What do we Mean by Rural?

I went to a conference about rural economic growth some time ago and, whilst I will look at growth later (DEFRA is promoting a Rural Economy Growth Review), this is an attempt to understand the rural economy and its shape based on some of the statistics used at the conference.

There seem to be quite a number of competing voices and some seeming contradictions, but one of the key issues is to define what we are looking at and what we mean by rural.  When we measure the rural economy (or indeed any economy) we need to differentiate between number of enterprises in any sector, number of employees, and Gross value Added (GVA) as these will vary depending on the nature and efficiency of sector of the economy that we are looking at.

The DEFRA Rural Economy Growth Review showed that businesses in rural England make a substantial contribution to the national economy, with a 28.5% share of the enterprises generating around 22% of national employment and 19% of Gross Value Added (GVA), worth around £200bn. At first sight it also appears that the economic structure in rural areas is broadly similar to that in urban areas, though with a higher proportion of sole traders and partnerships, but this takes us to the question of how we define rural.

It seems an official definition is ‘settlements with a population under 10,000 including small market towns, villages, hamlets and isolated dwellings’.  Within this there are three groupings: R80 – local authority areas where at least 80% live in rural settlements, R50 – those where from 50% up to 80% do so and Significantly Rural – those where from 26% up to 50% do so.  There are 55 Rural 80 local authority areas, 48 Rural 50 authority areas and 55 Significantly Rural authority areas.

This can be divided up even further when it comes to analysing the breakdown of industries in different types of area.  Unfortunately it is not possible to cut and paste graphs into blogger/BlogSpot (or at least I haven’t found a way!) but it appears the information at the conference came from a DEFRA publication ‘Statistical Digest of Rural England’ and the graph I am referring to is on page 108.  This shows the percentage of enterprises by industry from less sparse urban through less sparse and sparse rural towns, then villages through to hamlets and isolated dwellings.

The graph shows that in sparse hamlets, more than half the enterprises are in agriculture, forestry and fishing.  These industries also feature highly in less sparse hamlets (25%) and sparse villages (33%) as well as less sparse villages (16%), despite the fact that they only account for 5% of businesses overall in England.  In the remaining four classifications they account for less that 10% of enterprises.  As the number of agricultural enterprises increases the largest group of other enterprises declines in proportion: this is wholesale & retail trade, repair of motor vehicles, which has the greatest number of businesses in England overall and around 25% of businesses in Sparse Urban and Sparse Rural Town and Fringe areas, but in the area of greatest sparsity (where agriculture is is over 50%) this has fallen to 8%.  Other types of enterprises are also compressed as agriculture grows but not so significantly.

What this is saying to me is that it really depends on what you call rural.  If rural means hamlets and isolated houses then farming is very significant in terms of the number of businesses – but even then only accounts for half of them.  If rural includes towns up to 10,000 in population (e.g. in Worcestershire what were classified as market towns under an earlier government initiative such as Pershore and Bewdley, though Evesham is too big) then the situation changes radically.  This was where the representative of the conference from the NFU got upset when a speaker using the definition of population up to 10,000 at the beginning of this blog said that agriculture only accounts for 2% of GVA even in predominently rural areas (in significantly rural areas it is only 1% of GVA).  Of course, as the man from the NFU pointed out when you include in transport and processing as a result of agriculture the proportion will be higher (6.8% of GVA for the Agri-Food sector in 2010 according to a RuSource briefing (no. 1552)) but it really does highlight the question of what you mean by rural.  Here is part of the table from p. 74 of the Defra report to illustrate the point:

Share of predominantly rural areas GVA
Public admin, health, education	23%
Distrib, transport, food, accomm	20%
Production	17%
Business services	10%
Construction	8%
Real estate	8%
Financial and insurance services	5%
Information, communications	4%
Other services	4%
Agriculture, forestry	2%
Total / all sectors	100%

Having mentioned employment earlier, just a few quick points:  As there are few large firms in rural areas this means that many more people will work in small firms or indeed as sole traders and partnerships.  One of the things that came out of the discussion of employment was the resilience of rural people who will often have a variety of small jobs or work for themselves in order to make sometimes a very modest living.  Another feature of rural areas, and this is so for Worcestershire, is the number of people who commute out to higher paid jobs in urban areas.  This means that average income based on residence is higher than average income based on place of employment.

All this shows that the rural economy is complex and multi-layered and that different sectors, particularly agriculture and related industries, will vary in importance according to the type of rural area within that broader definition.  One aspect that is not taken into account in the figures is the importance of agriculture to the landscape.  Even if the number of people employed is now low and the economic numbers perhaps surprisingly small overall, we still rely on farming to shape our landscape and to care for much of the countryside.  The effect of what many of us take for granted is hard to quantify, though there is a cost which comes out of farmers' incomes and is recognised to some extent in the support received from the EU.  Our rural areas are much more than we may at first imagine them to be.