How We Pissed It All Away, Part 1


An exercise in wishful thinking

An exercise in wishful thinking

There was a time when the combination of high crude oil prices and abundant crude from Prudhoe Bay had the State of Alaska rolling in money. Those were the days, eh? There were a few politicians who recognized, even then, that the gravy wouldn’t last, that oil could only prop up the state’s economy for a time. Those politicians, led by the late Governor Jay Hammond, attempted to diversify the state’s economy, using some of the surplus oil revenues to try and jump start new industries.

One such effort was agriculture. The State of Alaska commissioned studies to determine the feasibility of greatly expanding Alaska’s near-dormant agriculture sector. But the thing about hiring agriculture professionals to evaluate farming potential, as opposed to, say, actual farmers, is that you get wildly unrealistic projections. Which is why there is a giant grain terminal in Valdez that has never had a grain of barley or wheat delivered to it. It’s why the slaughterhouse built by the late Don and Alice McKee – using their life savings and much of their retirement monies – at the corner of Peger and Davis Roads in Fairbanks is now a frozen fish store. Not a single pig or steer was ever brought there.

It’s why the Delta Agricultural Project exists, although it is much more successful as a migratory bird flyway than as a major barley production region.

Grain production forecast, 1981 study

Grain production forecast, 1981 study

And it was pretty much a complete flop. The forecast was that Alaska, by 1985, would be producing some 115,000 tons of grain. In 2016, the last year for which WC can find data, total grain production was about 4,900 tons. That’s about 4.25% of the predicted goal for 1985, let alone 2019.

It turned out that Delta’s annual precipitation was too variable to reliably grow barley or rapeseed (the source of canoli oil). And in years when you could grow it, the Delta bison herd proved to be big fans. The financing for the new farmers was just short of extortionate, and the Division of Agriculture was a lot more enthusiastic about calling loans than developing the agriculture industry. Nor was there any kind of cost-effective way of getting the grain to market. Without grain, the cattle and swine industries never got off the ground.

Abandoned nine silo grain terminal at Valdez Harbor

Abandoned nine silo grain terminal at Valdez Harbor, upper right

The Nenana Agricultural Project also never really got off the ground. The Point MacKenzie Dairy Project wasn’t just a bust; Alaska’s long-standing, relatively small scale dairy industry was killed as well. Today, Alaska has about 500 farms, most of them very small, selling through farmer’s markets and small stores. The estimated $76,668,143 the State invested in trying to jump-start agriculture in Alaska didn’t buy much of anything, at least viewed from three decades later. 

Some of WC’s buddies blame the government for interfering in capitalism, but capitalism hasn’t treated Alaska very well. You have to be pretty ignorant of Alaska’s history to think otherwise. Furs, salmon, copper; all we consumed to exhaustion and then the capitalists left, leaving Alaska that much poorer. It was clear to Jay Hammond that the same thing could happen with crude oil. And they were right. By some calculations, Alaska is paying more in subsidies to the crude oil industry now than it gets back in taxes, just to prevent cave-in of the walls of the economic hole the last few Alaska governments have dug.

WC applauds the late Governor Hammond and his administration for at least making the attempt, but a little more study, a little better management of the process and, above all, a little more planning and the agriculture industry in Alaska might be a lot bigger than it is today.

But, yeah, that’s how Alaska pissed away more than $76 million in irreplaceable non-renewable resource wealth..

 

 

 

One thought on “How We Pissed It All Away, Part 1

  1. And let’s not forget the Port Mackenzie rail extension: $184 million pissed away on a railroad line that goes nowhere.

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