338.19 St89x STRUCTURE OF THE ILLINOIS FOOD ECONOMY: Resource Issues Document No. 83/28 GSR Illinois Department of Energy and Natural Resources James R. Thompson, Governor Michael B. Witte, Director Printed by the Authority of the State of Illinois KfiDsrrowj APR l i 1984 81 URBANACHAMPAIGN oaks T> HDsp UNIVERSITY OF ILLINOIS LIBRARY URBANA-CHAMPAIGN NOTICE: Return or renew all Library Materials! The Minimum Fee for each Lost Book is $50.00. The person charging this material is responsible for its return to the library from which it was withdrawn on or before the Latest Date stamped below. Theft, mutilation, and underlining of books are reasons for discipli- nary action and may result in dismissal from the University. To renew call Telephone Center, 333-8400 UNIVERSITY OF ILLINOIS LIBRARY AT URBANA-CHAMPAIGN L161— O-1096 Digitized by the Internet Archive in 2013 http://archive.org/details/structureofillin8328west DOC. NO. 83/28 October 1983 5^ STRUCTURE OF THE ILLINOIS FOOD ECONOMY: RESOURCE ISSUES by Randall E.. Westgren John Braden David Chicoine Bartelt Eleveld James R. Thompson, Governor Michael B. Witte, Director State of Illinois Department of Energy and Natural Resources ' Prepared under contract with the Illinois Department of Energy and Natural Resources as project number 80.266; to the Department of Agricultural Economics, University of Illinois, Urbana, Illinois. NOTE This report has been reviewed by the Department of Energy and Natural Resources and approved for publication. Views expressed are those of the contractor and do not necessarily reflect the position of DENR. Printed by the Authority of the State of Illinois Date Printed: October 1983 Quantity Printed: 250 One of a series of research publications published since 1975. This series includes the following categories and are color coded as follows Prior to July, 1982 After July, 1982 Air Quality - Green Green Water - Blue Blue Environmental Health - White Grey Solid and Hazardous Waste - White Olive Economic Impact Study - Buff Brown Noise Management - Buff Orange Energy - Cherry Red Information Services - Canary Yellow Illinois Department of Energy and Natural Resources Energy and Environmental Affairs Division 325 West Adams Street Springfield, Illinois 62706 (217) 785-2800 n 33o- n CONTENTS Acknowledgements v 1. Introduction 1 2. Land and the Illinois Food Economy 7 The Land Resource 8 Illinois Population Turnaround 21 The Organization of Land in Agriculture.... 26 Agricultural Land Use 32 Implications 42 3. The Future of Crop Production in Illinois.... 46 Trends of the Last Three Decades 46 Row Crops and Small Grains 46 Forage Crops and Livestock 57 Underlying Causes 64 Future Directions and Challenges 71 The Soil Erosion/Water Quality Problem 73 Future Implications 81 4. Processing and Distribution of Foods and Commodities 83 Scope of Illinois Food Manufacturing 83 Trade in Processed Products 88 Trade in Nonprocessed Products 100 in Distribution of Foodstuffs 110 Resource Questions for the Future Ill 5. Additional Resource Issues 115 Effects of Surface Mining on Land Use 115 Strippable Reserves 117 Market Factors Affecting Strip Mining. 122 The Effects of Biomass Production on Land Use Patterns 127 Irr igat ion and Land Use 129 6. References 132 IV Acknowl eg emen t s The authors wish to thank Ms. Carla Carlson and Mr.' Reo Wilhour for their contributions to this report. Much of the data described in the manuscript was gathered through their efforts. Mr. Mark Flotow must be acknowleged for the computer-generated maps used in the report, The authors would like to thank the Illinois Department of Energy and Natural Resources for funding this research project, and Mr, Thomas Heavisides, Division of Policy and Planning, ENR, who acted as project manager. INTRODUCTION The food economy of the State of Illinois is a complex system of markets for producing, processing, and distributing food products. The food economy is best described as an open system, where inputs to production, processing, and distribution are "imported" from outside the state and from other sectors of the economy. Outputs from the food economy can also leave the open system as shipments to other states or countries, or as inputs into other sectors of the economy. Finally, the system is open in nature because there are external controls such as regulation, monetary and fiscal policy, and other legal constraints to activity in the agricultural sector. Figure 1 is a simple schematic of the Illinois food economy. It describes the activities that occur within the state in producing agricultural commodities, processing commodities into foodstuffs, and distributing foods to Illinois consumers. Points of import into, and export from, this economy are shown. Supporting infrastructure, such as financial institutions, and external controls, such as food safety regulations, are noted. This abstract portrait of a highly complex economy will serve as a point of departure for this study. The purpose of this research report is to identify the nature of interrelationships among the activities within this system, and where possible, to quantify them. Like most complex systems, the Illinois food economy evolved slowly into its present form. This paper will examine the historical trends leading to this current state and discuss CD i- 3 the roles of inertia and current pressures on the expected future trends. Some specific questions will be addressed regarding economic and social effects of expected trends. Some examples follow. 1. What pressures on Illinois resources, especially land and water, result from current and future trends in production and distribution of food? 2. Will future consumption and production patterns of foodstuffs alter the production practices and resource use in the Illinois food system? 3. Is the Illinois food economy inextricably tied to national and international markets so that shocks in these markets must bear on the welfare of Illinois producers and consumers? 4. Do opportunities exist for production and distribution of foodstuffs using more efficient, more effective, or more equitable methods? Questions have been raised by other sources (e.g. The Cornucopia Project ) as to the security of a food supply that is dominated by regional specialization. Are Illinois consumers best served by the current trade of grain and livestock produced in the state for fresh vegetables, processed products, and other foodstuffs imported from California, Mexico, and elsewhere? The thesis of the Cornucopia Project is that most states can become more self sufficient in production of vegetables, fish, and other foods and thus produce more efficiently and effectively for consumption. This report will examine the tradeoffs between specialized production and alternative production patterns in light of system inertia, efficient resource use, and consumer welfare. The policy agenda for Illinois agriculture includes many issues relating to resource use and conservation. Topics addressed in this report include conservation of topsoil, preservation of water quality, encroachment of other sectors of the economy onto productive farmland, and the relationships among these issues and farm production practices. Another set of issues relating to natural resources stem from the use of energy in food production, transport, and processing. What are the major energy sources? Is the Illinois food economy insulated from shocks such as price increases in energy or interrupted supply? Can alternative production patterns and cropping practices ameliorate these effects? Row crop agriculture, typified by large scale Illinois cash grain farms, uses a great deal of energy in exchange for releasing much of the historical farm population from crop production. The millions of farm residents that left agriculture in the past fifty years have provided productive labor to the manufacturing and service sectors of the economy. This former abundance of low paid agricultural labor has been replaced by high capacity capital equipment that allow current farm operators to cultivate large acreages with relatively little labor. Multi-row planting, cultivating, and harvesting equipment make farm family labor highly productive. However, these machines require fuel for operation at ever increasing price. Grain drying equipment that allows for early harvesting of high moisture corn similarly needs fuel. Nitrogen fertilizers are typically produced using massive quantities of fossil fuel. These energy uses make agriculture in Illinois sensitive to scarcity and expense of fuels. Food processing also is highly energy intensive. Milling, cooling, freezing, cooking, extrusion, and a myriad other activities that transform farm commodities into foodstuffs use electricity and other energy sources. This report will examine the role of energy costs in escalating food prices. Another important energy use in the food economy is transportation. Many commodities are bulky relative to their value and transportation becomes an increasing portion of the cost of processing and distribution of foods. Will energy prices force agriculture to readjust regional production? Perhaps Illinois, with immediate access to over 13 million urban consumers, will become a major supplier of fresh vegetables and "farmed" fish. Much of the discussion that follows is based upon technological possibilities. Existing and latent methods for production, processing, and distribution may have profound effects on the structure of the food economy. Direct marketing, conservation tillage, aquaculture, and organic farming are technological possibilities for Illinois agriculture. However, these alternative technologies may not be adopted for reasons beyond economic efficiency. Despite the potential for cost savings or increasing the quality of consumers' diets, acceptance by consumers and producers of new methods is hindered by perceptions of increased riskiness. The supporting infrastructure of crop production, including financiers, suppliers, and marketers, may hinder the adoption of new technologies as services they provide are not amenable to these techniques. Therefore, this report will consider the likelihood of adopting new agricultural practices as a function of more than cost savings or other potential economic benefits. The remainder of this report is organized in four separate chapters. Each chapter is a relatively self-supporting discussion of several issues that have a common theme. The second chapter presents the role of land resources in the food economy. Major issues discussed are land use in agriculture, land prices, ownership and tenure patterns, and relationships among land, population, and income. The third chapter considers the historical development of row crop farming in Illinois. Patterns of crop shifting, farm specialization, and adoption of new technologies are considered in the development of the current pattern of cropping systems. Future directions, including the impacts of soil conservation efforts, in Illinois farm production are discussed in light of the inertia of current practices. Chapter IV discusses the scope of food manufacturing and distribution in the food economy. The size distribution of food processing in Illinois across products is highlighted. The role of interstate and international food trade in the Illinois food economy is discussed. Resource issues in changing to a more self sufficient food system are presented in comparison to existing market organization. The welfare of Illinois consumers is considered as it relates to current and future structures of the food system. The final chapter considers the impact of three resource issues that could have considerable impact on the future structure of the production sector of the Illinois food economy. These issues are strip mining of productive farmland, conversion of Illinois farm production into ethanol as an energy source, and water withdrawals for irrigation, The public interest in these issues will increase as they draw more heavily on the resources of the state. CHAPTER II LAND AND THE ILLINOIS FOOD ECONOMY The quality of Illinois' land resources is unsurpassed in the world as a base for agricultural production. In general, the gently rolling topography, and deep rich soils are combined with adequate rainfall and appropriate temperatures to allow the continuous annual production of crops. While the specific properties of the soils of Illinois vary geographically, they are homogeneous enough to have supported the evolution of what has been termed a "grain desert." However, the increasing prevalence of grain monoculture has not escaped notice. The evolution of cash-grain farming as a principal in Illinois' food economy has been accompanied by and been in response to a number of economic and social forces. These forces have shifted land out of agriculture, altered the way land in agriculture is used and raised both land quality and quantity questions. Concern has been expressed about the adequacy of the supply of farmland as well as the productive quality of land remaining in agriculture. Accompanying these forces which include production technological innovations, transportation and communication improvements, income growth and the expansion of foreign markets for raw agricultural products has been a general restructuring of the rural economy. Circumstances have allowed rural areas to compete for nonfarm jobs and people. The "population turnaround" which began in the 1970s is proclaimed as evidence of these changes. The purpose of this chapter is to present the land resources of Illinois that are so basic to farm production. The objective is to provide an understanding of the resource base and how it is and has been used. This understanding will facilitate the drawing of . inferences about the future. To accomplish this task the material presented is organized as follows: First, a general discussion of the land resources of Illinois is presented including details on current use, ownership and quality. Next, the population trends for Illinois are presented and implications drawn. Third, the organization of land in agriculture is discussed using data on farm numbers and size, farmland ownership and tenancy. Finally, the trends in the use of land in agriculture and the implications of these trends are reviewed. The Land Resource The land base of Illinois is usually shown as containing 35.6 million acres. For the most part all lands are in some economic use. Approximately 2.7 million acres of Illinois land are devoted to urban and built-up areas with close to 31 million acres in agricultural use. Expectedly, agricultural uses are the most extensive land use in Illinois employing about 87 percent of the state's land area. However, all lands in agriculture do not possess the same characteristics. Land characteristics influence the economic use of the land and the type of agricultural production carried on. Figure 2 graphically portrays the distribution of Illinois land among major use categories with the land in agriculture subclassif ied . The quality of the Illinois land base is reflected in the high proportion u 3 CP •H fa c fO CO •H o c •H H 03 H Q) H CO «M ° o E CO fed's other nonfarm urban o •H 4J 3 ja •H CO 60 c o E co pasture cropland forest other farm water Percent o o vO O UO O o co o Csj -r~ o 3 •U W CO (3 c<3 cd M 3 •u «H 3 a •H M Q0 < ret C o •H 4-1 CO z cu o u 3 o c/3 10 of all lands that are cropland. The 23.8 million acres of cropland account for 66.7 percent of the land of Illinois. Other major agricultural uses of land are pasture (3 million acres) , forest or woodland (3 million acres) and miscellaneous farm uses (1 million acres). This latter category includes farm lanes, drainage areas, farmsteads and wasteland. The 6 million acres of pasture and woodlands account for about 18 percent of Illinois' land area. In contrast to many other states, particularly those to the far west, little Illinois land is held by the federal government. About 500,000 acres is reported under federal ownership (1.3 percent of the state). The remaining 12.1 percent of Illinois' land not in agriculture is distributed between urban areas, transportation uses, recreational uses and inland water impoundments. Urban and built-up uses dominate these remaining categories and occupy an estimated 7.5 percent of the land of Illinois. The expansion of urban and built-up areas and other nonfarm uses into the farmlands of Illinois and the country has been a concern for some time. The intensity of concern has varied temporarily depending on the perceived opportunity cost of rural land in agriculture. The most immediate flurry of activity centers around the recently completed National Agricultural Lands Study (NALS) (1980) which analyzed U.S. rural land use trends. NALS concluded that roughly 3 million rural acres in the U.S. were newly committed to "developed" uses outside of agriculture on average each year between 1967 and 1977. The annual acreage listed by NALS for Illinois is 106,000 acres. 11 At issue is whether an acre committed to a nonagricultural use today contributes to a long standing food shortage in the future. Certainly living at the edge of our capacity to produce food would bring about higher prices. It would also increase our exposure to risks associated with weather, pests and reliance on unproven and potentially troublesome technologies. However, higher relative food prices encourage use of land for food production, economies of food consumption and innovation to enhance productivities. Current agricultural prices clearly reflect an excess capacity, at least in the short run. Forecasting long-term trends in food production is certainly encumbered with ambiguities. NALS (1981, p. 17) offers the conclusion that "the conversion of agricultural land does not constitute a present-day 'crisis'." It is a pressing issue only in localities where land use conflicts increase costs for farmers and nonfarmers alike or where farmland is highly valued as open-space by nonfarmers. In Illinois the fringe area of Chicago may present such a local situation. An added dimension in Illinois' case may involve the forces of urbanization influencing the shift of land use within agriculture. For example, conflicts between residential land use and livestock production may encourage cash grain farming. Uncertainty may contribute to the decline of fresh vegetable and other specialty crop production near urban centers in favor of less intensive grain farming. Information on the owners of the 99 percent of the Illinois land base privately held is sparse. A recent USDA survey of landowners provides 12 some information (Moyer ) . Figure 3 presents two selected characteristics of the owners of Illinois' land. The dominant occupation of landowners is farming with 37.3 percent of Illinois' lands being owned by farmers. The holding of land assets by the elderly, reflecting a lifetime of work and investments is depicted by the high proportion of land held by retired individuals (22.4 percent). For the state, over half (55.2 percent) of all lands were reported as being owned by individuals 55 years of age or older. Those 65 and over held 34.3 percent or 12.1 million acres. Land held by partnerships, corporations or other miscellaneous types of owners is substantially less than the proportion of total lands owned in sole proprietorships and husband-wife teams. Only about 20 percent of the land in Illinois is uot owned in sole proprietorship or by a husband and wife. Current owners acquired their properties by various means. The survey reports 51.8 percent purchased their lands from non-relatives, with the remaining owners acquiring their properties through inheritance (28.5 percent), a purchase from'a relative (16.1 percent) or a gift (1.6 percent). Thus, only about one half the land transferred in any period would be done so through arms-length market transactions involving non- relatives. On a comparison basis the ownership of land in Illinois is not overly concentrated. The largest one percent of owners hold 21 percent of the land while the largest five percent of owners hold 57 percent of the land. This degree of landownership concentration is comparable to other midwest states but substantially more dispersed than the western states. The 13 OJ U 3 en •H fa 03 u •H 4-1 01 - 4J o 03 J- cO % o *o .J o c •H i-H c <3J 03 S- CJ < 8* partnership husband-wife sole prop, corp. misc. blue collar retired farming white collar other no response Percent o o o CO o n c aj CJ j= 4-1 u o • 2= ^ CN 0) 00 ,3 CTN 4J iH S-l 4J o 03 M-i 3 00 4J 3 U < O '*-' a. 01 .. ctf • U >. • 5-4 o CO c •> •H c S c •H 4J tH 00 0) 3 V4 •H cu .3 03 < CO 2 o« „ •3 < c Q CO en kJ 33 0) a, .3 i-H 4-1 i— 1 en 1 o P 00 3 Q W o oa tj z ^ 4-1 u *» o m a. 0) 0) ^ OS o S U-i U-l T3 CO •H 4-1 > co CO Q C/3 u . CO Q a • • 0) c u z o CD 14 influence of ownership patterns in the west and southwest result for the U.S. in the largest one percent of owners holding 48 percent of the land and the largest five percent of owners holding 75 percent of the land. The quality of Illinois' land base for agricultural use can be identified using physical and economic measures. The physical characteristics incorporate those properties supportive of plant growth. These include soil parent materials, surface and subsurface materials, drainage, water holding capacity, slope, vegetative cover and remaining surface material (Fehrenbacher, et al. ) . The value of farmland is an economic measure, in part, of the agricultural quality of land. This value, commonly measured by sale prices, incorporates market conditions for the land which are derived from the market conditions of the products produced requiring land services. In total, the majority (89 percent) of the cropland in Illinois carries the designation of prime, a classification reflecting mainly physical properties. This accounts for about 62 percent of the land in farms. The distribution of these lands by county is identified in Figure 4 which shows the percent of land area in each county that is designated prime. The black prairie region of east central Illinois contains the largest group of counties with 75 percent or more of their land area classed as prime farmland. Based on physical properties, Illinois has one of the richest farmland endowments in the United States and the world. The strength of the production sector of the Illinois food economy is anchored in this endowment. The erosion of this endowment through 15 Figure 4 ILLINOIS PRIME FARMLAND BY COUNTY 81 50, QO □ 25. OQ Do. QO - X OF LAND 100, 00 74, 99 49, 99 24, 99 16 water runoff and wind action on farm fields removes about 11.7 tons of soil per acre per year, on average. In general up to five tons per acre per year of soil can be lost without major impacts on productivity because of natural soil regeneration. Coupled with off farm damages (e.g., reservoir sedimentation), however, the erosion of Illinois farmland under the traditional modern farming methods of cash grain operations has become a major public policy concern. While the off farm damage is more visible, although not immediate, the on farm decrease in land productivity associated with excessive soil erosion is less certain. Producer and landowner behavior suggests that, within the private planning horizon, the private benefits of reducing soil loss to physical tolerance levels in general have not outweighed the associated costs. The balance, when benefits from the social account are added, may indeed be tipped in favor of soil conservation. This would suggest public actions are required to encourage (subsidize) the adoption of appropriate practices and possibly shifts in land use. Illinois is in the process of implementing a program that looks principally to volunteerism to reach the goal, by 2000, of reducing soil losses from all Illinois farmland to tolerance levels. The success of a program to reduce soil erosion based on volunteerism is suspect given the record of past efforts. With the price of good Illinois farmland hovering around $3,000 per 2 acre, the quality of this resource for food production is implicit. Land is different than man made capital assets in that 1) there is a limit to the total supply, in a physical sense, 2) each parcel has a locational 17 monopoly, and 3) land returns from current agricultural production, as a percent of land value, have generally always been substantially less than the long term mortgage rate of interest. This percent has varied around three in Illinois. Much of the wealth of the food economy in Illinois is in the land base. So not only are the lands of Illinois an essential physical base for Illinois agriculture, they are a critical economic asset. In this regard, land is both a production input and an investment. With the current rate of return being historically low for land in agriculture, a number of other values or demand factors affect farmland prices. These are commonly identified as increased agricultural income from technological change, inflation hedge and asset appreciation, asset control and scale economies, permanent repository of value, non-agricultural use potential and nonpecuniary benefits (i.e. pride of ownership, ego satisfaction, etc). As is evident, most of these values are subjective to the individual buyer and are quite substantial in some instances. The culmination of these values in the historically increasing value of Illinois farmland is presented in Figure 5. Compared here, over 20 years, are the changes in 1) farmland prices, 2) the corn price received by Illinois farmers and 3) a general price index. Recent weak commodity prices as reflected in the decline in the corn price and high interest rates have reversed a long term trend of rising farmland prices. From 1981 to 1982 the USDA index of farmland values for Illinois declined nine percent. During the 1960s farmland prices rose about twice as rapidly as the general price index. There was a small annual increase in land income in CU u CP •H fa CO cu oo c CO 4= U CU CJ •H J-i fa O o T3 II o P^ cu CU a CU T3 •H CJ C M •H CO fa J-l rH fa s c M U W CO o ■H fa U CJ •H CO CO H •H ■H a, O o e c c H ■H •H rH rH fa iH .-1 Z H H O o o o o 19 the 1960s due mainly to yield increases and cost reductions associated with technological advance. The large increase in land values beginning in 1972 through the mid 1970s was due in large part to commodity price increases associated with a strong foreign demand for grains. The weakening of commodity prices in the latter part of the 1970s and into the 1980s, when considered in combination with inflation driven production costs suggests the growth in other demand factors besides agricultural returns came to play a critical role in the ever higher bid prices offered by farmland buyers through 1981. There is evidence, however, that in some regions of Illinois farmland prices peaked in mid 1979, much earlier than indicated by the USDA index. This is particularly true for cash grain areas. It is evident that without some turnaround in the current weak economic conditions that characterize cash grain agriculture in Illinois and the midwest, continued adjustments can be expected. The evidence suggests the revaluation of the land assets in agriculture is p£rt of these 3 adjustments. Farmland values vary spatially as well as temporally. In a spatial analysis the impact of variation in land quality, locational characteristics and non-agricultural use potential, among other things, can be identified. The average values, per acre, of farmland and buildings reported by the 1978 Census of Agriculture for Illinois counties were used to construct Figure 6. From the map at least two things are evident. First is the impact of soil quality on agricultural land values. Comparing the prime farmland map with the value map shows that counties with a generally larger proportion of prime farmland have higher average values. This is as expected. 20 Figure 6 VALUE OF ILLINOIS FARMLAND BY COUNTY, 1978 * PER R 1U500, GO - 5000, 00 M 1750, CO - 2499= 99 □ 1000, 00 - 1749, 99 G 0. 00 - 999, 99 21 Second, the influence of the potential gains from converting farmland to urban uses is also evidenced by the pattern of values in Figure 6- The Chicago area fringe counties reported the highest per acre county average values . Increased population results in the growth in demand for land for nonfarm purposes. This places upward pressure on land values in advance of the actual conversion. Interestingly, it appears price pressures from nonfarm use potential and the actual conversion of farmland have been occurring at a constant if not accelerating rate while the state's population growth rate is among the slowest in the country (2.8 percent in the last decade) (Braden, Chicoine, and Dovring ) . Of course, nonfarm demand for land has been substantially reduced of late because of the general weaknesses in the economy and the severe slump in the housing industry. The recent months aside, the nonfarm land demands can be linked to rising affluence and the effects of highways, autos and other structural factors that encourage the decentralization of housing and industry into suburban and exurban locations. These structural shifts have been noted in part through the change in Illinois population growth patterns that began around 1970. The rural population revival in Illinois is discussed in the next section. 4 Illinois Population Turnaround The 2.8 percent population growth in the state between 1970 and 1980 is far below the national growth rate of 11.4 percent and the lowest for the state in several decades. The relatively low level of growth is largely a result of the reversal of migration patterns that have occurred over the past four decades. Illinois has become a loser 22 in the migration process. However, of interest to us is the fact that state-level trends are not mirrored in various counties or areas. Figure 7 displays the population growth rates for the state over the decades 1940-1970 with projections for the 1980s. Also shown are the growth rates beginning in the 1950s for 21 metropolitan counties and 81 rural counties with projections for the 1980s. The growth rate for the state peaked over the decade of the 1950s at 15.7 percent, and averaged 10.2 percent for the 1960s and 2.8 percent for the 1970s. The metropolitan counties in the state grew 20.2 percent during the 1950s. The population in these counties exceeded eight million by 1960 and grew to nine million by 1970 (82 percent of the state's popu- lation). However, only a litti.e over 180,000 people were added in the 1970s. This was about a 2 pe.rcent growth rate for the state's metropolitan areas. In contrast the rural counties of the state had growth rates substantially below the state average although generally on the increase through the 1960s. Between 1970 and 1980 the population of the rural counties grew at six percent which was over twice the state's growth rate and three times the growth rate of the metropolitan counties. As shown in Figure 6, these relationships are expected to continue through the 1980s. Figure 8 shows the population change 1970-1980 by Illinois county. What is evidenced is a reversal of what occurred in the 1950s and an extension of the pattern began in the 1960s: growth in formerly declining rural counties of southern and western Illinois and a slowing down of growth, or actual decline, in several of the larger 23 m IB i-t O (T> 3 rT Figure 7 Illinois Population Growth Rate Trend 1940-1980 25 - 20 - 15 - 10 - 5 - Rural Counties Metro Counties State 1980 Source: Illinois Bureau of the Budget, "Illinois Population Projections Revised, 1970-2025, Springfield, Illinois (June 1981). 24 Figure 8 Population Change 1970-1980 | | Loss MM 0% to 4.9% £> 5% to 9.9% union ■.■■.xjoMmion\ >vrt -nt [:■■:■:■:■•■■■ > t ' ' ill F7 ffirfrn Over 10% Standard Metropolitan Statistical Areas 25 metropolitan counties. However, the suburbanization of DuPage, Will, Lake and McHenry Counties in the Chicago area continues. The population turnaround shows up when note is taken of the 40 counties in southern Illinois who lost population during the 1960s but gained population during the 1970s. Most of these counties have gone from experiencing net out-migration to enjoying net in-migration. Thus while the state, overall, is experiencing relatively low population growth compared to other midwestern states, the nation and past population growth, Illinois rural counties are faring much better. Aggregate Illinois data on growth are heavily influenced by substantial losses in several large urban counties. These tend to characterize the state. Twenty-nine counties had growth rates in the 1970s of 10 percent or more and only six we;e "suburban" in nature. The implications of this trend, that now appears more than symptomatic, for the Illinois food economy are that the structure of regional economies that comprise the rural sections of Illinois are shifting and becoming more complex. While these regional economies were lagging the state and the metropolitan centers during the 1950s and 1960s with farm numbers declining and out-migration occurring, these same regions now lead the state and the metropolitan centers in many indicators of viability and are the recipients of in-migrants. While farm numbers, in general, have not increased in Illinois or any county, some complementing trends in farm numbers and size are evident. These will be identified in the following section. 26 One indication of the structural changes in the economies of the rural areas in Illinois is the proportion of employment in counties that is in manufacturing. While manufacturing currently plays a less significant role in Illinois' economy, about one out of every four workers employed still works in manufacturing. Figure 9 shows the pro- portion of manufacturing employment by Illinois county. The range of manufacturing employment among Illinois counties is from 57 percent to one percent. While about 38 percent of the metropolitan counties reported manufacturing employment percentages of 25 percent or more, about 20 percent of the 82 rural counties had similar proportions. Only ten rural counties reported manufacturing employment at less than five percent of total employment. The Organization of Land in Agriculture The land resources in agriculture are operated in production units or farms. If there is a widely recognized national trend that has received continuous attention, it is the decline in farm numbers and the increase in average farm size. Illinois farms have not been immune to these changes. The number of farms in Illinois reported by the 1978 Census of Agriculture was 109,924 down from 123,565 a decade earlier. The average operating unit has concomitantly increased the number of acres farmed. These changes are the result of technological advances, scale economies and drive by farmers for increased incomes. Of interest here is not the well established trend to fewer, larger farms but what is the emergence of a bi-model distribution of farms. At the upper end of the farm size continuum are the large farms that 27 Figure 9 PRQPOR I I ON OF MANUFACTURING EMPLOYMENT BY COUNTY, 1979 D, U D , nn □ 5. QQ DO- GO Y. r M p L Y M E N - 1QO. QO - 24. 99 14. 99 4, 99 28 continue on trend increasing in both average size and numbers. For example, the median number of farms among Illinois counties with 500 or more acres in 1974 was 132. Four years later in 1978 the median was 148. A similar trend is evidenced when farm size is measured by total sales. At the other end of the farm size continuum a similar numerical trend has emerged beginning in 1974. The number of small farms is on the increase. In Illinois in 1974 the median number of farms per county containing less than 50 acres was 166. In 1978 the median number was up 8 percent to 179. The middle sized farms have continued on their downward trend, numerically, as they are absorbed by the expansion of larger farms, absorb other like sized farms and become larger, broken into smaller units or dissolved through some combination of these alternatives. This growth at the ends of the farm size continuum is not isolated in Illinois, but as shown in Figure 10 characterizes the midwest. Identified here are the number of all farms and small farms from 1959 through 1978. The discontinuity is the result of redefining a "farm" in 1974. The new "small farms" are not low resource, low income agricultural units, but, in general, are rural residences where the occupants rely on nonfarm income from jobs in nearby towns. The small farmers have purchased their properties and done so to capture the perceived qualities of rural-farm life. In many cases, farm income is not even 29 CO I CU 10 s Ul c iX> R > o Hi (D 3 er cd €. rt g pj ^ 3* a ro m CD 3 DP- : •— n rt r-( (D H- 02 H 3 o cr ro a h- Hi I-" M = rt ro «« H- > 3 Cu ua ^ 3 3 h- 1 «. o • Q. <£> H- N. Q cn o : Hi £* C 0> 3 (_■ Q) CD s ft W 3 £ i-h C Cu = £U M h- 1 ^i £U C C_i a 3 M rt • ft) : h- n Ml W • H- £ O 3 3 a> < h- cn 3 rt 0) rt 3 H- H- 3 3 M- SJ W 3 rt o cn cn n. W 13 • <• hf hi Qj H C v£ G 0- M H! n i Hia CD kO cr ro cn rt a O 3 M 3* 3 . . 0) H- 0) s rt 3 5 v< M H H M CD U3 !-• I-" M 0) ^J H« l- 1 M H. ,C» K- H- H- « • 3 3 3 H- p. H . o cn cn cn 0) rt O cn p M w 3 VO C D o» OJ ^4 3 M H. £. H- W M CD j EU < CD 'v CD ►0 ^ *J *. 0) I- 1 cn H *. H- rt 3 rt rt • w rt ^ cd 2 CL i-t> • > * H- ^i 3 HUH M I- 1 • rt U3 1- H CD ~J h- rr hj CO 3 D (D 3 D>< cn p- ►a cn qj • M. rt 1 H- 03 C hi CD 30 expected from the farming operation. Small farm enterprises are similar to the enterprises of large nearby farms (van Es et al.). This type of growth in small farms and rural living provides a degree of refinement to the trends identified in the previous section and additional evidence of a reordering, to some degree, of the regional economies that comprise the food economy in Illinois. An alternative to number of farms as a way of presenting the organization of the Illinois land resources in agriculture is by ownership. Within farms of like size, a number of alternative tenancy arrangements are found: owner-operator, part-owner and full tenant. About 55 percent of the land farmed in Illinois is operated under some type of lease arrangement. Evidence of this percentage is found in the data on the occupational characteristics of Illinois farmland owners (Figure 11 ) . About 43 percent of the acres of farmland are owned by active farmers. Retired individuals own 21 percent of the farmland with white collar workers owning 16 percent and blue collar workers owning 7 percent. As with all land in Illinois, husband-wife teams and sole proprietors own the majority of the farmland in the state (79 percent) . Somewhat more farmland is held by partnerships than all land. About 3 percent of the farmland is under corporate ownership. Interestingly, while upwards to 55 percent of Illinois' farmland is operated under lease, only 21.5 percent of Illinois farms are classed as full tenant operations in the 1978 Census of Agriculture. The rate of tenancy has generally declined from a maximum of 40 percent in 1959 31 CD U 3 tn •H fa en •H U 01 4-1 o CO )-i CO X. u -1) T3 c CO CO fa C o •H 4-1 CO fa 3 o % .a T3 01 3 CO 01 i-l CJ < 5-S partnership husband-wife sole prop, corp . misc. blue collar retired farming white collar other CO 0) u CO 4-1 CO CO S-i 4-1 c 01 CJ s-l o 0) o CO ON o a. CD Pi *4 CO C ■H 6 CO 3 60 3 < 01 fa c CO •J CD Xi c o 4J c •H CO CO o CO E3 I o 00 a w 2: m CD >> O S "O •H > CO a no response S-i o a CD fa U-) CO ■u CO CO a CO Percent o o o n o CNl o CD CJ t-4 3 O CO 32 while the portion of land farmed under lease has been on the increase. This suggests that tenant farmers have accumulated sufficient capital to purchase land. However, they have not become owner-operators but part-owners. Indeed, the combining of owned and rented land into an adequately sized farming unit has become the mode farm operating unit. This accounts for the simultaneous decline in the tenancy rate and the increase in the percentage of land operated under lease. The land tenure situation may contribute to rather than be a result of the uses to which land in agriculture are put (Dovring and Yanagida). For example, cash grain farms are more likely to be rented than livestock farms. To nonoperating landlords, using farmland for a cash grain operation may be more attracti/e than a livestock enterprise because of the lower long-term risk, less and simpler managerial input and more opportunities to capture returns to size. This latter advantage occurs when the leased acreages of different landlords are combined by a part- owner operator into a large, efficient unit. These issues are discussed in the next section when the trends in agricultural land use in Illinois are presented. Agricultural Land Use Agriculture in Illinois is now heavily dominated by row crop production. In particular, in 1978 corn and soybean acreage accounted for 78.9 percent of the acreage in farms (11 million acres of corn and 9 million acres of soybeans) . As depicted in Figure 12 , this is in sharp contrast to the use of land in farms almost a quarter century earlier in 1954. While i— I other Percent r o -r vr pasture wheat & oats corn soybeans woodland specialty other pasture wheat & oats soybeans woodland specialty CTi c CO « CO cn 3 CJ ■H S-i 00 < o w 3 VI C 01 CJ CO 33 Ol o 3 o CO 34 corn was the dominant crop in 1954 (32.2 percent of the land area), soybean acres were exceeded by both small grain acreage and pasturelands. The evolution of soybeans as a cash crop was associated with the emergence and dominance of cash grain farming and the relative and absolute decline in animal agriculture in Illinois. Hay lands, pastures, small grain acreage and woodland, to the extent possible, were shifted during the past two and one half decades to corn and soybeans. By 1978 less than one million acres of pasture remain in Illinois from over four million reported in 1954. In contrast, the reported acreage of vegetable crops has remained relatively stable declining from 125,000 acres in 1954 to 117,000 acres in 1978. The acreage of woodlands dropped .9 million from 2.9 million acres to 2.0 million. Further evidence of the dominance of grain production, mostly for cash sale in Illinois agriculture is presented in Figure 13 . By the mid 1970s, crops sold as a proportion of total farm sales exceeded 65 percent. The growing dominance of cash grain agriculture has been prompted, to a large degree, by price relationships and the comparative advantage of Illinois' agricultural resources. The solid line in Figure 12 shows the growth in the proportion of commercial farms classified as cash grain farms. By 1978 over 70 percent of Illinois commercial farms were cash grain operations. Viewing the proportion of cash grain farms over time at the county level graphically traces the spread of grain monoculture throughout Illinois. Figure 14 contains maps for 1954, 1964, 1969, 1974 and 1973. As recently as 1969 less than 20 Illinois counties had 75 percent or more of their farms classed cash grain. By 1978 the number was 55. 3 90 - 80 70 - 60 - 50 " 40 - 35 Figure 15 Proportion of Cash Grain Farms and Total Sales Represented by Crops Sold in Illinois % Cash Grain Farms Crops Sold as % of Total Sales Source: U.S. Census of Agriculture, years cited 36 Figure 14 ILLINOIS CRSH-GRRIN FARMS BY COUNTY, 1954 X OF FflRMS H75, 00 - 100, 00 E3 50. 00 - 74. 99 DO, 00 - 49, 99 37 Figure 14 continued ILLINOIS CASH-GRAIN FARMS BY COUNTY, 1964 X OF 1175, CO 050. OQ DO. 00 38 Figure 14 continued ILLINOIS CflSH-GRRIN FARMS BY COUNTY, 1969 X GF 050, Do. 00 39 Figure 14 continued ILLINOIS CASH-GRAIN FARMS BY COUNTY, 1974 7. CF FflRMS 75, QQ - 100, 00 50, 00 - 74, 99 DO. QO - 49, 99 40 Figure 14 continued ILLINOIS CASH-GRAIN FARMS BY COUNTY, 1978 X OF 7 5. 050, Q DO. 00 41 Excluding Cook, only 14 Illinois counties did not have at least 50 percent of their farms classed as cash grain farms in 1978 and 7 of these counties had over 40 percent cash grain operations. The exception counties to the cash grain rule generally are lacking in physical resources for grain monoculture. While the high grain prices of the early 1970s may have accelerated the trend toward cash grain dominance, the data from the 1950s and 1960s suggest the trend had been underway for some time. The expansive forces pushing cash grain farming likely played as major a role in this trend as anything inherent in the economics of animal agriculture. These forces include increased returns to size, the market power of operating farmers and the ability in the 1960s and 1970s to substitute capital for labor by increasing the energy intensity of grain farming. This occurred when the terms of trade for energy inputs were very favorable. While enterprises such as commercial vegetables, orchard fruits and berries have been of only local significance in Illinois' agricultural history, animal agriculture at one time played a much more prominent role. However, a reversal of the decline in animal agriculture and growth in cash grain farming is not likely to be brought about just by more favorable price relationships. The change to cash grain farming often involves institutional and support service shifts that are costly to reverse. For example, cash grain operations are generally larger units. Livestock buildings, equipment and management skills are raised, abandoned and lost in the shift to exclusive grain farming. 42 One study of the impact of the spreading "grain desert" estimated a loss of over 10 percent of agricultural value product in Illinois between 1950 and 1974. Over 25,000 jobs in the meat products;, dairy products and grain-mill products industries were estimated to have been lost over this period because of the declining animal industry. The authors likened Illinois' grain monoculture agriculture "to the raw-material-producing role which many overseas countries complain about as a 'colonial' economy" (Dovring and Yanagida) . Implications Although this chapter presented something less than an exhaustive review of the land resource issues in Illinois that impact the s:ate's food economy, several implications can be drawn from the information presented. First and quite obviously the quantity and quality of Illinois' land area have supported and will continue to support a generally vigorous agricultural production sector. While nonfarm demands for land have increased in spite of limited population pressures, the threat of not meeting future food needs because of a limited physical supply of land is remote. This does not preclude, however, the need for the judicious allocation of land between farm and nonfarm uses in particular localities in the state to meet both public, as well as private demand with limited space. The ownership of Illinois land, which is largely held by individuals over 55 years of age, cannot be characterized as overly concentrated. This suggests that the production sector of the food economy will continue to be dominated by relatively large numbers of farms organized as part-owner operator units. 43 Such a structure encourages competition for land in both the rental and sale markets and requires land to continue to be viewed as a production input and an investment by operating farmers. If the recent weakening of Illinois land prices continues as is expected, some adjustments in the production sector will be made. Highly leveraged operators with land secured debt will experience portfolio adjustments and possible severe cash flow problems. On the other hand, high equity landowners carrying little debt will experience a decline in unrealized asset wealth and lower annual incomes. Second, the regional economies of which the food economy is a part are undergoing some restructuring as evidenced by Illinois' population turnaround, the diversification of county economies and the growth in small farms. For the food economy this suggests that the health and vitality of the regional economies while still tied to production agriculture are less dependent on production agriculture. The changes and forces that characterize Illinois that are derived from aggregate data may not at all characterize the circumstances in particular localities. With the "rural renaissance" expected to continue through the 1980s, the differences between rural and metropolitan regions, rural and urban fringe regions and rural areas and the state will likely be maintained if not widened. Finally, economic forces have brought forth a cash grain monoculture in Illinois agriculture. While escalating grain prices in the early 1970s contributed to the dominance of corn and soybean farming, these trends find 44 their roots in earlier times and more complicated forces. Animal agriculture has been the victim. Commercial vegetable production, while experiencing a reduction in acreage, maintained its position proportionately. The decline in animal agriculture has had its impact on sectors other than farm production. However, more favorable price relations will not likely return Illinois animal agriculture to its previous status. Limited only by land resource constraints, cash grain farming is likely to continue to expand. However, it appears that these resource constraints are beginning to become binding. The costs, explicit and implicit in both privat?. and public/social accounts of sector homogeneity are addressed in the remainder of this report. 45 Footnotes 1. The data on land uses is found in NALS (1980). 2. An interesting treatment of the market for rural land is found in Healy and Short . 3. See Scott for a discussion of these factors. 4. This section draws heavily from Sofranko and van Es . 5. For a more complete discussion of this trend see Fliegel and and van Es . 6. This section draws heavily from Dovring and Yanagida . 46 Chapter III THE FUTURE OF CROP PRODUCTION IN ILLINOIS It is often best to look into past and present situations before making predictions about alternative future scenarios. Illinois agri- culture has undergone rather drastic changes in the past 30 years, some of which parallel changes in the rest of the country, others of which are unique to the Corn Belt states. Many of the projections which could be made for Illinois crop production would apply in a general way to Iowa, Indiana, Ohio and parts of Missouri and Michigan as well. In discussing crop production in the Corn Belt, it will also be necessary to consider livestock farming since animal agriculture is often either complementary to or competitive with cropping enterprises on individual farms. From Past to Present - Trends of the Last Three Decades. Row Crops and Small Grains During the decades of the 50' s, 60' s and 70' s a tremendous simpli- fication of Illinois agriculture took place. While the state has, for many decades before this, specialized to a certain degree in corn pro- duction, in the past three decades there has been a movement to corn- soybean monoculture. There are still a few other crops which are important — primarily hay and wheat — but most of the other secondary crops have shrunk to minor roles in the overall trends in Illinois crop production. Table 1 shows the decline of oats, barley and rye during these past 30 or so years. In the remaining discussions these, and other minor crops, will be disregarded. The numbers in Table 1 for corn, soybeans and wheat are also interesting but these crops will be examined in more detail on a sub-state regional basis. 47 5>~, i— i u CO CO CO O 05 c CO 0) ft o c u o o CO TJ 0) a Li O CO u U Ot-io\neocoooirinio(«i cm m on m cMONmi/N.uicococo^HONr-»i'~> n^OO*Mnirn0^iri>J(0nNNNN(N N CM N H H H OOiOMf\irnO\Oiri'vtnl , lNN(M(MN CM CM CM <— I i— I LO VO r^r^vf«^in^H^vO-H^HCMc^csvoo^cooovOcMvo^cMOc)00^(^cofncoQor^^-iri«d-o o\ r^ H }.JCMfMCM|siriOv0c^CTvO v OQ0r^00(~»\£)r>~t'- < HH l f| < f(r| ( ^ rs f S | < » l0 , v0|s ^ 00r | < |.Q e0< j. (10r<-cr|Ooor|{r1| ^ ^^OCMeOCMCOr^a>^f^OO'^ulinvOI^\Ov0^v©Lni^OT\O^OOCOCMOOCMCOt^r»''-00 o o 0) OJ u u CO i/1 on T3 ON C - CO ■— I CO 3 O OTc^\oooovo J H ^ oavNN ^ rs (f )( ^^ < |.Q^ 0f r)Q ln{Nn< J (N ^ fl m on cncMvf^Nfo^OfncMc^NMn^cnMJoNONONm^inNpooMjsoo >— i m on t^t^•f^n•tf^\ocooNinr^oocooocMONini^-^^ONincoooNCMr^cMc»cooooouioooo om cMin>jcMO^^ooM3vrooocMOooor^<^d-oooo^OM3 <^ooaNONONOoOaNONo<^ONONo o O uir^\OvOOfOtnocoonvtocM inONOlAN^NCOOOeOvOvO^^COCMOCO^CMCTimfMOniriCTiMfCOCM^^OCOfOOtM CM ON oocoononOonOonOOOoO'-*^-— i— too— ioononoooo-hononooooncmcoco HHHHCMHfMHNMfMCMCMfMNrMCMCMMCMCMHHcMCMCMCMMNNfMCMCMCMrMfMfM CO CM CM CM s en CM c CO o "O CO o * vO c «w ■ I I 1 1 CO -^ r— I J C CO CO I I I ooooooooooooooooooooooooooo ooooooooooooooooooooooooooo r^vOvOLOCOCOCM<— iOCT\r^vO Lr, .OH(MOvtiriM5NCOcAO'- "CMr0vtmvOt^.00CT\O<— I CM CO 0) 4JCJ ou is; " ~ o ■;«co 48 The data and analysis of this chapter draw heavily from two sources. Data on acreage and production for the major crops come from the Illinois Cooperative Crop Reporting Service (hereafter ICCRS) which publishes annual summaries and has published several historical collections of data (ICCRS, 1981, 1968, 1969) as well. Other data and some of the analysis is drawn from a series of publications from the University of Illinois, Department of Agricultural Economics with the common overall title of Agriculture in Illinois: Alternative Futures for the 1980' s , AERR 165-176. Crop acreages and production are reported by ICCRS in nine separate crop reporting districts which are multi-county areas of approximately equal size, with similar soils, growing conditions and types of farming. These districts are mapped in Figure 1. For the remainder of this chapter the names of the nine ICCRS districts will be abbreviated as indicated in Figure 15. While most of the data that will be used in this section are available on a county basis, it was felt that the district level data would provide sufficient detail for discussion. Figures 16 and 17 show the trend in corn acreage and production from 1950 to 1979. Acres of corn harvested for all purposes increased in all but the two southernmost districts. The percentage change ranged from 59% in the NW to -2% in the SE district and for the state as a whole corn acreage increased by 36% during these three decades. It must be recognized, of course, that acreages in a specific crop fluctuates somewhat from year to year so that by looking at differences between two points in time, the potential exists to either over- or understate general trends. Nonetheless, the changes are so great that 49 W WSW ESE Figure 15. Illinois Cooperative Crop Reporting Service crop reporting districts 50 m x Ql950 1979 m NE W E wsw ESB SW SE Figure 16. Acres of corn harvested by crop reporting districts, 1950 and 1979 £ 200 150 100 50 X! ill 1*4. D i*i nw Figure 17, NE W E WSW ESE SW ^E Total corn production by crop reporting districts, 1950 and 1979 51 the general conclusion is indisputable. Production increased even more dramatically, from 272% in the C district to 155% in the SE with a 235% increase for the whole state. This demonstrates that yields were also increasing during the past three decades. The reasons for these yield increases will be discussed momentarily, but since there is considerably less regional variation than in acreage, corn yields are shown by the four ERS types of farming regions (mapped in Figure 18) used in the 1980' s AERR reports in Table 2. These figures show that corn yields increased rather consistently throughout the state except that the Area 4 (the southern, mixed farming area) yields were lower to begin with. Soybean acreage increased even more dramatically than corn during the post-war decades (see Figure 19). The most dramatic change was in the northern districts. The NW district increased by 132% from 1950 to 1979. Since soybean yields were also increasing — about the same as corn yield increased in relative terms (see Table 3) — the phenominal rise in soybean production as shown in Figure 20 should not be too surprising. Production increases ranged from 811% in the NW to 201% in the WSW region and for the whole state the increase was 296%. In terms of value of production, the third most important crop in Illinois is wheat. Figure 21 shows that while wheat acreage has remained relatively constant in certain areas of the state — NW, NE, and SW districts — it has increased substantially in the ESE and SE districts. In the remaining crop reporting districts, wheat acreage has declined. The increases in the southern districts are due mostly to the widespread adoption of double cropping with winter wheat. Growing seasons are long enough in these two districts to make the 52 ^s. 1. Meat Animals I and Dairy \ 3 2. Meat Animals and Grain J "2 I >. Cash Grain \ _j 4. Mixed Farming Figure 18. ERS type of farming areas in Illinois 53 (1) 00 CU CC OJ o_i CO c jj 0) 05 oo cj c 1-1 u-i •r-l cu O <1- e c- CO CO u_i CU U T3 CO < 0) 1— 1 /— •> X (JJ cu •H £ u 2 CO CJ 3 ct) I o ON CU 60 CO U V > CO 01 OJ CO OJ CO O a o u a. co CO c CO CO 0) Ui CO C o CJ 3 "3 O U a JO CO "3 C u o o 4-1 ^ Vo CO CO CJ Si * >> 0) u 00 01 •i-l 03 0-1 CO OJ CO •3 c OJ CD CO •3 CJ C 1-1 U-l ^ CO 01 Cm o CO i—( 0) CO u s <: • H ^^ c CO CO — H ' — \ 01 a; 4J -C U CO CO O 01 3 nj S3 -Q 0) CO 00 9) ■— 1 ^^v ca OJ 0) 11 lM CO jr !j V 0-1 CO u > to 3 CO < JO u CO cu mcor<>N>jscMiriHvo vOH^HlOCOfOCOHH r>.oor^oo\or^r~.oooof^ NnNCJiH^ONClfl m<©vONOinr"-NOONr>.r>» LOvOU^OOCIf^vjD^ n enm sj co fh \o m on SCOMMriCAcNox \ooooooo ci on VJJ o NO O O — ' mo-- i co vo ci r~ on .— i -oooof-~ONOOOONO cn a\ cm r>* I** O r ~ ' o •— < vo m o on i-* o o ^0\NnfO\Hi- 'OO nJ ci i- i in o "*> vo r^ o ^ OOOOn— COOAO>-i .— io»00000000ON00OONO oo —I 00 o o m o> oo m N O CT> ~i CD N fl Ifl'flO «* N •* O CS \or^oooor-~avooOcT\0 vO NO vO NO vO v© NO nO NO nO ON ON ON ON ON ON ON ON ON ON ^voocieovcr^m r-o— 'O » - 'Oo o-^cNo-i-^-inNOt^ OnOnOnOnONONOnOn ■3 C CO o CJ CO 01 CJ Im 3 o o on 73 i—l 0) t^ 1) 60 CO Ij 1) > CO > c CO V -Q >» O en at t— i .n co H co c CO a> .n s^ o co OJ 60 CO U V CO CJ < CJ 60 CJ CO u 4J <0 C *-> 01 CO 60 O C )-i <4-l •H 01 O 73 CO OJ •— I /•> x oj oj •i-t .c t* S co cj 3 co rf3 OJ 60 OJ CO 4J 4J CO C t-> 0) CO CJ C U U-l •i-i o) o co a- o CO CO CO >— • '"N CJ 01 0» X. U co cj 3 co JO c oj • H 60 0) CO CO OJ t-l 4J CO 60 C -u OJ CO 73 cj 3 U U-l CO OJ O a. i—i CO B •i-i ~~» C w co <— • <"> Ol OJ 4-1 x, u CO CO CJ OJ 3 CO 2 J3 >•. 01 Vj 60 fl) •r^ CO J-J CO 4-1 CO 73 c u 0) CO •o o C w U-l CO 0) O C CO CO ■— I '""■> 0) 0) 4J j: u CO CO o Ol 3 CO CJ CO ao 0) — 1 ^^ co J_J OJ a; ui CO jr i-i OJ i-l CO CJ > CO 3 CO < X> u CO OJ >< 54 ooi^cM^o^tcocoin-* \DoocM^iAcn O f*~ <}• i— i vo i— ii^ocno cococooorseONcjiCDrN O LO •— * csir-»f-i^tcoo>r^ O^ho-^OoOO OOOOOOOOOO OOOOOOOOO o^OHrocoNofi^oo NfincnNcicificico ^r^r^-LOLAcjNinc^ o co en h O '—' "— 1 m i—i On m i—i cn on CO oo en CN o o co m m o o o CO 1A i-l vO o o — I o ^ CN — i o \D OV I s N o o o o oo o CM o v© en o o OOOOOOOOOO OOOOOOOCN cNcncncncNcncncncncn 0>COMflOfinHcOH cnvor~.O>N' 4 - J >t cNCNCNcNCNCNCNcncncn O^Ncn O ft >> cd W 10 - 8 - x NW NE W E WSW ESE SW SE Figure 2h. Total hay production by crop reporting districts, I95O and 1980 59 In the state overall, the decrease was 59% from 1950 to 1980. Much of this land was put into row crop production. As with the other crops, yields followed an upwards trend during this time period. Yield improvements ranged from 65% in the SW districts to 126% in the E district and statewide they increased 87%. This increased productivity was enough to keep total production almost constant in the NW district and to actually increase in the SW district (see Figure 24). Everywhere else total production fell. Statewide, total hay production decreased 23%. Some of the forage requirements for livestock can also come from pasture rather than harvested hay. As shown in Figure 25, Illinois cropland used for pasture also declined substantially — 41%. Some of this acreage may also have been included in the hay acreage above and thus represent a double counting. Land other than cropland is often used for pasturing livestock. Figure 25 shows decreases in woodland and other noncropland acreages (including rangeland). Information is not readily available as to how much of these latter two classes of land are pastured, yet it is reasonable to assume that part of the decrease represents land which was used to graze livestock. As previously noted, most of the hay produced in Illinois is not sold in a cash market but rather used for reminant livestock entrprises such as dairying, beef cattle production and to a very minor extent for sheep. Decreases in these types of livestock enterprises have accompanied the declining acreages devoted to forage crops. Perhaps the implied direction of causation should be reversed. In any case, it is clear that Illinois farmers have been abandoning ruminant livestock. As shown by the number of milk cows on farms in Figure 26, dairying has virtually disappeared from the midsection of the state. The only 60 1950 1978 Cropland pastured 1950 1978 Woodland 1950 1978 Other land (incl. rangeland) Figure 25. Acres of cropland pastured, woodland and other land on farms (including rangeland) in Illinois, 1950 and 1978 61 s 03 •H 2 2 " 1950 1980 EL x MW NE W wsw ESE SW SE Figure 26. Milk cows on farms by crop reporting districts, 1950 and 1980 H •H 6 a o •H ■P O O P< H •H -P O EH 1U fl 12 10 X Figure 2J, X X X JSL NE T wsw ESE SW SE Total milk production by crop reporting districts, 1950 and 1980 62 really significant dairy areas that remain are the NW and SW districts. In Illinois as a whole, the number of milk cows has decrased 75% from 1950 to 1980. The decline in total milk production (Figure 27) has been ameliorated somewhat by a 94% increase in milk production per cow. The SW region actually increased its total milk production thanks to improved dairy animals and technology. Decreases in beef cattle enterprises were not as dramatic as for dairy. In fact the number of all cattle on farms increased in several districts between 1950 and 1970 (Figure 28). Changes in the number of all cattle ranged from a 54% decrease in the E district to a 25% increase in the SW district and for the whole state, cattle numbers declined 18%. Due to the cyclical nature of the beef market, one must interpret this general statewide trend with a degree of caution. All areas of the state face roughly the same cattle prices, however, so relative changes among the districts are more reliable indicators. The large decrease in the NE district is probably partially attributable to increased urbanization but in the C, E and ESE areas, it more likely represents the specialization in row crop farming. Hog farming is a different story. The number of hogs and pigs on Illinois farms increased by 5% from 1950 to 1980, a change too small to draw trend conclusions due to cyclical changes in herd sizes. Again, relative changes among regions are fairly reliable indicators since all hog farmers in the state face roughly the same market outlook. As was the case with beef cattle, numbers of animals decreased markedly in the NE , C and E districts (Figure 29). The same causes could be presumed to apply. An additional facet of both the beef cattle and hog industries which relates to cropland, however, is 63 a a o o H +> •P 8 < 7 | 6 I 5 I k I 3 | 2 § 1 ^L 1950 1980 m NE w wsw ESE SW SE Figure 28. All cattle on farms by crop reporting districts, 1950 and 1980 t3 CO 0) a o 03 a u CO to O 1.5 1.0 0.5 x x X NW KE W E WSW ESE SE Figure 29. Hogs and pigs on farms by crop reporting districts, 1950 and 1980 64 the changing technology of production. There has been a general shift from small, labor and land intensive operations towards larger, capital intensive confinement operations. This means that less land was needed for grazing livestock and some of this land was therefore available for conversion to row cropping. While it is true that roughages are still needed to feed cattle, forages are harvested less efficiently by grazing them by machines so less land is needed even if total cattle numbers remain the same. The move to confinement hog feeding facilities has probably had a much smaller effect than cattle, but a small amount of pasture is required for nonconf inement hog operations as well. Overall, cattle enterprises, be they dairy or beef, may compete with cropping activities for land. From a soil conservation perspective however, much of the land which has been converted from forage production to cropland might have better left as it was. Hog enterprises usually do not compete for cropland to a significant extent. They serve more as an alternative marketing outlet for the grain crop and as a diversification in farms' activities. Underlying Causes Having examined the history of the last thirty years, it would seem appropriate to ask what caused these rather remarkable changes. First, a brief summary of the preceeding section is in order. The agriculture of Illinois has undergone a dramatic specialization towards a row crop monoculture system. Acreages of corn and soybeans have increased but where has the land come from? The data in Table 1 show that while acres of cropland harvested have fluctuated somewhat, there has been a general increase of 2 to 3 million acres while at the same time land in farms decreased by about 3 million acres. The increased 65 row crop acreage has come at the expense of small grains (particularly oats), hayland and pasture land, and some land which was formerly not cropped has been brought into production (Scott and Hill, p. 13). Changes in crop production technology have made this conversion possible, government export policies have encouraged it and economic conditions within the agricultural sector have made it almost necessary in order for farm firms to survive. Each of these contentions will be examined in turn. There have been two major yield increasing technology advances. The first, which actually started in the early 1900' s and continues even now was the development of improved genetic varieties of plants. This was particularly true in the case of corn. Genetic characteristics for soybeans are not as well understood or recorded as for corn (Scott and Hill, p. 4) but improvements have undoubtedly been made here as well. The second major change was the increased application of commercial fertilizers, especially nitrogen. Figure 30 shows the trends in fertilizer use in Illinois from 1930 to 1978. A 260 fold increase was recorded during this time period (Conley, p. 12). While it would be difficult to separate the contributions of better plant varieties and higher quantities of fertilizers, it is generally acknowledged that these two factors have revolutionized crop production. Along with these major changes there have also been numerous small improvements in cultural practices and management. What can be expected in the future with regard to these technological changes? As far as genetic improvement is concerned, there is no reason to think that research and adoption in this area will cease, but it seems reasonable to speculate that most of the 66 1000- 900 — 800- 700- 600- 500- 400- 300- 200- 100 — I 1930 1935 1940 P 2 5 Figure 30. Tons of fertilizer nutrients used in Illinois 1930-1978 Source : Conley 67 "easy" discoveries have been made. Real public expenditures for basic scientific research have been decreasing in the past several years. This would not tend to accelerate further innovations. The increased use of commercial fertilizer was as much a function of decreasing relative fertilizer prices as it was of scientific discovery. Table 4 shows the changing relative price situation and use pattern for anhydrous ammonia (the cheapest form of nitrogen and the basic source for other forms of nitrogen fertilizer) from 1955 to 1977. It can be seen that the downward trend of nitrogen price relative to corn prices came to an abrupt end in 1973-74. A basic input to anhydrous production is natural gas which can be expected to continue to be more scarce and hence expensive. Also, corn has been in a state of over- production for several years now so prospects for rising corn prices are not particularly good. Hence further quantum increases in corn yields due to increases in fertilizer use do not appear likely in the near future. Government export policies have also played an important role in encouraging the change to intensive corn-soybean monoculture. Starting with the giant Russian wheat deal of 1973-74, the Federal Government aggressively encouraged export of U.S. feed grains and oilseed products. Under the Carter Administration many of the price support and supply control policies of the 1960's and early 1970's were abandoned and farmers were encouraged to produce larger quantities, primarily by bringing more land into production. Table 5 shows the increase in agricultural exports which began in 1973 rather dramatically. Now, during the Reagan Administration, agricultural exports have been tied to the "good behavior" of our major export 68 Table 4. Anhydrous ammonia use and price of anhydrous ammonia as compared with the price of corn Price of anhydrous ammonia Price of Corn Use of Pounds of corn anhydrous (cents per (dollars (cents needed to buy ammonia (dollars pound of per per one pound of Illinois Year per ton) nitrogen) bushel) pound) nitrogen (tons) 1955 166 10.1 1.28 2.2 4.59 17,315 1956 161 9.8 1.30 2.3 4.26 18,570 1957 152 9.2 1.15 2.0 * 4.60 14,727 1958 150 9.1 1.10 1.9 4.78 24,386 1959 147 8.9 1.10 1.0 4.68 41,626 1960 145 8.8 1.03 1.9 4.63 27,889 1961 140 8.5 1.01 1.8 4.72 46,536 1962 130 7.9 1.22 2.2 3.59 61,997 1963 125 7.6 1.25 2.2 3.45 41,469 1964 125 7.6 1.15 2.0 3.80 169,763 1965 120 7.3 1.11 1.9 3.84 200,320 1966 115 7.0 1.27 2.3 3.00 292,564 1967 110 6.7 1.26 2.3 2.91 345,085 1968 85 5.2 1.08 1.9 2.74 362,933 1969 67 4.1 1.14 2.0 2.05 422,045 1970 71 4.3 1.42 2.5 1.72 402,773 1971 76 4.6 1.59 2.8 1.64 538,132 1972 77 4.7 1.51 2.7 1.74 495,000 1973 86 5.2 1.57 2.8 1.84 323,639 1974 185 11.2 2.85 5.1 2.19 507,459 19 75 285 17.4 3.20 5.7 3.04 609,249 1976 193 11.8 2.67 4.8 2.46 646,187 1977 181 Source: Scott and Hill 69 customer, the U.S.S.R. , and these exports have moderated. Due to economic and financial conditions which will be discussed shortly, however, farmers have found it difficult to return to pre-1973 production levels. It is extremely difficult to say what the future holds in store with respect to agricultural exports since they have been tied so closely to political (foreign policy) considerations. However, due to the nation's continuing need for foreign trade to offset rising oil and manufactured goods imports, it can reasonably be assumed that whenever the political climate is favorable, the government will again encourage exports and hence production. Every time this happens, the lands which are brought into production are marginal lands which are most vulnerable to soil erosion. Finally, as previously intimated, there are economic and financial reasons for changes in Illinois farmland use. These are not really separate and distinct changes from the previously mentioned ones; rather they occurred within the context of technological improvements, changing foreign trade and agricultural policy. While it would be beyond the scope of this chapter to examine this issue in detail, a brief summary will be given in the form of a chronological narrative. Farm income, prices paid and prices received were relatively stable through the 1960's and early 70' s, due largely to government price support and supply control policies. When the Russian wheat deal was made in 1973-74, prices for the principal farm commodities suddenly skyrocketed. Encouraged by this and also by government's sudden abandonment of farm programs, producers expanded acreage and made heavy investments in new farm machinery. At about the same time this was happening, the nation and the world experienced its first oil crisis 70 Table 5. Selected characteristics of the agricultural and food sector relevant to public policy, United States, 1960-77: Labor productivity, disposable personal income, and agricultural trade Agricultural trade, calendar ye ar U.S. Exports Government U.S. Net Agricultural (Tota 1) assis ited Imports trade i Current Constant Current Constant Current Current Constant Years $ 1972 $ $ 1972 $ $ $ 1972 $ (millions) 1960 $ 4,832 $ 6,267 $1,461 $1,589 $ 3,824 $ 1,008 $1,307 1961 5,024 6,441 1,483 1,901 3,691 1,333 1,709 1962 5,034 6,512 1,479 1,913 3,868 1,166 1,508 1963 5,584 7,205 1,520 1,961 4,011 1,573 2,030 1964 6,348 8,107 1,644 2,100 4,082 2,266 2,894 1965 6,229 7,738 1,349 1,676 4,087 2,142 2,661 1966 6,881 8,310 1,353 1,634 4,491 2,390 2,886 1967 6,380 7,595 1,263 1,504 4,452 1,928 2,295 1968 6,228 7,301 1,189 1,394 5,024 1,204 1,411 1969 5,936 6,753 1,021 1,162 4,957 979 1,114 1970 7,259 7,797 1,033 1,110 5,770 1,489 1,599 19 71 7,693 7,964 1,069 1,107 5,823 1,870 1,936 1972 9,401 9,401 1,153 1,153 6,467 2,934 2,934 19 73 17,680 15,215 868 747 8,419 9,261 7,970 1974 21,999 14,834 859 579 10,247 11,752 7,924 1975 21,884 13,360 1,428 872 9,310 12,574 7,676 1976 22,997 13,528 1,441 848 10,992 12,005 7,062 19 77 23,671 13 , 209 1,493 883 13,459 10,212 5,699 Average annual change (1960-77) +9.8% +4.5% — — +7.7% +14.6% +9.0% Source: Spitze and Guither 71 and the price situation for manufactured and oil-derived commodities was never the same as it had been before. The cost of fuel and fuel derived products such as fertilizers and pesticides soared. Nations which imported U.S. agricultural products were caught in balance of trade squeezes and the world entered a global recession. The golden egg of high export demand and prices for farm products vanished as suddenly as it appeared but prices farmers had to pay continued to go up (see Table 6). Simultaneously, financial markets were squeezed and interest costs also rose. Farmers began experiencing severe cash flow problems. It was clear that output should be cut back but individual producers could not afford to do so due to debt servicing obligations. Also, since farm incomes have been declining in the past seveal years, farmers are reticent to decrease production because they need the high volume for family living expenditures and to replace worn out machinery. This pessimistic state of affairs in the farm financial situation persists to the time of this writing. What the future holds is unclear. Perhaps the needed production cutbacks will only come through the increasing numbers of insolvencies and farmers going out of business. If that is the case it is not certain that marginal lands will be taken out of production first. It may require a period of stabilization and readjustment (as surviving farmers acquire the properties of exiting farmers) before land use patterns settle down to more rational patterns. Future Directions and Challenges The major challenges to Illinois crop production in the coming decades will come from many different directions. Perhaps the most urgent is the resolution of financial and economic problems mentioned in the preceding several pages. Unfortunately these problems do not 72 0> "3 •H CO a co v cj •r-l u a c CO o 3 •a o u a Li o u-l "3 u > •H > >^ XI co •3 1-1 • pj 3 cO a Q- c ■ H en 0) s o Ll •H « Li U-l CL U-l U-l o o co X cu cu 1—1 Xl « H 0) u H M Li O a. u-i CU CO — i a; CO X CO 0) 11 T3 — 1 C O •r-l O (4-1 CO CU 6 Li CO to a co a> u •H L. a U-l o X CU "3 c ■— I < 0) 01 •3 i— i 3 •r-l Li o O CO r^ U CO •H o Li •r-l £ e cu U 60 C 00 •r-l i— i c u CO ■H c •r* ■a 0) Li r-< U-l OJ •r-l a-> 3 -3 CO PS c «8 e Li V N Li CU Cu CJ o AJ CO CU > •3 0> CU CO •3 cu 01 c E-S CO 4-1 CO u-i o S 3 0) f— I "3 4-1 r-l O "H < Li CO Li 4-1 O CJ CO U-l 3 CO 0) "3 CU CJ "3 O X-rl JJ H > a •H oj S CJ Li 01 CO Li U-i CO Li «0 \or-*r^voCT*c7nCTiO ^Hiod-«JOvONvO C^ONONO\a\ONC7sOOOO H, -'cNr^^-i^pNOr > »'0CTiOvCTic>C7\OCTV000J0N0>O\f r lO0000C7N , - ,l ^00 1-4 HNHi-IHNNN iA^^-J>JNc>o>OWroi- ir^r~r^vOinooooco\oO'^i- | cMro»d - oooHfn>jincjNO r-l ,— I _« r-l r- IHHHNNMNNNn 0000\3>000-*r»-oo-^Jt00i-lf1r4O C7\0NOCTiC00\OOO H NN«JCT\vt<*1lflu-\Nc^C0O r-4 r-lr-Hr-lr-4,— |r-Hr^r-*r- lr- IH H (V| N N N on on cm i*» r>* o 00 00 ON ON ON © OOO-J^CM^lflMniflH^CIiOW^ 0>OOO H NC0>0^<}-ocTi CTvONC^CTiavOVOOCTvOOOO^CTvOOavOOOOOcn^ r-lr-l r— l r-l r-l r-l r-l r- I i-l H H CM N CN cNco-rj-m^voooo^ooc^rMvovocNmor^oovOvf O\O\O\c^0\CTiOOOOO H N«t\000c>O'-l0000^ v3 HrtHi-IH on cimc^Nifl\owo H ^ofi i— l(N^CTiCO000OHO^NI r l^ , iAv0lvc0cTiO^ vOvO^o^OiO^Ovo^o^D^oi^^NrsrNrNrNpNrNscoco On On On On On On On On On On On On On On On On on On On On On On CO CO o> c •H co 3 pa CO CU CJ •H Li a. 3 CJ •H Li 00 < CO o> o Li 3 O CO 73 exist in a vacuum — other issues are building and will compound them. The inextricably related problems of soil erosion and nonpoint source pollution of water from agricultural land, while perhaps temporarily overshadowed by financial questions, will continue to vex farmers, policy makers and legislators alike. Another problem, which is dealt with elsewhere in this report is the inexorable conversion of prime Illinois farmland to other, nonfarm uses. This exacerbates the erosion and pollution problem by pushing farmers onto more marginal, erosion prone lands. This section of the report will focus on the soil erosion/water quality issue by examining the current state of affairs and by trying to peer into the future solutions. The Soil Erosion/Water Quality Problem: Past and Present The patterns of farmland use which were described in the first part of this chapter have come about at some very substantial environmental costs. Intense row crop agriculture, particularly when conventional, clean-tillage cultivation is used, leaves land very vulnerable to water induced soil erosion in all three of its major forms — sheet, rill and gully erosion. Soil erosion is of concern for two major reasons. First, if enough topsoi 1 is lost from a given area, the productivity of the soil will decrease — eventually to the point where it will no longer economically support an agricultural crop. Second, some of the soil particles eroded from the field are carried into streams, rivers and lakes where they cause turbidity and sedimentation. In most Illinois waters, which were once described as being clear turbidity produced by suspended sediment is in a range high enough to cause undesirable changes in aquatic life (Illinois Inst. for Environmental Quality, p. 16). When the sediment settles /4 in rivers and lakes it causes navigational problems, covers fish spacing beds, increases the likelihood of flood damage and decreases water storage capacity of reservoirs (Frohberg and Swanson, p. 6). Currently all the costs of these environmental damages are borne by the public. The private costs of decreased agricultural productivity are initially borne by farmers and landowners but ultimately the public may pay for this effect as well in more scarce, expensive food (Eleveld and Halcrow). The current extent of the soil erosion problem is demonstrated by the data compiled in "Task Force on Agricultural Non-Point Sources of Pollution, Final Report" (Illinois Institute for Environmental Quality, 1978) and charted in Figures 31 and 32. Excessive erosion, as used in these charts, is defined to be erosion above the soil-loss-tolerance (T) value. The T value is a somewhat arbitrarily defined level of erosion which agronomists and soil scientists determined would still allow a high level of crop productivity to be economically maintained for an indefinite time period (Wirschmeier and Smith, 1978). It is apparent from Figures 31 and 32 that all districts in Illinois have significant erosion problems. The percentage of land which exceeds T value erosion rates-which typically ranges from 3-5 tons/acre/year for agricultural land-varies from 41% in the NW districts to 24% in the ESE district. Public concern over these problems resulted in the 1972 enactment of PL92-500, the Federal Water Pollution Control Act Amendments. Section 208 of this Act mandates that the individual states establish statewide plans which set forth procedures and methods to control water pollution. In accordance with this requirement the state of Illinois, through the Illinois Soil and Water Conservation District Act, Illinois Revised Statutes, Chapter 5, Paragraph 106 etseq., has instituted a soil f, rn c^n -,„^ „,^,° - _ • ■*• ' a !,oli erosion and sedimentation control 75 03 u V a B -P •H *S CO o C 03 o ShaU ° 0t SXCeed double soil I— tolerance (4" The soil loss tolerance as established by the Soil Conservation Sprviro and as published in the Soil Conservation Service Techni^ ^S^iL?!!!" 6 sDp artfflent of Agriculture, S oil Conservation Service, Field Offices in Illinois) are adopted as the official »T" values for soils in lllinois. nm „Y U V^ e Jan ^y 1. 1983 to January 1, 1988 all land subject to this 8 : Sh * U not b * considered out of compliance with the State program if the long term annual soil losses are kept at or below four "T» value Effective January 1, 1988, soil erosion losses on gently sloping land not exceeding 5 percent slope, shall not exceed »T» va ue provided f his can LT! 1 ? 6 thr ° U - C ° nSerVati0n tilla ^. AH other land sub]ec o this program shall be considered in compliance with the State program if the lone Ja e n r :ary n i 198°8 t l0 T SeS "V'fo' ?' *' beloW d ° uMe • ,T,, d «»«8 "he period S January i, 1988 to January 1, 1994. nr„ar!,! f !H C 1 i T e K Jai,Uar ^ 1 l "^ L ° Janu «y L « 2 °°° » a11 land Sub Ject to this program shall be considered in compliance with the State program if the long term annual soil losses are kept at or below one and one-hal! »T» value. shallot'"!" vaTr '' 2 °°° ' "* ^* af ^> ^ ^ ^^ to the Act If a district adopts in its program soil loss limits more stringent than those as set forth in this rule, then those standards shall prevail for all agricultural land within that district (Illinois Department of Agriculture). This program, like others before it in Illinois, relies on voluntary compliance by landowners and operators since there are not real teeth in the law that can be used to force "violators" to comply with the standards. The system relies on complaints to initiate the hearings process which ultimately determines whether someone is in violation. The mechanism which will be used to determine whether compliance has been attained will be the same as that which is already most widely used to quantify the amount of erosion coming from a particular parcel of land. The Universal Soil Loss Equation (USLE) developed by Wirschmeier and Smith (1965) calculates average annual erosion in tons/acre based on the following factors: A = (R) x (LS) x (K) x (C) x (P) Where: A = average annual soil loss in tons/acres. R = a geographic rainfall factor which is determined by rainfall frequency, intensity and timing in that region. LS = a factor which increases for either increasing slope gradient or length or both. K = a factor reflecting the erodability of the soil type of the parcel. C = a factor reflecting the cropping system nad management practices such as tillage system and disposal of crop res idues. P = a factor reflecting any erosion control practices such as contour plowing and planting or contour strip crop- ping (Walker and Pope). 78 There is, of course, no way of knowing to what degree farmers in Illinois will cooperate with the state program. It is clear, however, that if they were to do so in any significant proportion, there would eventually be important impacts on Illinois agriculture. The changes farmers would have to make to bring their land into compliance may, depending to a large degree on the nature of the land they farm, have significant economic impacts on them. To do an exhaustive economic analysis for the entire state is beyond the scope of this chapter but an illustrative example for a specific soil type might provide a glimpse of what those changes might entail. An economic computer simulation program, called SOILEC, developed at the University of Illinois (IXimsday and Seitz) calculates the cost to a farm owner/operator, in terms of net income foregone, of adopting alternative crop rotation/ tallage practice/conservation practice alternatives (RTC alternatives) instead of a given base RTC alternative. A specific soil type and its associated characteristics must be prespecified in order to use the model. Figure 33 is an example of the program output from SOILEC. The soil type for this example is the Grantsburg series which is found primarily in Southern Illinois. This soil has a representative slope gradient of 6% and a slope length of 200 ft. A base RTC was arbitrarily chosen — in this case a corn-soybean rotation (CS) with fall plow conventional tillage, residues removed (FPCR) and a conservation practice of contour plowing (CONT = 1). The base RTC alternative causes an erosion rate of 32.8 tons/acre/year. The figure given under "Annual Cost per Unit Area" for this RTC is $121.01 which represents the average annual net income per acre for this alternative over a 50 year planning horizon, REDUCTION IN EROSION COMPARED UITH BASE ROTATION-TILLAGE SYSTEMS! CS AND BASE MECHANICAL CONTROL PRACTICE(S): CONT DISCOUNT RATE (7.): 8.00 FPCR ROTATION- MECHANICAL CONTROL REMAINING ANNUAL REDUCTION ANN. CST TILLAGE PRACTICES ANNUAL COST PER IN ANNUAL PER UNIT NO. SYSTEM VERT CONT STRP TERR SOIL LOSS UNIT AREA SOIL LOSS REDUCTN (TOM/ACRE) ($/ACRE) (TON/ACRE) ($/TON) 1 CS FPCR 1 32.824 121.01 0.000 0.00 2 CS CT 1 14*388 -26.14 18.435 -1.42 3 CS CT 1 14.388 -26.14 18.435 -1.42 4 CS CT 1 28.777 -15.49 4.047 -3.83 5 CSUA CT 1 3.597 -2.23 29.227 -.08 6 CSWA FPCR 1 4.721 -1.44 28.103 -.05 7 CSUA CT 1 7.194 -.08 25.630 -.00 8 CS FPCR 1 32.324 0.00 0,000 0.00 9 CSUA FPCR 1 9.658 1.41 23.165 .06 10 CS CT 1 1 12.038 2.50 20.785 ,12 11 CS CT 1 1 12.038 2.50 20.785 ,12 12 CSU CT 1 10.342 2.59 22,482 .12 13 CSU CT 1 10.342 2.59 22.482 .12 H CSUA CT 1 14.388 4.43 18.435 .24 15 CSUA FPCR 1 20.827 8.00 11.996 .67 16 CSU FPCR 1 . 16.637 9.08 16.187 .56 17 CSU FPCR 1 16.637 9.08 16.187 ,56 18 CSU CT 1 20.683 9.75 12.140 .80 19 CS CT 1 1 24.077 11.31 8.747 1>29 20 CSUA NT 1 1.709 11.38 31.115 .37 21 CSUA NT 1 3.417 12.41 29.406 ,42 ~ 22 CS NT 1 6.295 13.26 26.529 .50 23 CS NT 1 6.295 13.26 26.529 .50 24 CSUA NT 1 6.835 14.45 25.989 ,56 25 CS FPCR 1 65.648 16.61 -32.824 99999.99 26 CS NT 1 12.590 17.70 20.234 ,87 27 CSU FPCR 1 33.273 19.91 -.450 99999.99 23 CSU NT 1 4.362 22.18 28,462 .78 29 CSU NT 1 4.36!> 22.18 28.462 .78 30 CSU NT 1 8.723 24.39 24.101 1,03 31 CS FPCR 1 27.462 25.98 5.361 4.85 32 CS FPCR 1 27.462 25,98 5.361 4.85 33 CSUA CT 1 3.010 26,91 29,814 ,90 34 CSUA FPCR 1 3.950 27.57 28,874 ,95 35 CSUA CT - 1 6.019 28.64 26,805 1.07 36 CSUA FPCR 1 7.900 29.84 24,924 1.20 37 CSU CT 1 8 .653 30.85 24.171 1,28 38 CSU CT 1 8.653 30.85 24.171 1.28 39 CSUA CT 1 12.038 32.20 20.785 1.55 40 CSUA FPCR 1 17.185 34.92 15.639 2.23 41 CSU FPCR 1 13.919 36.34 18.904 1.92 42 CSU FPCR 1 13.919 36.34 18.904 1,92 .43 CSU CT 1 17.305 36.46 15,519 2.35 44 CSUA NT 1 1.430 40.21 31,394 1.28 45 CS FPCR 1 . 54.925 40.94 -22.101 99999,99 46 CSUA NT 1 2.359 41.04 29.965 1.37 47 CS NT 1 5.267 41.51 27.557 1.51 48 CS NT 1 5.267 41.51 27.557 1,51 49 CSUA NT 1 5.718 42.68 27.106 1.57 50 CS NT 1 10.533 45.02 22.290 2.02 51 CSU FPCR 1 27.839 45.45 4.985 9.12 52 CSU NT 1 3.649 50,36 29.175 1.73 53 CSU NT 1 3.649 50.36 29.175 1.73 54 CSU NT 1 7.298 52.54 25.526 2.06 VERT * UP-AND-DOUN-SLOPE (VERTICAL) CULTIVATION CONT := CONTOUR CULTIVATION STRP :-■ CONTOUR STRIP CROPPING TERR •-- TERRACING 99999.99 - INFINITE Figure 33. Example of SOILEC output: financial analysis for region- soil: Illinois - Southern, Grantsburg Soil 80 discounted at 8%. For all the other RTC alternatives listed, the figure in this column represents the annual cost of going to that system as compared to the base system. Note that for several systems this figure is negative which means that the system would result in a higher average annual net income than the base. Thus in this example, by merely switching to a conservation tillage system (CT), as shown on line 2, soil erosion could be reduced by an average of 18.4 tons/acre/ year over the planning horizon and net income could actually be incrased by $26.14/year. This does not get erosion down to the T value of 4 tons/acre for this soil, however. In order to do that, the RTC on line 5 would have to be chosen — a corn-soybeans-wheat-alfalfa (CSWA) rotation with conservation tillage (CT) and strip cropping (STRP = 1). This still yields a higher net income than the base system but it is lower than the highest income system by $23.91/year. Thus in order to be equally well off financially, a farmer would need to be offered a subsidy of $23.91/year to chose system 5 over system 2 or he would have to be taxed, fined or penalized by an equal amount for not choosing this system if T value were to be attained by a taxation approach. All of the other systems can be similarly compared to each other, or to the base system. Note that Figure 33 also gives the cost of the various systems in terms of annual cost per ton of soil erosion reduction compared to the base system. For policy markers trying to target subsidies to the most effective erosion control practices, this column may be more relevant. Figure 33 is just one of literally thousands which could be calculated for various soil types and slope conditions in Illinois, but some generalizations that seem to hold quite widely can be mentioned and their implications examined. The first is that rather large soil erosion reductions can be attained by changing to a reduced tillage or conservation tillage system which utilizes something other than the moldboard plow as the primary tillage implement. This change can actually increase income in most cases due to reductions in machinery costs and labor use and does not require a shift to a less intensive crop rotation. A second generalization is that on most steeply sloped soils (say, greater than 5% slopes) it is necessary to move to less intensive cropping rotations, i.e., those which incorporate small grain or hay production, to achieve T value erosion control. This is often done at considerable cost to the farmer if the income is compared to the highest earning alternative. Future Implications The question must now be raised as to what will be done with all the additional hay that is produced if the state is somehow successful in getting a large proportion of farmers to comply. It must also be remembered that similar efforts are being pursued in other states in the Corn Belt. Will some more organized cash market for forages be developed along with transportation systems to move the commodity to regions more suitable for ruminate livestock production? Alternatively, will Illinois farmers return to livestock farming in large numbers? Neither alternative seems particularly likely given the overproduction which already seems to exist in beef and dairy markets. For the more severely erosion prone soils no readily discernable answer appears in the forecaster's crystal ball. For the flatter soils, however, it does seem apparent that there are benefits, for farmers moving to conservation tillage. Farmers are already beginning 82 to recognize this and they are beginning to change over. Ironically, their reasons are usually the economic benefits (lower machinery, labor and fuel costs) and not the potential soil conservation possibilities. Legislators, policy makers and Illinois voters will ultimately have to decide whether more drastic measures are justified in order to improve compliance and who will bear the costs. If the public feels they have an inherent right to clean water, then do the economic costs of water pollution justify using a regulatory system with greater enforcement powers? Is a tax or penalty the proper approach to solving the water pollution/soil erosion problem? Either of these approaches would shift most of the cost of control to farmers. Or should the general public bear most or all of the costs by providing farmers with economic incentives, such as cost share payments, high enough to induce them to control soil erosion? Should a combination of approaches which would distribute the costs more equitably be used instead? On lands where the erosion/pollution problem is most severe, another less frequently mentioned alternative might be to actually purchase farmers' rights to use their land in an erosive way. These are questions which will ultimately have to be sorted out in the political process. On-paper forecasting can provide some input to the process by giving information about alternatives, but it can never provide the actual decisions. 83 CHAPTER IV PROCESSING AND DISTRIBUTION OF FOODS AND COMMODITIES Scope of Illinois Food Manufacturing Illinois is a major food manufacturing state. In addition to the processing of commodities produced within the state, food processors obtain grain, livestock, and other farm products from the north central US and from distant regions. Measurement of the scope of these activities is imprecise, as many manufacturing plants have joint products and multiple use facilities. The best source of data on Illinois food manufacturing is the US Census of Manufactures . Data are collected from all manufacturing facilities every five years and are published as national and state summaries. Table 7 shows four measures of the size of the Illinois food manufacturing sector. The total number of establishments, the value of shipments from all plants, the number of employees, and the value added to manufactured products in various food industries are illustrated. Each entry is for a group of firms aggregated according to the Standard Industrial Classification (SIC) code. The SIC code is a lexicographic system of seven digits. The first two digits specify the sector. In the case of Food and Kindred Products, they are 20. The third digit is a broad industry identifier, for example, 201 is the meat products industry. A fourth digit denotes the subindustry — 2011 is meat packing and 2016 is poultry dressing. Additional digits show product groups and 84 Table 7 Illinois Food Manufacturing: Number of Establishments, Number of Employees, Value of Shipments, and Value Added 1977 and 1958 SIC Code and Name No. Estab. No. Employees Value Shipments Value Added (thousand) (million $) (million $) 20- Food and (a) 1270 Kindred Products (b) 2186 201- Meat 218 Products 329 2011- Meat 105 Packing 132 202- Dairy 154 Products 434 2026- Fluid 58 Milk 221 203- Preserved 119 Fruits & Vegetables 150 2033- Canned Fruits 30 and Vegetables 69 204- Grain Mill 146 Products 144 2041- Flour and 17 Other Mill Products 26 2043 Cereal 5 Breakfast Foods NA 2047- Pet Foods 18 100 2051- Bakery 148 Products 358 103.9 14 ,938.2 4,725.6 129.0 NA 1,653.0 14.6 2 ,462.8 426.9 26.4 NA 226.2 6.1 1 ,443.6 167.1 16.0 1 ,021.8 134.0 6.6 1 ,085.3 340.8 14.7 NA 148.6 3.3 535.3 154.6 9.6 347.7 101.9 10.8 1 ,459.0 456.4 9.4 NA 118.6 41.3 123.9 41.3 3.4 96.5 35.6 14.4 2 ,474.5 921.8 2.6 NA 275.7 1.5 318.3 84.4 2.6 171.4 22.3 2.2 308.0 162.8 NA NA NA 2.3 380.5 187.3 3.7 258.5 92.6 10.1 553.4 311.8 15.7 258.1 133.3 85 Table 7 - continued SIC Code and Name No. Estab. No. Employees Value Shipments Value Added (thousand) (million $) (million $) 207- Fats 51 and Oils NA 2075- Soybean 16 Oil Milling 20 2079- Shortening 13 & Cooking Oils 15 208- Beverages 142 295 209- Miscellaneous 174 Foods and Kindred 329 Products 5.3 2,564.9 194.2 NA NA NA 2.6 1,741.0 64.6 2.7 386.1 49.5 2.0 704.4 94.6 2.1 37.1 39.4 10.9 1,522.3 717.5 11.5 NA 187.9 8.2 931.9 409.1 14.4 NA 276.6 NOTES: (a) 1977 Figures (b) 1958 Figures NA - Figures not available to avoid identification of individual firm behavior, or (primarily for 1958) to avoid double counting. Source: U.S. Census of Manufacturers , 195^7 and 1958. 86 individual products. For the purposes of this paper three and four digit codes will be used. Table 7 shows the relative sizes of food industries in Illinois in 1977 (the latest data) and 1958. Three digit codes are used throughout, with some four digit subindustries highlighted. Data measured in dollars are in nominal, or current, dollars and have not been adjusted for inflation. The first line of the table shows that employment has dropped from 129,000 to 103,900 over the two decades. Likewise, total establishments declined from 2,186 to 1,270. The scale of the remaining firms has grown as shipments have increased from less than 5 billion dollars to over 14 billion dollars and the value added in manufacture tripled from 1.6 billion dollars to 4.726 billion dollars. These trends result from movements away from labor intensive production techniques to more capital intensive and energy intensive processes. Smaller firms were replaced by larger firms that could exploit economies of scale in transportation, processing, and marketing. The meat products industry (SIC 201) is the third largest food industry in Illinois, with 1977 shipments of $2,463 billion. More than half of of this volume is accounted for by 105 meat packing plants. The value added in meat packing is only 11.5% of the value of shipments. This means that the value of additional inputs, including wages, that these firms use in transforming livestock into meat is about one ninth of the product value. For all SIC 201 industries the value added is 17.3% of the value of shipments. 87 The second largest industry in terms of value of shipments is grain mill processing (SIC 204). This industry includes flour milling, corn milling, cereal manufacturing, pet foods, and prepared flour and mixes. The percentage of shipments value represented by value added in manufacture is 37.3%. This figure is high because of the relatively high levels of value added for cereal breakfast foods and pet foods (52.9% and 49.2% respectively). Breakfast cereal products and other grain based foods, such as snack foods, that use a vast array of milling, cooking, drying, and extrusion processes and a variety of supplemental ingredients tend to have high value added during manufacture. These products are energy intensive and capital intensive relative to foods that require minimal transformation between field and table. The industry in Illinois that has the highest value of shipments is SIC 207, fats and oils. Of the $2,565 billion, just over two thirds is soybean oil milling — production of raw and refined soybean oil. Soybean milling has a ratio of value added to shipments of only 3.7%. Because this product is subject to price pressure from competing oils and because it has little processing beyond pressing and extraction, there is a very small value added in manufacture. The value added to soybeans takes place when the refined oil is made into salad oil, shortening, and blended into ersatz dairy products and other complex foods. The phenomenon of high value added beyond first processing is also evident in bakery products (SIC 2051). Basic processed products such as flour, sugar, fats and oils, and dairy foods are combined into highly 88 valued, sometimes complex products. The ratio of value added to value of shipments is 56.3%. Much of the value added can be ascribed to labor, energy (i.e. cooking), packaging, and distribution. Since 1955, Illinois food manufacturers have accounted for between 9 and 10 percent of the total value added in the food industries (Garcia and Corbett).The number of major food firms with headquarters and manufacturing capacity in Illinois is indicative of the relative size of Illinois' contribution to national food production. As a part of the total Illinois manufacturing system, the food industries are important, also. Despite the relatively small labor required for many food plants, over seven percent of industrial workers in the state are food manufacturing employees (Garcia and Corbett). Trade in Processed Products One important issue in the structure of the state's food economy is the portion of the retail value of food consumed that is captured by farmers and processors within the state. If a large portion of the value added by processing and distribution after the farm gate occurs within the state, then factors of production such as labor, capital, and other inputs will put income into the economy. If those factors are paid in firms outside the state, then the consumers' dollars will flow to firms and workers elsewhere. As an example, we will assume that grain produced in Illinois is shipped to other states for processing into dairy feed, which is then sold to dairy farms in those states. If the fluid milk is processed into retail dairy products, including cheese and butter, in those states and 8S shipped into Illinois for retail sale, then workers and firms in Illinois have not captured the value added in the market. Dairy farmers have received payment for transforming low valued grain into raw milk, creameries and dairies have captured the value added in manufacture, and some value added in shipping has accrued to firms outside Illinois. The Illinois consumers have paid for the grain plus all the additional value added outside the state. This has returned no employment benefits, income and property taxes, or "ripple" benefits to the Illinois economy. This problem is analogous to the situation less developed countries face in exporting minerals or commodities to industrial nations that produce highly valued products while retaining the economic benefits that occur from manufacture. There are no readily available data that describe the relative value of food products produced in the state for consumption and export to other regions and the value of foods imported from elsewhere for consumption in the state. There are some data series from the U.S. Census of Transportation that hint at these relative relationships, though. Table 8 Shows the value and tonnage of food products in various SIC classifications shipped from Illinois to consumption regions in the United States. This table relates the volume of all manufactured foodstuffs and the three digit industry shipment volume for the nine industries transported to nine destination regions. The states in these regions are reported following table 8. Not surprisingly, over half of the $14,992 billion of food shipments originating in Illinois are shipped to the East North Central 90 Table 8 Shipments of Food Originating in Illinois and Destination 1977 SIC Code and Name Value Tons New England Middle Atlantic (million $)( thousand)( value) (tons) (value) (tons) 20- Food and 14,992 31,827 267 762 1,469 2,468 Kindred Products 201- Meat Products 2,463 202- Dairy Products 1,085 203- Preserved 1,449 Fruits and Vegetables 204- Grain Mill 2,475 8,198 478 299 976 1,116 Products 1,808 59 42 426 289 1,187 104 153 1,917 25 28 104 132 205- Bakery Product 1,009 1,069 14 10 25 20 206- Sugar and 1,429 987 25 18 111 61 Confections 207- Fats & Oils 2,559 11,881 38 161 252 659 208- Beverages 1,552 3,764 27 25 65 97 209- Misc. Food and 932 1,016 (x) (x) 79 77 Kindred Products NOTE: (x) signifies less than 1/2 the unit of measure shipped. 91 Table 8 - Continued Shipments Originating in Illinois and Destination 1977 SIC Code East N. Central West N. Central S. Atlantic East S. Central (value) (tons) (value) (tons) (value) (tons) (value) (tons) 20 7,744 19,425 1,688 2,694 1,212 1,968 590 1,245 201 1,078 917 213 137 322 192 131 83 202 685 706 78 75 92 107 13 10 203 770 1,101 148 220 122 126 39 89 204 1,116 3,911 247 777 180 578 154 484 205 696 862 153 107 6 4 6 5 206 640 519 167 114 155 90 39 27 207 1,464 8,423 179 392 165 657 125 397 208 863 2,564 222 527 143 195 34 *95 209 432 423 281 355 28 17 59 57 92 Table 8 - continued Shipments Originating in Illinois and Destination 1977 SIC Code West S. Central Mountain Pacific Unknown (value) (tons) (value) (tons) (value) (tons) (value)(tons ) 20 837 1,738 176 218 536 832 403 477 201 130 98 21 7 78 42 2 1 202 94 115 5 4 3 3 10 13 203 87 90 22 29 55 53 77 50 204 89 242 34 64 109 406 167 281 205 21 15 4 3 21 14 63 28 206 88 53 34 18 125 71 45 17 207 224 952 8 11 74 161 31 79 208 70 130 35 51 60 72 3 7 209 34 44 13 31 11 11 4 1 NOTE: All "Value" columns are in millions of dollars and all "Tons" columns are in thousands. SourcerU.S. Census of Transportation, 1977. 93 Table 8 - Continued Shipments Originating in Illinois and Destination 1977 Definition of Regions NEW ENGLAND Maine New Hampshire Vermont Massachusetts Rhode Island Connecticut WEST NORTH CENTRAL Minnesota Iowa Missouri Nebraska Kansas North Dakota South Dakota WEST SOUTH CENTRAL Arkansas Louisiana Oklahoma Texas MOUNTAIN Colorado Wyoming Montana New Mexico Arizona Montana Utah Nevada MIDDLE ATLANTIC New York New Jersey Pennsylvania EAST NORTH CENTRAL Michigan Ohio Indiana Wisconsin Illinois EAST SOUTH CENTRAL Kentucky Tennessee Alabama Mississippi PACIFIC Washington Oregon California Hawaii Alaska SOUTH ATLANTIC Delaware Maryland Virginia West Virginia North Carolina South Carolina Georgia Florida District of Columbia 94 region which includes Illinois. Taking the 51.7% of all SIC 20 shipments (7,744/14,992) as a benchmark, it is possible to identify those industries that ship relatively more within the region. For dairy products, 63% are shipped in the region. The other categories above the benchmark are bakery products (205), 69%; fats and oils (207), 57%; and beverages (208), 56%. These data are reasonable given the perishability and relatively high bulk per unit of value. Typically products from these categories are sold in regional, rather than national markets. Grain mill products (204), preserved fruits and vegetables (203), and miscellaneous foods (209) have wider dispersion across the nation. For grain mill products, this is due to the proximity to raw material supply in Illinois and the immediate region and the relative scarcity of grain in the coastal U.S. regions. Often, milled products are shipped into these grain deficit regions for further processing. Note that grain mill products have very low unit value compared to most other SIC classifications . Much of the traffic in grain mill products and fats and oils represents intrastate and interstate trade from nearby states. Often this movement occurs as part of the processing channels, and may even represent intrafirm shipments across state lines. Tables 9 and 10 show that many of the shipments of foodstuffs into Illinois are in the same industries that have high exports from the state. Large volumes of cottonseed oil, soybean oil, and other fats and oils are imported into the state, processed further (perhaps into salad oil), and shipped out 95 SIC Code and Name Table 9 Volume of Food Shipments into Illinois From All Domestic Points of Origin 1977 and 1972 1977 (thousand tons) 1972 20 - Food and Kindred Products 29 477 201- Meat Products 2 957 2011- Meat: Fresh and Chilled 1,113 2013- Meat: Products 5 26 2014- Animal Byproducts (inedible) 721 202- Dairy Products 2 79 g 203- Canned and Preserved 2 313 Fruits and Vegetables 204- Grain Mill Products 6 126 2041- Flour and Other Mill Products 2,166 2042- Prepared Animal Feeds 1 999 2045- Blended and Prepared Flour 184 2046- Wet Corn Milling 1 42 1 205- Bakery Products 1 273 206- Beet and Cane Sugar 1 553 2062- Refined Sugar ± 3,0 207- Confectionery Products 208- Beverages 486 4,109 2082- Malt Liquors : 0Q5 25,14 7 1,522 567 417 266 NA 1,820 8,774 201 3,011 561 2,951 NA NA NA 1,041 NA NA 96 Table 9 - Continued Volume of Food Shipments into Illinois From All Domestic Points of Origin 1977 and 1972 SIC CODE and Name 1977 19 72 (thousand tons) 2084- Wines and Brandy 141 NA 2085- Distilled Liquors 228 NA 2086- Soft Drinks 2,448 NA 209- Miscellaneous Foods 8,638 6,713 2091- Cottonseed Oil and Products 42 NA 2092- Soybean Oil and Byproducts 3,567 4,802 2093- Vegetable and Nut Oils 210 NA 2096- Margarine, Shortening, and 3,677 748 Table Oils (except corn oil) NOTES: NA indicates insufficient data or changes in definitions. Source: U.S. Census of Transportation, 1977.. 97 Table 10 Food Shipments to the East North Central Region By Region of Origin 1977 SIC Code and Name New England Middle Atlantic West N. Central (value) (tons) (value) (tons) (value) (tons) 20- Food and -- -- — — 424 1,103 Kindred Products (not specified) 201- Meat — — 185 66 2,829 2,440 Products 202- Dairy — — 134 153 67 7 489 Products 203- Preserved 63 56 353 533 323 533 Fruits & Vegetables 204- Grain Mill 5 10 136 308 1,030 4,997 Products 205- Bakery — — 46 41 167 155 Products 206- Sugar and 29 11 461 312 209 849 Confections 207- Fats and Oils 3 11 94 213 536 2,153 208- Beverages .4 5 306 612 209 539 209- Miscellaneous 114 72 340 186 200 151 98 Table 10- continued Food Shipments into the North Central Region By Region of Origin 1977 SIC Code S. Atlantic East S. Central West S. Central Mountain (value) (tons) (value) (tons) (value) (tons) (value) (tons) 20 2,149 2,120 1,299 2,109 1,112 1,836 650 978 201 520 576 393 429 388 384 86 71 202 72 47 39 116 6 13 3 3 203 263 457 26 56 111 154 108 189 204 19 41 33 125 44 244 175 135 205 97 74 67 80 13 10 87 59 206 155 165 5 4 205 732 116 361 207 108 154 159 251 67 137 2 5 208 78 233 239 442 — — 7 22 209 659 210 254 162 233 69 99 Table 10 - continued Food Shipments into the East North Central Region by Region of Origin 1977 SIC Code Pacific East N. Central (value) (tons) (value) (tons) 20 1,420 2,432 201 — -- 4,652 3,481 202 203 691 1,309 2,140 4,009 204 42 159 2,467 8,945 205 2 1 1,474 1,716 206 141 418 975 1,628 207 100 149 2,612 11,460 208 146 256 3,534 11,968 209 281 118 1,326 3,985 NOTE: All figures in the columns labeled "Value" are in millions of dollars and all figures in the "Tons" columns are in thousands of tons Source: U.S. Census of Transportation, 1977. 100 to national markets. Much of the imported grain products trade operates similarly. There are some substitutions in trade. Illinois imported 1,558,000 tons of beet and cane sugar into the state in 1977. There is very little refining capacity for sugar in the state and no raw sugar production. However, the state's population requires sugar for household use and the food manufacturing firms require sugar for many products. Illinois, in effect, trades finished food goods and corn sweeteners for this sugar. Thus, although there are dollars leaving the state for sugar, there are dollars returning for the substitute product — corn sweeteners, and for goods using sugar in value - added production. Trade in Nonprocessed Products On a tonnage basis, it appears that food shipments into and from Illinois are nearly equal. Table 8 shows shipments to Illinois and other states to be 31,827,000 tons in 1.977 and table 9 shows imports into the state to be 29,447,000 tons in the same year. Aside from the confounding effects of transshipment and further processing, these figures indicate a balance in trade among processed products. The above discussion does not include shipments of unprocessed foods into or out of the state. Obviously, Illinois consumers purchase a tremendous quantity of fresh produce that is grown outside the state. The Cornucopia Project , a series of research reports from the Rodale Press, considers this to be a major issue in the structure of the modern food industry in the U.S. They have produced case studies of several eastern states to show the deficit production of fresh fruits and 101 vegetables and the cost to consumers of importing these products from California, Florida, and elsewhere. The recommendation of these various reports is to substitute acreage of fresh vegetables and fruits for current acreages for feed crops. Savings to consumers and "safety" of the food supply from interruptions are cited as reasons for the substitution. Earlier chapters of this report cite the trend in Illinois to row crop monoculture and specialization in types of farming. The various reasons for these trends and the inertia of this transformation are also reported. It remains to consider the costs of arresting this trend in favor of production of fruits and vegetables, as suggested by the Cornucopia reports. There are no data on the traffic in fresh produce within or into the state. Since most raw vegetables and fruits are purchased by supermarket chains under contract or in distant markets, and not through local markets, there is no mechanism for reporting these shipments. The Food Consumption , Prices, and Expenditures series of the Economic Research Service of the U.S.D.A. reports 1980 per capita consumption of fruits purchased at retail to be 84.0 pounds and per capita retail purchases of fresh vegetables to be 99.9 pounds. These are national figures, but there are no particular reasons to expect they are not indicative of Illinois consumption patterns. The hundreds of thousands of tons of fresh foods that these figures represent for statewide consumption make a tempting target for "import-substituting" production in Illinois. 102 The current state of production of horticultural crops in Illinois is illustrative of the problems in substituting for these imports. There are some vegetables produced for fresh markets, but they are predominantly for direct markets. Small fruits, such as strawberries and blueberries, are popular U-pick and roadside stand fare. Apples, peaches, tomatoes, and a few other crops are also sold through farmers' markets, roadside stands and U-pick operations. While these crops are available throughout the state, they tend to be concentrated around the major metropolitan areas. While the scope of direct marketing is growing, it will never be a major source of food for consumers (Padberg and Westgren). Direct markets are seasonal; consumption is not. Direct markets are not easily accessible to consumers; supermarkets provide easy access. Direct market produce may be of high, but variable quality; supermarket produce is of standard, relatively invariant quality. Therein lies the rub. Quality standards are important in food marketing. Supermarkets and fast food chains thrive on marketing standard quality and mass quantities of foodstuffs. They require the foods they purchase to be of uniform quality so they can be efficiently marketed and effectively promoted. Illinois cannot support a year-round production industry for fruits and vegetables. The climate will not permit multiple crops of major vegetables and fruits. In many cases, the climate can not support uniform year-to-year quality for many horticulture crops. Thus, chain store buyers will eschew local produce for crops from California, Florida, Arizona, and Mexico. These production areas have large, efficient producers that can meet huge 103 orders for uniform quality at several times of the year. Illinois producers cannnot offer these advantages of scale. Because the production of horticulture crops is fragmented and of small scale in Illinois, there is no established infrastructure of marketing services to bring producers and retailers together. These middlemen are necessary to establish marketing channels. Even farmer cooperatives can not always suffice to provide these services of collection, grading, shipping, etc. Only some special crops can be effectively marketed in the modern distribution system when they are not produced in huge quantities. An example of this is the production of high quality hydroponic lettuce grown in greenhouses heated with waste heat from manufacture. There are pilot programs for this production system in Illinois, but the crop is expensive and not a true substitute for low cost field grown lettuce from Florida and the Southwest. The other question that should be addressed is what would be preempted in some major shift to vegetable crops. Obviously, if most of the productive land in the state is used in growing grain, then some corn and soybean land would removed from production. There is not much debate about the likelihood of such a shift, given that there is a large capital investment in grain crop equipment that must be exchanged for a large investment in specialty crop equipment as well as the nontransferability of production expertise. There is nothing to support the contention that row crop farmers can produce vegetables with the same efficiency they get from grain production. 104 There is also a large, well developed infrastructure for marketing grain in Illinois. The existence of this infrastructure promotes the continued use of productive resources for growing grain. This infrastructure extends from county elevators to the great trading houses of Europe and Japan. Tables 11, 12, and 13 show the movements of corn, soybeans, and wheat within Illinois during 1977. The first column of the tables shows the grain receipts at local elevators during the year. The remaining columns show the shipments to destinations within the state (primarily for processing), to other states, and to export ports for sale abroad. The regions are shown on the map following the three tables . Those regions that abut major waterways show a large percentage of receipts going to export markets. The infrastructure values highly grain production with easy access to low cost transportation to Gulf ports and to the Great Lakes. Illinois enjoys better access to transportation services than many competing grain producing areas. This encourages a higher percentage of Illinois grain production being shipped abroad than any other state. The large grain and oilseed processing sector discussed above also thrives on the marketing infrastructure. The existence of many large processing plants for soybeans and corn in the state also encourage the large acreages of these raw materials. The value of these crops in interstate and overseas trade is immense. However, these commodities have low value added, primarily through transportation, and the economy receives less income per bushel 105 Table 11 Shipments of Corn From Illinois Regions Intrastate, Interstate, and Export. 1977 Illinois Region (a) Grain Receipts Intrastate Interstate Export Shipments Shipments Shipments (thousands of bushels) Region 1 442,914 168,928 18,295 256,547 Region 2 279,240 101,921 73,670 70,355 Region 3 203,557 106,959 32,731 47,456 Region 4 38,403 • 5,133 19,848 7,391 Region 5 361,980 124,976 4,542 206,613 Region 6 85,178 31,331 4,920 41,624 Region 7 40,172 7,292 16,392 21,388 Region 8 142,290 63,463 10,473 1,929 NOTES: (a) Regions are delineated on the map following Table 13. Shipments may not add to receipts due to inventory changes and intraregional processing. SourcerHill, Lowell D.,Mack N. Leath , and Stephen W. Fuller, Corn Movements in the United States, pp. 36-44. 106 Table 12 Shipments of Soybeans from Illinois Regions: Intrastate, Interstate, and Export 1977 (a) Illinois Region Grain Receipts Intrastate Interstate Export Shipments Shipments Shipments (thousands of bushels) Region 1 86,179 31,096 6,877 45,700 Region 2 67,173 27,195 1,562 3,635 Region 3 77,396 52,820 9,208 982 Region 4 15,559 3,420 6,763 4,424 Region 5 78,589 34,297 7,128 30,142 Region 6 58,776 9,09 7 4 13,042 Region 7 42,781 6,586 11,163 23,713 Region 8 101,423 30,138 600 NOTES: (a) Regions are delineated on the map following Tables 11 through 13. Shipments may not add to receipts due to inventory adjustment and intraregional processing. Source: Leath, Mack N., Lowell D. Hill, and Stephen W. Fuller , Soybean Movements in the United States, pp. 21 - 28. 107 Table 13 Shipments of Wheat from Illinois Regions: Intrastate, Interstate, and Export. 1977 (a) Illinois Region Grain Receipts Intrastate Interstate Export Shipments Shipments Shipments (thousands of bushels) Region 1 3,250 1,359 3,004 Region 2 3,051 1,689 784 685 Region 3 32,099 13,246 5,670 2,037 Region 4 8,163 3,134 966 4,846 Region 5 14,679 6,476 435 6,995 Region 6 28,847 10,168 5 8,166 Region 7 32,737 9,071 2,809 17,656 Region 8 559 560 NOTES: (a) Regions are delineated on the map following this table. Shipments may not add to receipts due to inventory changes and intraregion processing. Source:Leath, Mack N., Lowell D. Hill, and Stephen W. Fuller , Wheat Movements in the United States, pp. 38-45. 108 Regions Used in Tables 11 - 13 109 for exported crops than for processed grain and soybean products. This issue is often presented as a major research and market development question. That is, how can Illinois farmers (and businesses) capture more value added for the many bushels of grain and soybeans produced? Obvious answers are to provide more processed products for trade rather than raw commodities. Corn sweeteners, refined vegetable oils, processed feedstuffs, and even meat products would represent products of higher value. The difficulty lies in the fact that the destinations for raw commodities support the same processing industries as Illinois and will protect their home industries from encroachment by processed Illinois products. For example, Japan limits the amount of meat it imports to protect its own meat industry and to limit the amount of foreign exchange leaving the country. Similarly, the European Economic Community has import levies against soybean oil to protect its fats and oil industries. The EEC also wishes to limit imports of corn sweeteners that compete with its highly subsidized and protected sugar industry. There are no easy answers to the trade questions regarding the cost and availability of foods imported into Illinois or the expansion of exports of high valued Illinois products. The easy response is to retreat to the premise that all markets are interrelated and altering any one may bring serious repercussions in the others. Trying to maintain all relevant industries within the state would be costly and less efficient than producing what Illinois resources provide most efficiently and trading for products produced most efficiently 110 elsewhere. Unfortunately, this response is only valid when other markets are operating freely and no barriers are present. Distribution of Foodstuffs The food distribution industry is also a large part of Illinois commerce. In 1976, over 28% of all wholesale employees were in food wholesaling and over 13% of all retail employees were in food retailing (Garcia and Corbett). The distribution system in the U.S. arose from a symbiotic growth with food manufacturing. As the country developed into a post-war industrial power, the affluence of the working classes promulgated a demand for diverse goods. Even staple foodstuffs were no longer sufficient for the American household. Consumers demanded new goods: convenience foods, highly processed and packaged foods, and a wider array of manufactured foods. The food manufacturing sector responded. The distribution sector florished as consumers preferred convenient purchasing outlets — supermarkets. Mass distribution through chain stores, wholesalers, and using mass media advertising created an efficient market for food consumption. The economics of food distribution are highly complex. Aside from the goals of providing foodstuffs to retail customers efficiently, the distribution system must carry tremendous variation in products, perhaps 8-10,000 foods, and be flexible enough to change the mix of products continuously through time. Tremendous resources are spent in identifying new products, testing market response, promoting and advertising new and existing products, and identifying consumer needs. Although the U.S. Ill consumer spends less income, on a percentage basis, on food than nearly all other consumers worldwide, much of the expenditure is not on cheap staple items. Much of the growth in the food industries is attributable to high value-added processed products, imported luxury goods, and items other than bulk staples. One of the consequences of this development of the food market is the decrease in firm numbers for manufacturing and distribution. Illinois food manufacturers are national firms, producing and marketing in all regions. Many of these firms are conglomerates involved in several SIC industries. Food retailing is also concentrated. In most metropolitan areas in Illinois, four retail firms account for over 50% of food sales (Garcia and Corbett). Typically there are two or three leading firms in each market with several independent stores or small chains competing for the remaining market share. This structure allows for efficiencies in warehousing, buying, and promoting products. Resource Questions for the Future There are several points in the post-farm gate marketing channels where resource issues of the future may affect market behavior. While resource issues may not be as obvious as they are in the production agriculture sector, there are pervasive effects that may strongly effect employment, consumer prices, and the leadership that Illinois enjoys in food processing. The first issue is the general availability and price of energy in the future. The prices for fossil fuels and electricity will undoubtably increase for the foreseeable future. Overall, the marketing and 112 processing costs of transforming farm commodities into retail foods are about 62% of the retail dollar value (1982). Of this value added, 6% is direct energy costs and transportation is an additional 8%. Many food manufacturing processes are highly energy intensive relative to other manufactures. Substantial amounts of electricity are required for grinding, mixing, extruding, cooling, freezing, and other activities. Gas, oil, coal, and electricity are used for a myriad of processes including baking, drying, steam generation, and sterilization. Diesel fuel is necessary to transport perishable fruits, vegetables, and milk across vast distances. Processed foods from states like Illinois are distributed through national markets and require rail and truck shipments . As energy prices increase, a dollar-for-dollar increase in food prices can be expected. Most of the firms producing foods are of sufficient size and have sufficient market power to pass on energy price increases. Over the long run, there will be some shifts in production technology away from very highly energy intensive techniques to those which are energy saving. As an example, more foods will be maintained in packages designed for storage at ambient temperature, rather than as chilled or frozen products. Some products with high energy costs relative to profits will disappear. As transportation costs rise with general energy prices, there will be a reversal of the trend toward plants of national scope and a revival of smaller, efficient plants to produce for regional markets. If supplies of raw materials can be located near these plants, regional 113 processors will effectively reduce overall transport costs for commodities and finished food products. To some degree, this phenomonon already occurs. Although the corn refining industry is located primarily in the Illinois, Indiana, and Iowa corn producing regions, small plants have been erected in California and Pennsylvania to serve those local markets that are remote from the Corn Belt. Although procurement costs for corn refined in small plants on the east and west coasts are higher than for the Midwest, substantial savings over shipping the bulky products from the Corn Belt are realized. It is unlikely that supply interruptions or very large price increases will have more than a short run effect on food manufacturing and distribution. Energy saving production techniques will be invoked if these energy market disruptions are of significant duration. As all users of energy become more frugal as a result of market disruptions, more existing stocks of energy will be made available through conservation, and food firms will be able to bid for these supplies. At the worst, the food industries will have to justify their needs under government allocation programs. It is reasonable to assume that the domestic food supply would receive a high priority under such a scenario. A second long term resource issue is the safety of the raw material supply to the food industries and to Midwest markets. How vulnerable is our current system to loss of irrigation water in California vegetable production regions? The potential danger of such an occurrence is tempered by the availability of other supply regions that are not at 114 capacity. The entire Gulf region, as well as the river valleys of Texas and the Southwest, are as yet not fully utilized in producing high value vegetable crops. The important consideration here is time . Such a major supply interruption due to a resource loss will not occur immediately. There will be ample time for markets to value vegetable production activities in California and alternative areas and to allocate land and other resources where they will receive highest returns. It may be that lost irrigation water will cause alfalfa and cotton to disappear from California valleys and relatively high valued vegetable crops will replace them in using reduced water supplies. As an alternative source, Mexico and other Latin American countries may provide alternative supplies at low cost. An example of substitution of production techniques in response to declining raw commodity supplies is aquaculture. As the cost of landed fish has increased for marine and inland fisheries, there has been a rapid growth of U.S. fish farming enterprises (Gorden and Westgren). This change in production activities could likewise be caused by declining populations of wild fish and the high cost of capture (i.e. diesel fuel). To some extent, research at Sea Grant universities is addressing these very issues. In sum, many of the potential resource deficit problems will be mitigated by the flexibility of the economic system to bring alternative production, assembly, and transportation activities into operation. In the long run, resource adjustments will be made, and resource-saving technologies can be developed. 115 Chapter V ADDITIONAL RESOURCE ISSUES There are three additional resource issues to be considered in addressing the structure of the food industry in Illinois. They are (1) the effects of surface coal mining on land use patterns, (2) the effect of biomass production on land use patterns, and (3) irrigation use in Illinois. While these issues are of less significance than overall production patterns and market conditions in determining land use and resource values, they are nonetheless of current and pending concern to policy makers. Effects of Surface Mining on Land Use Approximately 210,600 acres in Illinois have been strip mined for coal. This amounts to about one half of one percent of the state's total land area. In most counties where surface mining has occurred, only a very small area has been touched. However, in the counties of Perry, Fulton, Williamson, Saline, and Knox between 4 and 12 percent of the acreage has been affected. Fulton County has the greatest number of surface rained acres: over 49,000. Perry County has the highest proportion of land area in surface mines, with 11.3 %. Table 14 shows the mined areas for all counties . Before the state's first mining reclamation Law went into effect in 1962, 103,181 acres had been surfaced mined in Illinois. Much of the 116 Table 14 Acreage Affected by Surface Mining County Adams Brown Bureau Clark Crawford Edgar Fulton Gallatin Greene Grundy Hancock. Henry Jackson Jefferson Jersey Johnson Kankakee Knox LaSalle Livingston Madison Marshall McDonough Menard Mercer Morgan Peoria Perry Pike Pope Randolph Saline Scott Schuyler Stark St. Clair Vermilion Wabash Will Williamson Totals Prior to After Total 1962 Law Law Acreage 177 51 228 19 35 54 2910 225 3135 3 3 4 17 21 51 51 25293 23909 49202 208 2544 2752 50 6 56 6162 1127 7289 101 101 2676 2676 4080 2076 6156 72 2736 2808 1 1 1 74 75 2097 63 2160 11434 9878 21312 1213 1213 46 46 7 7 1 1 6 38 44 6 6 25 25 4 4 1265 7870 9135 13084 19041 32125 1 1 53 53 2387 9373 11760 5584 6121 11705 1 1 1327 1036 2363 239 2447 2686 5948 7659 13607 4208 1143 5351 6 4 10 4698 1624 6322 7792 8277 16069 03181 107433 *210614 Percent of County .04 .03 .56 .0009 .007 .01 8.80 1.30 .016 2.63 .02 .50 1.59 .75 .0004 .03 .50 11.33 .16 .007 .001 .0004 .01 .004 .007 .001 2.26 11.33 .0002 3.04 4.73 .0006 .85 1.44 3.09 .93 .007 1.17 5.69 .583 Source: 111. Dept. of Mines and Minerals ^through late 1980 117 so-called "prelaw" land has been revegetated and used for productive purposes. On some of the prelaw land only minimal vegetation has been established, which has led to environmental problems. The roughly 107,500 acres disturbed by surface mining since 1962 have been subject to various reclamation requirements and have been returned to productive uses. Strippable Reserves Surface mining accounts for nearly 50% of recent Illinois coal production. Over 20 billion tons of coal in Illinois have potential for strip mining. However, under current economic and regulatory conditions, the amount of coal that can be surface mined is estimated at 6 billion tons. There are large strippable reserves in southwestern and southern Illinois. The latter areas are attractive for surface mining because land costs are lower, the heating value of the coal is higher, and the per acre recoverable tonnage is greater. About 75% of the state's current surface mine production comes from the southwestern and southern areas; the remainder is primarily from Fulton, Peoria, and Knox counties in western Illinois. Strippable reserves are found in 38 counties (table 15). Fulton, Perry, Peoria, Knox, and St. Clair counties have the largest reserves. Some large reserves are also found in Stark, Madison, and Randolph counties. Of the 38 counties containing reserves, twenty have never been mined on a large scale and only twelve had active mines in 1978. In the near future, southern reserves will continue to be major sources of surface mine production. Reserves in these counties have 118 Table 15 Reserves of Strippable Coal in Illinois (million tons, July 1975) County County Total Adams Bureau Cass Crawford Cumberland Edgar Fulton Gallatin Green Grundy Hancock Henry Jackson Jefferson Jersey Knox LaSalle Livingston McDonough Macoupin Madison Menard Morgan Peoria Perry Pike Randolph St. Clair Saline Sangamon Schuyler Scott Shelby Stark Vermilion Wabash Warren Williamson 75.733 149.515 2.243 21.305 2.478 64 . 05 1 672.011 51.533 226.223 24.865 28.511 201.246 183.075 22.616 84.029 519.827 20.592 19.965 78.183 82.346 252.218 43.023 62.201 642.240 650.138 15.759 222.968 427.132 171.746 109.589 191.460 29.619 27.430 267.990 146.499 136.306 54.563 110.144 Total 6091.583 Source: Illinois Department of Mines and Minerals 119 probably already been committed to existing and planned mines. Futhermore, new reclamation laws and higher land values may cause areas of strippable reseves in western and central Illinois to be less desirable than southern reserves (Treworgy, Bengal, and Dingwell). New technological developments and increasing demand for energy sources may yet make mining thinner and deeper coal seams profitable. Thus, coal production would expand into regions of the state not typically thought of as coal producing regions. Table 16 projects coal production from surface mines, land used for surface mines, and the value of agricultural production lost as a result of strip mining through the end of the century. Producing areas IL-1, IL-2, IL-3, IL-4 , IL-5 , and IL-6 correspond to western, northeastern and northcentral , central, eastern, southwestern, and southeastern Illinois, respectively. The counties included in these regions are noted following table 16. The land in coal producing areas of Illinois is mostly in farms. Most of the farms are in harvested cropland. In IL-1, IL-2, IL-3, and IL-4, seventy five percent of the area is in farmland and over half of this area is in harvested cropland. The soil and topography in these areas are well suited to agriculture, particularly row crops. The three regions projected in table 16 to experience new or expanded surface mining are IL-1, IL-5, and IL-6. These same regions are the only ones to incur significant losses in agricultural production due to strip mining. 120 Table 16 Projected Coal Production from Surface Mines, Land Used For Mining, and Value of Agricultural Production Displaced, by area 1975-1999. IL-1 IL-2 ■IL-3 IL-4 IL-5 IL-6 Average Annual Coal Production 1975-99 (mil. ton) 7.5 .1 18.5 5.7 New or Expanded Mines Coal Yield per Acre (ton) 4560 4200 3960 49 20 8400 6600 Average Annual Acreage Taken Out of Production 10024 505 102 12812 6118 Value of Displaced Production 143.76 ($ per acre) 159.10 144.04 145.69 94.72 71.38 121 122 Market Factors Affecting Strip Mining As the demand for Illinois coal changes, so does the magnitude of land disturbed by surface mining. The demand for Illinois coal has suffered from environmental legislation such as the Clean Air Act of 1970, which limits the allowable sulfur content for burning coal. To avoid the cost of installing flue gas desulf urization units, or scrubbers, many power plants and factories in the state have switched to low sulfur coal from the western states. However, the advantage enjoyed by low sulfur coal may be short lived if new laws are passed requiring installation of scrubbers capable of removing 90% of sulfur residue from high sulfur coal and 70% from low sulfur coal. Illinois coal production also suffers relative to western coal for geological reasons. Most western coal is taken from highly productive strip mines, while only 12% of Illinois reserves is strippable. Adding to the production costs is the Illinois relamation law. The cost of recontouring mined farm land and restoring topsoils increases the relative cost of Illinois coal (Krohe). The demand for coal, and thus the magnitude of land disturbed by strip mining could be greatly affected by the conversion of coal via large stale coal gasification and liquefaction processes. However, movement toward these processes have been slowed by temporary surpluses of crude oil. Land Use Patterns Following Reclamation In meeting land use plans, 71% of acres permitted for strip raining during 1980 will be reclaimed to agricultural uses, 17.8% will be 123 forested, nearly 8% will be for wildlife, and about 3% will be used for industrial purposes (Department of Mines and Minerals). To provide some indication of trends, the data in table 17 show land use patterns for reclamation plans of permits issued since 1975. During this period, the proportion of land being reclaimed to forest and wildlife uses appears to be increasing and agricultural uses declining. Table 18 shows premining land use patterns for permits issued since 1972. For permits issued during 1980, a smaller proportion of pasture land was involved than in any previous year and only in 1972 was a larger proportion of cropland involved. Forest land uses have changed the least of the major use categories affected by mining. Tables 19 and 20 provide a comparison of premining and postmining land uses. These data may be used to evaluate possible changes in land use patterns as a result of surface mining. These two tables differ from 17 and 18. Crop and pasture lands are summed and shown as agricultural uses. Forested areas and wildlife habitats are also combined as forest land . Tables 19 and 20 illustrate that postmining land use patterns more nearly reflect premining uses during 1978-1980 than during previous years. Federal rules for reclamation have significantly influenced land use choices in that regulatory preference is for land to be reclaimed to premining uses. In fact, changes in land use as a result of surface mining cannot be approved unless the permit applicant undertakes a complex procedure asking for alternative use allowance. Therefore, it 124 Year of Permit Table 17 Land Use of Post-Mining Acreage (percent) Agriculture Forest Wildlife Indus t: 94.46 1.48 .09 2.58 90.46 5.94 .13 2.77 83.42 7.63 6.94 .44 62.38 33.74 2.30 1.58 82.06 9.42 5.42 3.10 74.98 14.95 6.66 3.41 19 75 1976 1977 1978 19 79 1980 Mean 81.29 12.19 3.59 2.31 Source: Department of Mines and Minerals 125 Table 18 Pre-Mining Land Use Patterns (percent) Year of Permit Crop Pasture Forest Industrial 53.28 15.03 30.76 0.93 52.47 16.78 30.52 0.21 43.82 23.84 31.63 0.71 23.26 30.53 40.96 1.57 49.59 22.10 17.16 5.93 57.98 9.74 26.55 4.42 1975 1976 ' 1977 19 78 19 79 1980 Mean 49.01 20.61 27.53 1.71 Source: Illinois Department of Mines and Minerals 126 Year Table 19 Land Use During Five Year Pre-Mining Period (percent) Agriculture Forest Industrial 1975 1976 1977 1978 19 79 1980 MEAN 68.31 69.25 67.66 53.79 71.69 67.72 66.40 30.76 30.52 31.63 40.96 17.16 26.55 29.60 .93 .21 .71 1.57 5.93 4.42 2.30 Source: 111. Dept. of Mines and Minerals Table 20 Planned Use After Mining (percent) Year Agriculture Forest Industrial 94.46 1.57 2.58 90.46 6.07 2.77 83.42 14.57 .44 62.38 36.04 1.58 82.06 14.84 3.10 74.98 21.61 3.41 1975 1976 1977 1978 19 79 1980 MEAN 81.29 15.78 2.31 Source: 111. Dept. of Mines and Minerals 127 seems predictable that postmining land use will closely reflect premining patterns in the future. The conclusion that may be drawn from this discussion is that strip mining will not place undue strain on the state's agricultural productive capacity in the near future. For those lands where surface mining is economically viable, restoration will occur for agricultural uses. For much of Illinois' farm land, the expected return from strip mining is low and this acreage will not be disturbed until market forces, or relaxed environmental strictures, make Illinois coal competitive with western coal. The Effects of Biomass Production on Land Use Patterns Significant production of fuel ethanol is taking place in Illinois. Hauser and Braden estimate U.S. ethanol production at 75 million gallons in 1981, 155 million gallons in 1982, and 223 million gallons in 1983. Illinois firms account for 70% of 1981 production, 56% of 1982 production, and 48% of 1983 production. Thirty million bushels of corn were required for 1981 output. At average U.S. yields, this volume of corn could be grown on slightly less than 300,000 acres. The bushel volumes and acreages for 1982 and 1983, respectively, are 62 million bushels and 600,000 acres and 93.2 million bushels and 930,000 acres. The acreages necessary to produce Illinois manufacturers' shares of these three years' production are 200,000 acres, 300,000 acres, and 425,000 acres for 1981, 1982, and 1983, respectively. Because of the normal movements of corn in commercial channels, it is expected that Illinois 128 producers will use some corn from surrounding states and that these figures will overstate the acreages of Illinois corn going to alcohol. Assessment of cropping pattern changes resulting from increasing ethanol production are complicated by the production of the high protein by-product, distiller's dried grain, which competes with soybean meal in the feed supplement market. It is possible that an increase in the quantity demanded for corn in ethanol production, accompanied by a concurrent increase in distiller's dried grain output, will increase corn prices and depress soybean prices in the short run. In the longer run, some acreage shifting from soybeans to corn would be expected. The degree of crop shifting will depend on the magnitude of increased corn demand, which is a function of many factors besides ethanol demand. This discussion of land use resulting from biomass fuel production pertains to land already under intensive use. Dovring has estimated the quantity of land in Illinois that may be potentially available for biomass feddstock. Estimates were made at the county level, then aggregated to subtotals by type-of-farming areas. A distinction was made between lands thought suitable for intensive tree production and land indicated for silage crops for fuel feedstock. Land available for intensive forestry consists of cropland, pasture, woodland, and other land. Cropland considered eligible for tree farming is made up of land which was in conservation use only, and land in need of permanent cover. Woodland is composed of wooded pasture areas , and wooded areas that are not pastured or used for commercial timber production. Summing these estimates, Dovring concluded that farmland potentially available for izy intensive tree production (for bioraass) without disrupting the state's agricultural production is approximately 3.2 million acres (table 21). Cropland in need of "sod in rotation" would be used for biomass silage production. This amounts to slightly over 2 million acres, with over 1/3 coming from the eastcentral grain production region. The value of these figures is, of course, dependent upon the development of commercially feasible technology for biomass covers ion. Trees and silage crops have energy production potential that can displace the conversion of high-valued grain crops such as corn. The land use effects of cellulose conversion are certainly more amenable to the public interest in maintaining cropland for food production and not for energy. Irrigation and Land Use For the state of Illinois, irrigation has an insignificant impact on land use patterns. However, in a few counties irrigation is important in crop production. In the counties of Henderson, Kankakee, Mason, Tazewell, and Whiteside, irrigation withdrawals exceeded three million gallons per day. Of these five counties, Mason is the state leader in irrigation, accounting for 50 to 60% of the state's irrigation withdrawals in the past decade. Illinois is fortunate to receive adequate rainfall during most times of the growing season. However, in some areas, crop yields could certainly be improved by timely irrigation. As yet, though, few farmers outside the counties noted above have invested in irrigation equipment . Some growth in irrigation can be expected in the future as an alternative for farmers to purchasing additional land. The enhancement of 130 Table 21 Estimates of Land Potentials For Biomass Feedstock Production (thousand acres) Cropland Conservation Use 1,492.4 Permanent Cover 745.8 Pasture 192.6 Woodland Pastured 154.8 Not Pastured 378.9 Other Land 232.6 Total for Trees 3,196.5 Cropland in Need of Sod Rotation 2,058.2 Source: Dovring, 1982. 131 yields on land already owned through timely use of irrigation may become cost efficient if land prices resume their upward trend. 7200-S3I PB-33 C BT Mwm® UNIVERSITY OF ILLINOIS-URBANA 3 0112 107255108