Background Information on American Farms and Hermitage, Arkansas November 5, 1999

DESPITE ECONOMIC PROGRESS, RURAL AMERICA HAS NOT SHARED FULLY IN THE NATION'S ECONOMIC PROSPERITY. While parts of rural America have experienced benefits from the remarkable economic growth with new employment opportunities and lower employment rates, some areas are still experiencing high unemployment and high poverty rates.

• Farm Income. Farm income is projected to be $48 billion in 1999, up from $37.2 billion in 1995, the year before passage of the last major farm bill. However, after achieving a record of $55 billion in 1996, income has fallen recently because of slow world economic growth and low farm prices. Nonetheless, agriculture -- particularly agricultural exports -- remains an important component of rural economies. (Economic Research Service, USDA).
• Farm Exports. In 1998, the United States exported $52 billion in agriculture products, a 21% increase from $43 billion in 1993. Exports reached a record high of $60.6 billion in 1996. Agriculture exports generated 871,000 jobs in 1997, and 292,000 of those were on farms. (Bureau of the Census).
• Higher Poverty Rates. Although the average poverty rate throughout rural America in 1998 was 14.4%, only slightly higher than the national rate of 12.7%, pockets of poverty still remain in many rural communities. USDA has defined 535 rural counties as persistent poverty areas (i.e., at least four decades of poverty rates higher than 30%). (Economic Research Service, USDA).
• Earnings. Rural income for typical households (median income) rose to $32,022 in 1998 from $25,309 in 1993 — a 12% increase after adjusting for inflation and faster that the 9% growth for urban areas, which rose to $40,983 from $33,220 during the same period. Despite this growth, rural incomes are still 78% of urban income. (Economic Research Service, USDA).
• Unemployment. Although rural unemployment rates have improved to 4.8% in 1998 from 7.2% in 1992, the unemployment rate for minorities in rural areas is still high; 10.3% for African Americans and 7.1% for Hispanics. (Economic Research Service, USDA).
• Education. The share of rural adults without high school diplomas improved from 25.5% in 1992 to 21.6% in 1998, and the share of college graduates increased from 13.9% to 15.3% during that same period. Rural education attainment rates, however, remain significantly below urban rates. For instance, 15.3% of rural adults have college degrees, as compared to 24.4% of all adults. (Economic Research Service, USDA).

GEOGRAPHY AND DEMOGRAPHY OF RURAL AMERICA AND AMERICAN AGRICULTURE

• Approximately 54 million Americans live in Rural America, typically defined as non-metropolitan counties that have no cities with more than 50,000 people. (Economic Research Service, USDA).
• 18 percent of all counties in the United States are farming dependent (i.e., at least 20% of their earned income comes from farming). (Economic Research Service, USDA).
• 2.6 percent of the civilian work force is involved in agriculture. (Economic Research Service, USDA).

KEY ECONOMIC STATISTICS FOR BRADLEY COUNTY. Hermitage is a town of about 700 people and is in Bradley County, Arkansas.

• In 1997, the median family income in Bradley County was $21,644.
• The poverty rate in Bradley County has dropped to 22.5% from 24.9% in 1990. (Economic Research Service, USDA).
• In August 1999, the unemployment rate in Bradley County was 8.5%, down from 10.7% in August 1998, and 10.6% in August 1997. (Economic Research Service, USDA).

AGRICULTURE, THE LARGEST COMPONENT OF THE RURAL ECONOMY HAS NOT SHARED THE PROSPERITY OF THE REST OF THE ECONOMY; SMALL FARMERS HAVE SUFFERED THE MOST. Agriculture is the mainstay of the rural economy. Although larger farms have weathered the recent years, it has been harder for smaller farms.

• National Farm Income. As noted above, 1999 net farm income is projected to be $48 billion in 1999, up from $37.2 billion in 1995, but short of its peak of $55 billion in 1996. (Economic Research Service, USDA).
• Household Farm Income. Although agriculture production is the mainstay in most rural economies many farm families need to supplement their on-farm income in order to earn a comfortable income. In nearly 62% of farm households, someone (a farm operator, spouse or both) held off-farm jobs, and in 25% of all farm operator households, both the operator and spouse worked off-farm. There are many reasons for working off farm, but most households cite financial need as the primary reason. (Economic Research Service, USDA).
• Small Family Farms. Ninety two percent of all farms have less than $250,000 in sales:
• These farms account for 70% of the assets and land involved in farming, and account for 39% of total output. (Economic Research Service, USDA).
• Although the average income for small farm households was $52,536 in 1998, up from $47,714 in 1997, and about the same as the nationwide average household income, their farm operations resulted in an average loss of $992. Accordingly, these farmers are able to farm only because they are supported primarily by off-farm income. (Economic Research Service, USDA).

A SNAPSHOT OF ARKANSAS FARMS

• The 1997 Census of Agriculture found 42,500 farms in Arkansas, with an average size of 318 acres. (Bureau of the Census).
• Nearly 75% of these farms had sales of less than $50,000 and household income of approximately $22,000, only 48% of the U.S. average household income. (Economic Research Service, USDA).
• Total farm sales were $5.4 billion in 1998; $2.2 billion came from crops and $3.2 billion from livestock. Arkansas ranks eighth among all states in net farm income with $1.6 billion in 1998,up 11% from 1995 but down from a record high of $2 billion in 1996. (Economic Research Service, USDA).

COOPERATIVES: A PATH TO FINANCIAL SUCCESS FOR SMALL FARMERS

• There are 3,651 agricultural cooperatives nationwide, including 1,863 marketing cooperatives.
• Agricultural cooperatives have 3.4 million members. (This figure includes come double counting as many members belong to more than one cooperative.) (Cooperative Service, USDA).
• In 1998, agricultural cooperatives transacted $104.7 billion of business, and produced $1.7 billion in net income for their members. (Cooperative Service, USDA).
• By joining marketing cooperatives, small farmers can increase their income by taking advantage of economies of scale, pool capital to purchase equipment necessary to add value to their crop, and gain access to large markets that they could not service on their own.
• New North Florida Cooperative. Fifteen small-scale African American farmers in the Florida panhandle formed the New North Florida Cooperative to market greens and other vegetables. The farmers used to operate independently, and sold food at roadside stands or to local restaurants within days to avoid spoilage. Now they coordinate their crops and sell a range of produce to the Jackson County School District, a customer that none of the cooperative members were large enough to business with on their own. With the cooperative's help, the farmers are increasing their incomes and the school children are enjoying fresh well-balanced meals.
• Summary of Colorado Wheat Cooperative. In 1997, 225 wheat farmers formed the Mountain View Harvest Cooperative. With the assistance of a USDA guaranteed loan, the cooperative purchased a bakery that had gone out of business, and reopened it as Girard's Bakery. Using wheat produced by cooperative members, the bakery's business has grown to $15 million in just three years. Earlier this year, the bakery obtained a contract to supply a major national sandwich outlet, representing 40% of its total volume, and has recently started marketing through local supermarkets with different types of products. Demand is exceeding production capacity and the cooperative is examining options for expansion.