A reversal in the economic fortunes of our region

by John M. Meyer

Rural Missouri has reversed a century-long decline. For the first time since 1900 the number of farms in Missouri has increased. According to the 1997 Census of Agriculture (the latest federal count), Missouri had 98,860 farms. That compares to 98,082 just five years earlier. The gain is small but significant. It shows a change in direction, not only in agriculture, but in rural life.

North Missouri counties that once would have been devastated by a slumping farm economy are viable, even thriving. In Mercer County, where Premium Standard Farms operates, the number of farms rose 11 percent. Neighboring counties where PSF also has facilities posted similar strong gains: eight percent in Grundy County, seven percent in Daviess and Gentry counties, six percent in Putnam County, and two percent in Sullivan County.

The change comes at the same time these counties reversed a 90-year decline in population. From 1900 to 1990 the six-county population plunged 64 percent. Then the drop stopped. From 1990 to 1997 the number of people living in the six counties actually rose slightly, led by a seven percent increase in Mercer County.

There’s more good news. Unemployment rates have plunged. While it’s true that jobless rates are falling nearly everywhere, these six counties have actually out-performed the state as a whole.

Something good is happening in North Missouri. At a time when some rural areas are struggling, this one is thriving. North Missouri has found a way to compete in a global food market that rewards value-added production. Premium Standard Farms is proud of its part in this success story, and pleased at the number of small farms that have sprouted around us. It shows that North Missouri has found an alternative economic engine to the old commodity-based agriculture. It underscores the growing conviction that a new agriculture can sustain old communities.

Premium Standard Farms began operations in Mercer County in 1989. We now employ 2,200 North Missouri residents. Our annual payroll is $56 million. For many families, income from non-farm sources, whether Premium Standard Farms or someone else, allows them to stay on an existing farm, or start a new farming operation.

Our plant in Sullivan County processes pork for customers in more than 20 countries around the world. We export up to 20 percent of our production. PSF recently became the first pork producer/processor to earn process-verified accreditation from the United States Department of Agriculture. This program is part of the government’s initiative to promote world-class quality and international competitiveness in the US livestock and meat industry.

Competitiveness is crucial. The world food market is changing. Customers demand high quality, convenience, and low prices, and they’re shopping in a global marketplace to get what they want. The new food system is rearranging economic opportunities in Midwestern agriculture.

“Even those places that remain tied to agriculture will need to adjust to a new agriculture,” writes Mark Drabenstott, director of the Center for the Study of Rural America at the Federal Reserve Bank of Kansas City. The center tracks farm and rural economics and studies issues vital to rural America.

In a recent study, Drabenstott concludes that Heartland agriculture is changing in four fundamental ways. Production is consolidating on bigger farms, leaving fewer farmers to support small rural towns. Second, products are being grown and processed under contract or through vertical integration, skirting traditional market channels and transforming agriculture’s impact on the rural Heartland. Third, while the global food market is shifting toward value-added products, Heartland agriculture remains heavily focused on bulk commodities. And finally, U.S. farm policy is becoming more market oriented, making the future of the region’s marginal cropland more uncertain.

Premium Standard Farms is helping North Missouri get through these changes and stay at the leading edge of value-added farm production. A Federal Reserve study — The Changing Economy of the Rural Heartland — predicted in 1996 that the future of agricultural counties may depend on whether they become home to one of the emerging clusters of production and processing. More recently, the bank issued a report that says that the new hope for rural counties is “entrepreneurial business clusters” that attract venture capital, spawning local economic development and creating sustainable communities.

The encouraging figures on population, farm growth, and employment in the six counties where Premium Standard Farms operates indicate that North Missouri is on the right path.