil, have been primarily a Midwestern phenomenon. In the near future, more biofuels are expected to some from a wide range of other plant material and organic feedstocks, expanding the impact of biofuels nationwide, says a new report by Jim Kleinschmit for the Carsey Institute at the University of New Hampshire.

"Politicians and proponents tout the potential for biofuels to stimulate rural job creation and economic growth and increase energy independence as key reasons for providing public support for the industry," Kleinschmit writes. "But in the rush to grow the sector, the benefits to rural communities may be muted or lost if federal, state and local policies and programs that help determine the sector’s ownership, scale and structure do not sufficiently support rural development priorities." The study notes that "biofuels will be high on Congress' 2007 agenda, with the rewriting of the Farm Bill."

The study says David Morris of the Institute for Local Self-Reliance "presents the most compelling and detailed approach for rural community development through the emerging bio-based sector. Ownership of the refineries by local farmers and community members is seen as the key aspect to sustainable rural development. Local ownership assures that the facility is based to some extent on local resources and needs, and that much of the money generated remains in the local economy." Click here to read the study.

Past Blog Items on Broadband:

USDA says new rules will spur broadband in more places that lack it

Since 2001, more than half of the money in the U.S. Department of Agriculture's broadband program has gone to metropolitan regions or communities within easy commutes of a mid-size city, according to The Washington Post. Today, USDA proposed new rules for the program that Under Secretary for Rural Development Thomas Dorr said "will improve broadband coverage in rural America."

"The aim of the rules is to get funding and support to areas that need it most," Carolina-Virginia Farmer reports. USDA said the proposed rules would promote deployment to areas with little or no high-speed Internet service; ensure that residents in funded areas get access to broadband more quickly; limit funding in urban areas and areas where a significant share of the market is served by incumbent providers; clarify and streamline equity and marketing survey requirements; increase transparency in the application process; promote better understanding of application requirements; and ensure that funding is keeping pace with increasing demand for bandwidth. For the USDA press release, click here.

Wednesday, May 2, 2007

Rural broadband program criticized for doing too little to spread service

A federal program to bring broadband to rural areas may be not be doing as much as intended. Members of a House committee yesterday that the rural broadband program is passing over many areas still left without high-speed Internet while giving hundreds of millions in loans to providers in areas that already have service. The rural broadband program was created by Congress in 2002. Of 69 loans totaling $1.2 billion, only 40 percent went to underserved areas, report Dan Morgan and Gilbert Gaul of The Washington Post.

The Department of Agriculture’s Rural Development program has been criticized for not doing enough for truly rural areas. The Post reports, “Since 2001, more than half the money has gone to metropolitan regions or communities within easy commutes of a mid-size city. An Internet provider in Houston got $23 million in loans to wire affluent subdivisions, including one that boasts million-dollar houses and an equestrian center.”

The USDA has been working since late 2005 on new regulations to target the broadband program to rural areas in need, but the new rules won’t be revealed until they are published, said a spokesman for the USDA's Rural Development division, report Morgan and Gaul. “Last week, Rep. Stephanie Herseth Sandlin (D-S.D.) introduced legislation to close loopholes that allow areas that ‘are neither rural nor suffer a lack of service’ to collect the loans and loan guarantees.” (Read more)

Friday, March 23, 2007

New bill would designate unused airwaves for wireless broadband Internet

Legislation proposed in the U.S. House this week would allocate unused television channels for use by broadband Internet by 2009. The move could possibly provide affordable services to millions of Americans, particularly those in rural areas. The bill mandates a final decision to be made by the beginning of October. A similar bill failed last year, reports the Associated Press, but Democrats now control Congress.

“Under the measure, the Federal Communications Commission would be required to permit usage of the unused TV spectrum, also known as ‘white spaces,’ for Internet broadband service as long as it doesn't interfere with television programming,” reports AP. New technology has been developed that can transmit within these spaces and a coalition has submitted a prototype device to the FCC for testing. However, television broadcasters are doubtful of the device, concerned that it may interfere with meeting their federal requirement to transition from analog to digital signals in 2009.

House Dems to review telecom, including broadband, net neutrality

House Democrats will be taking a look at telecommunications and media policies, including several oversight hearings and planning new legislation. “Fostering high-speed Internet deployment, ensuring an open and accessible Internet, and overhauling the federal universal service program that subsidizes telecom connections in rural and impoverished areas are among the key issues to be addressed,” reports National Journal’s Insider Update. “The competitiveness of the video, telephone and radio marketplaces also will be explored, along with protecting the privacy of phone records and promoting efficient use of spectrum.”

“[There] won't be a stand-alone net neutrality bill, and that's a good thing because it won't pass,” Gigi Sohn, president of Public Knowledge, a watchdog group which supports the concept told David Hatch of Insider Update. “Observers said net neutrality might be added to a broader bill or to various related measures, such as privacy or antitrust vehicles,” writes Hatch. “They cautioned that, given the controversy surrounding the issue, Democrats would move slowly.”

House Democrats will examine several Federal Communications Commission policies, including media-ownership limits and investigating allegations that the National Security Agency conducted surveillance of phone records without warrants, as well as a FCC decision to relax video-franchising guidelines, reports Hatch. The Democrats' agenda calling for “universal, affordable broadband access within five years” will be part of the upcoming telecom legislation. “The Bush administration has pledged to achieve that goal by the end of 2007, but critics say they are not on track.”

The Institute for Rural Journalism and Community Issues helps non-metropolitan media define the public agenda in their communities, through strong reporting and commentary on local issues and on broader issues that have local impact. Its initial focus area is Central Appalachia, but as an arm of the University of Kentucky it has a statewide mission, and it has national scope. Cooperating institutions include Appalachian State University, East Tennessee State University, Eastern Kentucky University, Indiana Universiy of Pennsylvania, Marshall University, Middle Tennessee State University, Ohio University, Southeast Missouri State University, the University of North Carolina-Chapel Hill, the University of Tennessee-Knoxville, Washington and Lee University, West Virginia University and the Community Journalism Fellows program at the University of Alabama. To get notices of Rural Blog postings and other Institute news, click here.

Institute for Rural Journalism & Community Issues
School of Journalism and Telecommunications, College of Communications & Information Studies
122 Grehan Building, University of Kentucky, Lexington KY 40506-0042
Phone 859-257-3744 - Fax 859-323-3168

Al Cross, director al.cross@uky.edu