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Should we be talking "rural" policy instead of "commodity" policy?
Developing small town infrastructure and building new value-added businesses can be a win/win for farmers.
By Sara Wyant
For Michael Bowman, coming back to the family farm that his great grandfather homesteaded was a dream come true. He married Deb, his high school sweetheart, and they quickly started a family near Wray, Colo.. Nestled along the banks of the Republican River, Wray is the county seat of Yuma County and during good years, the largest corn producing county in the U.S.
Yet the farm economy spiraled downward in 1979 and so did their small town of about 2,000 residents. The school was badly in need of repair, the hospital was struggling and some local merchants were looking for new revenue sources.
The Bowmans wanted something better--not only for themselves, but for their community and their three children. They realized that keeping their small town healthy and vibrant was just as important as making their farming operation financially sound. After all, if they were successful on the farm but didn't have a place to educate their kids, find medical care, and enjoy other local amenities, their own quality of life would suffer.
So during the heart of the farm crisis, they joined dozens of others to pass a school bond issue. "Our school was the heartbeat of the community but we were greeted with a lot of apathy and concern about the bond," recalls Bowman. Their first effort failed, but they vowed to try again. Two years later they succeeded. That first "taste" of success encouraged Bowman and a group of nine others to join forces and work for more. Next on their "wish" list: a huge community and recreational facility.
"We envisioned a $2.6 million, 26,000-square-foot facility that would rival any complex in Denver, (three hours away)," noted Bowman. "We were young enough and perhaps naive enough that, the more people told us it couldn't be done, the more we wanted to do it."
Success breeds success
Today, tiny Wray has more amenities than Bowman could have ever imagined possible. Community leaders boast with pride about their new additions, including: an assisted senior living center, a community-owned daycare, a satellite branch of Morgan Community College, an ambulance facility, a medical clinic and hospital. They have four doctors, including three who are "home grown." And yes, the WRAC, (the Wray Rehabilitation and Activities Center) was built debt-free, seven years after Bowman's "Gang of 10" first conceived the project.
Bowman is one of hundreds of farmers and small town business men and women across this country who understand that farm policy needs to be addressed as part of a broader rural policy.
"The two really go hand in hand," emphasizes Tom Buis, Vice President, Government Relations for the National Farmers Union (NFU). "Farmers benefit when their small towns are healthy and vice versa."
The National Corn Grower's Association (NCGA) highlighted this interdependence in their reports on the Future Structure of Corn Belt Agriculture. In a segment due for release next February, they note: "The universe of farmers and their communities will continue to shrink severely in the next decade unless agriculture's stakeholders chart a new course. To revitalize rural America, agriculture needs a new focus--one that orients producers toward higher-value markets and one where producers can participate in profits beyond the farm gate."
New policies needed
"As a first step toward policy reform, we'd like to see some of the obstacles removed that prevent or make it more difficult for investors to pool their funds and raise capital for value-added ventures," says Mark Schwiebert, a grower from Hamler, Ohio, and chair of NCGA's task force. "But we will also be looking at several other policy options."
For many years, lawmakers who wrote farm bills reasoned that supporting farm prices would indirectly provide an economic stimulus to rural communities. Recent research suggests otherwise. During the 1990s, rural counties dependent on agriculture for the bulk of their income suffered serious setbacks relative to nonfarm communities. An analysis of eight Midwestern states by Iowa State University's Center for Agricultural and Rural Development found that, the higher a county's dependence on farm income, the lower its per-capita income growth during the 1990s.
"Seeing the fortunes of rural America as tied to agriculture can be a barrier in developing appropriate strategies," noted Harvard Professor Michael Porter, in a report commissioned by the U.S. Department of Commerce. "Just as dismissing agriculture is a mistake, trying to address the economic problems in rural regions by focusing on agriculture will almost inevitably fail. Rural policy needs to focus on where and how rural regions can be productive in agriculture relative to other locations."
Some economists believe that grain producers and their communities would benefit from developing markets for value-added processing and new value chains for differentiated agricultural products. The Renewable Fuels Association (RFA) commissioned a study, "Ethanol and the Local Community" which indicates the impact from a hypothetical 40 million-gallon per year ethanol plant. According to that report, the plant could:
--Provide a one-time boost of $142 million to the local economy during construction.
--Expand the local economic base of the community by $110 million.
--Create 41 full-time jobs at the plant and 694 jobs throughout the entire economy.
--Increase local prices of corn by an average of 5 to 10 cents per bushel.
For Benson, Minn., population 3,400, the Chippewa Valley Ethanol Company, provided just the type of economic boost the community needed when it opened in 1996, says Janet Lundebrek, board vice chair and President of First Security Bank in Benson. "Rather than blaming others for the problems facing our small town, we decided to do what was necessary to turn things around."
About 950 members invested $55 million in the co-op, which now generates about $85 million in annual sales. Lundebrek says non-producer investors are virtually all local people who wanted to show their support for agriculture.
In the last three years, investors across the U.S. have either constructed or begun construction of nearly 3.2 billion gallons of ethanol refining capacity. Of that amount, at least 40 percent has been initiated and owned by farmers and local business people. However, it's not the only type of value-added venture small communities are exploring. Benson will soon be home to a new biomass power plant, FibroMinn, which will burn turkey litter to generate 55 megawatts of electricity. In Wray, local leaders are looking at new projects involving wind energy and a biorefinery.
USDA Renews Efforts
Lawmakers began to realize the need to revamp their rural outreach initiatives back in the mid-1990s and reorganized several departments into the Rural Development mission area at USDA. The transition continued in the 2002 Farm Bill, with the addition of new programs to encourage value-added businesses and provide services like broadband and tele-medicine in rural areas. Funding has increased, as well. Today, USDA Rural Development, which views itself as the "Venture Capital Bank of Rural America" has a portfolio exceeding $85 billion in loans and deployed over $50 billion in programming dollars the past four years, says Tom Dorr, a senior advisor to Secretary of Agriculture Ann Veneman.
"The Secretary not only gets it when it comes to the importance of rural economic and community development, she worked aggressively to pursue successful economic models for rural communities," adds Dorr. "The exciting thing is that now, there really are economic reasons for folks to either return to their roots or take their first real look at rural America."
Editor's note: Columnist Sara Wyant is President of Agri-Pulse Communications, Inc. and publishes a bi-weekly newsletter, Agri-Pulse, on food and farm policy. For more information, you can e-mail her at Agripulse@aol.com.
Date: 11/24/04
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