I’ve always been interested in economic development and why some initiatives fail and others succeed. In Alaska, where the state owns land and controls resources, efforts are often state-led because Alaska’s private sector, except in oil and mining, is small.
But development projects led by the state often get political and labeled as boondoggles, particularly when the project in question is a road to a mine. It also happens in agriculture because of mistakes made in earlier state-led agriculture projects at Delta Junction and Point Mackenzie in the Mat-Su region.
Lessons were learned – or should have been – from those. I’m encouraged so far that the Nenana-Tokchaket Agricultural Project west of Nenana, in the Interior, seems to be better managed. The results of the land sale last fall speak to that, I think.
The entire project involves 140,000 acres of state lands designated years ago for agriculture, but the project land sales are being done in increments, the first about 2,000 acres.
Bidding was strong at the land auction, answering one question from skeptics as to whether there is demand for new farm land. Many of the bids were significant, with some over $100,000. The tracts ranged from 20 to 320 acres, and many bidders made offers on several tracts — a good sign.
Twenty-four of 27 tracts received bids, and seven tracts saw as many as 10 competing offers. Large parcels got most of the interest. Most bids were above the appraised value by the state.
For many buyers, the state will carry the note on the purchase — but the interest rate, about 9%, isn’t cheap. All the tracts sold will also need further investment to become farms, because there are requirements to clear land and make other improvements.
Since only agricultural rights are being sold most banks may be reluctant to lend money for development because of the impairment on title, which mean buyers will have to inject more of their own funds. The bottom line is that these seem to be serious commitments, not hobby farming. But we’ll see.
One lesson learned from earlier failures in agriculture projects is that the state isn’t being prescriptive on how development will be done. Buyers have to write farm development plans, but they are given flexibility to do these as they see fit.
Another lesson learned at Delta is to do these in small steps. Delta was done at big scale and in a rush. The effort was too ambitious, but the state had money to burn at the time.
What’s important at Nenana, however, is involvement of local Athabascan indigenous people. Nenana’s tribe secured federal tribal infrastructure funds to help pay for a critical bridge to the project across the Nenana River, but there were complaints later that state agencies did not do enough consultation on the overall project. Efforts have been made to correct this.
Earlier, Doyon Ltd., the Alaska Native regional corporation for Interior Alaska, built a 10-mile access road to aid Doyon’s oil and gas exploration. That effort was unsuccessful, at least initially, and Doyon donated the road to the city of Nenana to support the agriculture project.
Agriculture holds a special interest for me after seeing empty shelves in grocery stores during the pandemic. Alaskans import about 95% of our food and we’re vulnerable to shipping disruptions, as was shown in 2020.
Years ago, we were more self-sufficient in our food supply, with local farms and dairies feeding communities around the state. No longer.
There are reasons why this happened. Alaska’s population increased and, most important, ocean transportation became so efficient that milk and other food products could be shipped from the US west coast at costs lower than they could be produced locally.
Except for things like fresh vegetables in summer, Alaska growers face competitive challenges, and that bothers many.
In the 1980s, when the state was flush, ideas were developed that agriculture done at scale – really big scale – could lower costs and overcome the disadvantages. Thus was born the Delta barley project, a plan for large grain farms in the Delta region east of Fairbanks.
Land was sold and cleared and grain crops were planted (much to the delight of the local bison), but the plan to grow in volume and export grain was not clearly thought out.
In the enthusiasm, an export grain silo was built in Valdez, south of Delta. The silo is still there. The state-owned Alaska Railroad bought grain cars to support a plan for a grain terminal at Seward, though that was never built.
Delta’s vision, and that for a later dairy project in the Mat-Su, were doomed because state planners and enthusiastic politicians hadn’t done their homework. For example, there was never any research on whether a presumed huge export market for grain in Japan really existed. It didn’t.
Ironically, Delta worked in the long run, though not in the way originally intended. Farmers themselves learned how to make it work; local markets were found and the bison were lured away to new grassland across the Tanana River, although they are still a problem.
Many people, myself included, have always felt that Nenana should have been the state’s first choice for an agriculture project. The land is 400 feet lower, which means the growing season is longer. The soils are just as good.
Politics intervened, however. Jack Coghill, former state senator, lieutenant governor and a Republican leader, now deceased, was mayor of Nenana at the time and a booster for having the project near his home town, which even then was known for its potential.
But Coghill and then-Gov. Jay Hammond didn’t get along (an understatement), and Bob Palmer, Hammond’s chief of staff, steered the project to Delta, where the conditions were not as favorable.
Hammond himself held doubts about the viability of Delta and the grain export scheme, but a critical economic evaluation by agriculture experts was withheld from him, according to sources who were present when decisions were made (this is a tale for another column).
Delta went ahead and the faults became apparent. That farmers adapted and survived is a credit to their resilience.
I must confess a special interest in Nenana-Tokchaket because I lived in Nenana in the 1960s. I was young and playing out my Jack London adventure, living in a cabin with a dog team just outside.
I used to drive my dogs along trails through in Nenana-Tokchaket area.
One time, my towline snapped, leaving me left with two dogs as the other eight chased merrily down the trail back toward Nenana sans the sled and me. I made my way back and found my dogs, luckily unhurt, chowing down in the community dump.
I treasure those memories. I credit the Richard Ketzler family of Nenana, local Athabascans, for looking after this young pup, as I was called, keeping me alive through some cold but memorable winters.
Tim Bradner is publisher of the Alaska Economic Report and Alaska Legislative Digest.
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