What the EU and U.S. can teach each other about rural jobs

On both sides of the Atlantic, maintaining or increasing work in the countryside is a common goal for policymakers and economic development proponents. Professor of Agribusiness Ashok Mishra and his co-editors evaluate what types of policies can help.

Say the word “rural,” and average Americans likely will think of red barns, black-and-white cows grazing in pastures, and farmers on tractors tending fields of wheat or corn. Or they might think of mountain-studded landscapes beneath which European peasants scythe grain and stomp grapes.

Most won’t think of food-processing plants, manufacturing, public services, or tourism, but in fact, that’s where most of the jobs are in rural America and in rural parts of European Union countries. In 80% of non-metropolitan counties in the United States, farming is not the primary source of economic activity, the U.S. Department of Agriculture research shows. In most EU countries, more than 90% of economic activity comes from non-farm sectors, the European Commission found.

On both sides of the Atlantic, maintaining or increasing the number of jobs in rural areas is a common goal for policymakers and economic development proponents. But what policies encourage rural job creation, and what policies have proven ineffective?

That’s the question Professor of Agribusiness Ashok Mishra and his fellow co-editors try to answer in their new book, Rural Policies and Employment: Transatlantic Experiences. Nearly 40 researchers from both sides of the Atlantic contributed to chapters in the book, which is aimed at researchers, policymakers, community development agencies, and others working to energize job growth in rural parts of the United States and Europe.

“Some people will say rural development is an oxymoron: If it’s rural, it’s rural; if you develop it, it becomes urban,” says Mishra, who holds the Kemper and Ethel Marley Foundation Chair in Food Management. “So what does rural mean? How do we improve the labor conditions, the employment? How do we bring prosperity back to the rural areas? One of the things we wanted to do is look at the definitions, look at what’s going on in Europe and in the U.S.”

Defining rural is no easy task. The EU defines rural areas as those with fewer than 300 residents and outside areas of at least 5,000 residents. Depending on which U.S. federal agency you ask, “rural” could mean any place with fewer than 50,000 residents outside an urban area, or any place with more than 2,500 residents outside an urban area, or any of some 20 other definitions agencies use.

Job growth goes beyond agriculture

Trends in rural employment, though, are easier to spot. With agriculture no longer a dominant sector in rural areas on either side of the Atlantic, rural job growth depends more heavily on non-agricultural industries. The book notes that in the EU, employment patterns vary from country to country, and the prospects for growing rural jobs and incomes depend on growth and development at the national and regional levels. In the United States, jobs have been slower to recover in rural areas than metro ones since the Great Recession, but the high number of non-employer businesses and high rate of proprietorship suggest that new and young businesses can be a source of job creation.

Policies affecting farm and rural employment in the European Union differ significantly from those in the United States. Rural areas and jobs are politically important in the EU, so rural policies are prominent, the book says. The EU’s Common Agricultural Policy consists of two “pillars,” the first of which aims to stabilize income and boost productivity for farmers, and the second of which targets funding to specific sectors of rural development such as fisheries or social needs. EU countries and regions have their own additional policies. Despite the EU’s attention to policy and significant investment in the two pillars, the book says the overall effect has been to slow the decline in agricultural jobs rather than create more of them.

The United States, meanwhile, offers farmers subsidies and an extensive credit system, and it has programs to help rural areas improve utilities and housing. Otherwise, the United States prefers policies that invest in rural infrastructures such as highways and broadband and leaves further development to the private sector. Entrepreneurship, the book concludes, has been more effective than government policies in creating rural jobs.

Another factor in rural job creation is the entry and exit of people from the farming business. As older farmers retire and fewer of their children remain on the farm to take over, the issue becomes more pressing in both the EU and the United States. On both sides of the Atlantic, younger people interested in farming say their biggest challenge is the high cost of acquiring farmland. The EU provides more support for younger farmers, who also have greater lobbying power than their U.S. counterparts, Mishra says. The United States has credit programs designed to help young farmers, but most work in off-farm jobs to bolster their family incomes and help pay for land. The long-term trend toward mechanization replacing farm labor, and the more recent shrinking of the immigrant labor pool, also have stalled any growth in farmworker jobs.

The agri-food chain, which includes milk processors, meatpacking plants, canneries, and beverage and tobacco production, has created many rural jobs on both sides of the Atlantic, especially for immigrants willing to do the less-pleasant work. However, the industry has matured, and many plants have consolidated, says Mishra. Agri-food businesses, mainly in the Mediterranean area and Germany, have boosted rural employment by capitalizing on EU food quality policies, designed to protect consumers from misinformation and producers from fraudulent use of product names. In the United States, opportunities for job creation remain for agri-food businesses that can take advantage of consumers’ changing tastes or find non-food uses for farmers’ crops.

Diversifying, from new crops to agritourism

Diversification strategies might be the most direct way to create non-farm jobs using agricultural assets, Mishra says. Farmers can grow different crops or expand into renewable energy or tourism, and rural areas can work at developing non-agricultural sectors of their economy. In the EU, diversification is more common in developed countries and on larger farms, the book says, and policies to support diversification have worked better in urbanized areas and tourist regions than in less accessible areas that lacked attractions. Statistics from 2013 showed just 5% of EU farm households reported income from activities other than farming. In the United States, 80% of farm households have income from other activities. That level of diversification increases farm families’ income and investment in their farms, and it provides a stronger workforce, bigger tax base, and more services and recreational activities for rural communities. Unlike the EU, the United States has relied more on the private sector and entrepreneurs to find new job-creating opportunities.

The newest and potentially most significant effort at job creation is the growth in agritourism and rural recreation on both sides of the Atlantic. Opportunities abound, from camping facilities and bed-and-breakfasts to food and entertainment venues to hunting and craftwork experiences. The EU encourages farm- and food-based tourism, and it has become a significant part of rural economies and job creation there, the book says. EU countries, because of their greater variety of crops and shorter distances between urban and rural areas, have been better positioned than the United States to capitalize on the growing demand. In the United States, rural areas are figuring out how to leverage natural assets, human capital, and cultural heritage to meet the growing demand for agritourism.

“As more and more people move away from rural areas, you will find people can’t differentiate between wheat and soybeans because they’ve never seen it grown. So now people want to go back. They say, ‘Let’s go tour the farm. They’ll show us how to milk the cows, what different breeds of cows they have, how the farmer gets up in the morning to clean the stalls and wash the cows,’” Mishra explains. “People living in urban areas have the extra income to do leisure and recreation, and the rural community has found ways to attract these urbanites.”

Mishra hopes the book surprises readers who thought rural areas consist primarily of farmers providing food. He himself was surprised by the extent of agritourism in both the United States and Europe. “Human beings are able to find their next frontier. They are willing to venture out and find ways to make a living,” he says. “I hope the readers get out of this that there is no shortage of entrepreneurial skills or capacity on either side of the Atlantic.”

The book also shows that the United States and the EU can learn things from each other to promote rural development and job creation. The United States can adopt targeted interventions, such as tax breaks for college graduates who move to rural areas or enterprise zones for businesses that open in rural areas with declining populations and rising unemployment. The EU, for its part, can learn to encourage the private sector to take some initiative in solving rural problems.

The bottom line

Mishra says the book offers these takeaways on rural employment and policies:

• Technological changes, in which technology and machines replace human labor, will keep happening.
• Consumer preferences keep changing, and as incomes rise, so does consumers’ interest in local foods, homes, and gardens in the countryside, and outdoor leisure.
• Policymakers should consider that support for farm and rural incomes has been expensive but largely ineffective in protecting jobs from technological and social changes. The public and private sectors should work together to solve specific rural problems, such as the need for skills training and startup capital.