When Bruce Adams was elected to the board of directors of the Federal Reserve Bank of Minneapolis in 1988, he was eager to bring the point of view of a North Dakota farmer to the Fed's Ninth District bank. And so far he's taken advantage of the opportunity.
In addition to serving on the board, Adams was also chairman of the Minneapolis Fed's Advisory Council on Small Business, Agriculture and Labor from 1988 to 1990. In that position he not only met with local representatives of the region's economy, but also conferred annually with Fed Chairman Alan Greenspan and other Federal Reserve Board members.
"There have been times when I've read the minutes of the Federal Open Market Committee meetings and recognized a comment that was originally made at one of our Advisory Council meeting—that's a very satisfying feeling," Adams says in the following interview. Adams' election to the board in March 1988 filled an unexpired term; he was reelected to a three-year term that began in January 1990.
Adams, 44, brings a strong agricultural background to his role on the Minneapolis Fed's board of directors. After working on his parents' small grain farm in Lansford, N.D., he earned a bachelor's degree in agricultural engineering at North Dakota State University, Fargo, in 1968. Adams worked three years as a developmental engineer for Green Giant Co. in Le Sueur, Minn., before returning in 1971 to the family farm to form a partnership with his brother and parents—Triple Adams Farms.
Adams lives in Minot, about a 30-minute commute to his farmland north of town, where he has long been active in community and agricultural affairs. Four years ago, he was a member of an agricultural engineering delegation to the Peoples Republic of China.
In the following interview, Adams talks about his role at the Fed, the current and future conditions of agriculture, and North Dakota's potential for economic development.
Region: Your role as a director of the bank is unique in that—from 1988 to 1990 you were also chairman of the Advisory Council on Small Business, Agriculture and Labor.
Adams: The responsibility of that job was an opportunity for me to meet with the other associates on the Advisory Council and to hear their views on other sectors of the economy. I was fortunate to be able to get grass roots information from them and to join them in informing the bank's staff—and ultimately the Board of Governors in Washington—about business conditions in the Ninth District.
Region: A great deal of information is imparted at the Advisory Council meetings that's useful to the Federal Reserve System. As you suggested in your previous response, there was also value for you in this process. How did you personally benefit?
Adams: It was very interesting for me and so different from my ordinary, day-to-day experience. When I'm farming, much of that work is done individually; and meeting with a dozen different people from a dozen walks of life was very enlightening to me. It broadened my perspective on business operations in the district as well as nationally.
Also, it gave me an opportunity to meet with Alan Greenspan [chairman of the Federal Reserve Board] and the other board members in Washington. That helped me understand the Federal Reserve System better, so I could bring some of that information back to local people. I have more respect for the System because of that.
There have been times when I've read the minutes of the Federal Open Market Committee meetings and recognized a comment that was originally made at one of our Advisory Council meetings—that's a very satisfying feeling.
Region: As we travel throughout the Ninth Federal Reserve District, frequently we hear about the great difficulties smaller towns have maintaining their critical mass economically. You must have intimate knowledge of these problems from the surrounding communities of Minot.
Adams: I've been seeing that happening for the 19 years I've been farming here—how things have been consolidating and so forth. The ease of transportation and communication give people the opportunity to travel farther; likewise, it's easier for them to go long distances for their shopping and entertainment. That means more competition for everybody and some of the smaller towns fall away because of it.
Region: Geographers say this isn't new; that these trends have continued for decades and only became temporarily interrupted at times. Do you agree with that assessment?
Adams: As I suggested in my previous answer, that cycle has been going on for some time, and sometimes it works to the advantage of the smaller communities, but mostly the decline in rural areas has continued.
Because of their isolation, those living in rural areas can see the opportunity that everybody else has, and they have a clear view of their increasing isolation. And that causes stress. The problems in the ag industry the past few years have raised stress levels in rural areas, and we've seen a lot more mental health-type problems in rural areas because of that. Also, regular health maintenance becomes a problem because people have to travel farther and farther for health care. Farm machinery, spare parts and repairs aren't available locally anymore; it used to be you drove five or six miles to the nearest dealer, now you may go 60 or 90 miles. All of those things just add to the problem.
Region: Is there a positive side to this trend?
Adams: There are better goods and services available. Because people have consolidated into larger communities, there are more opportunities or choices in entertainment, shopping and education in those cities. A disadvantage is that you now have to travel farther to reach those centers of commerce, but with greater ease in transportation, people are more willing to do that.
Region: Moisture levels on the Great Plains has been one of the region's big stories the past few years. As we get ready for the coming year, what are the prospects for your state?
Adams: Through our crop season last year there was adequate moisture in much of the state, but going into the winter the entire area was extremely dry. Subsoil moisture, unfortunately, is nonexistent. So, things don't look too promising right now, but we still have some time before spring.
Region: You are the board's only farmer and your reports on the economic status of North Dakota have varied in tone recently. What's the current status for the state? [Adams' response refers in part to rising oil prices at the time of the interview. Oil prices have since dropped.]
Adams: For starters, the new farm bill will limit the income that comes from the government in the forms of subsidies to farmers. And now, with the price of oil increasing, the farmers' input costs will increase substantially. Oil prices affect more than just a farmer's fuel costs; they also impact the price of fertilizers, chemicals, plastics, tires and machinery, as well as transportation surcharges. The cost/price squeeze will therefore be more of a factor, and that's probably the outlook for the next five years especially with the low farm prices currently being offered. So, in the short run the farm outlook is not good; income will continue to decline.
Region: How about the long run, beyond five years and for the entire agricultural industry?
Adams: In the long run, if subsidies are done away with in the European community—equal to the degree they are here—I believe our farmers will compete with anybody in the world. And in the long run things will probably be better because we can raise food so much cheaper here than they can in other countries; likewise, our markets should expand.
On the negative side, we'll probably see another round of land devaluation as this process shakes out. The Farm Credit System is talking about a 10 percent to 15 percent reduction in land values because of the new farm bill.
There are about 25,000 to 30,000 farms currently in North Dakota, and some claim that number will settle to about 10,000 in coming years. It's hard to know if that's true. Bigness is not the only answer to making a profit—just gaining more ground doesn't necessarily mean you're going to make more money. And farmers are going to find other ways to make money in order to stay on the farm, whether it's taking a part-time job or diversifying their operation.
I feel that in the farming business, you need to look at things in a long-term manner rather than in the short term, and—more than anything—you need to keep control of expenses. Some of the things you're dealing with are so unpredictable, namely the weather, the prices and government programs. You need to be in a position to cut your costs or try to control them.
Region: North Dakota is one of the few states that does not allow all types of retail shopping on Sundays, and it appears that the state Legislature may again address this issue during the 1991 session. What is your opinion on the issue? [Following this interview, the state Legislature passed a law allowing Sunday retail shopping for most products and services.]
Adams: I feel the Sunday opening laws should be changed. It's still quite a controversial issue, but I'm in favor of Sunday opening. We have such an array of items that can be purchased on Sunday now, that it's hard to justify why everything can't be available.
As far as the supposed negative impact on rural retail stores—it's clear that changes have been taking place regardless of Sunday opening. In the last 10 years, and especially in the last three to four years, the retail areas from the larger communities have been stretching out farther and farther. And I don't believe that Sunday opening would have that much more of an impact than what already exists.
Then, of course, you have to include the positive impact that Sunday opening would have on the Canadian traffic flow. If you draw a circle around Minot to show its retail area, for example, half would be in North Dakota and about half in Canada; and Canadian shoppers have had a very positive impact in the last few years on the North Dakota retail scene.
Region: North Dakota, like other states, has gone to great effort to evaluate and anticipate economic trends. The result of the state's recent work is a report entitled Vision 2000, a plan that sets the framework for economic development into the next century. Why did Vision 2000 ever come about, and what is your assessment of its chances for success?
Adams: The reason it came about was the decline in state population, the decline of our rural areas and our eroding tax base—in short, people became concerned about the financial condition of our state. It has enhanced awareness of these problems. The Vision 2000 report has pointed out that the people and the leaders of North Dakota can and have to work to control our own future. We have to create the future by taking action in the present. More people are now willing to put forth the effort to change things—I think that's the positive effect.
Region: More specifically, what needs to be changed in the state's economy?
Adams: Diversity—we need diversity. We're so dependent on agriculture and energy that when one of those sectors goes down it has a tremendous adverse impact on the rest of the state. And, if anything, the Vision 2000 report has really emphasized that point—that there are a lot of business opportunities available within the state that will increase the economy's diversity. The report has brought some awareness to farmers, suggesting that they can also diversify within their industry by producing other crops or adding livestock. There seems to be a trend toward more agricultural processing in the state, and that's encouraging.
It appears to me that the state will be coming back; that the population decline will halt. There are numerous instances across the state where outstate corporations have moved in to set up shops in our smaller communities to take advantage of a skilled workforce and lower costs, and I think this bodes well for the future.
Region: Thank you, Mr. Adams.
