“Analysis of Skagit County’s Agro-Industrial Cluster”

from RECGA Member Bill Mundy, Ph.D.

Industry clusters were originally popularized by Michael Porter in his 1998 article “Clusters and the New Economics of Competition” that appeared in the Harvard Business Review. He defined clusters as “geographic concentrations of interconnected companies and institutions.” Central to the clusters concept is the requirement that a critical mass, or concentration, of firms exist within a strictly defined geographic area. The current study was undertaken to identify and determine the characteristics of existing conditions in Skagit County’s agro-industrial cluster.

Agriculture’s status in Skagit County is mired in the forefront of many natural resource issues in Puget Sound, including those surrounding water rights, salmon recovery, land use development, environmental regulation, local tax bases and American Indian treaty rights. Each of the sides in each of these issues has had its proponents and opponents and has generated lots of documents purporting to demonstrate the correctness of each position. It was decided therefore that the current study should be based on factual descriptions obtained exclusively from published government census and other statistical documents. In addition, a sample of opinion from persons directly engaged in Skagit’s agro-industrial cluster was conducted. The published statistical data together with the opinion sample constitute the empirical basis underlying the study’s findings.

Study findings are presented in two parts. The first category consists of four sections which provide the report’s context. Section 1 defines an agro-industrial economy and discusses what the terms mean and how they relate to Skagit’s agricultural areas. Section 2 sees what can be learned from the relatively recent experience of an agricultural cluster in Pierce County’s Puyallup Valley that hit its tipping point in the early 1970s and declined sharply thereafter. Section 3 reviews the technical literature about agro-industrial clusters. Finally, Section 4 presents statistics describing, comparing and contrasting the five counties (including Skagit) that lie on the eastern shore of Puget Sound.

The second part consists of Sections 5 through 9 and directly addresses Skagit County’s agricultural economy.  Section 5 uses U.S Census of Agriculture and Washington State Department of Agriculture data to present trends in acreage, crops, incomes, age, tenure and related descriptors for the period 1982 through 2011 for Skagit County’s fruit, berry and vegetable growers, dairies and shellfish harvesters. The section also reviews the importance of agro-tourism for the County’s economy and – to the extent the data allow – describes organic as well as traditional agriculture.

Section 6 reports the responses expressed by 19 farm owners/operators in Skagit County who were interviewed (a list of all persons interviewed, both farm owners and operators as well as persons working in agricultural infrastructure activities and commercial operations that sell to, or buy from, farmers, can be found as an appendix to this report) . Responses were recorded on a structured interview form to ensure comparability (also provided in an appendix). Guarantees of confidentiality were given to all farmers interviewed, so Section 6 presents summary information (but no individual detail) about farmer’s responses.

Sections 7 and 8 discuss Skagit’s agricultural infrastructure and markets, respectively. These Sections contain both published statistical data and the results of a structured interview that was used to interview farm related businesses and service agencies/organizations. Section 9 contains a projection of Skagit’s agro-industrial economy made by the authors under an assumption that current trends continue into the foreseeable future.

To make the study as accessible as possible for all readers, the sections in the body of the report contain narratives and graphs that summarize the study’s findings. The report’s appendices contain more data heavy narrative, graphs, and tables for persons wanting more detail. Each section in the report’s body has an appendix. Additional appendices include detailed data tables supporting the report’s findings.