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

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

2 Statistics Canada • Statistique Canada

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

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
CCS: the CCS in the centre of the buffer zone
Inverness, Québec
This is repeated for each CCS

Dissemination area centroid
Dissemination area boundary
Census consolidated subdivision centroid
Census consolidated subdivision boundary
Selected dissemination area centroids
50-km radius buffer zone


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


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

Labour supply
from the farm household (per capita)
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

Labour demand
from the farm business (per capita)


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 Low Total
Medium High
DEMAND Labour supply Labour supply Labour supply CCSs
From farm p.c. <$100 p.c. $100-$500 p.c. >$500
to community

Low
Labour demand p.c. 409 346 29 784
<$100

Medium
Labour demand p.c. 20 783 271 1074
$100-$500
High
Labour demand p.c. 36 447 483
>$500
Total CCSs
429 1165 747 2341

Toward a framework to assess
flows: direction of linkages and community type

Community type Agriculture is relatively Agriculture is relatively less
important in the important in the
community community
Direction
Higher farm to community Agriculture sector changes are Agriculture sector changes are
linkages likely to have large impact likely to have a small impact
on the rural economy on the rural economy

Higher community to farm Rural development is likely to Rural development may still
household linkages have a large impact on the have some impact on the
farm households farm households

Small linkage in both Agricultural and rural initiatives Agricultural and rural initiatives
directions are likely to be disjointed are likely to be disjointed


Toward a framework to assess flows:
Labour linkages (number of CCSs)

Community type Gross farm receipts per Gross farm receipts per
capita =>$1,602 capita <$1,602

Direction
Labour D > labour S 319 CCSs 88 CCSs
Higher farm to community
linkages

Labour S > labour D 851 CCSs 678 CCSs
Higher community to farm
household linkages
Small linkage in both … 409 CCSs
directions
Labour supply and demand
p.c. <$100


Gross farm receipts Gross farm receipts
per capita per capita <$1,602
Labour linkages between the Labour D > labour S
=>$1,602
319 CCSs 88 CCSs
farm sector and the community
Labour S > labour D 851 CCSs 678 CCSs

Small linkages … 409 CCSs


Toward a framework to assess flows:
Labour linkages (number of CCSs)

Gross farm receipts per Gross farm receipts per
capita =>$1,602 capita <$1,602

Labour D > labour S Average demand p.c. = $679 Average demand p.c. = $162
Higher farm to community Average supply p.c. = $507 Average supply p.c. = $131
linkages D/S ratio=1.34 D/S ratio=1.24

Labour S > labour D Average demand p.c. = $754 Average demand p.c. = $102
Higher community to farm Average supply p.c. = $1,432 Average supply p.c. = $294
household linkages D/S ratio=0.53 D/S ratio=0.35

Small linkages Average demand p.c. = $36
Average supply p.c. = $57
D/S ratio=0.63


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


Cs4 p12 alasia bollman agri_rural

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