cs4 p12 alasia bollman agri_rural

The rural and agriculture interface:

towards a quantitative framework

Alessandro Alasia and Ray Bollman

Rural Research Group

1st Annual Rural Research Workshop

May 5, 2011, Ottawa

Statistics Canada • Statistique Canada 2

Outline-summary

Why: it is one of the long-standing policy questions

Literature: farm families are more dependent on rural communities that the other way around

Our objective: assess economic flows between the farm sector and the local economy (focus on labour)

Methods: spatial buffers of labour earnings and other economic flows

Findings: farm household labour supply to the community is generally greater than the non-family labour demand generated by farm business


Why are agriculture-rural linkages a

relevant issue?

Since the 70s the decoupling of agriculture and rural economy has become increasingly evident

A set of questions has become recurrent in the literature and policy debate (Heady 1981, Otto 1986, Fuller and Bollman 1992, OECD 2006; OECD 2010): • Can agricultural policy be a rural development policy? Or vice

versa.

• What would be the impact of an agriculture shock on the rural economy? Or vice versa.


Insights from the literature

Over time, agriculture and agricultural policies have become less relevant to rural communities; while the rural economy has become increasingly relevant in sustaining farming families (Smith and Martin, 1972; Otto 1986).

OECD (2010:7) “while agricultural policies are important for those who obtain their livelihood from the agricultural sector, the contribution of these policies to the economies of rural communities is tending to diminish.”

OECD (2010:9) “the work conducted by the OECD suggests that a continued shift from a sectoral emphasis towards place-based policies is likely to lead to increased policy effectiveness.”

OECD (2006), Coherence of Agricultural and Rural Development Policies (pag. 418)

• An extensive review of concepts, theory and case studies.

• Lack of data on agriculture-rural linkages, particularly when the focus is “place-base.”


Our objectives

A (preliminary) quantitative framework that can be

used to assess the linkages between agriculture and the

rural economy with:

A focus on economic flows

• Between the farm sector (farm) and the community

• Between the community and the farm sector (household)

A focus on communities (a place-based interface)

Where are the linkages?

(With some simplification and a focus on labour and goods/services)

Agriculture policy Other sectoral policy

Sector /vertical Sector /vertical

E.g. Price/income stabilisation E.g. Price

Marketing Marketing

Agricultural infrastructure Infrastructure

Local organizations

Municipalities

Community organizations

Rural development policy

Place based/horizontal

Infrastructure

Farm businesses Non-farm businesses Business support

Not-incorporated Agriculture related human capital

Incorporated Non-agriculture related

Others

Farm families Non-farm families


Methods: a focus on communities

Dissemination area centroid

Dissemination area boundary

Census consolidated subdivision centroid

Census consolidated subdivision boundary

Selected dissemination area centroids

50-km radius buffer zone

CCS:CCS:

Inverness, QuébecInverness, Québec

The monetary value of the flow is tabulated

for the all observations in the buffer zone

The total population is tabulated in the

buffer zone

The calculated flow per capita is assigned to

the CCS in the centre of the buffer zone

This is repeated for each CCS


Methods: data sources

Census of Agriculture 2006 • Farm expenditures at the dissemination area level

• Gross farm revenue at the dissemination area level

Census of Population 2006 • Income by source of members of a farm household (household

with a census-farm operator present), at the dissemination area level

(Agriculture-population linkage database)


Methods: nature of the flows

Estimated value of labour demand generated by the farm business, computed as the value of:

• Wages and salaries paid to non family members

• 50% of (1) Custom work, contract work and hired trucking; (2) Veterinary services, drugs, semen, breeding fees, etc.; (3) Repairs and maintenance to farm machinery, equipment and vehicles; and (4) Repairs and maintenance to farm buildings and fences

Estimated value of labour supply from the farm household to the community, computed as the value of:

• wages and salaries received by household members with a non-agriculture related job (i.e. all NAICS except 111*, 112*, 1151, 1152)

• non-farm self employment income for all members of a farm households

Interest flows and other farm expenditures flows


Labour demand

from the farm business (per capita)

Labour supply

from the farm household (per capita)

Dollars per capita

0.0 – 180

181 – 460

461 – 935

936 – 1,600

1,601 – 2,500

2,501 – 4,000

4,000 – 7,300

Dollars per capita

0.0 – 230

231 – 520

521 – 1,100

1,101– 2,000

2,001 – 3,000

3,001 – 4,000

4,001 – 7,000


Towards a framework to assess

flows: Communities with low, medium, high labour

linkages on the supply and demand side

SUPPLY from farm

household to

community

DEMAND

From farm

to community

Low Labour supply

p.c. <$100

Medium Labour supply

p.c. $100-$500

High Labour supply

p.c. >$500

Total

CCSs

Low Labour demand p.c.

<$100

409 346 29 784

Medium Labour demand p.c.

$100-$500

20 783 271 1074

High Labour demand p.c.

>$500 36 447 483

Total CCSs 429 1165 747 2341


Toward a framework to assess

flows: direction of linkages and community type

Community type

Direction

Agriculture is relatively

important in the

community

Agriculture is relatively less

important in the

community

Higher farm to community

linkages

Agriculture sector changes are

likely to have large impact

on the rural economy

Agriculture sector changes are

likely to have a small impact

on the rural economy

Higher community to farm

household linkages

Rural development is likely to

have a large impact on the

farm households

Rural development may still

have some impact on the

farm households

Small linkage in both

directions

Agricultural and rural initiatives

are likely to be disjointed

Agricultural and rural initiatives

are likely to be disjointed


Toward a framework to assess flows:

Labour linkages (number of CCSs)

Community type

Direction

Gross farm receipts per

capita =>$1,602


capita <$1,602

Labour D > labour S


linkages

319 CCSs

88 CCSs

Labour S > labour D


household linkages

851 CCSs 678 CCSs

Small linkage in both

directions

Labour supply and demand

p.c. <$100

… 409 CCSs


Gross farm receipts

per capita

=>$1,602

Gross farm receipts

per capita <$1,602

Labour D > labour S 319 CCSs 88 CCSs

Labour S > labour D 851 CCSs 678 CCSs

Small linkages … 409 CCSs

Gross farm receipts

per capita

=>$1,602

Gross farm receipts

per capita <$1,602

Labour D > labour S 319 CCSs 88 CCSs

Labour S > labour D 851 CCSs 678 CCSs

Small linkages … 409 CCSs

Labour linkages between the

farm sector and the community



capita =>$1,602


capita <$1,602

Labour D > labour S


linkages

Average demand p.c. = $679

Average supply p.c. = $507

D/S ratio=1.34



D/S ratio=1.24

Labour S > labour D


household linkages


Average supply p.c. = $1,432

D/S ratio=0.53



D/S ratio=0.35

Small linkages Average demand p.c. = $36


D/S ratio=0.63

Toward a framework to assess flows:

Labour linkages (number of CCSs)


Open issues

Improve some of the current measures

• Agriculture-population linkage database

• Farm corporations and their reporting of agriculture

income remain a challenge for this type of analysis

Extend the analysis to other type of linkages

(capital, land, other assets)


Conclusions

Overall, insights from the literature seems to apply to labour flows from/to farm sector and community, but not all places are the same

If “place-based” is the new approach: we need to assess the place-based agriculture-rural interface(s)

When we look at labour linkages, about 850 agricultural intensive communities have stronger linkages from the local economy to the farm households; about 320 agriculture intensive communities have stronger linkages in the opposite direction

Thank you

cs4 p12 alasia bollman agri_rural

Business

farm sector farm

farm sector household

agriculture interface

agriculture shock

decoupling of agriculture

agricultural policy

farm household labour

agricultural sector