Alaska oil's new bonanza: vast amber waves of grain

Alaska is tapping its oil wells for a second product -- bountiful cropland -- to ensure a continuing harvest long after the oil runs out. Over the past 18 months, forests have been stripped and converted into rich fields of grain. The transformation, at a cost so far of $15 million for the first 50,000-acre, state-run demonstration project at Delta Junction, southeast of Fairbanks, has been made possible by oil revenues. It comes at a time when agricultural experts are increasingly concerned by the steady loss of US farmland to urban sprawl and industrialization.

The payoff, said bearded Alaska Gov. Jay Hammond on a visit to Chicago, is that with this fall's harvest his state has joined the grain export business. The first harvest from 14,000 acres is outdoing all predictions, and Governor Hammond expects that more than 10,000 tons of barley will be shipped to customers in Asia this year.

Hammond said this first success means the state will speed up plans to develop 20 million acres of land that recent studies indicate are suitable for farming. The state is committed to coverting 500,000 acres to farming by 1990 -- at an estimated cost of $150 million.

The news was announced here because Alaskan grain soon will be traded regularly in the busy pits of the Chicago Board of Trade, because Alaska is becoming a major market for the farm equipment manufacturers of the Midwest, and because Alaska's potential farmland, Hammond said, is "about the size of the farm production lands of Washington, Wyoming, Montana, South Dakota, and most of Nebraska combined."

Oil revenues are key to agricultural development, Hammond and his aides explained, because everything has to be provided -- vast acreages must be cleared and all-weather transportation systems, grain elevators, and port terminals must be built from scratch.

Up to now, the huge state had only 70,000 acres in farms. These have provided just 5 percent of its food needs. But a state-funded report six years ago concluded that "development of agriculture and attendant crop production in Alaska have been limited more because of economic than because of physical restrictions. Adapted crops, climate, and soils are suitable and available far beyond the extent to which they are currently being utilized."

Expanding Alaska's agricultural industry was impossible until it could be geared to supply the new and rising world market for grain. The answer, said Hammond, was to provide the start-up capital needed with state funding since the commitments were "undoubtedly too massive for risk capital."

But he says that with this project now well launched, "we are seeing more and more evidence of private sector involvement."

All but $1.5 million of the first $15 million in state money will be repaid, according to Bob Palmer, the governor's special projects coordinator. It has been lent to the farmers who were first selected for their skills and then narrowed down by lottery for the first 22 farms, averaging 2,600 acres each.

Alaska decided to sell the land with the restriction that it be used only for agriculture. Alaska's newest farmers are eligible for 40-year, 6 percent loans to cover the average $165 per acre cost of clearing their land.

But the first harvest showed the investment is a good one. Where 50 bushels of barley per acre were expected, the average crop yield is topping 100 bushels. Thanks to Alaska's 20 or more hours of sunlight a day in summer, protein content also is reported well above the average for "the lower 48" -- despite the fact that combines this week are harvesting in snow-covered fields.

Meanwhile, giant bulldozers are clearing scrub timber at the rate of 50 acres per hour. Mr. Palmer is confident there will be more than enough bidders when the state is ready to sell another 15,000 acres in March and to open a new 60, 000-acre tract next September.

In 1974, the Alaska Rural Development Council concluded that "agriculturally speaking, Alaska is in a rather unique position. In this day of worldwide urban pressure, increased food consumption, increased population, and better diets, Alaska is one of the few places where vast acreages of virgin potential agricultural land exist. Alaska must look to world markets for selling its agricultural products, and we must react to the worldwide demand for agricultural products."

One prime obstacle to this development, however, is certain to be environmentalists' objections to each new cut into the Alaskan permafrost. Palmer says 4 million of Alaska's 20 million acres of potential farmland will be lost "unless we can do something about the federal government, which has locked up this land in wilderness areas."

Yet Hammond has no doubt about keeping his pledge to provide the United States with 500,000 acres of sorely needed new farmland by 1990, just before Prudhoe Bay oil production is due to decline sharply.

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