Changing Economics of Locally Owned Agribusiness Firms and Impacts on Rural Communities

Roger G. Ginder

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: Farm supply and grain marketing agribusiness firms in Iowa and other rural Midwest states are an important economic player in the very smallest of rural communities. Even in towns where most mainstreet businesses have already vanished some type of grain handling and farm input supply firm has continued to service the agricultural producers in the area and provide primary employment for local residents. Current trends in this industry have created serious financial stress for a significant fraction of this industry. Fewer and larger farm customers, a decline in government subsidized storage programs, excess capacity, contract livestock production, Increasing, capital investment requirements for handlers of grain, an increasing capital requirement to meet fertilizer and ag chemical regulations taken together are threatening the viability of approximately 1/2 of these firms. The industry has divided itself into a group of "have" and "have nots". About half of the industry has shown positive trends in profits and cash while the o^er halfshow negative trends. Employment, tax base, and civic leadership are likely to be noticeably reduced in communities where these "have nots" firms fail

Date: 1992-02-11
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