A 10-Year Look at a Changing Resource Industry

School of Agriculture and Land Resources Management

University of Alaska Fairbanks

The agricultural industry that flourished in Alaska in the late 19^{th and early 20th century grew out of necessity related to frontier expansion. Expansion was encouraged throughout the United States and its territories by a positive federal policy for agricultural development. Alaska’s agricultural industry stagnated in the 1950s when transportation into the territory made it more efficient to import food products, both fresh and processed. When interest in agriculture was renewed in the late 1970s, the United States was well into the post-industrial, non-expansionist period and its policy did not favor increasing agricultural lands in production. As a result, there was virtually no federal support for expanding the agricultural industry in the state.}

There was ‘grass roots’ support for expansion of the agricultural industry in Alaska in the 1970s. The state’s economy was expanding because of increasing oil revenues. The non-indigenous component of the population had migrated from the contiguous states where agriculture signified a solid economic base and epitomized the frontier spirit. However, at the decision making level, there was little understanding of the industry. Certainly there was nostalgia for the pastoral farm landscape, but it was not understood that a commodity-based agriculture is a low-margin industry that develops over a long period of time. Only recently have higher margins been realized as agricultural entrepreneurs move into non-food and diversified new food and fiber production. Another misunderstanding held by Alaskan decision makers was and is that a traditional and a new agricultural industry require an infrastructure that includes transportation, processing, research, and outreach and aggressive marketing. The administration in power in Alaska in the mid 1970s and early 1980s provided support for expansion of the agricultural industry in the form of land sales, loan programs, and partial infrastructure. Its rational was based on nostalgia and only partial understanding of the infrastructure necessary to promote expansion. Following administrations failed to understand the continuing long-term support necessary to sustain the industry. As a result, state support for the agricultural industry in Alaska is minimal1.

Federal policy toward agriculture, simplistically, reflects the maturation and internationalization of an economy. Alaska policy toward agriculture reflects the misunderstanding of the characteristics of a diversified agricultural industry and the historical ‘boom-bust’ economic history of the state and territory that chases immediate profit rather than long-term stability2.

The result of policy decisions at the federal and state level is minimal support for Alaskan agriculture. Specifically, this support is not present for critical infrastructure elements such as transportation, financing, support programs, research, and outreach. The combination of public investment in these critical elements and the subsequent reduction of risk that induced private sector investment was responsible for the development of U.S. agriculture and the continuing success of the agricultural industry in the United States today. This is not the case in Alaska.

Today Alaskan agriculture supplies approximately 10% of the state’s food needs. All traditional agricultural products constitute less than one percent of the state’s revenues from resource industries3Alaska’s agriculture is a closed agriculture. There is no infrastructure to export bulk goods such as small grains and potatoes. Processing is minimal for red meat, milk and vegetables. The population base of 625,000 limits the in-state market. The lack of infrastructure to move product within the state further hinders producers of bulk products.

Despite impediments, Alaska’s agricultural producers continue to look to the future. The baseline statistics for a traditional industry are available through the Alaska Agricultural Statistics Service (1953 through present). They indicate that the industry continues to grow. This historical overview of the agricultural industry in Alaska uses these statistics and concentrates on the 10-year growth period from 1992 to 2001. The agricultural industry in Alaska is changing and expanding. It is becoming a part of new directions for agriculture in the United States – new products, diversification, and new markets.

Agriculture in Alaska had its beginnings earlier than is recognized by most. Production of food was a primary concern in selecting sites for Russian trading posts in southern coastal areas. As the Russians learned in the early 1800s, climate and soils in these areas are limiting. This is not the case in other areas of Alaska’s 586,000 square miles of land. In 1897, a study group from the Office of Experiment Stations identified 15 million acres as having agricultural potential4. The Tanana River Valley in interior Alaska and the Matanuska-Susitna River Valley and Kenai Peninsula in southcentral are regions with soils that have agricultural potential. Growing seasons though short, have sufficient growing degree-days and precipitation to support a diversity of crops. Range lands on the Seward Peninsula in northwest and northeast Alaska, Kodiak Island in southcentral Alaska, and the Aleutian Peninsula and Chain support a diversity of livestock.

After the Russian’s failed efforts at production of food crops, there were a number of vigorous start-ups for the agricultural industry in Alaska5. During the late 19th and first half of the 20th century, the stimulus for agricultural development was the lack of adequate transportation to provide frontiersmen with food. During the gold booms in interior Alaska in the earlier 1900s, farmers supplied food to the miners. In the 1920s, farms in southcentral Alaska and the interior were essential to construction of the federally supported Alaska Railroad. In the 1930s, the Matanuska Colony, a federal agricultural project, was established to provide relief for depression farmers from the north central United States. Each of these efforts left a core of farmers and some processing facilities. However, none maintained the momentum to continue expansion into a viable commercial industry but rather these efforts evolved into a regional cottage/subsistence industry.

There were later attempts to revive the agricultural industry in Alaska. Federal and state homesteading programs in the 1950s (federal) and from 1959 through the 1960s (state) failed to help the agricultural industry grow. Those who obtained the lands had access to federal loan programs and information but were left to develop the remaining components of an agricultural system on their own.6 Interestingly, a high percentage of the homestead lands have remained in agriculture. Private capital and financing provided the base for construction of farms and processing with assistance from the federal and later the state government.

The state of Alaska decided to invest in agriculture in the late 1970s at the beginning of a prosperous period that resulted from the discovery of oil in Prudhoe Bay in 1968. In 1976, the state legislature passed "Resolution 76" providing a positive state policy toward agriculture. The ‘project agriculture’ model, used internationally to stimulate development was followed. Two large projects were planned. In 1978, clearing of 50,000 acres in interior Alaska marked the beginning of the Delta Agricultural Project targeted for the production of small grains to support a red meat and dairy industry. It depended on state supported loan programs and state supported construction of appropriate infrastructure. Lands were cleared in 1983 to begin the Pt. MacKenzie Project in southcentral Alaska. The objective was to provide land and farms in the Matanuska-Susitna Valley to expand the dairy industry. Like the Delta Agricultural Project, MacKenzie depended on state loans and dollars for infrastructure but it was building on a base of existing farms and processing facilities that were constructed and financed by federal dollars as well as some private capital. These projects did not develop as planned. However, they did stimulate interest in the industry.7

Federal and state programs to stimulate agriculture in Alaska have been supported by projections and promises that agriculture would become a major Alaskan industry. Some might say that these programs were supported on myth rather than fact. On the other hand, there is a myth that agriculture in three decades has failed. This myth is based on reasoning that the ‘last great hope for agriculture’ – the Delta and Pt. MacKenzie Projects – did not develop as planners forcast. Reality is that agriculture expanded during the 1980s particularly in the small grain, dairy and greenhouse segments. This expansion continues in the 1990s and early 2000s but the characteristics of the industry are changing.

The traditional definition of agriculture is "the production of food and fiber." This restrictive definition has broadened as agriculture has evolved and more emphasis has been placed on diversification, niche markets, and value-added processing. Webster’s Third New International Dictionary defines agriculture as "the science or art of the production of plants and animals useful to man and in varying degrees the preparation of these products for man’s use and their disposal (as by marketing)." It is not restricted to food products or domesticated crops and animals and is indeed a very broad definition.

Much of Alaska’s agriculture has nothing to do with production of food and fiber. While some Alaska farmers produce traditional crop and animal products others gain income from production of such non-traditional products as grass seed for revegetation in oil fields, gold mines, and along roadsides. Entrepreneurs also derive income from agricultural tourism or raising and stabling horses and dogs for recreational purposes. A greenhouse operator may grow tomatoes, cucumbers, and other vegetables for the fresh market, a part of traditional agriculture, but a far greater source of income may be from bedding plants, flower baskets, cut flowers, compost, potting soil, and landscape materials. Unfortunately, the Alaska Agricultural Statistics Service does not report farm gate receipts for non-traditional enterprises. In their defense, these data are difficult to report because of the proprietary nature of the information.

Alaska’s agricultural industry has unique advantages. The state’s isolation from other agricultural areas and its severe winters reduce the hazard of insect and disease infestation in crops. This is a regime ideal for the propagation of disease free seed stock for export. These same reasons contribute to limited use of agricultural pesticides in a pristine environment ideal for production of ‘safe’ food. Another advantage of the Alaskan climate is the effect of cool temperatures and long day length on increasing the sugar content of vegetables and enhancing the color intensity of flowers. The climate regime may also contribute to increased levels of antioxidants in native and cultivated plants8Alaska’s farmers also take advantage of the climate to supply non-traditional products that enhance the environment. Soils disturbed by road construction, military operations, oil field development, and mining must, by federal and state law, be revegetated with plant species adapted to the area. Plant seeds and propagation materials must be grown in the environment in which they will be used. Production of agricultural products offers an efficient solution for the disposal of waste products. Shell and finfish wastes are used as protein supplements in animal feeds. Municipal sewage and shell and finfish waste are used as soil amendments in agricultural operations; a desirable alternative to ocean dumping, incineration, or shipping wastes out of Alaska. The Alaskan agricultural industry is exceptionally diverse and epitomizes the broad definition of ‘agriculture’.

There are seven major agricultural product categories in Alaska’s agricultural industry: red meat (beef, pork, and reindeer), small grains (barley and oats) hay (grain and grass), milk, potatoes, vegetables (lettuce, cabbage, carrots, the squashes, cole crops, beans, and peas), and greenhouse and nursery crops (tomatoes, cucumbers, peppers, bedding plants, and potted florals). In 1960 (statehood was granted in 1959), total agricultural farm gate value for these products was slightly above $3.5 million (Figure 1.) When the first barley crops were harvested in 1984 from the Delta Agricultural Project and milk receipts began to increase in 1985 because of new farms at Pt. MacKenzie, farm gate values peaked at over $30 million (Figure 1).

The mix of the seven product categories in Alaska’s agricultural industry has varied over the years (Figure 2). Milk receipts dominated the industry exceeding 50% of the total farm gate value in

Figure 1. Total farm gate receipts from 1970 through 1993.

the early years following statehood. In the late 1980s and early 1990s, milk production dropped. By 1992, milk, hay, and potatoes held approximately 75% in equal parts of the farm gate agricultural product value (Figure 2).

Figure 2. Agricultural industry product mix from statehood to 1990.

In 1993, the Alaska Agricultural Statistics Service changed its format for reporting data. Total farm gate receipts are shown in Table 1. The greenhouse and nursery category no longer included landscaping. No information is available for receipts in the landscape segment after 1992. Table 1 also shows that the greenhouse and nursery segment of the industry comprises approximately 50% of farm gate receipts. The Alaska Agricultural Statistics Service began tracking

Table 1. Total Agricultural Farm Gate Receipts