Economics don't favor gravel pit.

Byline: ED WHITELAW For The Register-Guard

AS YOU HEAD OUT River Road beyond Belt Line Road, the big Douglas firs lining the roadway signal the transition from city to country, from a dense commercial strip to open farm land. The pastoral setting belies a heated dispute, pitting a number of the farms along River Road, including Thistledown Farm and Lone Pine, against Eugene Sand & Gravel Company, which wants to develop a gravel pit and an asphalt plant on lands between the farms and the Willamette River.

Economics plays a role in the dispute. There's a narrow legal question involving economics, namely: Would the development and operation of the gravel pit and asphalt plant increase the costs of operating Thistledown, Lone Pine and the other farms? There's also a broader economic question, namely: Would rejecting the proposed gravel pit and asphalt plant hurt our economy? The short answers are yes and no.

Before I explain my answers, though, I should explain myself. No one should comment on an issue as charged as this one without making absolutely clear who he or she is, and why his or her mouth is open.

I'm an economist. During the past 18 months, I prepared several reports on behalf of Thistledown Farm. (I undertook the work without compensation.) I've examined sand and gravel operations and interviewed their managers, spoken with farmers and visited the neighboring farms. I've interviewed farm-extension agents, engineers, geologists, transportation specialists and many others, and I've read the relevant testimony and documents submitted by all the parties to the dispute. I hasten to add that I'm not now working for Thistledown or for any of the parties to the dispute.

Now, let's focus on the economic questions and answers.

Would the proposed pit and plant increase the costs of operating the farms? You bet they would. Imagine adding to the traffic passing Thistledown and Lone Pine's fresh-produce farm stands each hour 90 gravel trucks, plus the additional trucks of contractors and suppliers to the gravel pit and asphalt plant. Also, imagine adding dust, chemical emissions, irrigation-water shortages and winter flooding - all effects from the gravel-pit and asphalt-plant operations. There's more to the analysis, of course, but I've summarized enough of the impacts to make the point. Unequivocally, these numerous impacts would increase significantly the costs of operating these farms.

Would rejecting the proposed pit and plant hurt our economy? No way. But accepting it would. To understand these answers, it helps to understand the local economics of the disputants.

Thistledown and Lone Pine represent a new and thriving kind of agriculture. It's called "fresh market" farming. Thistledown, Lone Pine and farms like them across the U.S. have thrived in the past decade or so, because they've been meeting the increasing demand for produce sold directly on the farms. As Randy Henderson, Thistledown's owner, puts it, "The majority of customers shop at Thistledown Farm because they enjoy the experience."

A customer buying a cantaloupe at Thistledown or Lone Pine isn't buying the same thing as a customer buying a cantaloupe at Fred Meyer, Albertson's or Oasis, even if it's the same cantaloupe. Granted, there may be some who don't notice the difference, but there are plenty who do, and many of them are customers of the farms along River Road.

There's more to the economics than annual sales of fresh-market produce. Thistledown and Lone Pine farm high-quality agricultural land, a scarce asset that Oregonians, through their land-use laws as well as in numerous polls over the years, have chosen, rather emphatically, to protect. If we threaten the farm stands and the farms, we threaten the farm land.

Furthermore, there are other economic assets here: the farming activities themselves, the rural atmosphere, the recreation opportunities and the natural habitat, all near and threatened by the proposed pit and plant. These are absolutely essential components of our local economy's jobs, incomes and standards of living.

So, what about Eugene Sand & Gravel? What if the company doesn't get to mine gravel at the proposed site next to the farms? We have plenty of other suppliers - Delta, Egge, Wildish, Morse Bros. and others, to meet the demand for roads, streets, commercial developments and all the other demands for rock materials. So, even if Eugene Sand goes out of business, its competitors would satisfy the demand by employing the company's employees. But is Lane County, as Eugene Sand & Gravel claims, running out of sand and gravel? Nonsense.

Consider the facts: Local sand-and-gravel firms have been operating below capacity in recent years (even before the current recession); we've got 40 years of inventoried reserves and apparently huge amounts of un-inventoried reserves; we've got a market with numerous competitors; and we've got sand-and-gravel prices at or below prices in other urban areas in Oregon. The cub economists in my undergraduate courses at the University of Oregon understand this easily. Claiming the sand-and-gravel sky will fall when we've got excess capacity, substantial supplies and low prices simply doesn't pass the giggle test. Eugene Sand wants the farmers to subsidize its operation. That's lousy economics, and it's certainly unfair.

In this dispute, resolving the economic issue, whether posed in its narrow legal form - the impacts on the costs of operating the farms - or in its broader form - the consequences for the local sand-and-gravel industry and the local economy - isn't even a close call. The decision should go to Thistledown, Lone Pine and the other farms along River Road.

Ed Whitelaw, a professor of economics at the University of Oregon, is president of ECONorthwest, an economics consulting firm.