Iowa Ideas
Iowa Ideas

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Opportunities for rural Iowa: Time to decentralize

Feb 25, 2019 at 4:11 pm
    David Miller Iowa Farm Bureau

    Agriculture still is the backbone of rural Iowa. With more than $30 billion in agricultural sales, agriculture provides the foundation for economic activity in most of Iowa’s counties.

    In 37 of Iowa’s counties, more than one-half of their total economic output derives from agriculture and ag-related industries. In 30 more counties, at least one-third of total economic output derives from ag and ag-related activities.

    Thus, more than two-thirds of the counties in Iowa are highly dependent on agriculture for their local jobs and economy.

    While five years of declining net farm income are putting stress on farmers and related ag industries, Iowa’s farmers and farm suppliers are proving to be resilient as they adapt to changing weather and policies and adopt new technologies.

    Land values are a storehouse of wealth for rural Iowa. Compared to historical norms, land values in Iowa are still “high,” with farmland averaging $7,326 per acre in the 2017 report by Iowa State University.

    This is down from the early 2013 peak of $8,750 per acre but still up nearly 400 percent since 2000.

    With nearly 30 million acres of farmland in Iowa, this represents nearly $220 billion in stored wealth. This wealth is helping to fund innovations in agriculture, ag-related industries and is instrumental in providing funding for rural community services.

    Property taxes on ag land and buildings provided $833 million in the most recent fiscal year.

    To further put that in perspective, rural property valuation provides at least 50 percent of the local property tax base in 78 Iowa counties, with a significant portion of the rural tax base coming from ag land and buildings.

    Policies that are supportive to rural and ag land values are critically important for rural areas.

    Farm profitability still is a key component of economic well-being in rural Iowa. Iowa farmers had net farm income of $3.42 billion in 2017. This was up 34 percent compared to the previous year but is nearly 59 percent lower than the high seen in 2013 and is 37 percent lower than the 10-year average, highlighting the recent multiyear period of below-average income streams on Iowa farms.

    Current estimates point to what will be determined to be lower net farm income for Iowa farmers in 2018 as Chinese tariffs on pork, soybeans and other commodities continue to depress prices and slow economic activities related to trade and international commerce.

    As net farm income has dropped, so has the amount that farmers spend in their farming operations. Cash expenses have declined about 14 percent from the peak, resulting in less economic activity in many rural areas.

    Net farm income is affected by weather — in terms of yields and productivity — prices — as seen in supply and demand — and federal and international policies.

    Net farm income has been declining due to multiple years of trendline or better yields both here and among many of our international competitors.

    In addition, the changes in the 2014 federal farm bill contained revenue supports for agriculture that have declined sharply over the past four years.

    Combine this with continuation of multiple non-tariff market access issues for international markets, trade disruptions due to tariffs and retaliatory tariffs, and farmers get caught between a rock and a hard place.

    One response to the continued decline in net farm income is that farmers and farm families increasingly are turning to off-farm employment to provide sufficient income to support the family. This trend has resulted in record low unemployment numbers in rural areas of Iowa and highlights the need for additional employment opportunities in rural areas.

    Maybe it is time for the state of Iowa to decentralize many of its administrative functions and offices into rural or regional centers. With today’s information and internet connectivity, many record-keeping and administrative functions no longer need to be centralized in the largest urban areas.

    Viable broadband connectivity is critical to rural Iowa, and efforts to expand and upgrade rural broadband access should be put on a fast track. Iowa’s farms, towns and rural cities are changing. Technology is the major force behind the changes that are underway and agriculture is adopting technology and adapting to technological changes faster than many other sectors.

    Today’s agriculture uses technology in nearly every facet of production. We use biotechnology and conventional breeding in the seed. We use mechanical engineering and computers in the seeding, tending and harvesting processes.

    Global positioning systems are now integrated into a variety of operations on the farm, and internet-based connections are being integrated into nearly every facet of farm operations.

    • David Miller is director of research and commodity services for Iowa Farm Bureau and a farmer in Lucas and Clarke counties.

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