3/31/97

KUFM/KGPR

T.M. Power

Protecting Our Farm and Ranch Economy

To many Montanans and most residents of the West farming and ranching are a central part of our state’s and region’s unique identity. Culturally, these agricultural activities have their historical roots in the original European settlement here. Some of the most important landscapes of the West, including its vast open spaces, are also tied to farming and ranching. Finally, in our rural areas and our urban trade centers, agriculture is an economic mainstay. Clearly, the survival and prosperity of our farming and ranching families are important to all of us in many different ways.

Some recently released US Department of Agriculture data on farm family income provides some important and startling insights into the economic factors undergirding our agricultural economy. If one looks at all farm and ranch families and look at all of the sources of income supporting those families, one finds that only about ten percent of that income comes from on-farm agricultural activities. 90 percent of farm family income comes from off-farm sources. These are national statistics. But in the Rocky Mountain West the data is almost identical: 89 percent of farm and ranch family income comes from non-farm and non-ranch sources. For the Northern Great Plains, farm family reliance on agriculture for income is at its highest, about 21 percent. Crude calculations trying to extract Montana-specific information from this data suggests that Montana is more like the Northern Plains, with as much as a fifth to a quarter of farm family income being provided by on-farm activities. That still leaves 75 to 80 percent of Montana farm family income coming from off-farm sources.

This relatively small role of farm income in farm-family budgets is partially tied to the fact that there are a lot of relatively small, part-time farming and ranching operations. If we focus only on the larger operations, those that the USDA classifies as "commercial farms," it is still true that over half of the income received by commercial farm operators’ families comes from off-farm sources.

What this information tells us is that our farm and ranch families have been diversifying their own household economic base by engaging in off-farm economic activities. It has been our farm families success at doing this that has allowed farm family income to remain very close to national family income averages. Without that ability to diversify away from the farm and ranch while continuing to operate the farm and ranch, agriculture would have been much less viable as a way of life.

Consider, for instance, the situation of farms and ranches that are located in relatively undiversified rural economies. These are the areas where farms and ranches still truly dominate the local economy. In these agriculture-dependent counties, commercial farm family incomes are 30 percent below those in non-metro areas that are so farm-dependent, about $15,000 per year less. That certainly undermines the viability of those farm and ranch operations.

This factual information should cast the economic transformation that is taking place in most of our non-metropolitan counties in a new life. Some have argued that the "resettlement" of the inland West, including Montana, is threatening our traditional agricultural way of life. Subdivisions are seen gobbling up farm and ranch lands, destroying open space, wildlife habitat, and scenic beauty as our landscapes are suburbanized. The new services-based economy is seen as threatening agriculture. Fortunately, the opposite may be closer to the truth. It is the diversification of our nonmetropolitan counties that is allowing our farm and ranch families to diversify their household economic base and continue in agriculture. It is the employment and income opportunities that have developed in our small towns and cities that have allowed farming and ranching activities to remain economically viable. Without those off-farm economic activities, farm family income would be miserably low and many more farm and ranch families would be driven off the land. The transformation of our non-metro counties away from agriculture and other natural resource activities towards services is supporting the farm economy, not threatening it.

This significantly reverses the picture of who it is that depends upon whom. Rather than our nonmetro areas depending upon agriculture as their economic mainstay, it is the farm and ranch economy that depends upon the urban-based diversified economy to stay afloat and provide their families with a decent living. Of course, we are all mutually dependent upon each other, but it is important to keep that farm-nonfarm symbiosis in mind when evaluating the economic changes we are caught up in. All is not terrible for our traditional ways of life!