Issues
in the Rural
Economy
June 2005
Reports
of economic sessions of Rural Amerca, Community Issues,
a conference programmed by the Institute for Rural Journalism
and Community Issues for the Knight Center for Specialized Journalism,
University of Maryland, June 12-17, 2005
Globalization
demands changes in the way rural America develops its economy
Rural America must change the way it seeks jobs
in a globalized economy, and journalists should help public and
private policymakers at all levels realize the challenges and
choices they face, a leading student of the rural economy said
at the "Rural America, Community Issues" seminar at
the University of Maryland in June 2005.
The journalists heard from Mark Drabenstott, vice
president of the Federal Reserve Bank of Kansas City and
director of its Center for the Study of Rural America.
He said globalization is "changing the rules of the game
in profound ways and extraordinarily rapidly," and means
that rural America can no longer use cheap labor, low taxes and
cheap land to compete, because "legions of places around
the world" now have those advantages.
"We are going to move away from a model of
recruiting businesses to rural America to growing
businesses in rural America . . . gardening vs. hunting,
if you will," Drabenstott said. He said there are "exciting
opportunities on the horizon" but he sees "very little
discussion" of the challenge. "There is a tremendous
opportunity for you to improve the economic literacy of our nation
on some of these issues," he told the journalists.
Drabenstott said one key to being competitive is
thinking regionally, from town to town and even across state lines.
He said people in a self-defined region should ask themselves:
What are our distinct economic assets? What market opportunity
can we tap that no one else can? How do we exploit our assets
to seize that opportunity? To answer such questions successfully,
he said, a region needs the fuel of innovation and the engine
of entrepreneurs.
To function regionally, Drabenstott said, there
must be public-private partnerships; regional assets must be understood
and measured, competitive advantages must be identified, and entrepreneurs
must be developed.. A big question, he said, is whether the tools
of measurement and analysis will be private or public: "Do
we leave it to the consultants, or is it a job for the [Cooperative]
Extension Service?" he asked.
Al Cross, director of the Institute for
Rural Journalism and Community Issues, which programmed
the conference, mentioned the Kentuucky extension service's creation,
with tobacco-settlement funds, of an institute to train not just
entrepreneurs but coaches to train entrepreneurs in the state's
most tobacco-dependent region.
Much of rural America will remain dependent on a
commodity economy, in which the major imperative is to be the
low-cost producer, requiring producers to “be big or be
gone,” Drabenstott said. "Agriculture is at a fork
in the road," he said, with this choice: "Continue to
produce low-cost commodities or growing what will sell instead
of selling what you grow … ranging from farm-fresh organic
produce to pharmaceutical crops."
Drabenstott had a charge for journalists: "There’s
a tremendous opportunity for the press. How you build bridges
across your region as a public voice seems to me to be terribly
important. … Do you want to simply trumpet your home town
and bash all the other towns around you?" He challenged rural
journalists to "foster a climate for partnership by public
and private leaders" and focus coverage on long-term successes,
not short-term ones.
Drabenstott said such processes call for patience,
but he quoted an unnamed Texan on the urgency of the challenge
facing rural America: “Time is short, the stakes are high,
and the alternative is a Third World economy.”
Rural
areas need high-speed Internet to compete economically, researcher
says
High-speed internet access is no longer a luxury
for rural communities because they need it to compete economically,
an expert on rural broadband said at the “Rural America,
Community Issues”conference.
"If you don't have broadband, certain things
don't fall into place as easily," said Sharon Strover, director
of the Telecommunications and Information Policy Institute at
the University of Texas. Not only do businesses
use the Internet to buy, sell, distribute and control inventory,
but health care increasingly uses Web-based forms to deliver information,
and governments are interested in providing services online because
it is cheaper, she said.
“What we’ve also heard from rural communities
is that telecommunications was important to them because they
are losing population," Strover said. Broadband access can
entice young people to "stick around a little longer"
and explore career options closer to home. She said terms like
“the knowledge economy” can “create a lot of
fear in rural areas because they feel like they’re gonna
fall behind; they’re not there yet and the rest of the world
is.”
When some local governments got into the broadband
business, telephone companies began lobbying legislatures to pass
laws making municipal broadband more difficult or impossible.
The companies say "Get rid of government and we’ll
compete," Strover said. “In fact, competition doesn’t
just occur after government is no longer there. ... Everybody
talks a good line about competition, but in fact, companies hate
it." For more of this view, click
here.
Strover said the national extent of broadband monopolies
is difficult to determine, partly because the Federal
Communications Commission signed confidentiality agreements
with providers. Journalists may know who their local broadband
providers are, but Strover said they face other obstacles writing
about the issue: It is "filled with jargon," the technology
changes constantly, and the business is regulated at all three
levels of government.
Recent data from the census and the Pew
Internet and American Life Project show that Internet
use by rural Americans is about 10 percent less than for the nation
as a whole, but rural broadband use is 50 percent less.
Big-box
stores draining, reshaping economies, character of nation’s
small towns
When Wal-Mart Supercenters come
to towns across America, they drain about 70 percent of their
trade from local merchants and reshape the character of the communities,
retired Iowa State University economist Kenneth
Stone told the national rural journalism conference. Stone's research
also shows that the Supercenters have helped some local businesses
that don't compete with Wal-Mart, by generating traffic from a
wider area.
Stone, who has become known in some circles as “the
Wal-Mart Man” because of his studies, conducted some of
the first and most extensive research on the economic impacts
of malls, discount stores and big-box building materials stores
and various forms of Wal-Marts. A study in Iowa showed Supercenters
hurt grocery, specialty and apparel stores but helped restaurants
and service businesses because of the “spillover”
effect of extra traffic.
Wal-Mart, the nation’s largest retailer with
about 4,000 stores nationwide, had sales of more than $288 billion
last year, and is forecasting more than $416 billion by 2008.
But Stone said there are some signs that its growth is beginning
to taper off, as Wal-Marts become located more closely together
and drain traffic from each other.
When one journalist at the conference said some
localities are offering incentives to attract Wal-Mart supercenters,
Stone said he strongly opposes such deals.“It takes money
from taxpayers to give to big companies who then take it from
the local merchants,” he said.
Stone said Wal-Mart, under fire for its business
practices, is becoming more media-savvy in its public relations,
providing information that it once told journalists was proprietary,
and has started to buy run-of-paper advertsing in newspapers.
A top Wal-Mart official is scheduled to address this year's National
Newspaper Association convention in Milwaukee on Sept.
30. For more on the convention, which runs Sept. 28-Oct. 1, click
here.
For reports by the Institute for Rural Journalism
and Community Issues on two TV documentaries about Wal-Mart
last November, one of which featured Stone and his research, click
here.
Agriculture
still matters, partly because it provides rural leadership, expert
says
Though agriculture accounts for less than 1 percent
of America's gross domestic product, it remains important because
of its relationship to the environment and, more intriguingly,
to the culture and politics of America. So said David Freshwater,
director of graduate studies in agricultural economics at the
University of Kentucky..
Farmers are still "a key part of the social
elite" in rural areas, as leaders in civic, school and political
groups, and at the national level they exploit the agricultural
roots of the United States and do not align themselves closely
with either political party, giving them more leverage on both
parties, Freshwater said. "They have an effective voice that
greatly outweighs their numbers," he said, attributing that
partly to leadership training rural youth get in the Future
Farmers of America and 4-H Clubs.
Asked about the effect of the tobacco buyout on
Kentucky, the state with more tobacco growers than any other,
Drabenstott said it is"incredibly important" because
"the tobacco program froze the structure of agriculture in
Kentucky in the 1930s," preserving it as a state of small
farms and small towns. Without the program, he said, Kentucky
will produce as much tobacco, but for less money, and "We'll
see a lot of small-town dry-up."
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. It has
academic collaborators at Appalachian State University, East Tennessee
State University, Eastern Kentucky University, Georgia College
and State University, Indiana University 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 Knight Community
Journalism Fellows Program at the University of Alabama. It is
funded by the John S. and James L. Knight Foundation and the University
of Kentucky, with additional financial support from the Ford Foundation.
To get notices of Rural Blog postings and other Institute
news, click here.
