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November 10, 2000 Agriculture
experts disagree Michael
Corey DES MOINES, Iowa--Farm policy researchers think value-added agriculture may be the key to easing Iowa's agricultural woes. But they don't agree on how it will work and how much Iowa's farm economy will ultimately change. "Value-added agriculture" has become a popular catch-all phrase that means different things to different people. In its broadest sense, a "value-added" product is one that is refined from a raw commodity, increasing its monetary value. "Value-added agriculture has been around for hundreds of year only we didn't know it," said Iowa Farm Bureau commodities services coordinator Dennis Harding. He said many Iowa farmers used to sell eggs, chicken and pork products in town markets. "We always had that value-added aspect, it was just very local," he said. Iowa's most widely known value-added product is ethanol, a corn-based fuel blended into gasoline. According to the Iowa Corn Promotion Board, ethanol production added $730 million to revenue from Iowa's corn crop in 1998. In a Northwestern University study, Iowa ranks second in ethanol production in the United States. Ethanol is not the only value-added product in Iowa, however. State lawmakers have tried to lure hog and beef production facilities to keep some production revenue in the state. But some other farmers are taking a different path, tapping into a growing market for organic and natural foods. Others who will still provide raw commodities are trying to find a niche higher in the supply chain. Mary Holmes, community food security liaison for the ISU extension, is focusing on getting farmers out of the commodities markets and back into community-based agriculture. She said just trying to attract large businesses to Iowa is not enough. "I truly believe that we lose as a state when we let transnational companies come in that have no interest in Iowa other than to utilize its abundant natural resources," she said. "Then farmers are in the same position they've always been in." "I think each family's ability to be living a fairly healthy lifestyle is a more accurate measure of a healthy economy," she said. They might tap into increasing demand for ethnic food to serve immigrant communities. Some Muslim and Latino populations, for example, want goat meat and want it prepared a certain way. She said a market for these ethnic foods exists in Iowa and in surrounding metropolitan areas. Holmes said Iowa farmers can also find more value in high-end products like organic and natural foods or can sell produce locally themselves. "I think the markets are very quickly moving in that direction. The global economy is what's going to drive it," she said. "Now we're talking about farmers knowing, actually even securing the end market for their product before they ever put it in the ground." But she said she realizes she may be in the minority among agriculture policy makers. Even within the Iowa State University Extension value-added agriculture program, there is disagreement on what types of agricultural development will be good for Iowa. "If you just look at the sheer numbers of the allocations, it becomes pretty clear where the money is," Holmes said. Mary Holz-Clause, also with the ISU extension, said community-based agriculture is one avenue for development, but not the only one. "I think we're actually going to break out in three or four different areas," she said. "Another model that I think we're going to see is really more of an integrated supply chain." Under this arrangement, farmers form associations with particular companies to reduce their uncertainty. By offering just what a company wants, their product becomes more valuable. She said this arrangement will also be important if customers are to have confidence in where their food is coming from. "We're seeing it here in the United States and abroad. Give me a managed supply chain where I know where it came from," she said. Holmes predicts that the farm economy will shift drastically in the next few years, meaning farmers must act quickly to find a niche. "They're either going to make the changes or they'll drop out and they'll leave agriculture," she said. Harding said Iowa farmers realize the economy is changing, and they are trying to change with it. "I'm working with people who are trying to solve problems, and they are optimistic," he said. "They're not pining for the past." Harding said some value-added schemes will not work for Iowans living in more isolated areas of the state, but marketing over the Internet might help alleviate geographic differences. But he said some farmers might still choose to remain in the commodities markets. "In some cases, being the low-cost producer of commodities may be the way to go. There's still demand for commodities worldwide," he said. |