| Speeches by ODA Director Katy Coba |
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| January 14, 2004 |
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North Willamette Valley Horticultural Society
The growers in the NorthWillametteValley(Marion, Polk, Yamhill, Clackamas, WashingtonCounties) produce about one half of the total agricultural value in the state. This is the center for nursery, wine grapes, and much of the grass seed and vegetable crop production. Nearly 70% of the state’s class I soils are found in these counties – indeed, this is the place that the Oregon trail ended and the early pioneers identified as so fertile and fit for settlement.
And now 70% of the state’s population has followed in their tracks and settled here as well.
You are keenly aware of the challenges this presents with the urban-agricultural interface. And Oregon’s land use laws are at work everyday, preventing urban sprawl onto the most fertile agricultural lands in much of the world.
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.
- 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.
The Future:
It is worth noting that in the next 20 years 75% of farmland in Oregonwill 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?
Trends:
Now, some of you are very trend savvy – that is, you are very aware of what’s going on in the consumer/retail area and have modified your operations or your marketing strategies to match certain niche markets.
Let me share a couple of trend observations that I think have bearing on our industry:
- More U.S.households now have more pets than children. More households own horses now than in 1900. Ours is a culture of friendships with fuzzy things. Agriculture is the basic source of products for much of the pet-food industry, and this presents great opportunities for those who can latch onto it. But another aspect of this is that the public is increasingly interested in how farm animals are raised and handled and this is translating into pressure from major retailers like McDonalds and others that are shaping standards for animal care, housing, and handling.
- Our demographics are changing. Thirty (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. This is another opportunity for agriculture and food processing for those with their finger in the wind.
- Internet grocery shopping almost doubled from 2000 to 2002, with about 10% of consumers doing some amount of buying online. Oregon growers rank near the top in the nation for usage of computers in their business, some of it related to on-line direct to consumer retailing. Specialty fruits and other prepared products can fit nicely into this niche arena for some of our producers and processors.
- One of the largest growth businesses of the 21st century in the U.S. will be the health & nutrition industry, fueled by 76 million baby boomers in search of maintaining their health and appearance. And, of course, the Atkins diet is driving a wave of demand for beef. And fruits and vegetables fit well into the renewed interest in wellness and those wanting to lose weight. Health and nutraceutical products are predicted to grow to $500 billion in the next decade -- tremendous opportunities for new products and increasing demand if agriculture can structure itself to share in the growth.
- Quality assurance and traceability for food safety and production practices is a growing demand by food product buyers and consumers worldwide. ODA has been working with the industry ion responding to such customer demands, and Oregon is recognized for around the country for creating voluntary certification programs that match growers and processors efforts to these changing market demands.
- The Good Ag Practices (GAP) and Good Handling Practices (GHP) voluntary certifications are keeping Oregon producers in markets they likely could not access otherwise. There will be an increasing demand for this type of program.
- We are currently evaluating whether there is market value in a voluntary certification for “sustainable agricultural.” Yes – try to define what that means! The components are economic viability, stewardship of the resource base, and social or community development. So we are discussing what this means for actual production and marketing efforts.
In a recent trip to Europe I learned more directly about market expectations there and the EuroGAP certification program that will likely be required by producers and processors here in order to export to European countries.
- Another trend worth noting -- in the next 20 years 75% of farmland in Oregonwill change hands. Tax laws, development pressures, and the general economic climate will influence how many young farmers enter agriculture in Oregon -- and the characteristics of our farms, i.e., family owned, corporations, or consolidation and fewer farms all together.
- Presently more than 97% of Oregon farms are family owned and operated, either as sole proprietors (85%), family partnerships (7%) or family corporations (6%). The structure of farms affects our communities, rural businesses, and the landscapes that Oregonians value so much. I know some of your families have been involved in your operations for over 100 years.
- There are more than 1,800 Century Farms in Oregon. I know of no other sector of our economy that can claim 1,800 businesses that have been in existence for over 100 years. That is a remarkable accomplishment. And we need to continue this heritage for many more generations.
- Another development that is important to mention is the interest in sustainable production that I already mentioned and the tie agriculture has with renewable energy opportunities.
- 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. More recently, solar power for electric fencing and remote watering has been used for a couple decades.
But new technologies, and changing economics and social structures are enabling even more opportunities that require another look by our industry.
- 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. With rising energy costs and demand over water, this deserves a serious look by all growers and irrigation districts who have the appropriate water flow and drop (head) to generate the power.
- 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. This technology is appropriate for other large livestock operations as well.
- Many landowners participate in lease agreements for siting of wind towers, and some producers are making efforts to form their own companies to 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.
I encourage you to attend a conference next week (Jan. 20-21) at the PortlandConvention Center. If you go to ODA’s web site and click on “agriculture and energy” you can find more about the Harvesting Clean Energy Conference.
Now, I fully recognize the challenges that vegetable processors in the valley have faced in the past few years. Global markets, consolidation in the wholesale and retail food sectors, increased costs and labor issues, and other factors have taken their toll and we’ve seen the closure of some critical businesses that have affected growers.
I have met with the NW Food Processors organization and several of our key food processors recently and we have developed four key initiatives that are being presented to the governor and legislatures to assist the food processing industry in Oregonstay competitive. We will work through the details of these and I hope to see some positive outcomes from these efforts.
Despite the challenges we face, there are also many reasons agriculture and food companies will want to expand, locate, or do business in this state.
Oregon has distinct advantages, which include:
- Diversity of crops, climates, and production regions
- Reputation of quality products
- Recognized efforts in sustainable resource production
- Aggressive marketing programs with partnerships between grower organizations, dealers/processors, ODA, and other state and federal organizations (WUSADA).
- Food Innovation Center & export certification programs/labs
- Quality research and extension facilities and capabilities
- Major west-coast port facilities
- Land base, water, and infrastructure that, while subject to increasing competitive demands, represent significant opportunities for renewable energy and agricultural production capacity
- Oregon’s land use system and “right to farm” laws help minimize conflicts with non-farm residents and maintain our investment in a viable agricultural infrastructure
I am optimistic about the future. Change is rapid and constant in today’s global economy. And we will need to be flexible and adaptive and look at doing things new ways, with new partners, and constantly developing new products and measuring consumer demand.
But Oregon agriculture can be viable and will remain an integral part of Oregon’s economy because of the innovation and commitment and dedication of producers like you.
Thank you for the opportunity to speak with you and I welcome your questions.
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