Planning for a Sustainable Future: The Case of the North American Great Plains
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Planning for a Sustainable Future in the Great Plains

Marvin Duncan, Dennis Fisher, and Mark Drabenstott

From Settlement to Present

Understanding the Current Terrain

Strategies for the Future

Conclusions

The Great Plains represents a unique physical, sociological, and economic region in North America. Ranging up to several hundred miles wide at its northern end to only two to three hundred miles at its southern terminus, the area is astride much of what early explorers called the Great American Desert (Figure l). The region runs from the Canadian prairie provinces in the north to Texas and New Mexico in the south. Along the western extremity of America's and Canada's heartland, states and provinces within this area share much in common.

This chapter focuses on the economic and social stressors of the Great Plains, and on adaptation to changing social and economic circumstances, primarily since 1980. This chapter will address the experience of the U.S. Great Plains. However, the Canadian Plains shares much of the same experience.

No analysis of the Great Plains can be complete without consideration of its natural endowment of climate, soil resources, water supply, and geographic place. However, at this conference, those issues are the responsibility of others.

From Settlement to the Present

The region was settled quickly, and its residents have been involved in an ongoing process of change and adjustments.

The Endowment at Settlement

Those who live in the North American Great Plains have exhibited, since settlement, an ambivalence toward two fundamental elements of their environment. Those who promoted settlement in the region encouraged an initial endowment of people, infrastructure, and institutions that far exceeded the need for, or the capacity of, the region to support sustainable patterns of life and work on the Great Plains.

The pattern of homesteading, as a primary means of settlement, generally limited farmers to one quarter section (160 acres) of land. A bit later, in exchange for planting trees on land that generally was devoid of them in its native environment, farmers were able to obtain an extra 160 acres, called a tree claim. Late in the homestead period, and after many personal failures from trying to wrest a living out of a much different and more unforgiving environment from that of the Middle West and the East, the federal government provided homestead tracts of 640 acres in some parts of the Great Plains--Nebraska, for example.

Transcontinental railroads, given land by the federal government in exchange for laying tracks across the continent, began to promote settlement of those lands to develop an indigenous source of freight to be hauled from the region and inbound demand for freight to be delivered to locations along the railroads. A number of railroads began to build branch rail lines to further facilitate freight collection and distribution.

Communities were established every 10 miles along railroad lines to provide watering stops for the railroad steam engines and to provide communities within easy travel distance for settlers dependent on transportation by horse. Merchants, lawyers, bankers, teachers, adventurers, young people starting their careers, those seeking a second chance, and assorted scoundrels all flooded these little towns seeking their future, a fresh start, or an opportunity to become rich. Alexis de Tocqueville in Democracy in America (1835) commented on the westward expansion earlier in the settlement period of the United States: "Millions are marching at once towards the same horizon. Their language, their religion, their manners differ; their object is the same. Fortune has been promised to them somewhere in the West and to the West they go to find it." Some thirty years later, similarly diverse people populated the Great American Desert, and their objectives were no different from those de Tocqueville had observed.

The number of towns and businesses exceeded, almost from the beginning, what would be required by - and could be supported by - the settlers. Too many towns spawned too many schools, too many churches, too many saloons, too many court houses and jails, too many merchants, and too many roads to be supported by the more extensive type and scale of agriculture that emerged to replace homestead agriculture. Perhaps too many governmental units were created as well, though that remains an unresolved issue 130 years after settlement began in earnest.

Too many people arrived, as well. Railroads and land companies heavily promoted the region, often inaccurately. For example, the Northern Pacific (NP) Railroad advertised the availability of Great Plains land to Europeans, extolling the richness of the region and the prospects to grow wealthy in farming. To attract hard-working German immigrants, the NP provided maps to them across which was sprawled in huge letters the name of Bismarck, a small and rough railroad town and, incidentally, the title of the revered German ruler. European peasants, used to hard work and inspired by the prospect of owning land, flocked to the Great Plains. People left the more settled parts of the United States, as well, to join the settlement of the Great Plains. Alas, many would find the region too demanding, lacking in financial reward and social interaction, and would move on to the West Coast or back to the more settled areas from which they came. Some, in desperation, committed suicide to escape the incessant wind and the utter isolation of the prairie - a fate that befell more pioneer women than men. It was often a bleak and lonely life for women, isolated from their own gender and deprived of the social support system of U.S. and European cities.

Once on the frontier, many people had no viable alternative but to tough it out since they had nowhere to return to, and usually no money with which to finance a return. So they put up with drought, snow storms, hail, tornadoes, grasshoppers, rattlesnakes, illness, loneliness, claim jumpers, and assorted adventurers. For their efforts we are indebted. They wrested a productive land from great emptiness.

Remoteness of the region from the rest of North America created a stubborn independence on the part of Great Plains people. Most of the supply, distribution, marketing, and finance services used by settlers came from the larger cities to the east. The natural suspicion of those on the Plains was that they were often taken advantage of by business men from outside the region. Indeed, that view fueled a native insularity, giving rise to the often-repeated lament of the Plains, we buy retail, sell wholesale, and pay the freight both ways. Today they would write a country/western song about it - maybe they already have.

That insularity of the people, developed out of adversity, remoteness, and a need to depend on themselves, was understandable and perhaps even useful in a much earlier development stage. However, its remnants even today keep people from reaching out for new ideas and from building the network of social, political, and business alliances needed for success in a modern economy.

It bears repeating to note that although the Great Plains region was thinly populated as settlement began, it was not unpopulated. The region had been ceded by treaty to Native American nations before westward expansion pressures began. Unfortunately, as was the typical case, the United States did not respect treaty rights of Native Americans and through political pressure, new treaties, chicanery, and military force continued to move these people onto less and less desirable land. The isolation of Native Americans, often on the least desirable land, has hindered their own self-development and the integration of their aspirations into a broader fabric of economic growth and development in the Great Plains. Native Americans are an important people in the Great Plains and their economic growth and development must increasingly be recognized within the broader development efforts across the region.

Although this chapter focuses on the Great Plains within the United States, the Plains area of the Canadian prairie provinces shares much of the same background and faces most of the same challenges. Indeed, one of the linkages that binds the Great Plains together is that similarity of experience within the Plains region, contrasted to the differences between the Plains region and other regions of North America. For example, in North Dakota it is often said that farmers in the state's central and western regions have more in common with Kansans and residents of the Texas high plains than with the Red River Valley residents astride the North Dakota/Minnesota border.

A Pattern of Adaptation and Adjustment

The history of the Great Plains since settlement has been one of ongoing response to change, both to dynamics from within the region and to nationally based changes. By many measures the region has very successfully adapted to the changes required of it. It has become an agricultural production powerhouse, but it has not been able to diversify its economy as much as the rest of the country has.

The region's nonagricultural manufacturing base has grown as well, but it remains a relatively small part of the U.S. manufacturing base. However, aircraft, defense-related weapons development, and oil industry equipment manufacturing have long been important to the region and an important contribution to the nation's manufacturing base. The region remains a limited contributor to finance, insurance, real estate development, and other service industries as well. Finally, only a small proportion of the nation's tourist dollars are spent in the Great Plains, with an even smaller proportion in which the tourist destination is within the region.

More recent change (since 1970) in the demographics of the Great Plains has been substantial. Population has increased annually by 0.77% - just 0.13% if metropolitan areas are excluded. The Great Plains counties in each state, as a group, have increased in population. Annual growth has ranged from a high of 2.08% in Texas to a low of 0.11% in Oklahoma. Metropolitan areas within the Great Plains have, on balance, grown annually by 1.59% over this same period. Arapaho County in Colorado is the fastest-growing metropolitan county at 4.39% annual growth.

The Great Plains population includes a lower proportion of persons over 65 years of age than does the nation as a whole. Only 11.7% of the Great Plains population is 65 years of age or older, compared to 13.0% for the nation as a whole. Additionally, young adults in the region have tended to leave their home communities to seek careers after finishing their education. This is a trend of long standing.

Though a pattern of population loss does not necessarily mean the demise of rural towns and communities, there does appear to be a point beyond which it is extraordinarily difficult for them to rebound, to rebuild their economic vitality and social relevance. For many counties of smaller population, that demise picks up tempo when population falls below 10,000. Across the Great Plains, 59% of those counties lost population in the past 10 years. The problem is exacerbated when, in addition, the natural rate of growth is negative - that is, the number of births is less than the number of deaths.

Economic Performance of the Rural Great Plains

The economic sustainability of communities in the Great Plains is difficult to predict. Though not a precise predictor of the future, recent economic performance does provide valuable insight into the challenge facing the region. Comparing economic indicators for the Great Plains over the past decade or more with indicators for the nation raises concerns about economic sustainability in many rural parts of the region.

Table 1. Economic Performance of Great Plains counties, 1980-92 (US benchmark).

Note: "Winners" are counties with per capita income growth and employment growth above the U.S. nonmetro average. "Neutral" counties are those with per capita income growth or employment growth above the U.S. nonmetro average. "Losers" are counties with per capita income growth and employment growth below the U.S. nonmetro average.

Source: U.S. Department of Commerce.

A useful economic picture of the region comes from examining average annual growth in jobs and income since 1980. Like the nation and other regions, the Great Plains is subject to economic cycles that can distort economic performance in any given year. Persistent patterns of performance become more evident over a decade or more. This section examines growth in income and jobs for the Great Plains counties from 1982 to 1992, the most recent year for which county-level data are available. The data follow the Great Plains region that has been defined by the Great Plains Agriculture Council.

In general, the Great Plains economy has consistently boosted the incomes of its citizens, but it has had trouble creating new jobs (Table 1). Indeed, much of the income gain appears to come from dividing up a slowly growing economic pie among relatively fewer residents in the region. Put another way, per capita income gains are driven more by slowly growing - or even declining - populations than by robust gains in earnings. Real income grew just 1.3% a year in the Great Plains region from 1980 to 1992, a full percentage point less than for the nation as a whole. But per capita income, which takes into account the fact that the Great Plains population is growing much slower than the rest of the nation, actually grew faster in the Great Plains than in the United States as a whole. Total employment, meanwhile, grew 1% a year in the Great Plains from 1980 to 1992, roughly 40% less than for the nation as a whole.

Economic growth is not spread evenly across the region. Many rural places in the Great Plains have stagnant economies, while most metropolitan places are faring reasonably well. The region's metro counties enjoyed growth in both jobs and real income of 1.7% a year from 1980 to 1992. Per capita income grew just 0.2% a year after rapid population gains were taken into account. Rural counties in the Great Plains, on the other hand, had sluggish growth in both real income (1.0% annually) and jobs (0.3% a year). Income performance was substantially better when measured in per capita terms (2.1% a year) because rural counties lost population on average. Thus, fewer people shared an income pie that was growing very slowly.

For rural counties, economic growth has been concentrated among relatively few counties, most of which are emerging economic hubs. A useful way to benchmark rural counties in the Great Plains is to compare their economic performance with that of the nation's rural counties. Taken together, the region's rural counties had much weaker economic growth than elsewhere in rural America. Jobs grew only one-fourth as fast from 1980 to 1992. Total income also grew slower, although per capita income grew considerably faster in rural Great Plains counties (2.1% annually versus 1.5% for rural counties nationwide). That is the result of shrinking population in the Great Plains rural counties, compared with steady growth in the rest of rural America.

Very few rural counties in the Great Plains have enjoyed above-average economic growth since 1980. In fact, only 12 of the region's 375 rural counties had annual average growth in jobs and per capita income that exceeded the average for the nation's rural counties (those averages were 1.2% and 1.5%, respectively). Most of these counties were economic trade centers that essentially borrowed their growth from surrounding communities. By contrast, 142 rural counties in the Great Plains - more than one-third of all rural counties in the region - had below-average growth in jobs and per capita income. Most of these poor performers were dependent on farming or were former retail centers that have given way to bigger trade centers.

In sum, the region's economic performance since 1980 points out both strength and weakness. Metropolitan areas have enjoyed solid employment growth, creating jobs at a rate roughly equal to the nation's average. Rural communities, meanwhile, have had much weaker growth. Very few rural communities in the region have economic growth that exceeds the national average. Those that do appear to be doing so by becoming dominant economic hubs for broader market regions. Thus, serious challenges about long-term economic sustainability confront policy makers concerned with the future of the rural Great Plains.

Understanding the Current Terrain

Before discussing the future of the Great Plains, it is useful to review its current state and inherent limits that will inevitably shape its future.

What is Rural?

On balance, the non-metropolitan areas of the Great Plains may be among the most rural areas of the nation. Distances are far; population density is low. However, it would be a mistake to believe this area does not have important interdependencies with areas outside the Great Plains. Although there are few standard metropolitan statistical areas (SMSA) within the Great Plains, many have close linkages to the Great Plains. Among those cities are Minneapolis, Omaha, Kansas City, Oklahoma City, Dallas, Albuquerque, and Denver. Even more closely affiliated are Fargo, Des Moines, Sioux Falls, Tulsa, and Colorado's front range urban area from Pueblo to Fort Collins. These cities are the business, financial, distribution, health care, education, and cultural leaders with which Great Plains towns and cities affiliate and to which young people go to seek their future when they leave the Great Plains.

The Great Plains region is economically diverse, perhaps less so than other regions in the United States, but nonetheless diverse. The economy includes wheat, cattle, oil, coal mining, recreation, education, manufacturing, and service industry. Hence, the opportunities for development and employment vary greatly across the region. Employment opportunities in western Kansas or North Dakota are considerably more limited than they are in Oklahoma or along the Platte River in Nebraska. Consequently, a sustainable future for the Plains means different outcomes for different parts of the Plains.

There is a tendency to think of all the Great Plains as singularly dependent on agriculture. It is true that agriculture is of overriding importance across the Plains. Indeed, North Dakota, Nebraska, Kansas, and Texas are among those states most dependent on government farm programs. On occasion, government payments to farmers in those states represent more than 100% of the net farm income earned by farmers growing government program crops. Moreover, Texas, North Dakota, and Kansas (in that order) are the states with the largest number of acres retired from crop production into the Conservation Reserve Program, under which farmers are paid rental on the land to put it into soil-conserving uses and retire it from crop production for 10 years.

But not all counties in the Great Plains are primarily agriculturally dependent. Scattered across the region, 46% of the counties are predominantly nonagricultural. Manufacturing, mining, energy, and recreation are among the major activities in non-agriculturally dependent counties across the Great Plains. Hence, the range of development strategies for the Great Plains states must be much broader than farm policy strategies. Strategies must focus on adding new value to the base industries of communities, as well as on developing those manufacturing and business activities not primarily dependent on location for their success. Finally, a new and broader sense of community must be fostered and rural development must be viewed from the perspective of intercommunity cooperation, to create the critical mass needed for self-sustaining growth.

The Scenic Setting Phenomenon

It is more true than ever before that business activity can occur from locations selected by the owners, rather than from locations in close geographic proximity to firms' customers. This is especially true for high-value manufacturing and service activities for which geographic location is not a fundamental economic determinant. Examples are the growth of high-value computer and computer peripheral manufacturing that has grown up along the front range of the Rocky Mountains. That in turn has attracted computer software and assorted support businesses.

The primary placement of these businesses is not as random as might at first be assumed, however. Four factors appear important in determining the development of high technology and computer-based manufacturing along the front range of the Rockies. First, and very importantly, high-technology weapons manufacturing and sophisticated military installations in the region appear to have been a magnet. Secondly, the presence of universities in the region provided trained professional workers. Third, the region is a magnet for young adults drawn to the mountains and bringing with them good educations and high-quality work skills. Fourth, the lifestyle of the region was appealing to the firms' management and workers alike.

Another example of the location phenomenon, although outside of the Great Plains, can be found in southwestern Missouri and northwestern Arkansas, where the presence of several large lakes (the result of federal dam construction) and a rural Ozark ambience has stimulated development of recreation and retirement living. Indeed, the once sleepy Branson, Missouri, now rivals the Grand Old Opry of Nashville as the home of country/western music.

In short, this development is likely more place-specific than it might at first appear. The likelihood of duplicating broad computer industry development in the middle of eastern Colorado and the western Kansas plains is low. Nor is the recreation-based development of the Ozarks easily replicated in the absence of initial public investment in infrastructure and access to amenities of location.

In the absence of public policy intervention and investment - and perhaps even with it - stimulating new development of the type identified here is unlikely to occur.

The Importance of Critical Mass

Two factors are favoring development of midsize cities such as Des Moines, Lincoln, and Oklahoma City. The complexity and cost of doing many types of business in major metropolitan centers such as New York, Philadelphia, and Chicago are causing business owners to seek smaller and less costly locations. Moreover, increasing ease of electronic communication and control is making it possible to realize business economies in smaller cities. Thus, across the nation, this decade is treating the fortunes of smaller cities very well.

The second factor is the mirror image of the first. These smaller cities are large enough to have a critical mass of population, work force, education, transportation, other infrastructure, commerce, and lifestyle amenities to become magnets for people and businesses moving up from dying smaller communities. Thus, in the current environment these cities may provide the best of both worlds for the businesses and their employees.

Technological changes in communication have been extraordinarily important in bringing smaller cities more fully into the manufacturing, commerce, and services mainstream of American business life. Fiber optics and satellite up and down links make place a less constraining factor in choice of business location.

Aggressive marketing by somewhat smaller cities, along with some policy support, has brought a new array of cities into the development arena. Lawton (Oklahoma), Grand Island (Nebraska), Sioux Falls (South Dakota), and Fargo (North Dakota) are all cities able to play in this development game with considerable success.

Strategies for the Future

The changing demographics and lagging economic performance in the Great Plains, especially in non-metropolitan areas, do present a number of important challenges to the region. These challenges go to the delivery of public services and to the strategies to be pursued in economic development. This section discusses both the challenges and the strategies for meeting those challenges. Opportunities exist as well, perhaps more so now than ever before. These are addressed as well.

A Sustainable Future in the Absence of Policy Change

In many respects, the pattern of economic activity and development likely in the future is signaled by the patterns of recent years. These patterns can be characterized as development around scenic settings, development of towns and cities that have attained a critical mass of people and activity, large-scale agricultural production units, small communities in long-term decline, and continued outmigration of young adults from rural areas.

Large-scale agricultural production units. Narrowing profit margins in agriculture have long been a driving force in farm consolidation. Readily available government subsidy programs, underwriting producer risk, have also played an important role in supporting firm growth beyond the size envisioned in Jeffersonian agriculture. Critical mass having been attained in farm production units, it is often easy to grow even larger. Though there may be relatively limited production economies of scale beyond the threshold size of commercial agriculture, it is increasingly apparent that heretofore unrecognized economies of scale exist in input access and product marketing.

Here, too, technology has been a driving force. Access to large-scale equipment, computerized control technology, and production systems works to support farm firm expansion. Additionally, and importantly, improved management skills by firm owners should continue to support farm firm expansion. Finally, the trend toward contractual arrangements between producers and processors for livestock and, increasingly, for crops spurs expansion since processors usually desire to work with fewer but larger and more highly skilled producers.

Thus, in the absence of policy intervention, farm size should continue to grow. The larger and more successful farms will acquire the land resources of the smaller and less successful farms through purchase or rental. Most of these farms, if recent experience is a reliable indicator, will be specialized in production. Extensive environmental law and regulation will also spur consolidation of farming units. The per animal or per bushel cost of environmental compliance is typically lower for the large farm than for the small farm.

Larger farms have demonstrated their willingness to access farm inputs from outside their communities and to sell products to more distant markets, as well. These farm families, enjoying income levels equal to or in excess of their city cousins, travel great distances for consumer products, services, and recreation. Country/western and rock concerts in Fargo's new Fargodome attract attendees from a 200-mile radius. Walmart stores attract customers from a 100-mile radius. It seems unlikely that this long-term trend will change in favor of local, but small, communities. Consequently, without public and private policy intervention, towns below some critical size will be bypassed in favor of larger communities.

Small communities in long-term decline. Current trends do not hold much optimism for small communities. Those towns of less than 1,000 - 2,000 and located outside a reasonable commuting distance to a larger city seem destined, as a generalization, to decline in importance as business centers. That trend is not new. However, the tempo of decline may be picking up. Towns of under about 500 appear destined for even more rapid decline.

The factors driving this trend are not new. Better highways, more demanding consumer expectations, scale economies in almost everything a town provides, and a declining population base from which to attract customers all point to decline toward some irreducible minimum. For some towns, that means little will be left. For others that are able to create a specialized market niche, population may stabilize. That specialized market may be as a retirement center, a recreation center, or a bedroom community for a larger city.

Loss of young people to larger centers. Young people, especially those with good education and/or specialized training, have always been the most mobile segment of society. In the Great Plains, the pattern of outmigration of young adults is long-standing. It is unlikely that the pattern will soon change, except that those who depart are drawn from an increasingly smaller base. But the familiar pattern of high school graduation followed by a bus ride to the nearest city for college or job will continue.

That job may be found in a smaller city, possibly one closer to where the person grew up, as smaller cities enjoy a renascence. Ironically, many of those persons would prefer to find employment in their home communities. Yet, in most cases, those jobs exist only in larger centers.

In summary, under a public and private regime without new policies or initiatives to change, the trends identified are likely to continue. Nonetheless, it would be incorrect to assume that those who remain in rural areas do so at great cost. Despite declines in population, towns, and farm numbers, real per capita incomes tend to rise in these rural areas, although perhaps not at the pace of urban America. Moreover, improved communications and innovative means to deliver public and private services mean that rural America under this scenario will likely become a more desirable place to live, albeit for fewer people.

Building on Great Plains Agriculture

Even with the emergence of other industries in recent decades, agriculture will remain a vital part of the Great Plains' economic future. The region produces nearly two-thirds of the nation's wheat, more than half its beef, a fifth of its corn, a quarter of its cotton, four-fifths of its grain sorghum, and a sixth of its pork. With abundant endowments of soil and water, the region will continue to be the nation's breadbasket.

But from the point of view of economic sustainability, the question is not how many bushels of grain are produced, but how much value is added before this cornucopia of farm products is shipped to the rest of the nation and the world (Table 2, Table 3, and Figure 2). It is clear that if the region remains mostly a producer of bulk farm commodities, the number of farms will continue to shrink, leaving fewer and fewer farm trade centers serving ever-expanding market regions. This outlook is one of economic decline, if not death, for many small, remote Great Plains communities.

The alternative is to view the region's abundant herds and harvests as the essential ingredients for a budding food processing industry in the region. Food processing is the nation's leading manufacturing industry. But it currently is located mostly in the northeast quarter of the nation, near major population centers, or in the Sun Belt, where special crops are grown and the population is growing rapidly (Figure 2). Historically, the Great Plains has been too far from the nation's major cities to lure much food processing activity. In short, most farm states are not food states, and most food states are not farm states. Texas and California are notable exceptions to this generalization.

Can the Great Plains reverse this historical pattern and use its agricultural abundance to fuel economic growth in Great Plains communities? Pursuing a value-added strategy will not be easy, and widespread success is by no means assured. Still, the region does have three options to consider. The first is to enlarge its already large base of meat packing and processing. The second is to lay the foundations for a grain processing industry in the region. And the third is to explore new niches for food products or alternative products that might spawn additional processing opportunities. All three options call for public and private decision makers to reconsider their approach to economic development policy, funding for food and agricultural research, and logistical challenges.

Table 2. The importance of farm production in the 50 states, 1989-91 average.

Source: U.S. Department of Commerce, Bureau of Economic Analysis

Table 3. Population and food processing activity in the major food processing states and the farm states.

* 1992

** 1989-91 average

Source: U.S. Department of Commerce, Bureau of Economic Analysis

Enlarging the Great Plains meat industry. A sizable concentration of relatively new packing plants and a big, growing livestock herd make the meat industry an encouraging bet for adding more value to Great Plains agriculture in the period ahead. The region already accounts for half the nation's supply of beef, so there may be limited gains there. Pork may offer the greatest growth potential, as the industry continues its dramatic restructuring toward large, more vertically integrated producers.

Although the region's meat prospects are good, the corresponding economic impact may be low. Wages in the meat packing industry are relatively low. Moreover, the value added in meat processing is low. The average value added for all food products is 39%; for meat products it is just 21%. Thus, the region's solid prospects for expanding meat processing are unlikely to provide a widespread economic tide for Great Plains communities.

The Great Plains appears likely to retain its dominant hold on the nation's beef industry. The nation's largest, most efficient beef packing plants are found in the region. Supporting those plants are a concentration of commercial feed yards and a considerable beef cow herd that uses the region's extensive rangeland. The one resource that might limit further development of the region's beef industry appears to be water.

Water is essential to producing the feedstuffs that supply cattle feedlots. Water is also important to the meat packing process itself. Overriding both of these considerations may be the effect of concentrated livestock production on the quality of local water supplies. Water quality almost certainly will become a bigger factor for many communities in the Great Plains. Still, the great amount of wide open space in the Great Plains seems likely to provide ample room for continued expansion of the livestock industry.

The pork industry may follow the beef industry to the Great Plains. More than any other single segment of U.S. agriculture, pork production is undergoing a dramatic restructuring. Pork production is rapidly moving to producers who have three key characteristics: large scale, access to leading-edge genetics, and marketing contracts with processors. These commercial producers are locating in places with a welcoming business climate and substantial capacity to absorb animal waste. Many communities in the Great Plains welcome the new pork industry with open arms and have substantial environmental capacity. Thus, it is not surprising to see pork production moving away from its traditional home in the Corn Belt into states such as Oklahoma, Colorado, and Wyoming, states where pork has never before been a mainstay.

The key to further pork development in the region will depend critically on state laws on corporate farming. Some states in the region, including North Dakota, Kansas, and Nebraska, have laws that prohibit corporate ownership of farm enterprises, including pork production. Given the scale of the new pork industry, such laws will serve to push pork production to other states. Thus, if current laws continue, the Great Plains might resemble a checkerboard of pork production, with large concentrations in some states and little production in others.

Building a grain processing industry. The Great Plains produces huge amounts of grain, but most is exported to the rest of the nation or overseas. Thus, there is naturally a great deal of interest in building a bigger grain processing base in the region. The economic gains would be big. The value added in selected grain processing is among the highest of all food processing industries. But because these same industries are capital-intensive, they are dominated by a handful of large companies with well-established brand names. Thus, grain processing offers substantial potential but is difficult for new firms to penetrate.

Given the nature of the industry, states and communities in the Great Plains appear to have limited options. They might choose to seek branch plants of major food companies. Experience has shown that this is a costly, difficult approach to economic development. Firms would probably seek substantial concessions to offset the remote location of the Great Plains.

Another option would be to make new investments in transportation and packaging technology, aimed at offsetting the region's distance from population centers. The cost of shipping grain from the region to distant processing plants is relatively low; the cost of shipping processed products, on the other hand, is high. New technologies, related either to shipping or product shelf-life and freshness, might help to close that cost differential. Prospects for substantial progress, however, are uncertain.

Exploring new agricultural niches. The third option is to explore new niches for processed foods and alternative products. These niches are not well defined and will involve creative ventures that will naturally involve some risk. Given the economic outlook for the region, some of these risks may be worth exploring, especially if the risk can be shared between the public and private sectors.

In the past, the Great Plains region has produced a traditional set of crops well adapted to its soil and climate. In the future, with economic sustainability a key concern, the region may want to turn to a different set of crops. For instance, there may be parts of the region that, if water supplies were sufficient, might have the soil and climate to grow fruits and vegetables for several months out of the year. Costs of production might be substantially less than in coastal states such as California. As in grain processing, however, entry may be hampered by a strong industry concentration among a few firms located in a few states. For example, nearly 60% of the nation's employment in the frozen fruits and vegetables industry and more than 80% of employment in the dehydrated fruits and vegetables industry are located in just four states.

The region may also want to make some investments in alternative crops that might be used for either food or industrial uses. Such basic research has longer odds of success. Most states will want to pursue meat and grain processing opportunities first. Research on new crops is a good candidate for regional cooperation. By sharing the costs and the risks, states in the region can hold another development option open while limiting the expense of the investment.

Building on Information Age Opportunities

The new information age technology offers substantial opportunity for both business development and provision of public services in the Great Plains. It also presents an imminent danger. We will focus first on the opportunities.

Development opportunities. Business expansion opportunities in the Great Plains are scarce. Sparse population and outmigration often leave businesses with small and/or declining markets. Local consumers offer limited opportunity for businesses to expand sales. There will be some opportunity to expand business through value-added processing of raw materials available in the region, such as agricultural products and minerals. This will provide additional employment and income in the communities where plants are sited. However, there will not be many locations because of the generally large volume of the raw product necessary for plants to run efficiently.

The new information age technology has the potential to expand business opportunities. First, it greatly reduces cost and improves access to markets and market information from outside of the region. Second, working with the secular movement toward a service-based economy, some businesses, particularly those that depend on an effective communications system, have been freed from their traditional locations and may select a location in the Great Plains.

The market expansion potential of the new telecommunications technology is substantial. An increasing volume of goods and services is being marketed over the communications networks, but the total potential is far from being exploited. Computer networks allow a business person in any location to offer products, explore business opportunities, and gain critical trade information from within the United States and around the world. A business person can explore this network from any location with access to the network. Government procurement programs targeted to smaller businesses are prime candidates for this technology.

The information highway contains information about the goods and services available for sale or wanted and (often) the peculiarities of the market. International markets in particular require special technical expertise. The novice can exchange information with other business people who have operated successfully in the desired market. The information highway will not answer all questions, but it can be an idea generator and help narrow the search for markets and information before expensive on-site visits are made.

Not only can the information highway provide better access to markets and information, it has also freed many firms to locate in nontraditional areas. The last decade has brought a rapidly changing face to business transactions in the United States and the rest of the world. Large corporate entities have begun a process of downsizing and decentralization with extensive layoffs or early retirement buy-outs for many of their long-term employees. Many corporations are encouraging "virtual office space" for their executives, which allows them to provide leadership from off-site locations. Over the last decade, technological advances made in information and technology transfer have lowered the transaction costs of business start-up. Many of these former employees are discovering that the lowered transaction costs and technology advancements are providing opportunities for non-location-specific small diversified corporations that can better compete in the world economy.

Many large business firms are now locating business functions at locations remote from their main offices. In the first round of this activity, telemarketing, data processing, and certain accounting and financial functions are being remotely located. In subsequent rounds it is likely that some manufacturing, marketing, computer services, and additional financial services may be located remote from headquarter sites.

These remote locations appear likely to gravitate first to smaller cities with populations in the 50,000 - 150,000 size range. Cities of this size typically provide communications infrastructure, access to a labor pool, and desired lifestyle amenities for employees. It is reasonable to expect even smaller cities to benefit from this trend as well in subsequent rounds of business relocation.

Very small towns are not likely to prove very attractive to outside firms and will likely find their future in homegrown businesses and in serving satellite support functions for larger communities. Some small towns have done very well as bedroom communities for adjacent cities. Additionally, as discussed earlier, locational amenities will continue to play an important role in the growth of smaller cities and small towns. If a city doesn't have mountains or lakes nearby, it should hope for a river or a historic site.

Several Great Plains cities and larger towns have an underused advantage in the job competition arena. Their telephone and electric power transmission systems have been augmented to meet the needs of military installations such as air bases, radar stations, and missile installations. Those infrastructure upgrades can be very important advantages as communities compete for jobs in the information age.

In addition to expanding marketing and location considerations, the information highway can provide business services, technical assistance, and training. Businesses in major metropolitan centers are accustomed to having a wide variety of business services within easy reach. Businesses in less populated areas are faced with providing their own legal and accounting services, operational and financial management services, personnel services, and so forth. Computer networks can provide access to the top business schools and service providers around the world. Provision of these services and market information is in its infancy. A fraction of what could be offered is currently available. The information highway is far from friendly at this point. Significant investment in skill development is required to effectively access the system. The cost of accessing the system can be high and the response time slow if a local fiber optics line is not available. However, these barriers are being torn down. The new technology may create a change in the way business is conducted that is similar in scope to the revolutions created by the rail and highway systems.

Challenges to address. Where it once was more important to provide capital infrastructure improvements such as major traffic thoroughfares, bridges, rail transportation, and so forth, it is now important that capital infrastructure improvements focus on the ability to have reliable, instant communications transfer to worldwide markets. This business paradigm shift will likely affect regrowth in the Great Plains region as more businesses discover that they can operate from a physical location that is of their choosing rather than from a location that is determined by transportation arteries. U.S. businesses are just now discovering the extent to which the information highway will expand their location alternatives.

Although telecommunications technology will create the potential, actual regrowth will depend on several factors: First, the area will need to be connected to the new technology. Being left off the line could result in greater isolation than was true before the new technology was developed. Second, the area will need to possess other attributes that will attract businesses. Businesses being footloose will be of little consequence if locations within the Great Plains are not attractive. And finally, local business people will need to accept and use the new technology to capture some of its market expansion possibilities. The biggest impediment to using the new technology may be a cultural predisposition not to embrace it. The danger of this emerging technology is that those who do not access it will be more disadvantaged than before the technology became available.

In addition to communications infrastructure, a renewed policy commitment to traditional infrastructure development is imperative because most of the Great Plains region is a production-based economy. Transportation remains a vital link in the economic chain for commodity and manufactured goods. For the Great Plains region it will be critical that economic development policies continue to focus on the need for adequate rail, truck, and air transportation at the same time that communications technology also is expanded.

Finally, it is important to remember that economic development brings new ideas and more culturally and racially diverse communities. Economic development upsets the status quo and the local power structure. Not all communities are comfortable with that prospect. Those that are not will typically be viewed as less desirable places to locate a new business. Those communities that embrace change will create a more receptive environment for economic growth. They will be rewarded by growth in jobs and income, and a more dynamic, interesting community in which to live.

Conclusions

The Great Plains was, and continues to be, a region in transition toward the future. The region's progress has lagged that of the rest of the nation in many ways. That has been particularly true for the region's non-metropolitan areas. We have argued that this is the result, in part, of the insularity of the people as well as the natural impediments of distance and sparsity of population.

We have laid out, in our discussion, three possible scenarios for sustainable growth into the future. The first scenario is the most austere, and requires no change in policy.

The second scenario stresses the potential for adding value to the region's agricultural production as a means of adding jobs and income. That will require more indigenous leadership and investment than the region has heretofore demonstrated. However, the strategy has significant promise. Even if successful, it is unlikely that the growth impact would spread evenly across the region. Instead, growth would likely be enhanced principally around those cities and towns that have shown growth in the past decade.

The third scenario is the most intriguing. Vastly improved communication and footloose business functions could result in substantial job and income growth across the Great Plains. However, the attractiveness of agglomeration in and around growth centers would still be difficult to overcome. More importantly, this third scenario - and for that matter, the second scenario as well - will not occur without creative public- and private-sector partnering in infrastructure, education/training, and equity investments across the Great Plains.

Current evidence strongly suggests that economic development occurs most frequently and most successfully where private sector firms partner with each other, and with public institutions and governments, in doing the many things necessary to make business growth happen successfully. Great Plains people and their public/private institutions must act on the strength of this evidence if these more intriguing and optimistic scenarios for a sustainable future in the Great Plains are to be realized.

About the Authors

Dr. Marvin Duncan is a professor of agricultural economics at North Dakota State University (NDSU). Before joining the NDSU faculty, Dr. Duncan was a presidentially appointed member of the board of the Farm Credit Administration and, earlier, a vice president and economist at the Federal Reserve Bank of Kansas City. He researches and writes on agricultural and rural policy and rural financial and credit markets.

Dr. Dennis Fisher is a professor of agricultural economics and an economist with the Texas Agricultural Extension Service at Texas A & M University. He directs the rural policy program within the Economic Development Program Unit of the Extension Service. Dr. Fisher plans and conducts rural policy workshops on the national and state levels, and he has advised many state task forces and legislative committees. Before joining the Texas A & M University system, he was on the faculty at Cornell University, Oregon State University, and Michigan State University. Dr. Fisher also has consulted extensively with government, retail, service, and manufacturing firms throughout the United States and advises them on economic development, market analysis, and other business and economic areas.

Dr. Mark Drabenstott is vice president and economist at the Federal Reserve Bank of Kansas City. He is responsible for overseeing the bank's research on the seven-state Tenth Federal Reserve District. Dr. Drabenstott has spoken to audiences across the nation on agriculture, rural America, and public policy. He is the author of numerous articles and books on such topics as farm policy, agricultural trade, rural and economic development, and the food industry. Dr. Drabenstott is chairman of the National Planning Association's Food and Agriculture Committee and a director of the National Bureau of Economic Research.