Contributions of the agricultural industry to economic development including an 8-point plan for speeding Georgia's agricultural and industrial growth [Oct. 1961]

UTIONS OF. THE AGRICULTURAL I"DUSTRY TO
ECONOMIC DEVELOPMENT
Including an 8-Point Plan for Speeding Georgia's Agricultural and
Industrial Growth
TRENDS IN RESEARCH AND DEVELOPMENT OUTLAYS IN THE UNITED STATES
1930 TO 1960
MILLIONS of DOLLARS
20.0001----+---+-----+---+------l1-----f

201----+---+-----t----+----....,f------j

10L.-_ _--'-

1930

1935

..L-_ _---l.

1940

1945

.....L... 1950

L..-_ _-1

1955

1960

PHIL CAMPBELL, Commissioner GEORGIA DEPARTMENT OF AGRICULTURE
STATE AGRICULTURE BUILDING 19 Hunter St., S. W. Atlanta, Ga. October, 1961

CONTENTS

FOREWORD

11t

REFERENCE SOURCES,

lv

ACKNOWLEDGEMENTS

v

HIGHLIGHTS

VI

I. Relationship of the Agricultural

Industry to Economic Develop-

ment

~

l

II. Production and Management

Problems in the Agricultural

Industry'

10

III. Remedies and Partial Remedies

17

IV. Commodity Development in

State and National Markets,

22

V. Accelerating Economic Develop-

ment in Georgia

25

VI. Conclusion

29

FOREWORD

Closc study rC"ca!s that cconomic dcYclopmcnt of the countrics of the world with a fcw cxccptions, is highly depmdent upon the relatiYe efficiency of agriculture. \Vhere output per worker in agriculture is high, a high percentage of employment is found in nonagricultural pursuits. Population is concentrated in cities, with high per capita incomes.
Only a few countries of the world appear to escape this tendency by importing food, fiber and raw materials from foreign sources. This put~ them under a financial strain and a dcpendency on foreign countries that is at best unsettling. causes an unbalanced economy and results often in aggressiYe deprcdations on neighboring countries in order to provide protection against blockade in time of war.
As these relationships can be traced out spatially in terms of current experience, study of the history of economic development in the United States demonstrates the validity of this principle over time. In the last eight decades, as far back as data are readily available, it is found that low agricultural output in the early decades resulted in a low percentage of employment in nonagricultural pursuits with low per capita incomes. The reverse is true during recent decades. Rising agricultural output per man on farms has been accompanied by rapid increases in the relative number of non-farm workers and high per capita incomes.
The graphs in the report demonstrate that

economic development around the world begins with agriculture. Countries wanting economic development are therefore faced with the problems of production technology and the methods by which to get the masses of farmers, widely scattered, to apply the continuously improving pro. duction methods. These dual problems so well solved in the United States (and in Georgia) by agricultural research and extension in the past now face new dimensions by the shift from a production oriented to a market oriented economy.

Product development and marketing activities which have been developed to such a high degree by industrial organizations have been largely ignored by farmers, farm organizations, and professionals in agricultural administration, research, and extension. Organized research methods have been taken over by the larger industrial companies. A unique characteristic of industry has been market development, which characterizes modem business more than any other factor.

Agriculture must seek answers to its marketing

problems from industry. The agricultural industry

therefore needs to adapt, both borrow and imitate,

industrial methods of product development and

market promotion to agricultural commodities and

their by-products.

This report is therefore concerned with the

need for these measures and how they may be

implemented.

(JUtL~

PHIL CAI)4PBELL

111

REFERENCE SOURCES

The Budget Bureau, The Budget of the United States Government, 1961, Washington, D. C., January 1961, p. 331.
The Budget Bureau, "Special Analyses of Federal Research and Development Activities in the 1962 Budget," Washington, D. C., January 1961, pp. 3, 13 and 14.
The Economic Almanac 1956, The Conference Board, Thomas Y. Crowell Co., New York, pp. 276, 296 and 337.
The Economic Almanac 1960, The Conference Board, Thomas Y. Crowell Co., New York, pp. 212, 214-216, 305, 487 and 490.
Fulmer, John L., "The Challenge of Economic Development in Georgia, Part II. Help for Rural Counties," The Atlanta Economic Review, Vol. IX, No.9, SepteIllber 1959, pp. 16-19.
Fulmer, John L., "Grass-root Industrial Development," Georgia Business, Vol. 18, No. 11, May 1959, pp. 1-4.
Fulmer, John L.; Mallett, Mrs. Maria M.; and Stephenson, Ovid H., Analysis of Intercounty Commuting of Workers in Georgia, Engineering Experiment Station, Georgia Institute of Technology, August 1958.

Office of Budget and Finance, U. S. Department of Agriculture, "Table 7. Appropriations for Research and Education, Fiscal Years 1953 through 1961, and Revised Budget Estimates 1961," March 16, 1961.
Simon Kuznets and others, Population Redistribution and Economic Growth, United States, 1870-1950: I. Methodological, The American Philosophical Society, Philadelphia, 1957, pp. 363-400 and 703-738.
U. S. Bureau of the Census: Statistical Abstract of the United States: 1958, Washington D. C., June 1958, pp. 209-211, 500, 827-962.
U. S. 'Bureau of the Census, Statistical Abstract: 19'60~ Washington, D. C., 1960, pp. 842 and 859.
U. S. Bureau of the Census, Statistical Abstract: 1961, Washington, D. C., 1961, p. 534.
U. S. Department of Agriculture, Statistics 1960, pp. 448, 453, 446, 485, 488-489, and 492.
U. S. Department of Commerce, Historical Statistics of The United States: Colonial Times to 1957, A Statist'ical Abstract Supplement, Washington, D. C., 1957, pp. 139-599.
U. S. Department of Commerce, Survey of Current Business, August 1961, p. 13.

Lord, Russell, To Hold This Soil, Miscellaneous Publication No. 321, U. S. Department ot Agriculture, August 1938, p. 1.
National Science Foundation, Review of Data on Research and Development, No. 22, August 1960, p. 2.
National Science Foundation, Funds for Research and Development in Industry 1959; Performance and Financing, Washington, D. C., August 1960.

U. S. Department of Commerce, Personal Income by States Since 1929, A Supplement to the Survey of Current Business, Washington, D. C., 1956, pp. 142 and 182.
U. S. Department of Labor, Trends in Output per Man-Hour in the Private Economy, 19091958, Bulletin No. 1249, December 1959, pp. 5-12.
United Nations,
450-458.

iv

ACKNOWLEDGEMENTS

This report has been prepared under the direction of Dr. John L. Fulmer, consultant, assisted by Mr. Jack Gilchrist, director of Special Services, Georgia Department of Agriculture. The assistance of the following persops in supplying data, helping with critical analysis, or in other ways is also gratefully acknowledged: Dr. George

H. King, Director, Agricultural Experiment Stations; and Mr. W. A. Sutton, Director of Agricultural Extension, both of the University of Georgia, Athens, Georgia. Also Mr. Donald K. Stokes, Transportation Research Branch, U. S. Department of Agriculture, Washington, D. C., and Mr. Philip Webster, Federal Reserve Bank of Atlanta.

v

HIGHLIGHTS

Economic development around the world and 4 months in trade. Serious managerial errors,

begins with the ability of the agricultural industry therefore, take intolerably longer to work out of

to raise output per worker.

in the agricultural industry tha!1 in manufacturing

A high output per worker in the agricultural or trade.

industry enables a nation's economy to: (a) sup-

Through agricultural research into the basic

port a relatively high percentage of its labor sciences affecting production technology and the

force in nonagricultural occupations, (b) main- extension service (education), the United States

tain a relatively large urban population, and has solved and is solving many of the technical

(c) gain high per capita incomes.

problems of production in the agricultural In-

High agricultural output per worKer is inversely dustry.

related to the proportion of working men's family

Since 1947, the annual increase in output per

income required for food.

man-hour in the agricultural industry has been 6

Since 1880, agricultural output per worker percent per year compounded, about double the

measured in terms of the number of the general rise of productivity in the manufacturing industry,

population supported in needs for food, fiber and and almost three times the rate of the nonmanu-

other raw materials, has increased from 5.6 to 24.0 facturing industries.

persons currently.

The expenditure on research and development

The rise in output per worker in agriculture per worker in manufacturing in the United States

in the United States has been accompanied by a is about 10 times per worker expenditures in agri-

steady decline in the percentage of working men's culture. About half of the expenditure per worker

family income required to pay for food. In 1870, on research and development in manufacturing

the percentage was 51 percent; in 1960, it was is paid for from federal funds. Agricultural re-

about 27 percent.

search is supported by federal and state funds.

Rising output per worker in agriculture in the

Promotional outlays per worker in manufactur-

United States is directly related to a rise in the ing are about 8 times and trade 6 times the outlays

ratio of total employment nonagricultural. In 1960, for extension education in the agricultural in-

49 percent of total employment was nonagricul- dustry. The agricultural industry outlays are there-

tural, whereas in 1960 the ratio was about 92 fore, not comparable with those in industry or

percent.

trade.

Rise in productivity of labor m agriculture

Promotional outlays in manufacturing are for

must surmount overwhelming difficulties from un- product and market development and for meeting

certain weather, complex combinations of scientific competitive advertising.

forces,involving geology, chemistry, physics, biol-

In an increasingly complex market environ-

ogy, entomology, managerial pyramiding, and a ment, the agricultural industry requires an aggres-

hostile market environment.

,ive, dynamic program to expand market demand

The typical American farm has about two for all commodities, and particularly for intro-

workers, one of which is the manager. In con- duction of new by-products to industry and con-

trast, industry typically has many workers, has a sumers. The industry also needs to put a new

managerial organizational set up, is multi-owned, emphasis on marketing and promotion of quality

produces multi-products, is generally not affected products.

much by weather, and has rigid production con-

Economic development in Georgia is at the

trols.

crossroads of inadequacy, disunity, and incom.

Capital requirements per worker in the agricul- pleteness.

tural industry are one-third larger than those in

The major elements of a dynamic economic

manufacturing and more than double those of development program contains eight features:

;trade. Yet capital turnover of sales requires 4 a. Commodity and by-product development pro-

:years in agriculture, 8 months in manufacturing

gram for the agricultural industry.

vi

b. Technical and trade schools to train skilled workers.
c. Rapid completion of an adequate highway system.
d. Strong, centralized planning and development agency for Georgia.
e. Special emphasis in development activities on 14 strategically growing points in the Georgia

hinterland. . Engineering and consultant research in such
areas as plant design and product development. g. Financial aid and management consultation
for small, newly formed enterprises.
h. Research center for industrial laboratories in
the vicinity of Atlanta.

vii

I. RELATIONSHIP OF THE AGRICULTURAL INDUSTRY TO ECONOMIC DEVELOPMENT
"When tillage begins, other arts follow. The farmers, therefore, are the founders of human civilization."
DANIEL WEBSTER

AGRICULTURAL OUTPUT AND NATIONAL PER CAPITA OUTPUT

Low agricull:ural output per worker is associated with low per capita national output, and vice versa. There are such common factors as poor education and primitive culture which determine deficiencies in output and per capita income. Low agricultural output not only reflects an inade-

quate application of both the science of production and business management, but it also makes it very difficult to support a large urban population and concomitantly also a large nonagricultural employment.

2

RELATIONSHIP BETWEEN AGRICULTURAL OUTPUT PER WORKER AND PER CAPITA NATIONAL OUTPUT FOR SPECIFIED COUNTRIES DURING THE 1950'S

INDIA NIGERIA CHINA HONDURAS BRAZIL ITALY UNITED
STATES

200

NAL PER CAPIT OUTPUT

600

800

1,000

LEGEND
~
OUTPUT PER CAPITA
II
OUTPUT PER AGRICULTURAL WORKER

3

AGRICULTURAL OUTPUT AND FOOD EXPENDITURES

The proportion of working men's family income required for food declines sharply with output per agricultural worker. In India, during the 1950's, where output per farm worker supports about 1.2 of the population, over 80 percent of family income was required for food; whereas in the United States, where output per worker in agriculture is more than sufficient to support 24 persons in the general population, approximately 27 percent of family income is required.
The ability of one agricultural worker in India to supply 1.2 of the total population is not comparable with the ratio of 1 to 24 for United States farmers. Both ratios conceptually are in terms of local standards of living: Since the per capita income in the United States is at least 40 times that of India, it is seen that the volume per worker in the United States is much greater than 24

times that in India. (We estimate that agricultural output per worker in the United States probably exceeds 200 times the agricultural output per worker in India.) The same reasoning applies for the other countries in the chart.
Comparisons between the United States and many other countries of the world cannot be made directly because measurements are in terms of the standard of living of the local people.
It should be pointed out in connection with the chart that the relationship is generally a world-wide one, although a few countries have been able to maintain a sufficient excess of exports to import necessary food, fiber and other raw materials. Great Britain, Japan and Switzerland are the best examples of this type of an economy but most of the countries of the world depend primarily on their own agricultural resources.

4

RELATIONSHIP OF OUTPUT PER WORKER IN AGRICULTURE TO PERCENTAGE OF INCOME OF WORKING FAMILIES REQUIRED FOR FOOD FOR SPECIFIED COUNTRIES DURING THE 1950'S

NATION o
INDIA NIGERIA
BRAZIL ITALY UNITED
STATES

PERCENTAGE OF INCOME

10

20

30

40

50

60 80

% 'NCOlFOR FOOD
NO. OF POPULATION I
SUPPLIED PER WORKER
AGRICULTURE

5

AGRICULTURAL OUTPUT PER WORKER AND PERCENTAGE OF INCOME FOR FOOD. UNITED STATES, 1880 TO 1960

The graph shows strikingly the influence of rising output per worker in agriculture in the United States to the proportion of income of families of working men required to pay the food bill. Since 1880 the proportion of income required for food has been cut in half in the United States. Higher agricultural output means support for an

increased number of nonagricultural jobs and also a relatively cheaper food basket for working men's families. The amount of time required from workers to pay for bread, meat, eggs, and many other products, has steadily declined over a period of years.

6

RELATIONSHIP OF AGRICULTURAL OUTPUT PER WORKER TO PERCENTAGE OF WORKING
FAMILIES INCOME SPENT FOR FOOD
UNITED STATES. 1880 TO 1960

PERCENT
50 ~
\ERCENTAGE OF FAMILY INCOME FOR FOOD (LEFT SCALE)

NUMBER

I

45

~~~

,I 22
I
I I

40

'\

I

18

I

35

~ ----. 1

I

j

/

14

-..;

,... - 1 \ 30

,

\ " _..A ~'

.,-- NUMBER OF POPULATION SUPPLIED

I ~ - - -

'PER WORKER IN AGRICULTURE

t---- --- 25

e

(RIGHT SCALE)

10 6

20 1880

I 1890

1900

I 1910

1920

I 1930

1940

I 1950

2
1960

7

OUTPUT PER WORKER IN THE AGRICULTURAL INDUSTRY RELATED TO NONAGRICULTURAL EMPLOYMENT UNITED STATES

The data show, from 1880 and before, strong relationships between agricultural output per worker and rise in nonagricultural employment. A prosperous, efficient agricultural industry requires fewer people of the nation to produce the requirements of food, fiber and other raw materials. At the same time workers released from farms move to the city to swell the population of urban cities.
Traditionally, farmers reproduce at twice the rate required for replacement of people in agricul. ture. The difference becomes a big factor in city

growth and related prosperity. Since city populations have a low birth rate and until the modern era, a high death rate, in-migration from farms and small towns has been a big factor in city growth. Recently city reproduction rates have been almost on a par with rural birth rates among whites, although city death rates are stilI somewhat higher than in rural areas. Thus city growth is not as strongly dependent on rural to urban migration as formerly.

8

RELATIONSHIP OF OUTPUT OF FOOD, AND FIBER PER
WORKER IN AGRICULTURE TO NON-AGRICULTURAL EMPLOYMENT UNITED STATES, 1880 TO 1960

EMPLOYMENT (IN MILLIONS)
70 60
50
40
30
/
V 20

POTENTIAL EMPLOYMENT

~

~
~

POPULATION SUPPLlED BY 0 NE WORKER
40

/ONAGR'CULTURAL EMPLOYMENT

(LEFT SCALE)

,

30

/ 20

10

9

8

7
6 .-

.-... ~

5

4

3

2

~ -----
V

10 9

8

~AGRICULTURAL OUTPUT PER WORKER

7

(RIGHT SCALE)

6

5

4

3

2

1
1880

I
1890

1900

I
1910

1920 9

I
1930

1940

I
1950

1
1960

II. PRODUCTION AND MANAGEMENT
PROBLEMS IN THE AGRICULTURAL INDUSTRY
t<The. fabric of human life has been woven on earthen looms. It everywhere smells of the clay . .. Howsoever high tM spirit of man may soar . .. it is on (the stomach) that humanity, like an army, ever must advance. Beneath the stomach is vegetation, beneath vegetation the soil, and beneath the soil the ceaseless and varied turmoil of terrestrial forces."
- J. H. BRADLEY
AUTOBIOGRAPHY OF EARTH
1935
10

COMPLEXITY OF PRODUCTION TECHNOLOGY IN AGRICULTURE

The vagaries of weather make the outcome stand. Moreover, farmers are widely separated,

from operations in agriculture uncertain. The re- both in space and the determining concepts of

sponse function from production inputs are also each farm business. The extension service must

most variable because they depend upon weather. therefore communicate with farmers of widely

From the standpoint of lack of control and uncer- different interests and educational background,

tainty of output, there are no exact parallels in the and greatly scattered in space. That they have met

business world, with the possible exception of the difficulties in not only oral but written com-

trading in the stock and commodity exchanges on munication is strongly attested to by the rapid rise

margin.

in output shown in some of the preceding charts.

In addition the operator of an agricultural It is also attested to .by the phenomenally higher

enterprise is faced with a whole series of forces- output in the United States as compared to foreign

biological, chemical, physical and geologic, and countries.

insects and diseases. He would require at least the

The agricultural extension service is an organi-

following staff to effectively manage a broadly zation which extends into every county in the

diversified farm in the face of so many uncer- United States. It is financed by joint appropri-

tainties.

ations from Federal, State, and county governing

Annual Salary

bodies. It employs various methods of communica-

Agronomist

$ 9,000

tion/through extension bulletins, newspaper feature

Entomologist

8,000

stories, radio talks, and personal visits to inform

Pathologist

8,000

the entrepreneur of a farm business of the latest

Animal Husbandman

9,000

changes in farm technology developed through

Agricultural Engineer

9,000

agricultural research. More limited help is given

on farm management and marketing.

TOTAL

$43,000

The county agricultural agent and a small

The tendency to specialization in farming such staff, seldom over 'one assistant and one office

as livestock, tru-.:k, dairy farming, reduces some- secretary, provide production and related infor-

what the complexity of the production problems. mation to hundreds of farmers with whom he

In this case a greater emphasis in organization maintains contact throughout the year. From the

would be given to reducing to management con- standpoint of the production problems, there is no

trol the most important limitations through em- analogy in industry in degree of complexity. In

ployment of a specialist. The dairy farmer would management, financing and marketing only the

need a dairy specialist; the poultry farmer, a smallest manufacturers, independent retail stores,

poultry specialist; the fruit farmer, an horticul- etc., have analogous problems. The comparison is

turist. A man properly qualified in either of these further reduced by the fact that most large manu-

areas would command a salary of at least $9,000 facturers and other large businesses have multi-

annually. Proper management and control would owners. The products or services, however, are

still need all the other services listed above. Yet numerous, like the output of most farms

the scale of operations would not be sufficient

Beginning with the Morrill Land Grant Act

to justify hiring this staff or the services even of of 1862, fortified by various subsequent legislative

a specialist.

acts, the American people instituted actions in

Society has found an answer to the complexity higher education, research, extension education,

of agricultural production through the agricultural and also vocational education which have resulted

extension service, though it still fails to be as in a tremendous rise in agricultural output per

effective as the production and management con- worker. The world has long marvelled, and now

trols found in industry. Because farmers are lim- belatedly, is beginning to imitate the American

ited in education, generally having less than a answer to higher output from agriculture, and the

high school education, informational activities related economic development.

must be pitched to a level that they can under- 11

COMPARATIVE GAINS IN OUTPUT PER MAN-HOUR

To surVIve In wartime, a nation must have not only military strength, but it must also be invulnerable economically. Self-sufficiency in food, fiber, and other raw materials is a significant part of economic strength. Not only does the United States have the capacity to produce for war, as shown by two world wars, but technological advance in recent years indicates invulnerability for future wars.
Studies by the Bureau of Labor Statistics show that output per man-hour in agriculture increased about 6 percent annually compounded

from 1947 to 1958, compared to 2.9 percent in manufacturing and 2.3 percent in nonmanufacturing. This shows that the methods of research and research dissemination in agriculture have paid off.
The nature of agricultural production--small scattered units, operated by persons with less than a high school education in general-still holds output per man to about 50 percent of each worker in manufacturing. This shows the necessity for maintaining a high output from organized research, coupled with extension education to farmers.

12

TRENDS IN OUTPUT PER MAN-HOUR FOR THREE INDUSTRIAL CATEGORIES.
1947 TO 1957-58
(BASED ON BUR. OF LABOR STAT. STUDY)

INDEX

= 1947 - 49 100

190

180 ~

/

170 1/

160 ~

.-/

150

. / AGRICULTURE

140 ~

V

/ 130
........... - 120 I-
; / " .- 110 v....> 100

... MANUFAr~~~G.-

~

......

"
~

"

~

/ -..: ...-

~ - .-.i'7.


NONMANUFACTURING

90

80 l-

70

I

I

I

I

I

1947

1949

19 51

1953

1955

1957

13

CAPITAL PER WORKER RELATED TO CAPITAL TURNOVER

The agricultural industry requires about onethird more capital per worker than manufacturing and almost double the amount required in trade.
Capital turnover (time in months or years for sales to equal total capital) requires four years in agriculture, about eight months in manufacturing and four months in trade.
Serious errors of management, or failure from bad weather, may require four years for recovery in agriculture. In manufacturing and trade, the effects of most managerial 'errors can be worked off in a few months. Furthermore, weather is not generally a serious factor in either manufacturing or trade except in special cases.
Under modern day conditions, it may take a

farmer a lifetime to accumulate enough equity to own outright a farm. In contrast, owner's equity is accumulated much more rapidly in manufacturing and trade.
Where very large aggregates of capital are required in industry, as is generally true, the company may be incorporated to limit liability. Financing problems, therefore, become less dif. ficult because of access to the money markets of large cities.
Where attempted, the corporate form of organization in agriculture has been in general a signal failure, due to numerous quick decisions required on a farm.

14

COMPARISON OF INVESTMENT PER WORKER AND CAPITAL TURNOVER FOR AGRICULTURE, MANUFACTURING AND TRADE IN UNITED STATES, 1956 OR 1957
INVESTMENT
;II?" on INVESTMENT PER WORKER
25
20~-
15
10~-
5

YE~~

_

CAPITAL TURNOVER

2.01---------------

1.0 .......- - - - - - -

0.0 "'------:AGRICULTURE IN 1957

MANUFACTURING
IN 1956

TRADE
IN 1957

15

16

III. REMEDIES AND PARTIAL
REMEDIES Agricultural research seems to have met the problems posed by a complex production technology. Agricultural extension, a method of carrying production technology to farmers is solving the production problems in agriculture. The managerial and the marketing problems, particularly those associated with market development of commodities and by-products through advertising and promotion, remain largely unsolved.
17

RESEARCH EXPENDITURES

Agricultural research is based almost entirely upon public funds. In industry research is. financed about equally from company and public funds. Although a limited amount of research is obviously carried on in trade, it was impossible to get reliable estimates.
The graph shows that R&D expenditures in manufacturing are very high. In 1957 total expenditures amounted to $406 per worker, .according to the National Science Foundation. Over half or about 52 percent of research outlays in manufacturing are from government funds, much of this latter being for national defense.
In the agricultural industry research outlays per worker are about one tenth as large as in manufacturing. The figures shown for agriculture are based entirely upon funds appropriated by

Federal and State sources. Some minor researCh is carried on by some farms from their own funds and by private individuals and companies but it was impossible to get estimates of the size of these outlays; they are believed minor, however.
R&D expenditures in manufacturing (including company and private funds) amount to 3.3 percent of sales. At this percentage rate research expenditures in agriculture should be $160 per worker, or about four times current rates. Considering the complexity of agriculture, the rate in terms of sales suggests a rate of research expenditure above 3.3 percent perhaps. The chemical industries, also highly complicated like agriculture, spend 3.9 percent of net sales revenue on research and development (about half is from governmental sources).

18

COMPARISON OF EXPENDITURES FOR RESEARCH AND DEVELOPMENT PER WORKER EMPLOYED IN MANUFACTURING,
AGRICULTURE AND TRADE IN THE UNITED STATES
DOLLARS
1960
7001-------
6001-------
5001-------
4oor-.
300~
200Lil

100
o

AGRICULTURE 19

TRADE

PROMOTIONAL OUTlAYS PER WORKER

The data gIven for agriculture are based on estimates covering private companies and the agricultural extension service, which accounted for two thirds of the total shown.
Agricultural extension education is for transmitting information on production technology primarily. The outlays per worker of $32 mean little in terms of market development of new products or maintenance of the market for old products, in contrast with market development in

manufacturing. The chart comparisons show that outlays per
worker in agriculture, ignoring the limitations of the data mentioned, are only one eighth as large as in manufacturing, and one sixth as large as in trade. Advertising and promotion represents about 1.2 percent of sales in manufacturing. At this rate promotional outlays in agriculture would have to be more than $60 per worker.

20

COMPARISON OF ADVERTISING (OR PROMOTIONAL ) OUTLAYS PER WORKER FOR MANUFACTURING, AGRICULTURE AND TRADE IN THE UNITED STATES
DOLLARS

250.---
2ooJ----
150t---
100J----
501---
0'---_
MANUFACTURING
1957 21

TRADE
1957

IV. COMMODITY DEVELOPMENT AND
PROMOTION IN STATE AND NATIONAL MARKETS "To things of sale a seller's
praise belongs."
SHAKESPEARE LOVE'S LABOR LOST
22

NATURE OF THE MARKET FOR AGRICULTURAL PRODUCTS

Market development and control in industry and many trade organizations lead to a quasimonopoly or oligopolistic situation. Through brands, fortified by frequent changes and improvements in product, and advertising, the typical American manufacturer exercises a considerable degree of control over his product which has been imitated by only a few of the larger farmer cooperatives.
Farm output per farm is small and undifferentiated from other farmers. Except in special cases, the entire output of anyone farm could be withdrawn without the slightest effect on market supply, and therefore market price. In this simple comparison we find only contrasts between industry and agriculture. The farmer, being greatly subject to the tides of chance, has a marketing problem but presently he has no effective way of tackling it.
The manufacturer brands his goods; introduces them by advertising, and engages in market promotion, to gain market acceptance for a specific product. The agricultural industry has not proceeded in this way because no effeCtive method has been developed by which most agricultural products can be identified in the market. Consequently, organized promotional methods have failed to materialize to solve marketing problems, as research and extension education have been perfected to solve production technology.
To solve the problem of market development it is proposed that an integrated commodities development and promotion program be instituted in the State. Its main objective will be to step-up by-product research for commodities produced by Georgia farmers, with analysis and screening procedures to seleCt those of practical value. From this highly logical basis, sufficient promotional activities on all feasible by-products in a manner resembling industry would be instituted in order to gain acceptance first by manufacturers, and then by consumers.
Advertising and promotional activities of such strength and duration would be engaged in until

firm industrial and consumer acceptance for specific commodities or by-products is obtained. Manufacturing operations would be supported in the market place.
In the event a satisfactory manufacturer for a product demonstrated to have practical market value is not located, the organization proposed would proceed to develop processing locally.
The organization contemplated for this new action program, "The Commodities Development and Promotion Division, Georgia Department of Agriculture," perhaps would have the following objectives: 1. Concentrate on the demand side of the agricultural problem by finding new uses for current agricultural products, either at the industrial or consumer level, or both, through product development, promotion and orderly and effective marketing procedures. 2. Analysis of existing product uses. from laboratories, and promote, market test, and otherwise push the sales of current products. As a result of consumer acceptance tests, suggest changes in the laboratory products. 3. Market research to learn consumer and industrial requirements in the area of agricultural commodities. Coordinate laboratory research to develop products to meet these demands. 4. Project the industrial and consumer demands for agricultural commodities taking into account shifts in consumer tastes, trends in industrial use, population growth, rise in per capita income, and Jther factors affecting the character of the future market demand for agricultural commodities. 5. Introduce new consumer by-products and industrial applications of agricultural commodities by disseminating information on products which by laboratory and market research tests have met the test of practicability. 6. Expand the per capita demand for existing agricultural commodities and pro.ducts by quality control, better flow of products to market between seasons, advertising and promotion, and merchandising activities.

23

The activities of the Commodity Development and Promotion Division would not be confined entirely to the commodities under marketing orders, although initially it would be primarily concerned with them. It would be concerned also with all new agricultural commodities or byproducts which promise volume sales in the market, to contribute to greater agricultural output on Georgia farms and to industrial employment in the state's factories.
A product like Coastal Bermuda grass, for instance, which promises to provide a new source of fiber for the paper and pulp mills in Georgia, would be investigated for practicality. If more research were needed, a contract for additional

research would be placed. If not, the new product group would take over and proceed with necessary promotions to industry in order to get the manufacturing processes underway.
For the first time in any department of agriculture, there will be in Georgia an organization which could take over any new products emerging in the laboratories from agricultural commodities, or from ideas of inventors, and pursue a sequence of integrated analyses to determine market potentials, and most importantly, obtain market development. Where necessary it would work with specific persons or groups to develop manufacturing from scratch.

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V.
ACCELERATING ECONOMIC DEVELOPMENT IN GEORGIA
Economic development occurs simultaneously in all segments of the economy. Lagging growth and development in one sector handicaps all other sectors through market impacts. The agricultural industry must develop in sequence and in pace with the manufacturing industries and other types of businesses. Yet there are shifts and replacements constantly in process which may be desirable. These must be taken into account by any program.
Expenditures for research, promotion and planning must be proportionate to the difficulties and complexities of each segment of the economy and not necessarily relative to size in terms of employment. A balanced approach is needed-one that is sound from the standpoint of requirements of state and local funds and private funds.
We must approach this problem from the standpoint of adequacy, efficiency, effectiveness, programming and planning, with different groups cooperating so that there is the fullest coordination of all activities related to the state's economic development.
The first point on commodity development and promotion has been presented above. The seven additional points required for an adequate program are presented below.
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Technical and Trade Schools for Training of Skilled Workers

It is advocated that the State move promptly to establish technical and trade schools in the larger centers and located otherwise so that all high school pupils desiring technical training will have access to such schools. The future of Georgia's economic development can be sharply curtailed if types of workers needed by industrialists are not readily available. We must not permit any barrier to forestall the state's growth through inaction. Scarcities of skilled workers with predictions of even greater scarcities demand that we act now.
The scarcity of highly skilled labor limits industrial expansion in at least three ways. Migration of firms into the South may be inhibited by the inability to find key production men in the localities where it is desired to locate, or even to import them. Lack of sufficient trained workers annually ;mplies lack of facilities and training programs of sufficient size to assure these companies that future needs for replacement and addition of skilled workers will be met. Second, expansion of branch

and local plants may be delayed, or prevented even, by inability to hire the necessary skilled labor. Third, new firm starts are to a great extent dependent upon the rate at which skilled workers stop as employees to become their own bosses. It is important to our economy, and particularly to a developing economy, that new firm starts be kept at a high rate.
From the standpoint of recovery from a depression, scarcity of skilled workers, particularly key workers may delay or prevent employment of a number of semi-ski~led and unskilled worker: which normally would be employed to suppor1 the key workers. This in turn would prevent a multiplier effect on the community from respending of wages of workers who might have been employed if the enterprise could have gotten off the ground. We have for too long ignored, or employed the improper methods to attract young persons into careers as skilled technicians and workers.

Speedy Development of Adequate Highway System

Another problem is of course adequate highways. The great population and industrial centers must have access through all common means of transportation to necessary raw materials in the State or anywhere else in the nation. They must be able to move the final products to the markets of the nation and the world wherever they may be, with dispatch, efficiency, and at competitive costs.
Great centers of enterprise like Atlanta, Savannah, Augusta, Columbus, Macon, Rome, and

Albany have a circular flow of trade and service activities in their respective hinterlands. Consequently, prosperity and growth on the part of these generators of activity have impacts on the cities and towns within the range of their influence and business connections. When the larger centers are hindered by failure to provide a suffciency of public transportation facilities, as for instance roads, the growth of such centers is obviously retarded but it also affects all other centers which have contacts with the bigger growing centers.

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Strong State Planning and Development Set-up

Many states in America have a State Planning and Development Board or some similar body. Centralized planning and long range capital planning have the power to generate a certain amount of economic growth independent of actions in the private enterprise economy. Without long range planning in this area of public outlays, much of value is lost to the prosperity and development of the state.
Certainly, the Board or the Committee should be responsible directly to the governor of the state

because it must have rapport with the current administration and also approval of the political group that is in power. On the other hand the professional staff would need to have a great measure of continuity, of course, in order to conduct research and keep up to date the planning activities for the state and its areas without having the disorganization, confusion, and delay which of necessity follows a complete replacement of such staff people every four years.

Stimulation of Growth of Strategically Located Employment Points

A commuting study in 1958 showed that there are seven counties in the Georgia hinterland, not close to any large city, which obtain twenty percent of their nonagricultural employees as commuters from an average of four adjacent counties. There are thirteen growing centers aswciated with the larger cities in Georgia which obtain fourteen percent of their nonagricultural employees as commuters from nine nearby counties. These twenty growing centers provide jobs to farmers and people from small towns up to a distance of fifty miles. Commuters spend most of their salaries in the communities where they live, thus maintaining a certain volume of business for the traditional types of businesses.
Providing jobs for farmers and persons from small towns at a distant point, up to 50 miles, is healthy to the State's economy because it balances its growth in terms of space. It also helps prevent urban slums and the other evils connected with migrations to the cities of rural people who are not equipped to deal with city life. Concentrating development activities on a limited number of points causes growth toward that size of economic

unit which has self-generating growth factors. Therefore, it is proposed that economic devel-
opment concentrate on getting a faster growth in the present seven outlying growing points, plus seven additional areas which would be made into growing points. These latter are to be selected in such a way as to keep the distance factor in commuting to fifty miles or less.
Not only may efforts be concentrated on locating new industries in such areas where the economic factors relative to labor, raw materials and markets are satisfactory, but it is also desirable that state planning recognize the needs of these areas in terms of public investment in state facilities as well as state expenditures.
So far as the thirteen urban centers are concerned, no actions will be permitted which will detract from their growth. Rather, all necessary steps should be taken to encourage continued rapid growth of each center through studies of tax inequities, access highways, and the requirements for other types of transportation and communication facilities.

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Engineering Research and Development

There is serious need for research in the engineering sciences to assist local, and foreign firms wishing to come to Georgia on plant design and equipment requirements, product development, and other problems requiring engineering services related to the production technology of

plants in Georgia. This service should be wholly Or partially financed from state funds depending upon circumstances.
Financial aid to help in developing industrial products from Georgia's raw materials from farms, forests and mines is desirable.

Financial Aid and Managerial Consultation for Newly Started Enterprises in Georgia

The failure rate among new firm starts is about 50 percent the first two years, and 80 percent the first 10 years. This is a heavy price to pay by the individual and the community to obtain new business enterprises in Georgia. Some program by which a part of the equity capital could be loaned to enterprises initially, coupled with management consultation for a few years, it is believed, would reduce the failure rate of businesses and losses to the Georgia economy of jobs that might have been

provided. In New York and Chicago private consultant
services are in operation which provide equity capital, operating funds, management consultation, and various other services to enterprises which qualify. The cost of loan funds is about double the usual rate of interest. The Coastal Credit Corporation of New York is a prime example of such an operation. Georgia should encourage development of such consultant services.

Research Center Near Atlanta

In the Atlanta area, which includes the University of Georgia at Athens, is a very fine group of colleges and universities. Georgia Tech's Engineering Experiment Station and Computer Center, and the emerging science center of the University of Georgia, the services and research associated with the medical establishments of Emory University, rank with the best in the nation. These colleges and their men provide a natural attraction for location of industrial laboratories in this area. Trends indicate that such laboratories are increasingly located to have access to highly specialized

college scientists. The fine communication and transportation
facilities of Atlanta would also offer strong advantages for location in the Atlanta area. All that is needed to get a research center that would surely out-class the Research Triangle of North Carolina are actions by State and Atlanta political and business leaders to raise sufficient funds to acquire the necessary land, to initiate promotional activities, and to increase contacts with industrial prospects by scientists and educators and business leaders.

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VI.

CONCLUSION

The people of Georgia are limited in economic development only by an adequate-sized, balanced program, and by the power generated through any effort which comes from unity of purpose and cooperative action.
The analysis indicates that more rapid, balanced economic development in Georgia can be achieved by an.' eight-point program: 1. Recognizing the complexities and the needs. of the agricultural industry, and jJToceeding with product and market devcl0lJ1llent IJTograms similar to those fJTI'sently existing in the manufacturing indUJtries. 2. A crash IJrowam to establish technical schools in sevaal areas. of Georgia in order that industry may be sUlllllied 1{,ith its Jkilled labor rcquiremmtJ. 3. Establishment of an arlequak highway system in orda to IlUt the stati! in reach of tlll' .\Ource.\" of raw lIlatnials alld in touch with thi' nation's markets. 4. A Jtrong statio Illanlling and rlcvelolm!Cnt or-

ganiza~ion, staffed with capable analysts to take the lead in planning and promoting the State's economic development. 5. Concentrate planning and development efforts on seven old and seven new outlying growing areas, to put farmers and small town persons desiring jobs within a fifty-mile commuting range of such jobs.. 6. SuPIJort of engineering and development resi'arch to assist small firms anywhere in the state with Iliant design, product development, and variOUJ engineering problems. 7. Financial did and management consultation Jcrvici'.f for newly formed bus.iness enterprises in orda to reduce the failure rate among new firm (tarts. 8. Ri'si'arch centa near Atlanta to facilitate establi.dzment of comjJany laboratories in contact with thi' coUrgc scirntists and other facilities of the Atlanta arra.

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