Farmers have been producing large amounts of wealth for 35 years and exporting it to other areas with no benefit for themselves, says Ken Meter, a former journalist and professor of microeconomics.
The truth, he said, can be found by combing through decades of economic data from the U.S. Department of Agriculture, which reveals the real picture of what is happening to farm communities.
Meter, president of the Crossroads Resource Center in Minneapolis, Minnesota, spoke at a meeting last week in Deloraine, Man., organized by the Manitoba Food Charter and Prairie Skills Inc.
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In his examination of seven counties in southeastern Minnesota, Meter found the area’s population of 303,000 residents had $10 billion US in annual income.
The diverse agricultural sector had 9,000 farm families raising more than one million head of livestock and a wide variety of crops, including fruit.
From 1969 to 2003, farmers in the area lost $600 million.
In the last seven years ending in 2003, the region produced $912 million worth of food but spent $996 million in the process. Each year, farmers lost an average of $84 million.
Meter said they shored up their losses by earning money off the farm, to the tune of $166 million, of which $58 million was farm related, such as renting land or custom combining. Another $98 million came from subsidies and the rest from off-farm jobs.
Since the 1973 oil crisis, when oil prices rocketed to $40 a barrel, farmers in southeastern Minnesota have reduced their fuel costs substantially.
This is an indication of good management, he said, but the combination of more seed purchases and chemical inputs from outside the region means more wealth flows out.
“I estimate that farmers there spend about $500 million outside of the region to produce their crops and livestock at a loss. That sends more money outside of a prime farming region. It doesn’t really make sense,” Meter said.
“While farmers are struggling with these bizarre economics, the region’s consumers buy about $640 million worth of food each year, again mainly from outside sources.”
The amount of money leaving the area adds up to about $1 billion per year, which is more than the total value of all the crops and livestock produced in the seven counties.
“One could say that the region might be better off producing nothing rather than sustaining these losses,” Meter said. “How long can a farm region sustain this kind of an economy?”
However, when examining the local consumer market, he found that it was large enough to accommodate two-thirds of the supply produced in the area.
“So farmers in this region have a choice. Do they want to meet the needs of their neighbours who they can meet every day on the street, in church or at the store and sell them food at a fair price, or do they want to continue selling to a global market that is not very good at rewarding them for what they do?” he said. “Or some combination of the two?”
Local demand for meat, for example, amounted to $87 million. Although the lack of infrastructure prevents livestock producers from easily tapping that market, he said it presents an attractive alternative.
“It’s certainly a flow of money that a lot of farmers would like to be a part of.”
Demand in the seven counties for fruit and vegetables was $60 million, $40 million for dairy products and $12 million for sweets, fats and oils. All that is missing is the economic infrastructure needed to make it happen, he said.
“If consumers bought 25 percent of their food from local farmers, it would compensate for a lot of the losses that farmers are experiencing. It’s well within the reach of local consumers to make choices that change some of these dynamics.”
However, in the middle of some of the most productive farmland in the United States – in Minnesota, the sixth largest farming state – one town went two years without a grocery store.
To compensate for this shocking decline in the local economy and to help create an infrastructure that would allow local farmers to produce food directly for local consumption, local producers and processors formed the Southeast Minnesota Food Network.
An attractive brand was developed, called Hiawatha Valley, and is used to market high quality local milk, cheese and grass-fed butter, which won an award for the best butter in the U.S. two years in a row.
“Unfortunately, they have stalled at about $250,000 a year,” Meter said.
“They realize that they need to invest in a warehouse and processing plant so they can store food longer.”
Acquiring capital has been the biggest stumbling block.
Bankers were reluctant to extend loans and the group responded by assembling a private equity fund. Efforts to win tax breaks from the state legislature have shown promise, Meter said.
Creating a local food system is one of the clearest paths to economic development for communities because there is a lot of room to create new businesses, wealth and new opportunities and build health, wealth, connection and capacity.
“The food system we have in the U.S. fails on all four of those counts,” he said. “I’m not sure if you have the same problem here.
“We all eat three times a day, share recipes and have cultural meals. When you build that as part of your economy, it lasts longer and builds a sense of place in the culture as well.”
Interest in building local food networks is growing in the U.S., he noted. A recent Time magazine cover story was headlined: “Is local the new organic?”
“People are increasingly concerned about where their food comes from,” Meter said.
“They ask, ‘how do I know the farmer is reliable? How do I know it’s healthy? How do I know that the supply is secure over time?’ ”
