New Rural Economy: Implications for Louisiana

Linda Benedict  |  1/5/2006 9:43:45 PM

Deborah M. Tootle

The U.S. rural economy is often described as declining, even devastated, and at best as in a state of flux. To be sure, many rural communities in the United States are struggling to exist. Today’s economy is far less local than it ever has been. Because of technology, we can buy and sell almost anything globally in the time it takes to click “send” on our computer screens.

The rapidly changing global economy has left rural communities, once dependent upon agriculture and natural resource extraction, now dependent upon nondurable manufacturing, retail trade and consumer services. Today, nearly 90 percent of farm households in the United States depend on off-farm income. As traditional economic opportunities in rural areas decline, it is becoming more difficult for some farm families to find reliable sources of income.

The consequences of economic transition are not consistent across space. In some areas, manufacturing remains an important component of off-farm income. In others, a decade of downsizing and closing manufacturing plants has left many rural areas in need of serious alternatives. Many companies are relocating operations in countries where costs of production are lower. The consequences of relocation and global outsourcing can range anywhere from negligible social problems to high unemployment, declining opportunities for income, population loss, shrinking tax bases, and the inability of local governments to provide basic services. In other locations, however, rural communities have recognized that new challenges mean new opportunities. These communities have embraced change to pursue innovative rural development strategies.

Roughly one quarter of the Louisiana population lives in rural areas where income and earnings are lower while unemployment and poverty are higher than in urban areas. The rural economy in Louisiana has traditionally relied on agriculture and manufacturing. However, those activities that encouraged rural development 10 or 20 years ago are no longer effective. Traditional agricultural enterprises and industrial recruitment can no longer be depended on to bring jobs to rural Louisiana, and a shortage of jobs is eroding away the population base.

Industrial Recruitment

Traditional rural development strategies relied on identifying weaknesses or deficiencies in the local economy and recruiting businesses and industries that could fill these needs. One of the problems with this approach is that it can provide a quick, but not sustainable fix.

In today’s global economy, capital is mobile and the “easy come, easy go” philosophy prevails. It is also an expensive approach to rural development. State and local governments throughout the United States spend an average of $4,000 per job when they recruit industries. Most state and local governments today are hard-pressed to find those kinds of funds for industrial recruitment. Moreover, the socioeconomic forces that once encouraged industry to relocate to the rural South now lure manufacturing and jobs out of the country. Louisiana has seen its share of global outsourcing and relocation. Many areas of the state have yet to recover from the loss of the apparel manufacturing in the late 1990s.

Out-migration

Louisiana’s population has been slowly increasing over the past decade. Between 1990 and 2004, it increased by about 7 percent. However, almost all of this growth came from the urban areas, which grew at a rate of more than 8 percent. The rural population grew by about 3 percent during this period. Populations increase because of either an increase in the birth rate or an increase in migration from other locations. Much of the population increase in urban Louisiana reflects migration from rural areas.

In those communities less successful in finding alternatives to farming and small scale manufacturing, many farm families, the middle class backbone of rural communities, are relocating to urban areas in search of work and better economic opportunities. Extensive outmigration of farm families and educated young adults to urban areas creates serious problems for rural Louisiana communities as businesses and social institutions close their doors.

Local Initiative

Not all rural communities are experiencing decline in the global economy. Recent research shows that rural communities successful in developing industrial alternatives or nonagricultural forms of employment avoided decline and in some cases experienced population and economic growth. This has particularly been the case in communities adjacent to rural areas.

In other places, members of rural communities have taken actions to im prove their quality of life, the local business environment, and opportunities for economic development. Entrepreneurs are emerging in those rural communities providing the appropriate social and civic infrastructure. Some of the rural parishes, especially those with an abundance of natural resource amenities, are actually growing as entrepreneurs and retirees from urban America relocate there. Many rural parishes are growing their enterprises. Small manufacturers, attracted to these rural areas by the quality of life, are working together in networks to capture the economies of scale previously only available to larger manufacturers.

Some Louisiana agricultural producers also are becoming entrepreneurs, initiating value-added production and adopting direct marketing strategies. Residents in rural areas are learning about entrepreneurship by participating in entrepreneurship workshops organized by the LSU AgCenter’s Community Economic Development team. In the past two years, nearly 250 potential entrepreneurs and entrepreneurs from St.Charles, St. Bernard, Iberia, Franklin, Madison, Ouachita and Ascension parishes have participated in AgCenter training programs. Participants have learned what an entrepreneur is, whether entrepreneurship is an appropriate vocation, how to write a business plan, time management principles, how to evaluate business ideas, financial management and finding resources. A number of participants report successful business start-ups and growth.

One couple who participated in the entrepreneurship program reported that their business began when they made a batch of soybean candles for a local weekend craft show. This sale and another similar attempt showed them they had a product that the public demanded. They could make several hundred candles a month in their kitchen, but they thought they could expand their business by moving it into a facility designed for candle-making. After the couple completed the LSU AgCenter’s six-part, 15-hour entrepreneurship program, they decided to build a candle-making facility next to their home in rural Husser, La. The new facility was completed in the spring of 2004, and now the business can produce and sell several thousand soybean candles a month.

In other areas farmers are working together with community groups in food systems marketing alliances and other cooperative ventures. Still others are thinking about biofuels and other alternatives to traditional crops. With help from the LSU AgCenter and Louisiana Tech University, roughly 100 farmers and business owners learned about the availability of U.S. Department of Agriculture funding for value-added product development. Several participants formed producers’ cooperatives and applied for USDA funding. One group of producers obtained funding for a feasibility study relating to the use of soybean oil and meal. They were awarded the first value-added producer grant funding in the state.

Tour Louisiana

Other producers and business owners are exploring and venturing into the “agri-tainment” industry as the demand for eco- and agri-tourism opportunities grows. Tourism continues to be a major rural development strategy for Louisiana’s rural areas. In the past year, the AgCenter’s Community Economic Development team, which consists of Dora Ann Hatch, Cynthia Pilcher and Kay Lynn Tettleton, has provided technical assistance and educational programming for rural tourism through a variety of programs. Efforts include a program for workers in the hospitality industry and a visitor infrastructure awareness program, which helps communities learn whether the local infrastructure is prepared to accommodate tourism.

The Community Economic Development team has been instrumental in the development of the Delta Outdoors and Wildlife Association (DOWA) and several agri-tourism ventures. Approximately 50 landowners in Northeast Louisiana participated in the organization of the DOWA. With help from the AgCenter, DOWA has conducted tours for other interested landowners and the press and completed a marketing package with a Web site, brochures, a trade show exhibit and video. Association members have participated in trade shows throughout the South. As a result of the increase in recreational activity, more than 100 Louisiana residents in Central and North Louisiana have increased the value of marginal farm lands by opening or expanding some form of business based on natural resource and recreational tourism. (Go to Nature-based Tourism Blazes Trail for Economic Development.)

One of the new agri-tourism ventures in the state had been a struggling dairy operation. It is now a successful outdoor classroom for school field trips. It draws students from a 100-mile radius. This facility, which opened in the fall of 2003, grossed approximately $20,000 in its first two months of operation. Other farmers, including a dairy farmer in Ohio, have been contacting the LSU AgCenter for assistance with similar projects.

Future of Rural Louisiana

Research on the rural economy suggests (a) local economic conditions are shaped by a complex array of global and local forces, and (b) the consequences of economic transitions, such as the transition into a global economy, are not consistent across space. These examples of successful practices and outcomes in rural Louisiana communities suggest there are new and positive rural development opportunities associated with the new rural economy.

The LSU AgCenter is committed to helping rural Louisiana in the identification and implementation of these new rural development opportunities. The AgCenter’s newly organized Louisiana Center for Rural Initiatives (LCRI) is working to address these and other rural and community development issues. LCRI is a cooperative of social scientists and policy professionals engaged in research and extension programs that contribute to sustainable community and rural development in Louisiana. AgCenter faculty participating in LCRI are in the process of (1) analyzing changes in social and economic conditions in rural Louisiana, (2) assessing the impacts of strategies for rural development, and (3) working with rural communities to build their capacity for rural development, increase local economic opportunities, and improve their quality of life.

Deborah M. Tootle, Associate Professor, Department of Agricultural Economics and Agribusiness, LSU AgCenter, Baton Rouge, La.

(This article appeared in the fall 2005 issue of Louisiana Agriculture.)

Rate This Article:

Have a question or comment about the information on this page?

Innovate . Educate . Improve Lives

The LSU AgCenter and the LSU College of Agriculture

Top