October 31, 2003 - Metro speech
I want to thank Metro for holding this symposium and listening closely to the impacts of its decisions on one of Oregon’s leading industries, because -- It’s all about agriculture!
I’ll tell you why…
- Metro is a regional organization. Let’s start with some regional figures:
- The food industry is one of the largest economic sectors in the Northwest according to US census data. It employs over 630,000 people in all phases of food production, processing, marketing and retailing. Food employment outpaces high tech and wood products by more than 4 to 1, according to Portland State University’s Food Industry Leadership Center. The economic value delivered by all phases of the food chain in the NW exceeds $91 billion, with over 60% attributed to manufacturing and distribution.
In Oregon:
- Agriculture is Oregon’s number two industry, accounting for more than 150,000 jobs in Oregon (8% of total jobs, 1 in 12) that are related to production, input industries, processing, transportation, storage, and marketing. The overall industry payroll tops $2.8 billion.
- The agriculture industry contributes nearly 9% of gross state product when all of these related segments are counted. Agriculture is more than production- but production is the central component that keeps the machine going.
- Agriculture and related industries are everywhere in Oregon. As you’ve heard today, agriculture is rural and urban. Five of the top six ag producing counties are located in the Willamette Valley and are within an hour´s drive of Oregon´s two largest cities, Portland and Eugene.
- Nursery production, centered in the Metro area, has more than tripled in the past decade and has led as the top agricultural commodity by value over the past decade. This is a “cluster” industry that employs over 10,000 workers directly and thousands more in shipping, supplies, equipment, and other economic aspects.
- Oregon agriculture is very diverse. We are blessed with many micro-climates and geographic regions that enable production of over 200 specialty commodities.
- This diversity contributes to the economic vitality of the industry and the breath-taking landscapes that result from hard work and proper management of resources.
Despite the overall downturn in the economy in the past 3 years, the value of agricultural output has remained stable. Net farm income did suffer and growers have faced lower prices and higher costs, but 2002 showed an 8% increase in net income and 2003 looks to be an even better year.
So, while ag is cyclical and producers and processors are struggling, they are still able to contribute significantly to the economy and continue to show their resilience and productivity (more output with fewer inputs).
- Land is the critical infrastructure anchor to maintaining and expanding production and economic development.
- Land -- as one of the key components of production – isn’t easily transferable. Some would like to move it, but costs are somewhat prohibitive! The base is anchored here. It isn’t a factory that can move jobs or production overseas at any moment, rendering large investments (public and private) in buildings and equipment idle or obsolete.
- Agricultural land is a stable resource that gives the industry an advantage in economic development because it isn’t going to be quickly converted to another use or have its associated “productive assets” shipped somewhere else.
- Agricultural land is a sustainable and renewable resource. Oregon producers are employing some of the most progressive and advanced practices in the world to ensure their lands function as working, producing, economically viable and environmentally sustainable operations.
Because Oregon’s land use laws help stabilize agricultural lands for agricultural use -- and because Oregon’s producers and the extended food processing industry are recognized as leaders in the area of sustainability and high quality products -- this creates the infrastructure for economic development in expanding existing food processing and attracting new processors to the state.
ODA is cooperating with OECDD and other local economic development organizations to increase the number of agricultural entrepreneurs who make good use of the agricultural bounty we have in this state. The variety of high quality products we can grow lends itself to value-added, sustainable, specialty product production and innovation. Others recognize this fact as well.
So:
- I joined Governor Kulongoski recently in signing a letter of recruitment to California food processors and other businesses.
- We are trying to expand on our existing food product base to create more jobs and associated economic activity, support existing and new agricultural businesses, add value to products, and assist in the market development of the specialty commodities and niche products we produce.
- Out of more than 200 letters sent, 18 companies have responded -- 12 of these were companies that ODA sought to recruit as progressive food processing entities.
To be sure, Oregon agriculture is not immune from the forces of global trade, currency fluctuations, consolidation in the retail food sector, economic pressures, and shifting environmental attitudes.
How are Oregon producers and processors adapting to these changing market conditions?
I want to briefly talk about 4 or 5 ways that Oregon agriculture is adapting and the advantages we have here that make this such a dynamic industry.
1. Certification Programs:
- Oregon is more reliant on trade than most states. We move over 80% of production across state lines, with half of that leaving the U.S. for destinations in Japan, Korea, Taiwan, Egypt, the EU, and many other nations.
- Agricultural products, by volume, are the largest export through the Port of Portland, making up over 60% by tonnage. By value, agriculture ranks second, representing nearly 20% of all Oregon’s exports.
Meeting the expectations and quality desires of our customers -- overseas as well as domestic -- is critical.
Quality assurance and traceability for food safety and production practices is a growing demand by food product buyers worldwide. Oregon (and ODA), in responding to such customer demands, are recognized leaders in the US to create voluntary certification programs that match growers and processors efforts to these changing market demands.
2. A Commitment to Research & Development and Technology Adoption:
Oregon producers are adopting cutting edge technology to stay competitive.
Here are just a few of those efforts:
- Usage of Computers: more than half (52%) of Oregon farms owned or leased a computer, and 30% used it for their farm business – one of the highest rates in the country.
- On-board computers -- touch-screen monitors in tractors and GIS technology provide instant data on harvesting that enable constant flow adjustments to equipment and precision application of fertilizers and seeding rates adjusted to field changes in soil, fertility, moisture, etc.
- Growers of grass seed, wheat, potatoes, and other field crops here in the valley and around the state are using this technology.
- Machinery that drives itself -- GIS precision steering of farm machinery is being employed that enables unmanned operation for extended hours and precise planting and harvesting.
- Stahlbush Island Farms and others are using this equipment.
- Precision irrigation -- low-pressure irrigation technology, laser leveling of land, recycling of water, and satellite imagine of soil moisture or in-field monitors enable water use reductions of 10-40%.
- Container nurseries throughout this area recycle virtually all of their water.
- Food Processing Imaging Equipment -- infrared or other sensory imaging in processing equipment that sorts commodities by grade, size, or other characteristics quickly and accurately.
- State-of-the-art Plant Propagation --micro-propagation of plants in laboratories from plant materials, cutting the grow-out time of new types of crops (eastern filbert blight resistant hazelnut trees) by over 50%.
- Environmental Know-how -- applying knowledge of plants, soils and environments to assist in environmental remediation and restoration.
- Micro-forecasting – localized weather station monitors that relay information via satellite or the internet to producers for use in crop planting, protection against frost, irrigation scheduling, etc.
- These stations are used extensively throughout the Willamette Valley, along the coast, and elsewhere in Oregon .
- Mechanical power – mechanization of pruning, harvesting, thinning and other technologies are being developed to address competition with overseas labor rates.
- Renewable Energy – Kettle Chips has put in the largest array of solar energy panels in the Northwest to generate power for its processing facility and to sell back to the energy grid.
Which leads nicely to the next topic area:
3. Renewable Energy:
While still relatively new in its application in Oregon, renewable energy derived from agricultural sources is as old as agriculture itself. Water wheels and windmills, just two examples, have been around for centuries. New technologies are enabling more producers to utilize farm-based inputs to lower purchased energy costs and to generate power for sale to others – renewable, clean, and sustainable power.
- Oregon’s infrastructure of irrigation canals and piped water systems presents many opportunities for small-scale, micro-hydro energy generation that can assist in the offsetting pumping costs and water conservation.
- Oregon wheat growers are examining the feasibility of an oil-seed crushing facility that would transform mustard seed, canola or other oil-seed crops that are used in rotation with wheat, into the base oil for bio-diesel and other bio-based products.
- Dairies are evaluating the potential for anaerobic digestion of manure that can reduce odors, manage manure nutrients, cut land application costs, create value-added compost products, and generate electricity.
- Many landowners participate in lease agreements for siting of wind towers, and some producers are making efforts to form their own companies to actually own the towers and sell the electricity.
These are all ways that Oregon producers are beginning to evaluate additional uses of their land and structural assets for potential cost savings, increased revenue flows, and generation of energy in a clean, sustainable way for Oregon’s citizens and businesses. You will likely see more of these technologies even in urban areas.
4. Connecting with Consumers:
- Oregon ranks tenth in the U.S. for direct sales to consumers, restaurants, or other markets.
- Oregon boasts 67 farmers markets that served an average 90,000 consumers per week throughout the season, with estimated sales of $15 million - $20 million.
- Nearly 100 farm roadside stands operate around the state selling directly to consumers.
- Five Oregon counties, including Clackamas, Multnomah and Washington, are ranked in the top 100 counties nationally for farm direct sales. With the consolidation in the wholesale and retail food sectors, producers are finding fewer outlets and more of them are marketing directly to consumers. This direct link between growers and buyers help bridge that sometimes cavernous urban-rural divide.
- Oregon producers and processors are also increasingly selling product on the internet.
- Nationally, internet grocery shopping almost doubled from 2000 to 2002, with about 10% of consumers doing some amount of buying online. Oregon producers and processors are taking note and marketing to internet savvy buyers.
- Oregon is engaging in more specialized product development and marketing to niche buyers, including ethnic groups.
- Consider that 30 of the U.S.’s 100 largest cities now have a “minority” as the “majority” population. Increasing numbers of ethnic groups are seeking foods that fit their culture and tastes.
- Another niche market, perhaps 10% of the public, buy their food based on preferences surrounding how food is produced, whether it be “sustainable,” “organic,” “natural,” “humane” or some other practice.
- Some producers and processors are targeting these markets and finding success with buyers willing to pay higher prices. The certification programs noted earlier can play a key role with these niche markets.
Quality is the final denominator and marketing trait of Oregon agricultural and food products. A close connection with what consumers are seeking is one of Oregon’s strengths.
The Future:
It is worth noting that in the next 20 years 75% of farmland in Oregon will change hands as Oregon’s aging farmers retire. Tax laws, development pressures, and the general economic climate will influence how many young farmers enter agriculture in Oregon and the characteristics of these farms – will they be family owned (currently 98% are), non-family corporations, or paved over land with urban sprawl?
- Agricultural land cannot be viewed as an idle resource waiting for conversion to a “bricks and mortar factory” or homes.
- These lands and associated infrastructure are an integral and stable economic platform statewide – urban and rural.
- These lands already generate thousands of jobs and on-going investment throughout the state.
- These lands are not static in how they are managed.
- Farmers adapt to changing market structures, grow different commodities when possible (witness the expanding wine industry), adopt new technologies and best management practices that provide conservation, environmental and economic benefits, and beautify the Oregon landscape for all of us.
- The vistas we have in Oregon, the beauty that is Oregon, owes in no small measure to the agricultural community that protects the land and feeds our people.
- Agricultural lands present the resources for renewable energy that can make Oregon as a whole more sustainable.
I’ll conclude in agreeing with Ralph Waldo Emerson who said that sometimes “what we call results are [really] beginnings.”
This discussion or dialogue today is an important step that continues previous discussions that will go on into the future.
My hope is that Metro and all of Oregon’s citizen can fully recognizes the value, importance, and stability that agriculture adds to this region and the state as a whole, because, after all --
It’s all about agriculture!
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