Tough Times Down on the Farm

Member Group : Lincoln Institute

Although Pennsylvania is often characterized as an "industrial state," agriculture is actually the state’s number one business. A recent poll of farmers across Penn’s Woods found that, although there are some problems unique to agriculture, many are suffering the same ill effects from the recession as are non-farm businesses.

The sheer size and scope of agri-business makes the health of the sector critical to Pennsylvania’s economic recovery. Over one million Pennsylvanians are employed in farming operations and with 27% of the state’s land mass dedicated to farming, the industry generates over $6 billion per year in sales.

Farming operations have been hit particularly hard by the economic recession. State Senator Michael Brubaker (R-Lancaster), chairman of the senate Agriculture Committee, says dairy producers in particular are in financial distress. He points out over half the farms in Pennsylvania produce dairy products, and they currently are unable to make a profit.

The fact dairy producers cannot even sell what they produce for enough money to cover costs has forced many farm families to seek outside employment in order to make ends meet. Brubaker said in some cases farms have been in a family for generations, so the current generation will do whatever is necessary to hold on to their farm business.

Effects of the economic recession on farming mirror those of the economy as a whole. The agri-business poll conducted by the Lincoln Institute of Public Opinion Research found that, relative to the rest of the economy, 42% of the farmers responding rate the current business climate for agriculture in Pennsylvania as average. Fifteen percent gave the state’s agricultural business climate above average or excellent marks, while 43% rated it as below average to poor.

The fair to negative assessment carried over to the perceived trends in the state’s agri-business climate. Half of the respondents said the agri-business climate has remained about the same over the past six months, while 30% say it has gotten worse and 21% feel it has gotten better. Looking ahead six months, 60% think the commonwealth’s agri-business climate will remain about the same, with 21% expecting it to get worse and 18% expecting it will improve.

Senator Brubaker feels that those numbers are actually rather optimistic given the current state of agriculture in Pennsylvania. "When you have fifty percent of our farm economy not making money," he said, "but yet farmers have some level of optimism about the future, that makes me believe that we are going to have agriculture in Pennsylvania going forward."

Driving the positive feelings farmers have about their economic future is a love for the quality of life the occupation provides. When asked what they consider to be the state’s biggest agricultural asset 45% cited quality of life followed by confidence in the agricultural infrastructure of the state and growth potential.

On the down side, the regulatory environment was cited by 35% as Pennsylvania’s biggest liability, closely followed by the costs of land, and taxes. Senator Brubaker said the animus toward regulations is fueled by the fact the state and federal governments often implement new regulations with little advance notice and that it is unpredictable what will come next.

As you might expect, land and land use regulations are a top concern of Pennsylvania’s agri-business community. Farmers gave a vote of confidence to local municipalities with over half saying land use and zoning decisions should remain in the hands of local government. Twenty-nine percent would like to see such decisions made at the county level, while only 12% wants to state to make zoning and land use decisions.

In dealing with the economic recession, farmers have had to take many of the same steps as those in non-farm businesses including reducing work hours, raising prices, laying-off employees and closing or consolidating facilities. Still, as a testament to the resilience of the farming community, more expect to see their revenue increase over the coming six months than anticipate a decline.

Although agri-business seldom gets much media coverage, it is clear that for Penn’s Woods to emerge from the current economic recession this sector of the economy must be restored to economic health. With regulation and taxes among the industry’s top concerns it is clear government is a big part of the problem. Lower taxes and less, or at least more predictable regulation will be the keys to the sector’s recovery.

(Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal. His e-mail address is [email protected].)

Permission to reprint is granted provided author and affiliation are cited.