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$27.8 Million in USDA Funding Helps 184 Value Adding Enterprises

On December 12, 2003 USDA awarded $27.8 million in value added grants for the 2003 cycle. The planning or working capital grants will assist farmers, ranchers, cooperatives, and trade groups to develop new products and markets to increase profitability.

The 184 funded projects range from $5,000 to $500,000 and include projects that:

• Target emerging markets in mainstream grocery stores for natural and organic pork ($350,000, Niman Ranch Pork Company, Iowa)
• Establish a soybean meal/biodiesel processing facility ($33,000, National Trail Biodiesel Coop, Ill.)
• Develop a commercial business plan for segregating, aggregating, and potentially processing fresh farm produce for sale to local schools ($69,400, Community Alliance with Family Farmers, California)

Over 781 applicants submitted proposals totaling nearly $150 million, showing the growing demand for this program.

Despite its popularity the program will likely experience severe cuts in fiscal year 2004 as Congress resumes in January to make a decision on the burgeoning 2004 budget package – estimated at $820 billion.

The 2002 Farm Bill included the Value Added Producer Grant program with annual mandatory funding as opposed to being at the discretion of appropriators each budget cycle.

The program was authorized at $40 million a year through 2007. Now it appears the program will be demoted to a discretionary status with a $15 million funding level.

View the list of 2003 value added grant recipients at http://www.rurdev.usda.gov . You can stay tuned on the value added program on our website. To add your name to the list receiving electronic updates for the program, contact Kim Leval, 541.687.1490, or email kimleval@qwest.net .

State Corporate Farming Laws Help to Level the Playing Field

State corporate farming laws play a critical role in providing a level playing field for family farmers and ranchers. As they come under attack in courts and legislatures, it is critical to remember why these laws were passed in the first place.

Corporate farm laws restrict access to government-granted advantages and subsidies to corporate farm businesses. They allow non-farmers to invest in agriculture as long as they are willing to operate as sole proprietorships or general partnerships – paying taxes as individuals and taking full legal responsibility for the operation.

That keeps them operating by the same legal rules as most family farmers and ranchers, who in most cases don’t incorporate because the legal costs and time burdens aren’t justified on smaller operations.

Large farms get lower tax rates by incorporating and can deduct costs that cannot be deducted by sole proprietors and general partners. And investors who use the corporate form of business are shielded from liability. If the corporate farm cannot pay its bills, the owners are not personally responsible. If it fouls the air and water, the owners are not liable for the damages to neighbors.

Keeping everyone operating by the same legal rules gives family farmers and beginning farmers a fairer shot at opportunity. The biggest barrier to beginning farmers is the competition they face from large, often corporate operations, with a long list of advantages – volume premiums for livestock, deeper pockets, and cheaper capital. The last thing they need is the playing field tilted even more toward their corporate competitors by repealing corporate farming restrictions.

The same is true for more established family farms. Many are starting new value added initiatives to survive in the 21st century. To succeed, they need a level playing field. Corporate farm laws don’t solve all their problems, but they make the competition a little fairer.

Corporate farming laws also promote responsibility. Investors have complained that they are forced to accept full legal responsibility for the liabilities of their operations in states that restrict corporate farming.
But if not them, who should be liable? Their neighbors? Local businesses? Agriculture is more responsible when legal liability is assumed by those who enjoy the profits and exercise the power of control.

Rural America gains nothing from constantly re-fighting old battles to weaken corporate farming restrictions most rural people support. If the critics of these laws want to help us move forward, its time to instead help bring rural people together to figure out where we want to go in the 21st century and develop a strategy to get there.

Agree or disagree? Share your opinion with Chuck Hassebrook, chuckh@cfra.org or 402.687.2100 x 1018.

Understanding Rural
Economic development policy defines rural as what it isn’t – urban. Rural is much more than that.

One of the fundamental problems experienced today in the world of rural economic and community development is attempting to understand what it means to be rural. Most dictionaries still define rural as being in the countryside. While this definition maintains the traditional meaning of rural, automobiles, airplanes, and other developments have made it completely outmoded.

The countryside is broken up with urban centers dispersed throughout. Traditional rural land uses like farming and ranching now must exist side by side with traditional urban land uses like residential developments and manufacturing plants.

On a deeper level, economic development policy defines rural by the term urban. Therefore, rural is simply that which is not urban. Rural only becomes meaningful when used with a reference like cities to associate the meaning. Thus the simplest definition of rural economics is that which has a single urban center with surrounding spatial land used for its benefit.

If we accept that use for the word rural, it would only go to show some places are more rural than others. Measuring this remoteness in matter of degrees is difficult at best. In terms of economics, it might represent factors to overcome such as cost of transportation, technology, and distance to urban centers.

Cities sprouted up to take advantage of economies of scale. This was their advantage. What are the advantages of being rural? As last month’s article discussed, place is extremely important to the human psyche. We need to have space and a sense of place. Rural atmospheres give us the ability to strive for quality rather than quantity.

Specialization has become a trademark of rural. In economic terms, rural has the ability to provide urban with products and labor they cannot produce themselves, either because of specialization or because of the character of their workforce.

While rural may be becoming tougher to understand, it is also becoming more appealing for both economic and social reasons. Next month, this column will explore some of the advantages of rural economics.

Contact: Michael L. Holton, michaellh@cfra.org or 402.687.2100 x 1021.

Corporate Farming Notes
USDA’s late library; Corporations surpassing countries; and Cargill’s Excel causing concern in beef industry

The Swine Contract Library is open for business at http://scl.gipsa.usda.gov/ . Congress mandated this project in the Livestock Mandatory Price Reporting Act of 1999, so it has been anything but a swift process. But, according to GIPSA, the library is now ready “to aid in the price discovery process and provide equal access to market information for all market participants.”

A new report from the ETC Group, formerly the Rural Advancement Fund International (RAFI), documents corporate consolidation. The report, “Oligopoly, Inc.,” is at http://www.etcgroup.org .

According to the report, based on 2002 statistics, 51 of the world’s 100 largest economic entities are transnational corporations, not nations. Wal-Mart is bigger than Sweden; Home Depot is bigger than New Zealand. Of the oil-rich Middle East countries, only two (Saudi Arabia and Iran) are in the top 100, compared to six of the oil companies.

Combined sales of the world’s top 500 corporations were equivalent to 43 percent of the world’s GDP, but they employed just 1.6 percent of the world’s workforce.

Beef Magazine is concerned about Excel’s November recall of 26,600 lbs. of mislabeled ground beef. The product, produced by Excel from Sept. 2 to Nov. 20 and sold in Iowa, Minnesota, and Wisconsin, was labeled and marketed as “irradiated for food safety” but hadn’t undergone the irradiation process. The industry magazine worries what the mistake says about the hazard analysis critical control point (HACCP) monitoring system.

“While this particular recall may have nothing to do with Excel’s HAACP procedure, though ensuring that product packaged as irradiated certainly is irradiated should be a critical control point, the incident could fix in consumers’ minds the question about just how much it can trust the beef industry to police itself. Picture a consumer asking him or herself: ‘How good can a HAACP program be when it misses a critical control point like this – for almost three months?’”

Contact: Brad Redlin, bradr@cfra.org or 402.687.2100 x 1010 for more information.

Mark your calendars, and plan to attend The Beginning Farmer and Rancher Conference: Realities and Opportunities coming March 27, 2004 to Kearney, Nebraska. The Center is partnering with USDA’s Risk Management Agency Outreach office, University of Nebraska, and Land Stewardship Project of Minnesota to bring a full day of networking, information, and experience on starting to farm or ranch.

Dr. Don Jonovic, a nationally recognized farm and business planning specialist, will serve as keynote speaker, sharing his knowledge and vast experience working with generational farm transfer issues. His speech is titled, Surviving Family Farming White Water.  Panels of beginning farmers and others will share real life experiences and challenges and will provide the reality of what to expect and strive for in starting a farm or ranch.

Concurrent workshops planned so far include whole farm planning, estate planning, risk management insurance, alternative funding sources, sharing expenses and equipment, marketing opportunities, low input and low cost strategies, and more.

Conference registration and conference information are available on our website.

Contact: Joy Johnson, joyj@cfra.org for more information.

A load of issues vital to the future of rural people and communities faces the Nebraska Unicameral when it convenes on January 7, 2004. The 2004 session is a “short session,” mandated by law to last only 60 days. Despite its short status, the 2004 session is shaping up to be significant to the future of rural Nebraska.

Again, the session will be dominated by budget issues. The state budget is facing a $211 million shortfall. After tax increases and expansions over the past three years, there is not likely to be much appetite for more revenue raising.

The solution for filling any budget shortfall will likely come from cuts in spending from state agencies and programs. Depending on where Governor Johanns and the Legislature focus their budget cuts, rural people and communities could again bear a heavy burden.

The Center’s 2004 session priorities include:

Protection of small business development funding in the state budget. Small business development is provided $250,000 in state appropriations through the Nebraska Microenterprise Partnership Fund.

Maintaining or increasing this funding is crucial to many rural communities. This funding provides programs like our Rural Enterprise Assistance Project (REAP) the ability to provide capital and assistance to those entrepreneurs ready, willing, and able to develop rural Nebraska.

As our research has shown, most of the job creation in rural Nebraska since 1987 has been in non-agricultural self-employment and small businesses. Maintaining this funding is crucial to the economic future of rural Nebraska.

Defending Initiative 300. Nebraska’s strongest-in-the-nation anti-corporate agriculture law is under attack even before the session begins.

Governor Johanns, the Nebraska Department of Agriculture, the Nebraska Farm Bureau, and the Nebraska Cattlemen all support creating a task force that will review Initiative 300 and make their recommendations for its modification.

As we have shown the last few months in these pages (and will continue to do so), the case for Initiative 300 remains strong.

A study of the future Nebraska agriculture, what we want it to look like, and an evaluation of a broad range of policies to get us there are the right subjects for a balanced legislative task force. Targeting Initiative 300 is not in the long-term best interests of rural Nebraska.

Other issues such as school finance and school structure will also find their way onto our legislative plate. If you would like to keep up on all legislative news and views from the Center, please contact Jon Bailey at jonb@cfra.org to subscribe to our free weekly Legislative Update. For more information, call Jon at the Center’s Lyons office at 402.687.2100 x 1013.

Plans for the 2004 Annual Gathering are in full swing. This year’s event will be held February 7 in Lyons, Nebraska, home of the Center’s new office building. The day will begin at Lyons-Decatur Northeast Schools, 400 S 5th Street.

This year’s schedule is provided below.

• Registration, 9:00-9:30 a.m.
• Teach In I, 9:30-10:20 a.m.
• Teach In II, 10:30-11:20 a.m.
• Keynote 11:30-12:00, featuring Dan Looker, Business Editor of Successful Farming, “Strategies for Family Farms to Thrive in the 21st Century”
• Lunch until 1:00 p.m.
• State of Rural America, 1:15-1:35 p.m.
• History of Center and our 30th Anniversary, 1:35-1:50 p.m.
• Teach In III, 2:00-2:50 p.m.
• Open House, 3:00-4:30 p.m., 145 Main Street

Teach-ins this year will cover a wide variety of topics to spark your imagination and inform you of important issues facing our rural communities, farms, and ranches.

We are planning the following teach-in topics:

• Drought – learn how best to cope with a dry cycle
• Tilling the Soil of Opportunity – showcasing alternative agricultural businesses
• Non-Hormone Treated Cattle Program – learn about this program for supplying meat to the European Union
• Youth Making A Difference – see how communities are using their greatest asset to make a positive difference in their towns
• Working with Radio & Media – a hands-on activity workshop to help you promote your message through the media and reach your audience
• Community Development – a look at some different models that work in rural communities throughout the Midwest
• Wealth Transfer and Communities – find out what a community can do to capture the wealth transfer taking place
• Retirement and Investment Planning – changing tax laws have brought new opportunities and pitfalls for those looking ahead to their retirement
• Nebraska Unicameral Review – will discuss what is happening in the Nebraska Unicameral and the consequences for rural people and communities
• Conservation Security Program – a look at how the program will work and at the proposed rules and regulations
• Federal Budget & Appropriations/Commodity Organization Reform – we will discuss efforts to gain support of agricultural organizations and federal appropriators through grassroots resolutions
• New Homestead Act – what is happening with the law
• Business Transition – how do you prepare a business for sale?
• REAP Members Share their Story – rural entrepreneurs tell all
• Customer Service: “You Can Be a Super Star”
• Southern Cone of South America – slide show from a LEAD fellow

Our new building is located at 145 Main St, which is accessible from Highway 77. The school is located at 400 S 5th Street and is 3 blocks south of Main Street on 5th Street.

The event is free and open to the public, with a minimal charge for the noon lunch which will feature beef and chicken raised by family livestock producers. To sign up, call the Center office at 402-687-2100. Pre-registration is not required, but is strongly encouraged.

Contact: Kim Preston by phone (x 1022) or e-mail, kimp@cfra.org.

Editor: Marie Powell

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Visit the current newsletter and recent archive pages.
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One of the proposed rule’s biggest problems is the plan to limit participation in the initial sign-up to qualifying farmers and ranchers located only in priority watershed areas.
The CSP, as stated in the law written by Congress, is to be available nationwide to all qualifying farmers and ranchers. Even considering the first year’s funding is limited to $41 million, NRCS should follow Congressional intent by making the program available across the country.

Another attempt at limiting the scope of the program is requiring farmers and ranchers to address both soil and water quality to the highest possible level before they even qualify for the program. The bar is being set so high that very few farmers and ranchers would qualify.

The payment rates set out in the proposed rule are so low that the CSP would fall far short of being a stewardship incentives program. As it stands now, the base payment could be $0.50 per acre or even lower. The proposed rule also calls for offering a miniscule 5 percent cost-share rate.

And several important elements are completely left out of the proposed rule. These missing pieces make it very difficult to accurately assess the value of the proposed rule and how it will affect program implementation.

You can access the proposed rule and the Administration’s explanation of it as a 32- page pdf file at http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/2004/pdf/03-31916.pdf . Summaries of the rule, fact sheets, and the accompanying economic analysis are available from NRCS at http://www.nrcs.usda.gov/news/index.html#csp .

Contact: Traci Bruckner, tracib@cfra.org or 402.687.2100 x 1016 for more information on CSP and how to submit comments on the proposed rule.

USDA Should Take Steps to Reopen Beef Export Markets

The mad cow scare demonstrates the need for American agriculture to take a consumer-oriented approach. And it illustrates both the risks and opportunities for family farmers and ranchers in an era when consumers set high standards of accountability for their food sources.

The Department of Agriculture should be taking the steps necessary to reassure foreign buyers and reopen export markets to American beef producers. Japan is key. It is our biggest export market, buying $1 billion of beef annually.

Japan has blocked all beef imports from the U.S. and Canada and is demanding all animals be tested at slaughter. The European Union is now testing all animals over 30 months of age, when the disease is far more detectable and likely to be passed to those who eat infected tissue.

At $30 per head, it’s not cheap. But it is far less expensive than sacrificing our key export markets. In recent weeks, loss of markets due to the mad cow scare has taken anywhere from $150 - $300 per head off the price of slaughter cattle.

This is not a time for foot dragging at USDA or debating whether sound science demands more extensive testing. If our buyers demand it, it is in our interest to provide it. We must take the steps necessary to reopen lost markets. Those who ignore what the consumer demands do so at their own peril.

If there is a silver lining to this cloud, it is that surveys demonstrate that consumers intrinsically trust family farmers and ranchers more than corporate agriculture. And many are willing to pay more to know where their food comes from and that it is a source they trust.

For example, the Small Farms Cooperative has been gaining price premiums for its farmer members for hormone-free beef sold in the European Union. Even with the discovery of mad cow disease in the U.S., the cooperative continues building its sales in the European Union. The Europeans know and trust the source.

Therein lies the greatest opportunity for family farmers and ranchers in the 21st century and their inherent competitive advantage over corporate agriculture. Most consumers trust family operations more and want to keep them as stewards of the land. We need to build new cooperatives and other channels to link those consumers with the family farmers and ranchers who can give them what they want.

Agree or Disagree? Send your opinion to Chuck Hassebrook, chuckh@cfra.org or 402.687.2100 x 1018.

To learn more about the Center initiative to establish a regional family farm and ranch livestock marketing cooperative, contact Michael Holton at michaellh@cfra.org or 402.687.2100 x 1015.

Making Rural Economics Work in Small Communities
A third of the nation’s rural counties claim a majority of capital flowing to rural areas. Identifying a community’s purpose may help to bring capital to the other two-thirds. We identify six purposes that help some rural communities attract capital.

Last month’s newsletter discussed an economic and community development definition of “rural.” The common assumption is that rural means what urban is not. The next step in understanding rural economics is to locate the path rural capital has followed.

Rural communities began for certain cultural or economic reasons – the railroad came through or immigrants wanted to settle together to farm. Over time communities evolved and changed, and the original purpose is no longer the overriding one.

Today, rural capital flows primarily to only 33 - 40 percent of all rural counties in the United States. Areas prospering are located in the Intermountain West, the Ozarks, around major metropolitan areas like Kansas City, and along major transportation corridors like I-80 in Nebraska.

Most flourishing small rural communities today can be defined by six distinct purposes:
Academic Communities – Communities whose primary employers are boarding schools, colleges, universities, research labs, and corporate training facilities. The educational base provides the community’s asset.

Area Trade-Centers – Areas generally located far enough away from an urban district so that their business climate still flourishes.

Exurbs – Rural areas located close enough to urban regions for people who work in urban centers to buy cheaper land and commute. Exurbs are also called bedroom communities.

Government Centers – County seats and or areas that house military bases, federal and state agencies, prisons, or other nonprofit agencies. The economic base of these communities is greatly enhanced by their presence.

Recreation Centers – Communities with a clear advantage or natural asset which provide an attraction for others to visit. Historic locations or scenic vistas often provide for tourism.

Retirement Centers – Areas drawing a disproportionate amount of elderly by providing housing and other amenities for a peaceful retirement.

That leaves up to 67 percent of rural counties without a good flow of rural capital. The question then arises, how is capital shifted to these areas?

Look and see how your community could fit with these categories. Next month we’ll discuss how to incorporate rural economic strategies with these community types, and how to make the fit compatible with pre-existing community assets.

Contact: Michael L. Holton, michaellh@cfra.org or 402.687.2100 x 1015 for more information on rural community revitalization.

Corporate Farming Notes
Mounting troubles for Tyson; health group wants no more CAFOs; and the No. 1 irradiator is cooked

The Tyson Foods’ cattle price-fixing case, also known as Pickett v. IBP, began January 15. The class-action lawsuit trial, expected to last a month, accuses Tyson of violating federal law protecting competition in the livestock industry by using captive supplies. The plaintiffs represent 30,000 cattlemen who sold cattle to IBP or Tyson from February 1994 to October 2002. Associated Press

Three class action lawsuits filed in U.S. District Court claim Tyson Fresh Meats and John Morrell & Co. illegally deducted insurance costs from hog sale payments. They consist of 1) all Iowans who sold swine to Tyson or IBP since December 1999; 2) all Nebraskans who sold swine to John Morrell since December 1999; and 3) all Iowans who sold swine to John Morrell since December 1999.  Associated Press

The Arkansas Supreme Court will hear from about 90 Arkansas hog farmers February 5 who say they should be able to challenge the termination of their contracts with Tyson Foods Inc. in jury trials, instead of in expensive binding arbitration.

The farmers want to argue in court that Tyson acted in bad faith by reducing swine operations in 2002 shortly after convincing the farmers to invest $500,000 to $1 million for facilities to raise hogs. AP

Last month the American Public Health Association (APHA) issued a resolution urging federal, state, and local government health agencies to impose a precautionary moratorium on all new Concentrated Animal Feeding Operations (CAFOs) and to initiate and support further research on the health impacts of air and water pollution from them.

The reasons for calling for the moratorium include negative economic effects on rural communities, health problems associated with air pollution and contaminated drinking water from manure runoff, increasing antibiotics resistance caused by the routine use of antibiotics in farm animals, and serious respiratory problems found among CAFO workers and among neighboring residents.

SureBeam Corp., the nation’s largest irradiator of beef products, announced last month it would cease operations and file for Chapter 7 bankruptcy. Lawsuits filed on behalf of stockholders accuse the company of misstating earnings among other things. Cow Calf Weekly

Contact: Brad Redlin, bradr@cfra.org or 402.687.2100 x 1010 for more information.

Agriculture ‘Visionary’ Receives Research Award

The 4th Annual Seventh Generation Research Award was presented to Bill Liebhardt last November. Liebhardt began his career researching soil fertility and water quality from poultry farm runoff at the University of Delaware. His work met substantial resistance from industry and his own institution.

He became the Assistant Director of Research for the Rodale Research Center in 1981. At Rodale he established the longest running farming systems comparison of organic farming systems in the country. His research led the way in demonstrating that organic farming could be economically viable.

In 1987, Liebhardt became director of the University of California Sustainable Agriculture Research and Education Program, one of the first statewide, university-sponsored sustainable agriculture programs in the country. After retiring from UC, he returned to the Rodale Institute as Research Manager.

The Seventh Generation Research Award is cosponsored by the Center for Rural Affairs and the Consortium for Sustainable Agriculture Research and Education. It recognizes innovators in food and farming system research.

People from Wisconsin, Minnesota, South Dakota, Iowa, and Nebraska can travel by bus to this event. The conference is focused on risk-reducing strategies and resources to help the next generation of farmers and ranchers get established on the land.

A chartered bus will be available to provide low-cost transportation to The Beginning Farmer and Rancher Conference, to be held March 27, 2004 at the Holiday Inn and Convention Center in Kearney, Nebraska.

The Route: The bus will depart from La Crosse, Wisconsin on Friday morning, March 26 and travel west on I-90 across southern Minnesota and southeastern South Dakota. The Express will head south on I-29 in Sioux Falls, South Dakota and continue south to Omaha, and then west on I-80 to Kearney, Nebraska.

Who Can Ride: Stops along the way will be available for interested farmers, conference speakers, and participants. En route stops are planned in Rochester, Albert Lea, and Worthington, Minn.; Sioux Falls, SD; Sioux City, Iowa; and Omaha, Neb.

Bus travelers will have the chance to network with beginning and established farmers and participate in farm tours. Entertainment is also planned, and sightings of sandhill cranes are also possible along the Platte River. The bus will depart after the conference ends on the evening of March 27.

The Fee: Round-trip cost for the bus is $25 per person. Bus registration will be taken on a first-come, first-serve basis. Riders are asked to bring their own food. Conference registration is $30. Checks may be sent to the Center for Rural Affairs, along with registration materials.

For more information on the conference Express Bus, contact Heidi Busse, Land Stewardship Project, 507.523.3366 or heidib@landstewardshipproject.org . Conference registration and conference information are available on our website.

Contact: Joy Johnson, joyj@cfra.org for more information.

Patty Huff grew up on a dairy farm in Chester County, Pennsylvania. Although she left the area for a number of years, she maintained her ties in the community.

Dairy farmers Suzanne and George Lamborn remembered Patty as a teenager. The Lamborns offered to rent their farm to Patty and her husband. The Huffs declined that offer, but they kept in touch.

In 1999, the Lamborns decided to sell. They had learned about a Pennsylvania Bureau of Farmland Protection program that would allow them to get the development value from their land while ensuring it would be farmed.

The Lamborns called the Huffs. The Huffs decided it would be a good move for them if they could arrange the financing. Using a mix of farmland protection programs available in Pennsylvania, the Lamborns sold their farm to the Huffs at its farmland value, considerably less than its development value.

The selling price used the appraised development value, less the purchase price of development rights received from the Pennsylvania Bureau of Farmland Protection program. The couple financed the remaining amount – the farmland value – on a contract
for deed.

With equity gained previously, the Huffs were able to secure financing from the Farm Service Agency. This allowed them to expand the milking facility, add a six-month manure storage facility, build a silo, and complete soil conservation measures including new stream-bank fencing.

The Huffs also participated in the aggie bond program available in Pennsylvania, which provided an additional return on the interest to the Lamborns. This arrangement has been so successful, the older couple is considering investing in additional farmland to help another young farm family get a start.

The Rural Enterprise Assistance Project (REAP), a program of the Center, has loaned over $2 million to startup and existing small businesses in rural Nebraska since its inception in 1990.

REAP is Nebraska’s largest microenterprise program and operates on a statewide, rural basis through regionally-based Business Specialists. REAP provides lending, training, networking, and technical assistance opportunities for startup and existing microenterprises (businesses with 5 or fewer employees).

This latest milestone is important both for what was attained and when, according to REAP program director Jeff Reynolds. “It wasn’t until 2002 that REAP reached that first $1 million in direct loans, and now we are already surpassing the $2 million mark,” said Reynolds. “That says a lot about the need for and success of our program.”

REAP provides “peer group” loans up to $10,000 through locally formed associations of small business people in a “step-up” process, along with individual loans up to $25,000 through the REAP Direct loan program, added in 1999. REAP also provides “Quick Grow” loans up to $5,000 in collaboration with the GROW Nebraska program, a service added in 2002.

Since 1990, REAP has placed 273 peer group loans totaling $463,423 (total includes Quick Grow loans). Since 1999, REAP has placed 110 direct loans totaling $1,550,508. REAP has leveraged an additional $3,667,420 in loans from traditional sources since 1997 through its business planning and loan packaging services.

In rural Nebraska the primary employment source is self-employment and the dominant type is microenterprise. REAP provides key business development services to entrepreneurs. Funding from the Nebraska Microenterprise Development Act, Community Development Block Grants, Small Business Administration, United States Department of Agriculture and other sources make the services possible.

Contact: Jeff Reynolds, 402.656.3091 or jeffr@alltel.net or visit www.cfra.org/reap for information.

Unique Blend of Enterprises Supplements Agriculture Income
Nebraska leads the nation in the number of people holding multiple jobs – a statistic this resourceful agricultural family lives daily.

Keith and Sue Roberts, Orleans, Nebraska, are prime examples of the innovative entrepreneurial drive shown by rural residents in Nebraska. In the midst of declining family farm income due to drought and poor prices, the Roberts own 188 acres of ground and help Keith’s folks on their farm.

To create enough total family income, Keith and Sue are blending outside employment with agricultural and non-agricultural small business enterprises. These include an active and successful recreational business, Twin Creek Paintball in Orleans.

This enterprise is a clear example of taking an agricultural resource, native pasture, and converting it to a higher net income from a non-agricultural use. They are also initiating a meat goat enterprise on their farm.

Keith and Sue both maintain outside employment. The couple also owns the Sappa Creek Trading Post in Orleans, which features t-shirts, collectibles, upholstery, working furniture, etc. Keith mows lawns at two area cemeteries. Their two boys and their daughter provide help in some or all of these entrepreneurial efforts.

Twin Creek Paintball is their oldest and most lucrative venture, with an 8-year history and steadily increasing volume of revenue and net profitability. The Roberts have used peer loans from REAP, the Center’s small business support program to help this enterprise expand and grow.

As resourceful and steeped in the work ethic as the Roberts are, they are yet another example of why Nebraska ranks #1 in the country in the number of people holding multiple jobs. As Keith states, “You have to have a lot of things going these days to supplement agricultural income in order to make a decent living.”

The Roberts are charter members of the South Central Business Development (SCBDA)REAP association in Phelps and Harlan County, and Keith is currently chairperson. Keith has generously donated time to speak on behalf of small rural business. He has served on several panels, including ones exploring alternatives in agriculture.

Volunteers Help to Move the Center Office in Less than Two Hours

Led by an outpouring of volunteer support from the people of Lyons, Nebraska, the Center for Rural Affairs moved into its new home in Lyons on December 22. Close to 70 community volunteers joined 20 Center staff and volunteers in moving literally hundreds of boxes, over a dozen desks, and scores of filing cabinets and other essential goods to the Center’s newly-completed 6,400 sq. ft. office building.

When a date for moving was set, Center Development Director, Greg Finzen, asked the Lyons Community Club if they would help with the move. They agreed, and Lyons’ resident, John O’Mara coordinated getting volunteers and equipment to make the move happen.

In an atmosphere resembling an old fashioned barn-raising, volunteers with pickups, goose-neck trailers, grain trucks, a truck from an antique store, and a half-dozen hand carts started the big move at 9 a.m. By 11:00 a.m. everything was moved and the crowd retreated to a free lunch provided by local Lyons church groups, the Lyons bank and other businesses.

Contact: Kim Preston by phone (x 1022) or e-mail, kimp@cfra.org.

Editor: Marie Powell

You are viewing the Center for Rural Affairs newsletter archive for 2002-2006.
Visit the current newsletter and recent archive pages.
Visit the Center for Rural Affairs Home Page.

A beginning farmer panel will share their real-world experiences in transferring farm assets to a new generation, use of alternative markets, challenges facing women farmers, and environmental obstacles they have overcome. Three concurrent sessions spaced throughout the day will focus on a wide variety of topics, including whole-farm planning, estate planning, start-up programs, insurance, low-input systems and low-cost strategies, contracts and asset sharing, alternative funding sources, and mentoring.

Conference registration is $30.00, which includes materials, lunch, and refreshments at two breaks. To register, call the Center for Rural Affairs, 402.687.2100 or email Joy Johnson, joyj@cfra.org

See more information on the conference

Administration’s Budget Priorities

If you want to know what someone values, you have to look at where they put their money. President Bush’s budget proposal speaks volumes about his priorities. It would eliminate the Small Business Administration programs focused on serving the smallest businesses – those with five or fewer employees.

Those programs provide funding to intermediaries, like the Center’s Rural Enterprise Assistance Project, to provide loans, technical assistance, and business training to small and start-up businesses not typically served by the regular Small Business Administration loan guarantee programs.

This is no small matter. Across the country, such businesses account for nearly 17 percent of all private employment. Their impact is even greater in rural areas – much greater. In the farm and ranch counties of the nation’s heartland – Iowa, Kansas, Minnesota, Nebraska, North Dakota, and South Dakota – self-employment in the smallest businesses accounts for three-fourths of the net job growth over the last decade.

Likewise, the administration budget would eliminate nearly two-thirds of the funding for the Value Added Producer Grants program that funds producer-owned initiatives in value-added marketing and processing. But once again, the administration has turned its back on the cut that should be made.

It refuses to support an effective cap on farm program payments to the nation’s largest farms – payments they use to drive smaller farms out of business. A payment cap is the single most effective thing Washington could do to strengthen family farms, and it would save more than enough money to make it possible to keep the valuable rural programs off the chopping block.

Money also spoke volumes recently when an Alabama jury awarded independent cattle producers $1.28 billion in a case against Tyson Foods Inc. for illegally depressed cattle prices through its contracts with large producers. This case has a long way to go through appeals and legal motions. But whatever the ultimate outcome, it says that the American people value fairness and oppose the abuse of power by the large and wealthy.

Money does speak volumes, and it also exerts influence. But we must never mistake that as evidence that money is the only or even the most powerful source of influence. When the citizenry gets engaged, people trump money.

That was demonstrated in Alabama. It was demonstrated the same day in Lincoln, Nebraska when hundreds of rural people packed the capital to challenge the governor’s assault on Initiative 300, Nebraska’s constitutional amendment banning corporate farming.

Now we must demonstrate it in Washington by demanding the administration and Congress produce a budget that reflects the values of the American people.

Agree or Disagree? Send your opinion to Chuck Hassebrook, chuckh@cfra.org or 402.687.2100 x 1018.

Appropriations Battles Foreseen
Family farm programs likely to be targeted for cuts when Congress determines budget.

The debate over Fiscal Year 2005 appropriations will soon begin. Because of increasing deficits and shrinking budgets, Congress is under pressure to hold down spending on all programs with discretionary funding status. Expect an all-out assault on farm bill programs that stand to make a difference for small and medium-size family farmers and ranchers.

A majority of separate spending bills will likely be rolled into one large omnibus appropriations bill. This means limited time for debate and puts programs at risk for across-the-board spending cuts.

Under current budget pressures, program funding levels are not just being cut, their funding status is being compromised as well, with programs going from mandatory to discretionary funding status.

The Value Added Producer Grants program (VAPG), which provides grants to farmer and rancher initiatives to market high-value crops and livestock, fell victim to this process during the Fiscal Year 2004 appropriations conference committee.

This program passed in the 2002 farm bill with $40 million in mandatory funds (meaning it should not be subject to the annual appropriations process) but was cut to $15 million and demoted to discretionary status. We must advocate for it to return to $40 million with mandatory funding.

The Conservation Security Program (CSP), which rewards farmers with payments for environmental stewardship, has been attacked the past two appropriations cycles. The popularity of the program prevailed, and full funding was reinstated. However, we expect the battle may rise again, so we need to continue to advocate for full funding for the Conservation Security Program.

Other valuable farm bill programs have failed to gain any funding. For example, the Beginning Farmer and Rancher Development Program is a competitive grants program that would provide extensive training and market development opportunities for beginning farmers and ranchers. We will push for this program to be funded and implemented this year.

Be ready to contact your senators and representatives to save vital programs and restore funding to others. We’ll send action alerts as the process unfolds. Together we can protect these programs and make a difference for family farmers and ranchers and rural communities.

Contact: Traci Bruckner, tracib@cfra.org or 402.687.2100 x 1016.

Economic Strategy for Rural Survival
Assess existing markets, find niches to match, cultivate local economic activity, and bring citizens together to create change – a recipe for increasing rural vitality.

Before focusing on economic strategies to improve rural America, let’s set the record straight on a few commonly held myths. First, rural America is not mostly farming or even about farming. Though agriculture is believed to play the largest role in rural America, only 1.78 percent of rural residents earn their primary living from the farm or ranch.

While family farming is important in our culture and is a vital part of rural economies, the perfect Jeffersonian model of the family farm is not dotting many landscapes. Instead, 66 percent of rural American residents actually make their living working in the service and manufacturing industry.

And of the 200 counties listed as persistently in poverty by the Economic Research Service, only five are not considered rural. That leaves 195 rural counties throughout the United States that need economic strategies that will work.

Here is a closer look at a rural strategy with three primary focus areas.

Use niche markets to compliment existing markets. Every struggling community must assess its existing markets. Then the community can look at developing niche markets to compliment the existing economy.

Grow entrepreneurs from within the community. Cultivation and development of entrepreneurs must be a priority in the economic development strategy for small rural communities. Economic gardening is the best way to alleviate poverty in rural areas.

Supporting cottage industries helps to curb the massive importation of goods taking local dollars away from the region. The Internet also gives rural regions access to markets that were previously unavailable.

Work together to improve quality of life in the community. The final piece of this puzzle is the development of social capital. Working together to establish housing, arts, institutions, and cultural benefits for a community’s citizens only makes the community stronger in leadership and attitude.

Conventional economic development strategy relies on recruiting outside industry to locate in a community for a purely financial motive. Rural economic development strategy needs to be more creative.

We need to realize that traditional strategies generally have not worked in rural areas. In some cases, the area ends up more damaged than before. It is the exception, not the norm, when outside industry decides to stay, especially during hard times.

Contact: Michael L. Holton, michaellh@cfra.org or 402.687.2100 x 1015 for more information.

Victory for Independent Cattlemen in Alabama Class Action Suit
Verdict finds packer control of livestock illegal under the Packers and Stockyards Act; jury awards $1.28 billion to 30,000 producers.

In the first-ever class action suit brought with the Packers and Stockyards Act of 1921 as its foundation, independent cattlemen won a $1.28 billion judgment against Tyson Fresh Meats, Inc.
Originally the case was filed in 1996 against IBP for violating the Packers and Stockyards Act, which prohibits packers from employing any “unfair, unjustly discriminatory, or deceptive practice or device” or from making preferential agreements. IBP was purchased by Tyson in 2002, and the case became Pickett v. Tyson Fresh Meats, Inc.

The plaintiffs are Lee Pickett (AL), Mike Callicrate (KS), Chris Abbot (NE), Robert Rothwell (NE), Johnny Smith (SD), and Pat Goggins (MT). And in achieving class action status during the eight-year course of the case, the plaintiffs came to represent a class of approximately 30,000 cattlemen who sold to IBP exclusively on the cash market from 1994 to 2002.

David Domina of Domina Law in Omaha, Nebraska, and Joe Whatley of Whatley Drake in Birmingham, Alabama represented the cattlemen at the court proceedings in Montgomery.

The case was brought to enforce the Packers and Stockyard Act of 1921 on the basis that IBP used contracting with large beef producers to depress prices and hurt the livelihoods of 30,000 ranchers who were harmed by these unjust and illegal practices. The jury found damages to the affected cattlemen amounted to $1.28 billion in revenue lost due to anti-competitive practices.

Michael Stumo, general counsel for the Organization for Competitive Markets based in Lincoln, Neb., said, “The plaintiffs’ experts showed that Tyson depressed prices by an average of 5.1 percent over the eight-year class period. This means that Tyson received one out of every 20
cattle free due to their manipulation of inventories that allowed them to depress prices.”

Iowa Senator Tom Harkin addressed the role Packers and Stockyards played in the case. “After
decades of USDA and Justice Department inaction, these ranchers and cattle feeders took on the packing industry themselves – and won,” Harkin said following the jury’s decision.

The verdict further demonstrates the relevance and purpose of banning packer ownership of livestock, an effort so far unsuccessful in Congress, but a reality in Nebraska since the 1982 passage of Initiative 300. Control of supply by dominant packers like Tyson by definition upsets the supply and demand function of a competitive marketplace. As re-affirmed by the verdict, the very ability of packers to hold livestock away from the open market disrupts and distorts market pressures.

Corporate Farming Notes
Purdue University plays with models; Seaboard sees a familiar face; and a big banker discourages bigness

A newly released study by Purdue University agricultural economists concludes that livestock contracts and vertical integration, in place of a spot market, can be good for hog producers and packers.

However, as pointed out by Allan Gray, one of the four Purdue economists who conducted the study, the very possibility that the vertical integration system encourages consolidation and could lead to a handful of companies controlling the pork industry was not allowed in their model.

“Many people start from the premise that the packers are the smoking gun – that the packer is a monopoly and is forcing people to move to vertical integration,” said Gray. “So, in our study, we built a model that doesn’t allow that to happen. Our numerical model specified that the packer has no market power. With our model we were able to ask: if the market power issue is not there, do all the parties involved still benefit from a coordinated production system?”

In case you couldn’t guess, Gray determined the answer in such a circumstance was “yes” for producers and packers. The study, Evaluation of Alternative Coordination Systems Between Producers & Packers in the Pork Value Chain, can be found at www.agecon.purdue.edu/staff/gray/Research/research.htm .
Source: Feedstuffs

Seaboard Corp. announced in January that its pork division, Seaboard Farms Inc., had entered into a marketing agreement with Triumph Foods LLC (formerly Premium Pork) to market all of the pork products produced by Triumph Foods at a new state-of-the-art pork processing plant. Triumph is planning to build the plant in St. Joseph, Mo.

Rick Hoffman, chief executive officer of Triumph, was CEO of Seaboard Farms until early 2001.
Source: Feedstuffs

An observation from Wells Fargo Vice President and Agricultural Economist Dr. Michael Swanson, of Minneapolis, at an Ag Appreciation Banquet in Yankton, S.D.:

Most small family farms are no longer profitable. But, neither are huge multi-thousand-acre farms.

Swanson said there’s a threshold where operation costs catch up with input, lowering net profit. According to an Illinois study, the magic number is 1,200 tillable acres. When farm size continues past this threshold, the revenue evens up – no matter how many acres or head of livestock are part of the operation.  Source: Yankton Daily Press and Dakotan

Contact: Brad Redlin, bradr@cfra.org or 402.687.2100 x 1010 for more information.

I-300 Supporters Flock to Capitol to Tell Legislators “Hands Off”

On February 17 over 400 supporters of Initiative 300 descended upon the Nebraska State Capitol to tell their state senators “Hands Off I-300.” The occasion was the hearing on LB 1086, a bill that proposes to create a gubernatorial-appointed task force to determine ways to “modify” Nebraska’s anti-corporate farming constitutional amendment.

Wearing distinctive “Hands Off I-300” badges, people from all over Nebraska lobbied their legislators to kill LB 1086. At the hearing, representatives from the Center, Nebraska Farmers Union, the AFL-CIO, the Nebraska Catholic Conference, Nebraska Grange, Women Involved in Farm Economics (WIFE), the American Corn Growers, the Organization for Competitive Markets, and the Sierra Club all testified about the positive aspects of I-300 and the Pandora’s Box that would be created by opening I-300 for changes.

Dr. William Heffernan of the University of Missouri testified as to the unique position Nebraska enjoys in providing agricultural structural and market access advantages compared to other states. Several farmers and ranchers – including beginning farmers and ranchers – testified to the positives of I-300 and the fact that I-300 has not acted as a barrier in their operations (contrary to the assertions of many proponents of LB 1086).

All the testimony at the LB 1086 hearing was on top of thousands of letters, calls, and faxes people throughout Nebraska made to their state senators, and the letters appearing in Nebraska papers for weeks on the positives of I-300 and the dangers of LB 1086. This activity shows the power of an engaged citizenry, and we compliment the efforts of everyone.

The Agriculture Committee passed an amended bill to the full legislature. Look for more information next month.

Contact: Jon Bailey, jonb@cfra.org or 402.687.2100 x 1013, for more information.

Despite cold and ice-covered roads, nearly 100 people made it to the Center’s Annual Gathering in Lyons on February 7, 2004. Participants enjoyed a scaled-back Small Business Fair, morning and afternoon teach-ins, and words of wisdom from Dan Looker, business editor at Successful Farming magazine, Don Ralston, Center co-founder, and Chuck Hassebrook, the Center’s executive director.

The annual gathering is also the occasion where we recognize those who have been especially involved in the Center’s work. This year, the Seventh Generation Award, given for a lifetime of service, was presented to Frankie and Darlene Charipar of Leigh, Neb.

The Charipars have been especially strong advocates of Initiative 300. Frankie has been to Lincoln many times, sponsored resolutions in livestock organizations, and called politicians on the carpet for wavering on Initiative 300. They have also been active on federal agricultural policy, bringing forth innovative policy ideas concerning soil and water conservation and beginning farmers.

The Citizen Award, given for extraordinary grassroots assistance in our public policy work, was given to Mary and John Ridder of Callaway, Neb. Mary writes a periodic column in the “Midland Voice” section of the Omaha World-Herald. Her columns demonstrate the challenges facing rural people and how public policy often fails them.

Mary provides positive and viable answers to those challenges – often those developed and expressed by the Center. She is a strong voice for a rural and agricultural public policy fixed on sustainable principles.

The Pioneer Award was presented to Curt Arens from rural Knox County. Curt began his pioneering efforts by introducing Christmas tree production to the farm. With support from his father, this beginning farmer took over the reins of the land and changed the “look” of the farm.

This young man designed farm practices to match what the land could sustain. Erosion-prone acres were converted to grass to support the beef animals, while low-lying acres along the source of the Bow Creek are rotated with crops to maintain fertility and reduce insect and weed pressures.

The Entrepreneur Award was given to Betty Vermeer, a long-time member of the Nemaha Valley Small Business Network (NVSBN) at Johnson County. Betty owns Hilltop at Sterling, a floral and gift shop which recently celebrated 10 years in business.

Betty has worked hard to see her business grow in this tiny town. She provides a greenhouse for retail and wholesale bedding plants, landscaping services, and t-shirt screen printing in addition to her floral and gift services. Betty believes a focus on customer service and keeping flexible hours are keys to success in a rural business.

Have you and your loved one ever had a free weekend when you were able to take a short trip and spend some quality time together? Have family members had differing interests and ideas about how to spend quality time?

A group of enterprising individuals might have an answer for all your desires. Suppose you want to shop for unique items, but another family member wants to hunt. Or maybe you want to fish while other family members prefer to go sight seeing.

How about relishing some unique experiences as you tour the area traveled by Lewis and Clark some 200 years ago? Members of the Heartland Experience might have an answer to the common problem of how to spend some enjoyable quality time as a family:

• Part of the family can go hunting on ground coordinated by the Heartland Experience, while other members of the family can tour beautiful churches (including the famed Cathedral of the Prairie in Bow Valley) in the area of northeastern Nebraska.
   
• Part of the family can go trapping or hiking on ground coordinated by the Heartland Experience, while other members of the family can go shopping at St. James Marketplace at St. James, Neb.
  Some family members can tour buffalo and/or elk farms/ranches (Tarbox Hollow outside of Dixon or Kreycik’s Riverview Ranch near Niobrara) while other family members go fishing at Lewis and Clark Lake or along the Missouri River.
   
• Some members of the family can tour area historical sites (such as the Wiseman Monument) while other family members travel or hike through the beautiful landscape of northeastern Nebraska (such as the Devils Nest or Brookey Bottom).
   
• The whole family can stay at cabins or campsites coordinated by the Heartland Experience, while all family members pursue their own interests.

The Heartland Experience is a loose confederation of independent farms, ranches, and businesses working together to attract tourists to northeastern Nebraska. For more information about this emerging effort, contact Mike Heavrin, mikeh@cfra.org or 402.687.2100 x 1008.

Myth: The only way to get started in dairy farming is by investing hundreds of thousands of dollars in high-cost, full-confinement systems. And even if you can get established as a low-cost, family-sized dairy operation, you’re irrelevant in terms of your ability to contribute to the economic health of the local community.

Fact: An increasing number of farmers are getting started in dairying without taking on huge amounts of debt, and they are showing low-cost systems are profitable and can contribute needed economic vitality to a community.

The Land Stewardship Project’s ( http://www.landstewardshipproject.org ) Farm Beginnings program is one of the best examples of how low-cost dairy systems such as management intensive rotational grazing (MIRG) can be viable for new farmers. MIRG produces milk by moving cows through a series of grass paddocks, allowing farmers to make good use of a bovine’s natural ability to harvest its own feed.

The system dramatically reduces the need for expensive confinement buildings, liquid manure storage and handling facilities, as well as crop production resources. Such grass-based systems are also good for the environment since they spread manure efficiently and protect the soil with a perennial cover of grass.

MIRG can also make good use of land that’s rough enough to be affordable to beginning farmers. A recent analysis shows that it’s possible to enter a grass-based dairy business with as little as $50,000 on as few as 40 acres. The study, conducted by Ag Connect out of Lenox, Iowa, developed economic case studies for dairy farms using rotational grazing systems in southern Iowa and northern Missouri between January 2001 and December 2002.

Nine of the 10 families in the last year of the project were new to the dairy business since 1996. The average milking herd size was 60 cows, and the size of the farms ranged from 40 to 270 acres. In 2002, the 10 families participating generated a total gross income of $942,596 from the sale of milk, which in turn was used to buy feed, services, and building and production supplies from local businesses. Tim Ennis of Ag Connect estimates that new dairies similar to the ones that participated in the study are likely to generate more than $110,000 gross income per year.

Farmers who adopt MIRG go through a steep learning curve the first couple of years, and these families were no exception. But because of its low start-up and production cost, MIRG helped these dairies get established with relatively few resources, the study concluded. These farmers had a particular advantage in that rotational grazing allowed them to make good economic use of hilly or otherwise “rough” land. Because it isn’t considered prime for row cropping, this kind of land can be purchased at a lower price than normal, another plus for beginning farmers.

For more information on the “Grass-based dairy and dairy networks/promotions” study, call Ag Connect at 641.333.4656. The Leopold Center for Sustainable Agriculture, study funder, has a summary available at www.leopold.iastate.edu ; look for the Summer 2003 Leopold Letter.

Editor: Marie Powell

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Yet today we are getting the opposite of what most people want – ever greater concentration of economic power in large corporate entities, fewer family farms, and fewer small retail businesses.

We are a democracy. Public policy should reflect the values and aspirations of our citizens. But today it does not. Deliberate policy choices are facilitating the concentration of economic power and reshaping America for the worse.

Wealth naturally concentrates in a private economy unless government takes strong steps to counter that tendency. Those with an initial advantage of wealth use that to gain ever greater wealth until opportunity is foreclosed to all but a few and free enterprise – with open opportunity for all and dispersion of economic power – is destroyed.

In recent decades government has shifted from countering the tendency toward economic concentration to reinforcing it. Farm programs subsidize the largest farms to drive their neighbors out of business. Publicly funded agricultural research programs focus on developing technology to enable big farms to get bigger.

Economic development programs throw money at corporate job relocation while giving crumbs to small business development. The courts and the administrative branch refuse to enforce anti-trust prohibitions on price discrimination against small business and family farms.

Our democracy is dysfunctional. It is producing the opposite of what citizens want – for a variety of reasons. Too many citizen organizations have been overtaken by a self-serving elite. The electoral system is dominated by money. And too many citizens have withdrawn from the process, just when they most need to engage.

But the news is not all bad. I sense the beginnings of a reawakening of citizenship and the responsibilities it places on us. Across the country I see small but growing numbers of citizens and elected officials stepping forward to force the growing concentration of economic power to the center of the agenda and work for genuine opportunity for all Americans.

It’s no time to give up. We have the support of most Americans. And we are just getting started.

Agree or Disagree? Send your opinion to Chuck Hassebrook, chuckh@cfra.org or 402.687.2100 x 1018.

Payment Limitation Successful in Senate, Problematic in House
Senate supports meaningful farm program payment limitations in their vote to approve the Budget Resolution bill.

With the Congressional budget process nearing completion – the Senate has passed their budget resolution and the House debate was on-going at press time – payment limitation reform was again successful and provides for funds to be redirected to vital programs that are threatened by cuts.

Budget Resolutions are a non-binding blueprint for fiscal year spending. Although they are non-binding, they set precedent for which programs could be on the chopping block as appropriators begin their work on the Fiscal Year 2005 appropriations bill.

During Senate Budget Committee debate, Senator Nickles (R-OK), who chairs the committee, established an assumption that severe cuts would be made to two vital programs: the Value-Added Producer Grants Program (VAPG) and the Conservation Security Program (CSP).

To restore those cuts, Senators Grassley (R-IA), Conrad (D-ND), Hollings (D-SC), and Johnson (D-SD) introduced an amendment to cap farm program payments at $300,000. This amendment had overwhelming bi-partisan support and passed 16-6 in committee. This freed up $1.2 billion to fully fund the VAPG and the CSP, as well as other conservation, child nutrition, and welfare reform programs. The full Senate voted and passed the Budget Resolution bill without any changes to this provision.

This is one more step in the right direction to achieving meaningful and transparent payment limitations. There are good reasons for the growing support for payment limitations.

Farmers are not well served by current law. It imposes no real limit on marketing loans gains, and its loopholes ensure that limits on direct and counter-cyclical payments affect few who spend money on a good lawyer. Thus, it subsidizes the nation’s largest farms to drive their neighbors out of business by bidding land away from them.

An effective payment limitation, like the Senate Budget Resolution bill is calling for, would slow consolidation and keep more farmers on the land. This is also good for rural communities because there would be more farmers to patronize local businesses, support churches, provide leadership, and send children to schools.

At this writing, the House Budget Resolution bill was still being debated in committee. Representative Nussle (R-IA) presented instructions called “reconciliation instructions” for the House Agriculture Committee to cut mandatory spending by $110 million for Fiscal Year 2005. The Senate bill does not contain such instructions.

At the end of the day, if Congress does have to cut mandatory spending levels, they would be wise to follow the path established by the Senate Budget Committee.

Contact: Traci Bruckner, tracib@cfra.org or 402.687.2100 x 1016.

Corporate Farming Notes
Heartland Pork wants out; Smuckers wants more; and a parting Cargill quote.

In the beginning, Heartland Pork Enterprises, Inc. became one of the fastest-growing hog producers in the United States by using more than $30 million from investors in New York, North Carolina, and Canada. The company used that investor interest to secure a $91.6 million line of credit from Farm Credit Services of Illinois.

Now, Iowa’s second largest hog producer is for sale.

Heartland is struggling financially and its operations in Iowa, Illinois, and Indiana, its 500 employees and 54,000 sows, await a buyer. A financial summary shows that last year Heartland lost $23.2 million.

Heartland sells all of its hogs to Tyson Fresh Meats Inc., and Tyson is a minority stockholder with a representative on Heartland’s board of directors, which unanimously approved plans to sell the company. Associated Press

The J.M. Smucker Co. is acquiring Minneapolis-based International Multifoods Corp., the maker of Pillsbury, Hungry Jack, and other food brands in a $500 million deal. Smucker’s would assume about $340 million of Multifoods’ debt. The purchase also will give Smucker the Canadian brands Robin Hood baking mixes and Bick’s condiments.

Combined sales of the companies are expected to exceed $2.3 billion annually. The purchase will strengthen the company’s position to buy other brands in the future, said Tim Smucker, chairman and chief executive.

Multifoods acquired the Pillsbury desserts and specialty products businesses from General Mills in 2001 for $304.5 million. Ledger-Enquirer

Mr. [Warren] Staley [chief executive of Cargill] remains critical of the direction of U.S. agricultural policy, and says that although Cargill will go on investing in the U.S., it expects the country’s overall share of investment spending will continue to shrink.

“Over 20 years you have fewer farms and the government is clearly involved in agriculture, otherwise why did you have declining commodity prices until just recently, and ever-increasing land prices? We sit here as a company and say that’s probably not the healthiest investment climate for us.

“At the same time Brazil has very free markets. They have internal infrastructure challenges that can only improve. So Cargill makes a choice. Are we going to put a whole lot more money and grain and agriculture processing in the U.S., or in Brazil, Argentina or Russia or China?” Financial Times

Contact: Brad Redlin, bradr@cfra.org or 402.687.2100 x 1010.

Administration’s Budget Would Cut Key Micro Business Programs
Loss of the Small Business Association (SBA) Microloan and PRIME programs would be a critical threat to entrepreneurs in small businesses and communities across the country. These programs represent a real chance for some of our most disadvantaged.

Despite the proven success of the SBA Microloan and SBA PRIME Programs, the President has requested that Congress discontinue funding for these programs in Fiscal Year 2005.

The potential loss of these vital federal funding sources represents a critical threat to the future of the American microenterprise industry and microentrepreneurs across the nation. (A microenterprise is defined as a businesses with five or fewer employees).

While federal funding for microenterprise has decreased steadily over the past 3 years, microenterprises – the nation’s smallest businesses – have played an increasingly large role in our nation’s economy. Across the United States, over 27 million micro-entrepreneurs account for 17 percent of all private employment.

The Microloan Program is the nation’s largest funder – public or private – of microenterprise capital and technical assistance. For many very low and moderate-income entrepreneurs, these programs represent the only opportunity they have to receive business training, a business loan, and a real chance at success through self-employment.

For over 10 years, the SBA Microloan Program has been successful in serving communities across America, specifically in those areas suffering from a lack of credit due to economic downturn. In 2003, the Microloan program provided over 2400 loans.

These are individuals who, despite facing challenges to successful business ownership, strike out to make better lives for themselves, their families, and their communities. These borrowers are unique to the Microloan program, and are not adequately served by alternate government programs, as suggested in the Administration’s 2005 Budget Proposal.

The PRIME Program is also unique in that it provides business technical assistance to low- and very-low income entrepreneurs across the country. The PRIME Program provides business training regardless of whether or not trainees seek business capital.

The Rural Enterprise Assistance Project (REAP) was started by the Center for Rural Affairs in 1990 to meet the needs of self employed people in the rural Midwest. REAP is Nebraska’s largest microenterprise program and operates on a statewide, rural basis through regionally based Business Specialists. In fact, REAP is the nation’s largest statewide rural microenterprise program.

REAP provides lending, training, networking, and technical assistance opportunities for startup and existing small businesses and has provided development services to over 3000 micro businesses. REAP recently reached the two million lending plateau for the history of the program and has been an SBA Microloan Intermediary since the program began in 1992. REAP is also very proud to operate Nebraska’s only SBA Women’s Business Center. (See REAP website)

Contact: REAP Program Director Jeff Reynolds, 402.656.3091 or jeffr@alltel.net for more information.

Center Chosen for a New National Microenterprise Policy Group

The Center was recently honored with a selection by the Association for Enterprise Opportunity (AEO) to be part of the national learning cluster focused on rural policy and microenterprise development.

According to AEO, the Center was selected because it has exhibited consistent leadership in rural microenterprise development. The Rural Enterprise Assistance Project (REAP) – the Center’s microenterprise development program – has assisted the startup and development of nearly 3,000 businesses in rural Nebraska since 1990, including over $2 million in loans to new and existing businesses.

Other members of the group represent microenterprise programs in Iowa, Vermont, Ohio, Texas, and California. The group will exchange ideas on public policy issues related to microenterprise development and on how to raise public awareness of the value of supporting locally-owned small businesses, and share those ideas with AEO’s national membership of over 460 organizations.

Jon Bailey, Director of the Center’s Rural Research and Analysis Program, will be the Center’s representative in this group. Information on REAP can be obtained by contacting REAP Director Jeff Reynolds at 402.656.3091 or jeffr@alltel.net . View REAP on the web at www.cfra.org/reap

AEO was founded in 1991 and remains the only national member-based association dedicated to microenterprise development. AEO provides its members with a forum, information, and a voice to promote enterprise opportunity for people and communities with limited access to economic resources. Learn more about AEO at www.microenterpriseworks.org

LB 1086, a bill that proposes to create a gubernatorial-appointed task force to determine ways to “modify” Nebraska’s restrictions on corporate farming (Initiative 300), was advanced by the Legislature’s Agriculture Committee.

The Committee made some amendments to the bill, but we believe the effect is the same. Initiative 300 is still the only policy or policy issue specifically mentioned in the bill, thus making it the only identified target for the task force.

Governor Johanns – who has already stated that I-300 does beginning farmers and ranchers and family farmers and ranchers more harm than good – still gets to appoint the task force.

And a phony amendment directs the Task Force to operate by consensus, unless they don’t agree – then recommendations are made by majority vote of a task force appointed by someone who has let his views on I-300 be known.

It’s not unreasonable to believe that a majority of the task force members will hold similar views, and will be able to push through any recommended change to I-300.

We still believe LB 1086 – no matter how bright a bow its proponents want to put on it for appearances – is a dreadful and unwanted offering for Nebraska’s family farmers and ranchers and rural communities and for the long-term best interests of the state.

Visit our I-300 information and Friends of the Constitution for updated information on LB 1086 and Initiative 300.

Contact: Jon Bailey, jonb@cfra.org or 402.687.2100, ext. 1013 for more information. Our weekly legislative update is available free by email. Contact us to be added to the list.

Nebraska Agricultural Leadership Training

The Nebraska LEAD program is accepting applications for its 24th class. LEAD provides an intensive two-year course of training and domestic and international travel for active agricultural producers and people in related businesses and organizations – ages 25 -50. The trainings are largely based on weekend seminars to allow people to work them in around the demands of farming and other occupations.

LEAD graduates have been prominent in an array of leadership positions in Nebraska including the legislature, check-off boards, and agricultural organizations. It provides skills and an impressive network of contacts for people aspiring to leadership positions in Nebraska agriculture. It’s an important opportunity for people who care about family farming and sustainable agriculture to prepare for positions through which they can shape the future of agriculture. For more information, contact LEAD at ablezek1@unl.edu  or 402.472.6810 or visit www.ianr.unl.edu/lead/ Applications are due by June 15.

Communications and Development Program Change

Center Communications and Development Program Director Greg Finzen is leaving the Center this month to pursue opportunities closer to his home in Sioux City, Iowa. He will be missed.

Greg brought important changes to the Center’s communications and funding base. A new logo, revamped website, and redesigned newsletter are only a few of the imprints Greg leaves on the Center. He also spearheaded a capital campaign for our new building and oversaw all facets of the construction project.

The Center’s donations, newsletter readership, and prominence in the media have grown substantially under his leadership. He has been lauded for his effective team building and leadership style. We wish him the best in his new efforts.

Grass-based dairy farmers Dan and Muriel French began management-intensive grazing 15 years ago to cut costs and improve profits. Like most dairy farmers, they were prisoners of market price. Even very efficient farmers watched their profits drive off the farm with the milk truck.

A group of six grass-based dairy farmers, including Dan, decided to take control of processing, distribution, and marketing. They formed a co-op, PastureLand Farms, that focuses on getting profits to the farmers rather than building equity for the organization.

The group chose to start with cheese and butter. PastureLand focused on the high-end specialty market. They wanted to move beyond organic to pioneer the next step in quality food.

Grass Is Better
Milk from ruminants that graze fresh grass is rich in conjugated linoleic acid (CLA), as much as five times that of milk from grain-fed animals. Research suggests CLA can reduce cancerous tumors and help to decrease obesity and heart-attack rates.

The health benefits of CLA make PastureLand products unique in a crowded specialty market. Customers told Dan there was something different about PastureLand cheese; those with milk and cheese allergies can digest PastureLand with no problems.

Dan says, “The biggest problem most start-up businesses have is not figuring a large enough profit.” Grants from the Minnesota Department of Agriculture and other organizations helped with start-up costs and organizational development.

Every Silver Lining Has a Dark Cloud
Since the industry moves to a larger scale all the time, the cost to process small volumes is high. Volume is also a problem in making butter. The co-op provided one truckload a week – half the capacity of the churn. Costs per pound were expected to decrease as the volume of production increased.

Many processors don’t want to handle small volumes, and maintaining brand identity is critical, but packaging can be expensive. The farmers realized it didn’t make sense to ask premium prices for generically-wrapped products, so they spent nine months developing their own packaging.

Dan says the first step in direct marketing any product is to evaluate your resources. Have the support system you need to get your product to market, and find a market that can bear the expenses you need covered.

Success is dependent on the people involved. Dan says, “It takes people with passion and vision to get something like this started, but without someone who can organize to minimize costs and fill orders, it is not going to succeed.”

For more information on CLA and the benefits of grass-based agriculture, go to www.eatwild.com or read Why Grassfed Is Best! by Jo Robinson. This is an excerpt in our series from the report, Profitable Practices and Strategies for a New Generation, available on the web at www.farmprofitability.org

A new radio program shines the spotlight on family farmers in the Siouxland corners of South Dakota, Nebraska, and Iowa who are direct marketing food and farm products to area customers.

The Farm to Family Connection first aired in March on Yankton, S.D. FM radio station KKYA. The initial show featured the Wilfred and Donna Tramp buffalo meat operation, while the second show introduced the Sobotka family community-supported agriculture garden. The show runs at prime commuter time to catch people driving to work from Sioux Falls, S.D. to Norfolk, Neb. to Sioux City, Iowa.

The shows are written and narrated by Crofton farmer Curt Arens. Each featured farmer adds a line at the end of the two-minute program, driving home the message to consumers about the quality of locally raised food. The programs not only provide a voice for farmers who care for their land and customers, but they offer narratives championing restaurants, caterers, lockers, and grocers who feature locally grown food in their menus and on their shelves.

The goal of the show is to make area consumers more aware of the farmers who offer local food products. But Farm to Family Connection also holds up family farm success stories to the public, while giving young and beginning farmers hope and other farmers food for thought on how they might improve their bottom line by direct marketing new products.

A companion website, www.farmtofamily.net helps consumers learn more about the featured families on the show and others who offer meals and farm products. The show is sponsored by two local ag-based businesses, the radio station, and the featured farms/businesses.

Contact: Curt Arens for information or to participate in the program, bowview@bloomnet.com

Expanding Specialty Markets for Family Farm-raised Livestock
Buyers from The Organic Meat Company, Wholesome Harvest, and Niman Ranch Pork Company are looking for more suppliers.

Several buyers for family farm-raised livestock are now looking for more supply. These companies service specialty markets that cater to consumers’ increasing interest in foods that they perceive to be healthier, safer, or are produced with special care for animals or the environment. These consumers are willing to pay more for these products, which usually means that the farmers get higher prices for their livestock.

Specialty meat products, such as ‘natural’ or ‘certified organic’ are a rare growth segment of the food industry. Sales of organics, for example, have increased 20 percent per year nationally for the past 10 years. The products are ‘special’ in that they must conform to specific feed and management guidelines and are often certified by an approved third-party organization.

The Organic Meat Company, owned by farmer cooperative Organic Valley, needs more organic pork and beef. Organic Valley, based in Wisconsin, now has over 600 farmer-members in 17 states. Production standards are based on the USDA organic standards, but are occasionally more stringent. Beef is sold primarily as ground meat; Angus-based breeding is preferred.

Pork products are from 50 percent Berkshire breeding. Contact Peggy Leum for membership information at peggy.leum@organicvalley.com or 888.809.9297 or look at the company website www.organicvalley.coop

Wholesome Harvest, a farmer-owned coalition, is seeking organic certified beef and lamb. Wholesome Harvest buys meat from its members and suppliers and then markets it to national grocers and distributors under the brand Wholesome Harvest.

Organizer Wende Elliot says she is particularly interested in adding farmers/ranchers to ‘pods’ in Nebraska, South Dakota, and Colorado. She also wants to work with more organic certified processing facilities across the region. Contact her at welliott@wholesomeharvest.com or 641.377.7777 or see www.wholesomeharvest.com for more information.

Niman Ranch Pork Company, based in central Iowa, is recruiting farmers to farrow and finish hogs. Niman meat products are produced without antibiotics and follow animal welfare guidelines.

Manager Philip Kramer says that the company serves markets across the country and demand is growing rapidly. He reports that in addition to its price premium over commodity markets, the company recently increased its floor price and is buying more animals from each participating farmer.

Trucking pools have been established in surrounding states to reduce shipping costs to the Iowa processing plant. Contact Kramer for more information at philipk@nimanranch.com or 641.998.2683 or see the website www.nimanranch.com

Contact: Wyatt Fraas, wyattf@cfra.org or 402.254.6893 for more details.

Editor: Marie Powell

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It assures aggressive, expansion-oriented large farms bid the entire farm program payment into higher cash rents, transferring the benefit to investor landowners. An effective payment limitation would change that. Large farms would have to bid for add-on acres based on what they could earn from the market without federal payments. That would reduce their bids and slow the spiral in cash rents, reducing the attractiveness of land to non-farm investors.

It would enhance opportunities for small and mid-size farms to buy land and pay for it by farming it.

Report Finds U.S. Taxpayers Subsidize Low Wages
Low wages not only harm workers, they devastate small business and communities as well. Policies should encourage reform.

Each Wal-Mart store costs federal taxpayers over $2,000 per employee to supplement low wage levels, according to a congressional study released by U.S. Representative George Miller. For a store with 200 employees, the report estimates taxpayers each year pay:

• $36,000 for free and reduced school lunches
• $42,000 for housing assistance
• $125,000 for low-income tax credits and deductions
• $100,000 for services to at-risk students
• $108,000 for health care subsidies
• $9,750 for low-income energy assistance

The significance of these findings is underscored by estimates that Wal-Mart will control over one-third of all food and drug sales in the United State by 2007. This report reflects not just one company. It reflects one of the world’s most profitable and rapidly growing corporations and the emerging global economy.

Simply put, major companies are seeking a competitive edge by running a race to the bottom for worker pay and benefits. It goes without saying that this is bad for workers. But it’s equally bad for small business and communities.

Farmers and small business people are also working people. As wages for working people are depressed, their incomes fall too. Self-employed small retailers cannot pay themselves a middle class income for the work they do in their own business and compete with large companies that pay poverty-level wages. Family farmers face the same problem in competing with low-wage corporate farms.

It’s devastating for communities. As chain stores replace independent businesses, profits are drained out of the community. And as self-employed business people are replaced by low-wage workers, communities lose their middle class who can buy homes, put down roots, and give back.

It does not have to be that way. But if we want to take America in a better direction we must make a different set of policy choices. We must make companies pay a living wage in return for the things they expect of government.

If corporations want access to American markets for goods produced outside our borders, they should be required to respect the rights of workers to organize and elevate living standards. If they want access to the special tax breaks states and the federal government provide, they should be required to pay a living wage and provide decent benefits. It does not serve the common good to subsidize companies to create poor jobs.

Finally, we must return to the time when competition was based on efficiency and service to customers rather than economic power. We must enforce anti-trust laws, including those that prohibit the giants from using their size and power to gain unfair price advantages.

Read the Congressional report: http://edworkforce.house.gov/democrats/WALMARTREPORT.pdf

Agree or Disagree? Send your opinion to Chuck Hassebrook, chuckh@cfra.org or 402.687.2100 x 1018.

Value Added Producer Grants Program at Risk

The Value Added Producer Grants Program (VAPG) provides funding to farmers, ranchers, cooperatives, agriculture trade groups, and others to help develop new markets, products, and cooperatives, returning a greater share of food system profit to producers and their local communities. The VAPG final rule was due in April and a Notice of Funds Availability for 2004 is likely in May. Grants can be made for feasibility studies or for working capital. The program requires a 50/50 match.

VAPG was hard hit in negotiations on the 2004 agriculture spending bill. The 2004 omnibus bill eliminates the mandatory spending status of the program and appropriates $15 million for fiscal year 2004. This is a considerable demotion in status for the program, which was authorized in the farm bill to receive $40 million annually in mandatory funding for years 2002-2007. The President’s budget for 2005 sets the program at $15.5 million in discretionary spending.

Reviewers for the 2004 round of VAPG proposals are now being sought. If you are interested, contact Kim Leval for more details, kimleval@qwest.net or 541.687.1490.

Redirecting Federal Research Dollars
We have an opportunity to influence the decisions USDA makes in their program priorities, budgets, and request for proposals for the National Research Initiative (NRI), the premier competitive research grant program for agriculture.

The Center strongly supports funding for the Initiative for Future Agriculture and Food Systems (IFAFS) program, a competitive grants program for outcome-oriented research to improve food production, family farm profitability, environmental performance, and non-farm microenterprise and other rural economic and community development strategies. IFAFS was subsumed into the NRI in 2003.

With this budget-saving move, Congress directed USDA and NRI to target at least 20 percent of $167.1 million of NRI funding to “IFAFS like” program areas. But research into development of non-farm microenterprise and other rural development strategies, public plant and animal breeding, farm/ranch profitability, agriculture systems, natural resources, and environmental quality are receiving little or no funding under NRI.

In the past, IFAFS and NRI research dollars have funded a variety of projects to promote and improve direct marketing initiatives, from farmers’ markets to understanding new co-operative ventures. They funded research into corn breeding for sustainable and organic systems and other important projects across the country.

We expect a supplemental call for NRI grants in 2004 in response to our pressure on USDA to make good on the intentions of Congress to target part of research funding to farm income and rural economic and community development. We’ll keep you posted.

Contact: Kim Leval at 541.687.1490 (Oregon) or kimleval@qwest.net for more information.

Why Rural Communities Differ: Social Dynamics Give Some Clues
As different as night and day, small rural communities can be worlds apart. Underlying social factors help to explain the differences.

Rural communities are a peculiar assemblage, and it is difficult to create a plan of action to help them all. Small rural communities are as different from each other as they are from their urban counterparts. So, how do we as community developers and members work through these difficulties? The answer is to understand the social and human dynamics that make up a small community.

Studies of macro sociology reveal underlying dynamics that make up social structures and permit the community to become collectively alive. In the theory of social functionalism, each rural community has certain purposes and needs. It develops a collective conscience. Community institutions develop a functional interdependence that sets the social system in place.

Dr. Cornelia Flora’s book, Rural Communities explains this experience as bridging and bonding. Bonding is the ability for social structures to come together and become one voice. We look at others in our community as a mirror reflection and act accordingly. As a township we shape each other to create an image of who we are.

Bridging is a phenomenon that allows outside resources to come in. Many small rural communities have an extremely high bonding social structure but a particularly low bridging capacity. Newcomers are looked at with suspicion, and internal factions have conflicting views on changes they feel are good for the community. As a result, communities resist change.

The idyllic social structure for a community is when bridging and bonding are both high. This creates an entrepreneurial social infrastructure, and these communities are poised for action and change. Ideas from individuals are encouraged, and bringing outside resources to help with change is acceptable. These communities are receptive and usually diverse in both ideas and opinions. Citizens are included in decision making for the community.

Our next four articles will look at different communities. We will examine why they differ and what makes them successful models for others.

Contact: Michael L. Holton, michaellh@cfra.org or 402.687.2100 x 1015 for more information.

Corporate Farming Notes
Christensen climbs higher; USDA bows to bigness; and Cargill stays in court.

Christensen Farms, Sleepy Eye, Minn., announced it will buy Heartland Pork Enterprises, Alden, Iowa. The acquisition will add about 50,000 sows to Christensen Farms’ production base, for a total of more than 140,000 sows.

It will make Christensen Farms one of the top five pork production companies in the country. Christensen Farms will also acquire Heartland’s feed mill in Iowa Falls, Iowa, as part of the deal. Source: Feedstuffs

USDA moved to block Creekstone Farms Premium Beef from doing a test for BSE (mad cow disease) on all of its beef intended for export to Japan. USDA’s action assures the Japanese market will remain closed to U.S. farmers and ranchers and cattle prices will remain unnecessarily depressed.

It’s easy to understand why the major meatpackers would want to block a smaller more nimble competitor from capturing the market by being responsive to Japanese consumers. But there is no justification for the U.S. government shamelessly doing their bidding at the expense of farmers and ranchers.

The U.S. Supreme Court ruled that a Sizzler USA restaurant can sue Minnesota-based Cargill’s Excel Corp. for an E. coli episode that sickened more than 100 Sizzler customers and killed a girl in 2000. The court refused to hear Excel's appeal to end the suit by Sizzler and some of those who became ill.

Excel contended it couldn’t be sued in state court because the steaks it sold to the Sizzler USA restaurant in Milwaukee weren’t a ground beef product and thus were not considered “adulterated” under federal law. The case now moves back to Milwaukee circuit court. Worldwide Restaurant Concepts Inc.’s Sizzler USA plans to seek more than $10 million in damages from Excel, a Sizzler lawyer says. Source: Beef Magazine

The Saskatchewan Wheat Pool (SWP) plans to exit the pork business by selling its majority shareholder interest in four operations in Saskatchewan. In fiscal 2003, SWP’s pork operations sold about 360,000 hogs, or about 15 percent of total production in the province. Source: Feedstuffs

Thanks to: Brad Redlin for writing Corporate Farming Notes for the past couple of years. For more information on this month’s column, contact Chuck Hassebrook, chuckh@cfra.org or 402.687.2100.

The Agricultural Marketing Service (AMS) of USDA is working to create a set of minimum standards for certain livestock and meat marketing claims used to distinguish meat products and sell in a value-added market.

This is an important issue because, although the use of a USDA-approved label to market differentiated meat products is voluntary, it will affect the value-added markets small and medium-size farmers and ranchers have already created. The standards need to be strict so that they have a positive impact for these farmers and ranchers.

The process began in December 2002 when USDA published minimum standards in the Federal Register seeking public comment. The proposed minimum standards for antibiotic, hormone, grass-fed, and free-range label claims drew enough interest that USDA is essentially starting over and has invited interested groups to discuss the issues with them.

The grass-fed standards were particularly problematic as proposed – setting the minimum standard for the animal’s diet at 80 percent grass. Such a standard would only discredit the grass-fed value-added market. A majority of farmers and ranchers who helped create the market are feeding 100 percent grass or very close to that.

USDA held a meeting to discuss this issue with those interested in a much tighter standard. As a follow-up to that meeting, Bill Sessions with USDA came to Nebraska for a farm tour at Bev and Chuck Henkel’s farm near Norfolk. Bill was able to see how such a grass-based system works and how it is managed.

We are hopeful we can reach consensus and get a minimum standard of 100 percent or certainly much closer than the originally proposed 80 percent. The promise the grass-fed value-added market holds for small and medium-size farmers and ranchers depends on a rigorous minimum labeling standard.

Contact: Traci Bruckner at tracib@cfra.org or 402.687.2100 extension 1016 for more information.

A pilot loan program to help beginning farmers and ranchers kicks off with the purchase of a herd of Boer meat goats.

The first in the state, Eric and Konnie Frederick of Randolph, Nebraska, received a living livestock loan from the Center for Rural Affairs in April. The Fredericks used the proceeds to assist them in starting their Boer meat goat business.

Livestock loans are not new, but this unique loan fund is. The Center has partnered with Heifer International, better known as a hunger-relief organization, to be part of a national demonstration project to help beginning farmers start livestock businesses.

The living livestock loan is a no-interest loan to beginning farmers allowing the borrower to defer payments during the first three breeding cycles. As with most livestock loans, it is repaid within six breeding cycles, often six years.

To qualify the Fredericks agreed to some unique terms. They completed a farm business planning course and a whole farm plan (see below). The whole farm plan encompasses their farm business plan and assesses the environmental aspects of their farm as it relates to their personal, family, community, and business goals.

Eric says, “The part I’m most excited about is being able to share our learning experiences with others.” The Fredericks agreed to the unique lender visits, which will be more like a farm tour. Folks interested in the goat business or this unique loan fund will be able to learn firsthand the intricacies of starting this type of business.

For more information on how to qualify for this unique program or to participate in the farm tours contact, Michael Holton at 402.687.2100, extension 1015 or michaellh@cfra.org .

Agricultural Entrepreneurs Graduate from Farm Business Planning Course
Lyons, Nebraska was the site of the Center’s most recent “Tilling the Soil of Opportunity” class. The class steers students through a comprehensive set of business planning lessons. The end result is a complete business plan for a prospective agricultural business.

Graduating from the class on April 6, 2004 were Klint Stewart of Stanton (shown at left in photo), Shawn Satorie of Decatur, Jamie Kroger of Lyons, Ryan Roeber of Pender (shown at right in photo), and Sherrie Zvacek of Omaha. The graduates are now ready to take the next steps to participate in the Center’s living livestock loan program (see story above).

The class was taught by the Center’s Farm Transition Specialist, Joy Johnson. It took place in the conference room at the Center’s new office.

Nebraska’s Small Farms Cooperative (SFC) is looking for producers interested in marketing beef through the Non-Hormone Treated Cattle (NHTC) Program. The program’s production standards prohibit the use of any growth implants (hormones) or antibiotics.

To become NHTC certified, producers must complete a comprehensive farm plan and have an inspection/audit by USDA. The audits are conducted annually. More than half the producers in the country who have earned NHTC certification belong to the Small Farms Cooperative.

A major marketing expansion is underway. This market expansion is driving the rapidly growing demand for NHTC-certified producers. Products soon to enter the natural foods marketplace will be the only meat in the world carrying multiple certified claims.

John Smith, a Pender, Neb. area farmer, is the NHTC Coordinator for the cooperative. He will conduct three informational workshops in the near future, probably after planting season. Workshops will be held where interest in the NHTC program has been greatest; most likely in northeast Nebraska (near Hartington), southeast Nebraska (near Seward), and in the Panhandle (the Scottsbluff area on or about June 11).

The workshops will feature an overview of the NHTC program, a question and answer period following the presentation, and technical assistance to producers wishing to begin the certification process. Center staff will also provide technical assistance to producers entering the NHTC program. Look for more information in the media as dates are finalized.

The Small Farms Cooperative will pay producers for their animals in two installments. The live animal will be purchased by SFC (the price for NHTC cattle cannot go below an established floor) with a first payment; and a second “premium” check will follow on a regular basis (reflecting income generated by the new marketing effort now underway).

Contact: Mike Heavrin, mikeh@cfra.org for information.

Conference Delivers Insight, Inspiration to Beginning Farmers
Humor, advice, and stories of farmer’s trials and successes highlighted the day-long Beginning Farmer and Rancher Conference.

Dr. Don Jonovic, keynote speaker at The Beginning Farmer and Rancher Conference held March 27 in Kearney, Nebraska said he doesn’t buy the common assertion that there is no future in agriculture. “In all my experience in industry of any kind throughout the Western Hemisphere, the greatest growth potential is in agriculture.”

Jonovic challenged the nearly 200 people in attendance to openly communicate about values, differences, strategies, goals, investment objectives, and succession. He said the most common advice the next generation in agriculture receives is “Shut up and watch, shut up and listen, and stay the heck out of my way.”

Instead, we should “pay attention to differences in values and goals. Ask ‘why are we doing this, what is the purpose,’ and recognize it’s not all financial. Have a way to talk to each other, and get help in doing that sensibly,” counseled Dr. Jonovic.

At noon R.P. Smith, a fourth generation rancher from the Broken Bow area of Nebraska received gales of laughter with stories of child-rearing, travel, and his cow-calf operation. Poems about his grandfather, son, and his love of the ranching life, a “song that has no tune,” touched the audience.

A panel of farmers shared their trials and tribulations in getting started in agriculture. Common themes included hard work, experimentation, constant learning and adjusting, growth, and networking with others.

Panel member Eric Klien, a farmer from Elgin, Minn. has tried pastured beef, hogs, and poultry. He and his wife love direct marketing, love meeting people and talking to them. Eric said each day is a new experiment, a new education on the farm. Eric and his wife Lisa now serve as mentors in the Land Stewardship Project’s Farm Beginnings program.

Todd and Julie Stewart, farmers from Meadow Grove, Neb. told of realizing their dream of farming full-time with the help of the Center’s Land Link program. After a few years, Julie joined Todd full-time on the farm, which was when they “started making money.”

Julie has had problems with lenders and equipment dealers taking her seriously. She stressed the importance of being prepared before meeting with anyone about the farm business. Julie counsels farm couples to leave the little frustrations that arise from farming outside the house. Harsh words spoken in the barn are best forgotten there.

Carol Ford, from southwest Minn. is just beginning extended season greenhouse and root cellar vegetable production. Help from mentors, classes, and the Farm Beginnings program are helping her learn as she fills a strong local market stemming from Community Supported Agriculture farms.

Evaluations from the conference showed high marks. Attendee Keith Penry from Colorado commented, “The conference was awesome. It was rewarding, fulfilling, and I will probably be looking you up.” Conference materials are available from us for $30.00; call 402.687.2100 or email info@cfra.org .

Contact: Michael L. Holton, michaellh@cfra.org for more information.

Editor: Marie Powell

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Visit the current newsletter and recent archive pages.
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In the meantime, Congress enacted two changes to CSP funding. It removed a funding cap placed on the program in 2003 and restored the program to full funding status for fiscal year 2005 and beyond. Then, given the Administration’s snail-paced approach to implementation, Congress limited funding for CSP to $41 million, but only in fiscal year 2004.

Despite the fact CSP will return to a conservation entitlement program this October and the massive number of public comments disagreeing with their approach, USDA continues to show complete disregard for the law as evidenced in their May 4 announcement.

This announcement provided details about watershed selection and other criteria they will use to distribute funds to farmers and ranchers. Their approach sets out a two-tiered process to drastically limit eligibility. Only farms in 18 “priority watersheds” and only some “categories” of farmers within those watersheds will be allowed to participate in the sign-up.

It is obvious USDA is advocating for a budget cap on CSP by constructing a process that seeks to limit participation. This approach runs counter to the philosophy USDA has been espousing – Reward the Best and Motivate the Rest. The Administration is violating the letter of the law and attempting to rewrite the 2002 Farm Bill.

View the selected watersheds map at: http://www.nrcs.usda.gov/programs/csp/watersheds04.html 
The Center for Rural Affairs will operate a CSP Hotline to help farmers and ranchers sign up for the program – be watching for more details. Also look for a feature-length article on CSP in the July newsletter.

Contact: Traci Bruckner, 402.687.2100 ext.1016 or tracib@cfra.org.

Corporate Tax Avoidance Rising
The Wall Street Journal reports large corporations increasingly adept at dodging federal taxes

According to a recent report from the Government Accounting Office, more than 60 percent of U.S. corporations did not pay any federal taxes from 1996 through 2000, a time when the economy boomed and corporate profits skyrocketed.

Corporate tax receipts shrunk drastically as a share of overall federal revenue in recent years and were particularly depressed when the economy went south. By 2003, they had fallen to just 7.4 percent of overall federal receipts, the lowest rate since 1983 and the second-lowest rate since 1934.

The GAO analysis comes as tax avoidance by U.S. and foreign companies draws increased scrutiny from the IRS and Congress. Dodging taxes, legally and otherwise, has become deeply rooted in corporate culture. About 70 percent of foreign-owned companies doing business here reported owing no U.S. federal taxes in the late 1990s.

The basic federal corporate-tax rate for big corporations is 35 percent. But credits and loopholes allow companies to pay far less.

Despite the rising rate of tax avoidance among corporations, collections from the federal corporate income tax rose to more than $200 billion in 2000, from $171 billion in 1996. But over the next three years they fell each year, reaching $141.8 billion in 2003 – the lowest annual total since 1993.

Contact: Chuck Hayes, 402.687.2100, ext. 1014 or chuckch@cfra.org.

Family Farm Definition Expanded
USDA proposes adding $750,000 limit on gross sales to the family farm definition

The Sustainable Agriculture Coalition has urged the U.S. Department of Agriculture (USDA) to establish strong standards to target its farm ownership and operating loans to family-size farms only. The Center for Rural Affairs is a member of the Coalition.

The Coalition wrote in support of USDA’s proposal to make loans only to farms with under $750,000 gross sales. It also urged the department to limit its lending to farms on which hired labor is used only to supplement family labor (not as the primary source of labor) and to farms where the family owning the farm makes the management decisions.

USDA has long had a policy of making loans only to family-size farms. It has largely based the determination of family farms on whether the farm family provides most of the labor and all of the management. However, that standard has been inconsistently applied in recent years.

USDA is proposing the addition of the gross sales to bring greater consistency and objectivity to the family farm definition. It is proposed as an addition rather than a replacement to the labor and management requirements in use now.

Consumers Favor Family Farms
Another national consumer poll shows strong support for food raised by family farms

For safe and nutritious food, Americans place more trust in small family farms than in large industrial farms, according to a national consumer opinion poll conducted by Roper Public Affairs.

The poll was conducted on behalf of Organic Valley Family of Farms, the largest and only independent national organic farmers’ cooperative. You can find the survey report at http://www.organicvalley.coop 
 
More than 8-in-10 consumers say they trust smaller-scale family farms to produce safe, nutritious food. Almost twice as many place a lot of trust in small family farms compared to large industrial farms.

Nearly 7-in-10 say small family farms are more likely than large industrial farms to use techniques that won’t harm the environment. Two-thirds say they would pay more for foods produced without chemicals such as pesticides, antibiotics, and hormones. Over half say they would pay more for food produced with humane treatment of animals.

Perhaps most significant, the poll indicates over 8-in-10 say they are at least somewhat concerned with the decline in the number of American farms, and nearly half are very concerned.

American consumers want and support family farms! Family farmers can earn premium prices by building new cooperatives to sell those consumers food produced in ways they support.

New Tax Incentive for Small Rural Businesses
Small businesses could receive tax savings of $5,000 per year under tax bill proposal now in Congress

The tax bill just passed in the United States Senate includes a tax credit for starting and growing small business in rural counties losing population.

The Jumpstart Our Business Strength Act (S 1637) would provide a 30 percent tax credit for money invested in starting or expanding an owner-operated business with five or fewer employees. Small businesses could receive tax savings of up to $5,000 per year and $25,000 over their lifetime.

But there are limitations on the credit. Each state would have authority to allocate $185,000 of tax credits for each county that lost at least 10 percent of its population over the last 20 years. Unfortunately, only 10 percent of that amount can be used for small business credits. The rest must go to spur construction or rehabilitation of buildings.

The bill now goes to the House of Representatives, where we are working to include the provision but with the majority of credits allocated to small business rather than buildings. The most effective and desirable economic development strategy for most agricultural communities is small entrepreneurship – development based on locally-owned, owner-operated small businesses.

The idea for the small business tax credit was taken from the New Homestead Act, co-sponsored by Senators Byron Dorgan (D-ND), Chuck Hagel (R-NE) and 15 others. The provision was placed in the tax bill by Senators Chuck Grassley (R-IA) and Max Baucus (D-MT). The Center for Rural Affairs originally developed the small business tax credit proposal.

Bridging Community Resources together in Rural Small Towns
A northeast Nebraska county uses leadership training to build a common vision and action plan

Last month’s article Why Rural Communities Differ explored the concept of bridging and bonding and how it affects small rural communities. It is not uncommon for small communities to have strong bonding capacity but seem highly isolated from the outside world. Creating the bridge in those communities becomes the objective in community development.

The Center’s rural community revitalization effort, known as Project HOPE, began in Cedar County Nebraska. Through assessments and interviews, we found the bonding capacity, particularly in the community of Hartington, to be strong.

Other pockets of bonding were evident in Randolph, Laurel, Bow Valley, Coleridge, Wynot, and St. James. People were genuine and took care of the community in terms of being neighbors. What was missing were some of the links to be able to bridge resources.

In Hartington, Project HOPE began a leadership process to bring groups together. Prior to our involvement, the Chamber of Commerce, the Economic Development groups, and the city had never come together for a comprehensive visioning session.

Around the same time, a new group was formed in the community called the CORE group. It was made up of citizens who really had no formal power. In 2003 a unique retreat brought all of these groups together for a weekend to begin a visioning process and a plan of action for Hartington.

The retreat broke down barriers between groups and began a new collaborative approach to community development. This spring the groups met again to re-explore Hartington’s future and review their accomplishments. Their ability to accomplish goals and projects was accentuated by bridging community resources together.

Another bridging technique Project HOPE brought to the Cedar County region in northeast Nebraska was creation of a special telephone directory. The directory listed entrepreneurial and home-based businesses throughout the county at no charge.

Over 750 small and home-based businesses contributed to the directory and allowed a bridge to be formed for all of Cedar County to use.

Contact: Michael L. Holton, michaellh@cfra.org or 402.687.2100 x 1015 for more information.

Corporate Farming Notes
Courts rule against Tyson jury, are silent on Amendment E, reveal bankruptcy in Neb.

On April 23, U.S. District Judge Lyle Strom overturned the jury’s $1.28 billion verdict against Tyson Fresh Meats, Inc.

Judge Strom left intact these findings: 1) captive supplies harmed all cash sellers of fed cattle to Tyson in the amount of nearly $1.3 billion, and 2) cattle quality was lower with captive supply cattle and higher with spot market cattle. However, the Court found legitimate business reasons for captive supply and, therefore, did find it in violation of the law.

The plaintiff’s argument, that when damage caused by captive supply looms larger than any benefits being claimed, the court should rule the practice unlawful, fell on deaf ears. The Court instead sided with the defendants, who argued that even if the harm was severe, if there is any benefit at all, the law was not broken.

The plaintiffs have filed an appeal in the 11th Circuit Court of Appeals, where this decision will hopefully be reversed to ensure open and competitive markets free from abuses in market power.

On May 3 the U.S. Supreme Court declined to hear oral arguments on Amendment E, South Dakota’s anti-corporate farming law, which was ruled unconstitutional by the 8th Circuit Court of Appeals. The Supreme Court issued their decision without comment.

Some legal issues surrounding Amendment E remain unanswered, as the 8th Circuit has two contrary rulings regarding corporate farming laws and the Commerce Clause. In 2001, it upheld Missouri’s law, ruling that a Missouri livestock price reporting law could not be ruled unconstitutional under the Commerce Clause. In 2003, it ruled that Amendment E violated the Commerce Clause.

Nebraska’s largest and typically most controversial pork producer has filed for Chapter 11 reorganization.

Filings in the U.S. Bankruptcy Court for the District of Nebraska show Furnas County Farms owes approximately $172 million to creditors nationwide, including some in Nebraska and Iowa. The largest creditor in Nebraska is First National Bank of Omaha with $19,313,987 owed.

Contact: Traci Bruckner, tracib@cfra.org or 402.687.2100, extension 1016.

Since 1987, Voices for Children has focused on the well-being of Nebraska’s children. For the past 11 years, the nonprofit has compiled the annual KIDS COUNT in Nebraska Report, released every January.

Funded by the Annie E. Casey Foundation, KIDS COUNT is targeted to those making policy decisions and designing programs for the welfare of children. Three years ago Voices for Children in Nebraska and KIDS COUNT agencies in North and South Dakota identified a common concern: most national studies on poverty focus on children and families in metropolitan areas rather than those from rural environments.

The group believed rural families face different challenges in raising their children. Yet no body of research or common language documented the circumstances endangering the ability to raise healthy children in rural communities.

With funding from the Annie E. Casey Foundation, the Great Plains Rural Collaborative was established to document the unique strengths and challenges affecting the quality of life for low-income rural children and for their families.

In December, 2001 the collaboration published A Rural Road: Exploring Economic Opportunity, Social Networks, Services and Supports that Affect Rural Families. A copy of this report can be down-loaded at http://www.voicesforchildren.com [First click Advocacy, then click on Publications.]
In producing this study, the Rural Collaborative drew on research from the Center for Rural Affairs. Since then, we have worked with Voices for Children to analyze data from the studies and determine the best next steps.

The two organizations hope to collaborate on another initiative to help Nebraska families – if funding can be secured. Both organizations believe all children in Nebraska are best served by genuine economic opportunity and sustainable communities.

Contact: Voices for Children in Nebraska or acquire a copy of the 2003 KIDS COUNT in Nebraska Report at www.voicesforchildren.com or call the Omaha office, 402.597.3100.

Field Days Showcase On-farm Research

Practical Farmers of Iowa (PFI) plans 19 field days this summer and fall. Started 17 years ago, the field days showcase PFI’s pioneering work in on-farm research – where farmers conduct research on their own farms to answer their own questions. From better weed control to new methods of controlling pests, solutions are shared with other farmers through these events, other publications, and the PFI website.

This year’s slate of field days includes everything from organic farm tours with food and live music to in-depth looks at open-pollinated corn and soybean aphid control. The events are free and open to everyone. Since the program was established in 1987, over 22,000 people have attended.

“PFI farmers are out there putting sustainable theory into practice,” PFI president and Solon, Iowa, farmer Susan Zacharakis-Jutz said. An important feature of the work is building learning relationships between university researchers and farmers. PFI’s cooperator farmers analyze their research results with assistance from Iowa State University Extension.

Field days run June 12 through September 21. Some highlights of this year’s field day schedule include:

• Tours of farms participating in the popular Buy Fresh, Buy Local campaign.
• Three events exploring the integration of crops and livestock.
• A July 24 celebration of Marshalltown Community College’s new sustainable agriculture program with an address by Leopold Center director Fred Kirschenmann.

For more information: call the PFI office at 515.232.5661, or go to http://www.practicalfarmers.org  Field day guides are available while they last.

Value-Added Producer Grant Funding Round Expected Soon
Intense competition for fewer funds will require grant applications to be precise

USDA Rural Development in Nebraska has been told to expect the Notice of Funds Available (NOFA) for the 2004 round of Value-Added Producer Grants (VAPG) sometime in late May or early June of this year. After the NOFA is published in the Federal Register, applicants will probably have 60 days to submit a proposal.

VAPG funds in the past have been divided into two broad categories – planning grants and working capital grants. Until the official NOFA is published, however, nothing is “set in stone.” Last year, approximately $40,000,000 was awarded under the VAPG program; only $13,000,000 to $14,000,000 is expected to be available in 2004.

Competition for the reduced funds will be intense. One USDA official noted reviewers will likely be very strict with incomplete applications or applications that don’t exactly follow directions.
The USDA official said that it is possible independent contractors who score proposals might disqualify applications that “forget to check a box” on required federal forms based on the rule that incomplete proposals cannot be considered for funding.

USDA will schedule at least three informational meetings across Nebraska soon after the NOFA is published. The Center’s website will have information available at about the same time, as will next month’s newsletter. 

Author’s note: Most of the ideas you will see here were discovered while researching a follow-up report to Swept Away: Chronic Hardship and Fresh Promise on the Rural Great Plains. The new report, to be published later this summer, will chronicle the Fresh Promises in the region. This column draws on the good ideas and practices we found across the country.

South Platte Business Beyond the Farm, Holdrege, Nebraska
Betty Sayers and her sister Nancy Herhahn know that one of the major problems rural areas face today is the decline of population and the loss of youth. They started South Platte Business Beyond the Farm to help alleviate the problem.

The sisters are working to build a database of 10,000 people who graduated in the South Platte River region since 1950. When the database reaches its goal, a survey will be developed and sent to alumni about their interests, occupations, and other facts.

When job openings are announced by local employers, the sisters will be able to help local employers “bring back” those who have left the region for other employment opportunities. For more information, contact Betty at 866.639.7013 or visit http://www.businessbeyondthefarm.com 

Source: Kearney Hub, September 2003

Entrepreneurial Fairfield, Iowa
Located in the southeast part of the state, Fairfield is the county seat of Jefferson County and boasts a population of over 9,000. Fairfield has been recognized as one of the nation’s most entrepreneurial small towns.

The town boasts a host of support services including: the Fairfield Economic Development Association, Fairfield Entrepreneur’s Association, the Chamber of Commerce, Iowa State’s Center for Community Vitality, Maharishi University of Management, the local Small Business Development Center, and many others.

The key to their success has been true collaboration. Over the past 15 years, 2,000 jobs have been created, and the town averages $10 million in new construction each year. Visit http://www.cityoffairfieldiowa.com

Source: Grassroots Rural Entrepreneurship: Best Practices for Small Communities, National Center for Small Communities and the Kauffman Foundation  http://www.smallcommunities.org 

Contact: Kim Preston, kimp@cfra.org for more information or to submit ideas for the column.

Land is one of the primary assets of agricultural communities. Using some of that land to satisfy Americans’ yearning for access to nature can support community development and create new opportunities. But it needs to be done right – with community members in control and in a way that supports self-employment and small business.

Farming and ranching will long be the primary use of land in most agricultural communities. But communities can benefit by diversifying land use so that it complements rather than threatens agriculture. The effort can be as modest as working in partnership with farmers and ranchers to make the community more attractive by providing access to natural space.

For example, communities can work in partnership with landowners to restore strips along streams to grass and trees and provide public access. Federal conservation programs could compensate the landowners. The hiking and nature-related opportunities could make the community more inviting for new people who buy homes, start businesses, and help reinvigorate the community.

There are larger opportunities – and potential pitfalls – in some areas. For example, ongoing efforts to preserve the natural character of Western Iowa’s Loess Hills will tap their potential to draw visitors and support community development.

Talk of committing a significant block of grasslands on the Great Plains to habitat for native wildlife such as buffalo and elk is increasing. The vast African Serengeti grasslands draw wildlife enthusiasts from around the world. Some have suggested the Great Plains is the American Serengeti with equal capacity to draw visitors.

That could diversify the economic base for affected communities and provide a whole new set of economic opportunities. But how it is done matters a great deal. Communities fare best if:

• Land is locally owned and controlled – Approaches that restore and protect land while keeping ownership and control in the hands of local citizens are better than absentee ownership and control, whether by private parties or government.
• Land use is diversified – Voluntary approaches that leave room for agriculture and other existing businesses better serve communities than heavy-handed approaches that dictate a single land use.
• There is a deliberate strategy to foster small entrepreneurship – Tourist economies tend to be low-wage economies, often dominated by national hotel and restaurant chains. If the economic benefits of tourism development are to be widely shared, business ownership must be widely held.

Agree or disagree? Send your opinion, comments, or questions to Chuck Hassebrook, chuckh@cfra.org or 402.687.2100, extension 1018.

Graduates Heralded at Center for Rural Affairs

We are proud to recognize several recent high school and college graduates. Congratulations to:

• Keith Mahaney, board member and husband of staff member Peggy Mahaney. Keith graduated from Wayne State College with a Bachelor’s degree in Business Management.
• Gerard Ras, the Center’s Administrative Director, who completed his MBA at Wayne State College.
• Amanda and Emily Fraas, Coleridge, accepted at the University of Nebraska Lincoln to major in dance and in dance and nutrition. Amanda and Emily are daughters of Jeanie and Wyatt Fraas.
• Erin Johnson, Homer, plans to attend Dordt College in Sioux Center, Iowa and to study Pharmacology. Erin is the daughter of Joy and Ruben Johnson.
• Leah McClure, Wymore - Southern High School graduate, planning to attend Peru State College and major in elementary education. Leah is the daughter of Glennis and Ed McClure.
• Grant Powell, Wayne, headed for South Dakota School of Mines and Technology to study Atmospheric Science. Grant is the son of Marie and Tim Powell.

Editor: Marie Powell

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Iowa Senator Chuck Grassley requested the investigation, with the assistance of the Center for Rural Affairs. It was prompted in part by published reports of a 30,000-acre farm with over 50 partners receiving $20 million of payments.

Had Congress adopted the payment limitation reforms introduced in the farm bill debate by Senators Grassley and Byron Dorgan of North Dakota, this loophole would have been closed.

Contact: Chuck Hassebrook, 402.687.2100 ext.1018 or chuckh@cfra.org.

Reinvest in Rural America by Cutting Subsidies to Mega Farms
If agriculture policy was part of a larger rural policy, we would find more ways for farms to thrive while protecting natural resources

If rural people are to succeed in creating a better future, we must work together for our common interests and the common good.

That is especially important in Washington. But too often, agriculture and rural development are lined up as opposing teams. That’s not good for anyone in rural America. To fix that, we must develop a new rural policy focused on creating genuine opportunity for rural people, building strong communities, and protecting our natural resources.

Agriculture should be part of rural policy. The worst mistakes in agriculture have come from serving the vested interests of influential elements of agriculture rather than the common good of agricultural communities.

If we pursued agricultural policy as part of rural policy, we would never subsidize mega farms to drive smaller farms out of business. We would focus on finding ways for more farms to thrive and protecting natural resources for the community and the future.

But there has to be more to rural policy than agriculture policy. We disagree with those who say a good agriculture policy would solve all the problems of rural communities. It’s an important part of rural policy for agricultural regions, but it’s not the whole answer. As much as we dislike it, we’ve moved beyond the point at which we’ll ever have enough farms and ranches to provide an adequate base for thriving rural communities.

Small business development is essential to the future of rural communities. It’s time public policy recognizes that by investing more in job creation through self-employment and small business. Community building is essential. Communities need resources to come together, develop leadership skills, and implement revitalization strategies. Government should help.

Natural resource protection is vital to our future. Society should share the cost by assisting and rewarding the conservation efforts of farmers and ranchers. And as we discussed in this space last month, restoring natural areas and offering public access can provide a new basis for economic re-vitalization.

Government provided much of the initial impetus for settling the prairies and plains through the Homestead Act. We agree with Senators Byron Dorgan (ND) and Chuck Hagel (NE), who say it’s time for a New Homestead Act that provides a broad array of incentives to live and do business in rural America – beyond agriculture.

A first step to unify rural Americans around a new rural policy is to cut subsidies to the largest farms and reinvest the savings in building a future for rural America. That may not be enough, but it would be a great start. And it is in the interest of almost all rural people – except those benefiting from current policies at the expense of the common good.

Agree or disagree? Send your opinions, questions, or comments to Chuck Hassebrook, 402.687.2100, ext. 1018 or chuckh@cfra.org

Suit Challenges Constitutionality of I-300 in U.S. District Court

On May 18, 2004, former Nebraska State Senator John DeCamp filed a lawsuit in the U.S. District Court for the District of Nebraska challenging the constitutionality of Initiative 300, Nebraska’s constitutional amendment restricting corporate ownership of agricultural enterprises.

Mr. DeCamp brought the suit as an individual and on behalf of a corporation in which he has an interest. The lawsuit alleges that I-300 “unduly interferes with” or violates several portions of the U.S. Constitution and federal laws including the Commerce Clause, the privileges and immunities clause, the 14th Amendment, and the Americans With Disabilities Act.

The Center and Friends of the Constitution will likely play some role in this lawsuit; we will keep you informed of its progress through the courts.

Contact: Jon Bailey, 402.687.2100, ext. 1013 or jonb@cfra.org for more information.

New Rural Poverty Data Shows Some Gains

In an annual, summertime ritual, we bring you the latest data from the United States Department of Commerce, Bureau of Economic Analysis on county income levels.

Based on 2002 data (the latest data available), the new figures again show how pervasive rural poverty is in the United States. For the sixth year in a row, the rural Great Plains can lay claim to being the lowest income region in the nation. For the sixth consecutive year, rural Nebraska is also home to some of the lowest income counties in the nation.

The table below shows the rankings of the 2002 lowest income counties over time. While some counties come and go from the rankings, others are permanent fixtures.

The per capita income of the nation’s lowest income county – Slope, North Dakota – is $5,540, about 18 percent of the nation’s per capita personal income and over 1,500 percent less than the nation’s highest income county (New York, NY – Manhattan).

In a ray of good news, income levels in many of 2002’s lowest income counties increased significantly from 2001 (for example, Loup, Nebraska’s per capita personal income increased by over 48 percent from 2001 to 2002). Stronger agricultural commodity prices likely played a role.

But we must continue to strive for public policy and rural community action to address a circumstance where the labors of many of our neighbors continue to be so undervalued.

The Nation’s Lowest Income Counties

Numbers next to each county represent their ranking each year among the nation’s 3,110 counties, with 1 being the county with the lowest per capita income. Note: All South Dakota counties listed are reservation counties.

Contact: Jon Bailey, jonb@cfra.org or 402.687.2100, ext. 1013 for information.

Cooperation Works to Make Bridges in a Small Rural Community
Plainview, Nebraska is using leadership development to bridge community groups and intensify bonds

Leadership development may pave the way for small communities to build bridges in their community using the strong social bonds that already exist.

The Center’s Project HOPE, our rural community revitalization program, has focused on 12 different communities in Nebraska. Each one has required varying levels of involvement and development. Last month we looked at Hartington and examined the social and human capital that had to come forth for their continued internal development.

This month we look at Plainview, Nebraska and the way the community addresses growth. In looking at bridging and bonding of social capital as laid out in Dr. Cornelia Flora’s book, Rural Communities, Plainview ranks fairly high in bonding social capital, but sometimes struggles with bridging. This is common for small rural towns.

Plainview is well known for physical assets that define a peaceful community. (Just so you know, I live in the community of Plainview.) We have two attractive parks, a band shell structure for concerts, a new swimming pool, and a new running track. Our downtown, while suffering economically, is still a gathering area for local residents.

Plainview, along with nearby towns Wausa and Bloomfield, went through a year-long process in leadership development that emphasized leadership without authority (open to all) and servant leadership (helping others). These workshops allow people to develop skills to gather more inclusive involvement from others within the community.

Of the people that attended, many have gone on to try and bridge social capital through area resources. They have become active members in the Chamber of Commerce, the area Resource, Conservation & Development Council, town councils and village boards, county government, and several other local groups.

Plainview continues to show growth towards high levels of social bonding and bridging, but is still struggling with bridging. Several local groups are fractionalized, and issues divide many. What makes Plainview, Neb. special is that we recognize the gaps in bridging and are working to bring it together.

Bridging groups and outside resources will only serve to strengthen small rural communities as they creatively look for ways to survive. Without the entire community working together, fractionalized groups will continue to struggle against enormous odds.

Contact: Michael L. Holton, michaellh@cfra.org or 402.687.2100 x 1015 for more information.

Corporate Farming Notes
Supreme Court to hear beef checkoff case, declines to hear pork checkoff case; reprieve for ban on meatpacker livestock ownership

On May 24, the U.S. Supreme Court decided to weigh in on commodity promotion programs. The Court agreed to hear the USDA’s appeal from the 8th Circuit of Appeals decision in Livestock Marketing Association v. USDA.

The 8th Circuit upheld a lower court ruling that the mandatory beef checkoff program is an unconstitutional violation of the First Amendment rights of cattle producers who are compelled to pay an assessment for a promotion program and message they oppose.

While agreeing to hear the beef checkoff case, the Supreme Court denied USDA’s petition to hear an appeal of the 6th Circuit Court of Appeals decision holding the pork checkoff unconstitutional. The dairy promotion program has also recently suffered the same legal fate. The Third Circuit Court of Appeals case has held the dairy promotion program as an unconstitutional infringement of First Amendment rights of dairy producers (the case was brought by Pennsylvania dairy farmers).

Recently, the full Third Circuit Court denied a request for a rehearing of the three-judge panel decision. It appears the Supreme Court has elected to use the beef case to make a final determination on all commodity checkoff programs.

In a temporary victory for independent livestock producers, the 8th Circuit Court of Appeals set aside a summary judgment that found Iowa’s ban on meatpacker ownership of livestock unconstitutional. On May 20, 2004, the Court ordered Smithfield Foods, Inc. v. Miller back to the U.S. District Court in Iowa for further trial proceedings.

In 2002 the Iowa Legislature enacted an amendment expanding their general ban on packer ownership by adding a prohibition of packers from financing a swine operation in Iowa or a person who directly or indirectly contracts for the care and feeding of swine in Iowa.

In its order for summary judgment (a judgment by the court without a trial), the Court found the action of the Legislature discriminatory against out-of-state interests in favor of in-state economic interests, thus a violation of the Commerce Clause of the U.S. Constitution on its face, in its purpose, and in its effect.

Contact: Jon Bailey, jonb@cfra.org or 402.687.2100, extension 1013.

Former Oklahoma State Senator Paul Muegge was named a recipient of the 2004 John F. Kennedy Profile in Courage Award. The award is presented annually to public servants who have withstood strong opposition to follow what they believe is right. The award is named after President Kennedy’s 1957 Pulitzer Prize-winning book Profiles in Courage and was created in 1989 by the John F. Kennedy Library Foundation.

As chair of the Oklahoma Senate Agriculture and Rural Development Committee, Senator Muegge authored several laws restricting corporate swine and poultry agriculture in Oklahoma, many of which have become national models. Senator Muegge was moved to act by the need for clean air and water and conservation of the high quality of life in rural Oklahoma.

Proposals he sponsored include setback requirements from neighbors for new hog facilities; water and soil testing; assessments on large hog facilities to pay for necessary environmental regulations; and regulation of chicken farm waste.

Despite opposition from corporate farming interests, Sen. Muegge was able to obtain the support of the Oklahoma Governor and Oklahoma Department of Agriculture, as well as environmental interests and independent family farmers and ranchers. As well as courageous, this represents quite a political feat!

Sen. Muegge declined to seek a fourth term in the Oklahoma Senate, yet continues to be a strong voice for family farm, rural environmental, and rural development issues. The Center has received his counsel and ideas on several occasions. We congratulate him on this well-earned award and on his commitment to rural America.

Fresh Promises for America’s Rural Places
Presenting strategies and practices that are helping to revitalize rural communities

New Farmers Markets
The Floyd Boulevard Local Foods Markets, a project of Sustainable Foods for Siouxland, held its grand opening June 19, 2004. It is the first farmers market in the nation that exclusively sells humanely raised and naturally produced local food products.

The market is a project of a group of farmers and consumers working together to develop a true local food supply based on humane and organic principles.

Currently, the Siouxland region (communities within a 75 mile radius of Sioux City, Iowa) spends approximately $320 million on food annually. Less than 1 percent of that amount is raised locally.
The Floyd Boulevard Local Foods Market is the beginning of an effort to source 10 percent of food locally – to capture $32 million in new sales for local farmers, producing an estimated $100 million in new local economic activity through the multiplier effect.

Contact Michelle Oehlerking, Market Manager at 712.253.4728 for further information. Visit their website, www.siouxlandlocalfoods.org, to be up and running in late July.

Geotourism Explained
Fermata Inc. is in the business of “geotourism,” defined as tourism that sustains or enhances the geographical character of the place being visited – its environment, culture, aesthetics, heritage, and residents’ well being.

Fermata Inc. has been established to assist governments, agencies, states, communities, organizations, and individuals in taking advantage of the natural, cultural, and historical resources that surround them. As more tourists search for authentic experiences, geo-tourism should grow.

Fermata Inc. assists clients and communities to identify, understand, and use their natural, cultural, and historical resources while protecting them for future generations of people and businesses. Projects are located in Alabama, Connecticut, Kansas, Louisiana, Michigan, Nebraska, North Dakota, Oklahoma, Ohio, Pennsylvania, Texas, Virginia, and Wisconsin.

For more information about projects Fermata Inc. is working on, visit their website, www.fermatainc.com or call Ted Eubanks, founder at 512.472.0052.

Contact: Kim Preston, kimp@cfra.org or 402.687.2100 extension 1022.

Newspaper Publisher Selected “Small Business of the Year”
In five years this paper’s circulation has increased nearly 7-fold, serving growing Hispanic communities

Abril Garcia was selected as Small Business Person of the Year for 2003 by the Center’s Rural Enterprise Assistance Project (REAP), a small business development program. Abril came to the U.S. in 1996 to learn English. While attending a community college, she met and married her husband. Since she already had a Bachelors degree in Broadcast Communications, she decided to start a newspaper.

Mundo Latino, the voice of the Hispanic community of Nebraska and Iowa, printed its first issue October 1, 1999. The paper was born out of the desire to provide a communication vehicle for the large community of Hispanics. The goal was to create a medium of communication that understood the language, the culture, the Hispanic existence, and – more importantly – their needs.

The paper started as a monthly with 6-8 pages, printing 3,000 copies a month. The response from the community was so overwhelming that in 3 short months, it grew to 12-16 pages, published bi-monthly, distributing 10,000 copies a month.

By January 2001, the paper had grown to 16-20 pages. Demand continued to build as more Hispanics became familiar with the paper. In January 2003, Mundo Latino became a weekly, with 10-16 pages, printing 20,000 copies per month with numerous national and local companies advertising their products or services.

Mundo Latino is considered the main Spanish newspaper for the Hispanic community of Northeast Nebraska/Northwest Iowa by its readers and advertisers. The paper serves the areas of Council Bluffs, Le Mars, Sioux City, and Storm Lake in Iowa and Columbus, Fremont, Madison, Norfolk, Omaha, Schuyler, South Sioux City, Wakefield, Wayne, and West Point in Nebraska.

Mundo Latino has evolved into a respected voice of the Latino community. It has become a prism through which Latinos can look out and gain an understanding of other societies who are the heart of pluralistic America.

At the same time, the prism provides a means by which to look into the heart of the individuals that make up our community, thereby laying the foundation for understanding and communication. These ties bind us together as one nation and one country.

Contact: REAP Business Specialist, Karen Linnenbrink at 402.372.3840 or karenjl@cableone.net

• The Hispanic population grew by 58 percent in the 2000 Census, three times the national growth rate, making it the fastest growing segment in the U.S.
• Today over 35.3 million Hispanics reside in the U.S., representing almost 13 percent of the country’s total population. The census total counted three million more Hispanics than previously estimated.
• Demographers have anticipated for years that Hispanics would become the largest minority group by early 2005.
• The U.S. Hispanic population is currently larger than the entire population of Canada.
• Over 72 percent of Hispanics living in the U.S. were born abroad.
• The Hispanic population is projected to grow to 42.4 million people with a total of 15 percent of the total population by 2010. This represents a 79 percent increase in only two decades. Even more astounding is the fact that by 2050 it is projected that the Hispanic population will represent as much as 25 percent of the entire U.S. population.
• Starting this millennium, 40 percent of all new U.S. consumers will be Hispanic and will account for one in every five households.
• Hispanic households are larger in size due to very high birth rates and extended family presence. The average persons per Hispanic household are 3.9 persons versus 2.1 people in the non-Hispanic household.
• The U.S. Hispanic market is much younger than the general market with a median age of 26 years versus 36 years for non-Hispanic.
• In 2000 the total annual Hispanic purchasing power was estimated by DR/McGraw-Hill at $442.8 billion. This represents an increase of 105 percent from 1990. Furthermore, it is projected that the Hispanic buying power will more than double by the year 2010 to $939 billion.

The Rural Enterprise Assistance Project (REAP), a program of the Center for Rural Affairs, has begun work with a new initiative, the REAP Hispanic-Rural Business Center.

Funded by a one-year Rural Business Enterprise Grant from USDA, the business center will provide Hispanic startup and existing businesses with small business management training, networking opportunities, one-on-one technical assistance, and access to small loans – all of REAP’s essential services. Without these, business development assistance for rural Hispanic entrepreneurs will continue to be virtually unavailable or extremely underserved in rural Nebraska.

A survey focusing on Hispanic businesses was recently completed at South Sioux City by the Siouxland Minority Business group, a diverse set of folks representing a wide range of organizations.

The study found almost three-fourths of the minority businesses formed within the past five years, most were family owned and managed, and most owners were interested in taking specific business training.
The final results clearly show the need for small business development efforts, including training, technical assistance, and lending opportunities. The full report is available on the Internet at http://www.southsiouxcity.org

The Hispanic Rural Business Center is focusing on three Nebraska communities during the first phase of the project: Schuyler, Scottsbluff, and South Sioux City. These communities have a large Hispanic population and are located in Nebraska counties with the highest Hispanic population base throughout rural Nebraska.

The REAP Basic Business Management Training was recently completed at Scottsbluff and is set to start at South Sioux City. Phase two of the project will involve adding three more pilot communities and potentially hiring a bilingual staff person. Phase three will involve expansion of the program statewide in Nebraska.

Contact: Jeff Reynolds, REAP Program Director, jeffr@alltel.net or 402.656.3091 for more information, www.cfra.org/reap

Editor: Marie Powell

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Closest Greyhound stops will now be hundreds of miles away from rural people in the states affected, further isolating them from what they need in larger cities. Many of the rural communities and businesses affected do not have other forms of public transportation – no air travel, no rail service, and now no bus service.

And many of the rural people affected have no transportation alternatives – no private vehicles, no local public transportation. One of the crucial issues facing rural communities is access – and Greyhound has now compounded the issue of access to transportation for rural people.

Greyhound was born in small-town Minnesota, founded in Hibbing, Minnesota in 1914. In their literature and on their website, they advertise this fact and appear proud of it. Yet, in a bottom-line decision, Greyhound has abandoned its roots.

Wilmer, Minnesota, mayor Lester Heitke told the Minneapolis Star-Tribune in reaction to the Greyhound announcement, “I’m afraid that the concerns of rural Minnesota are forgotten.” And the concerns of rural Nebraska, rural Iowa, rural North Dakota, rural Wisconsin ….

Contact: Jon Bailey, jonb@cfra.org  for more information.

Good Development Creates Genuine Opportunity, Active Citizens 
This kind of development builds assets, respects future generations, and inspires people to become involved in community life.

Not all economic and agricultural development is good development.

To truly develop rural communities and make them better places where our children and grandchildren will want to raise their families, we need to make good choices about what kind of development to nurture. If it creates jobs that pay poorly, damages the environment, and bleeds profit out of the community to absentee owners, the costs imposed on the community may outweigh the benefits.

Good development builds assets and skills. It may provide quality jobs with good benefits and incomes to enable people to buy homes, educate their kids, put down roots, and become contributing members of the community.

Empowering local people to establish owner-operated businesses, farms, and ranches is one of the best forms of development. It keeps profits in the community and provides opportunities for people to build assets and earn middle class incomes as business and farm owners. When real wages are falling in many industries, creating ways working people can become business owners increases equality and opportunity.

As important, nurturing locally-owned businesses puts the economic future of the community in the hands of its own members – people committed to its future. That is especially important as large employers – both corporate farms and manufacturers – increasingly move offshore for lower-wage labor.

Good development respects future generations and thus protects land and water. That is critical to the quality of life and the local economy. Only if we protect our resources will they be there to sustain farms, ranches, tourism, and other resource-based businesses in the future. Only if we protect the land and water will the rural environment draw young families to live and raise families in our communities.

The most important element of good development is human development. Some communities succeed at economic development where others fail. They succeed because people, many people, take initiative and responsibility.

These communities identify people’s gifts and talents, develop them more fully, and put them to use. They embrace diversity in leadership. The more perspectives and ideas brought to the table, the greater the range of options to pursue and the capacity to effectively evaluate them.

Good development engages people and enables them to build assets, gain control over their lives, and become contributing members of communities. It gives people a stake in the future of their community and empowers them to take responsibility for its future. It creates genuine opportunity as it creates good citizens.

Agree or disagree? Send your opinions, questions, or comments to Chuck Hassebrook, chuckh@cfra.org

New Homestead Act Is Gaining Support

The New Homestead Act – designed to revitalize struggling rural communities – is making progress in Congress.

Initially introduced in the U.S. Senate by Byron Dorgan (D-ND) and Chuck Hagel (R-NE), the Act has gained 15 cosponsors, including Sam Brownback (R-KS), Tim Johnson (D-SD), Tom Daschle (D-SD), Tom Harkin (D-IA), Norm Coleman (R-MN), Mark Dayton (D-MN), Richard Durbin (D-IL), Zell Miller (D-GA), Conrad Burns (R-MT), Kent Conrad (D-ND), Mary Landrieu (D-LA) and John Rockefeller (D-WV).

A companion bill to the Senate New Homestead Act (S. 602) has been introduced in the U.S. House by Representatives Tom Osborne (R-NE) and Earl Pomeroy (D-ND). The bill (H.R. 2194) includes the same language as the earlier Senate bill.

More cosponsors are needed, so ask your Senator and Representative to join the list if he/she is not already on.

A key portion of the Act has also been included in the tax bill that recently passed the U.S. Senate. It provides investment credits for buildings and a 30 percent tax credit for investments in starting or growing owner-operated small businesses.

We are working to get this provision adopted by the conference committee that meets in September to work out differences between the House and Senate bills and to produce the final legislation.

The New Homestead Act provides a variety of incentives to live and do business in counties that have lost at least 10 percent of their population over the last 20 years. Lead sponsor Senator Byron Dorgan made the case well when he said: “America’s Heartland is being relentlessly depopulated. Several decades ago, when America’s cities were in trouble, the Congress enacted urban renewal and model cities programs to help them. Now, it’s time to help America’s Heartland.”

Contact: Chuck Hassebrook, chuckh@cfra.org for more information.

Agricultural Appropriations Update
The House bill cuts value-added and conservation programs, turns down help for farmers’ markets. Senate action is delayed and may not take place until next year.

The House of Representatives approved the FY 2005 Agriculture Appropriations bill on July 13, 2004. We continue to see an assault on programs passed under the 2002 Farm Bill with mandatory funding status (meaning they should not be subject to the annual appropriations process).

Two programs we have been advocating for because they stand to make a real difference for small and mid-size family farms, the Value Added Producer Grants Program (VAPG) and the Conservation Security Program (CSP), both sustained cuts under this appropriations bill. The VAPG was cut from $40 million in mandatory funds to $15.5 million. The CSP was capped at $194 million.

The Farmers’ Market Promotion Program (FMPP), a 2002 Farm Bill initiative designed to bring assistance to thousands of family farmers and ranchers who market quality, locally-grown fresh food directly to consumers, has yet to be funded through the appropriations process.

The FMPP would provide grants to agricultural cooperatives, local governments, non-profits, economic development corporations, and other eligible entities working to establish, expand, and promote local farmers’ markets, community supported agriculture (CSA) farms, farmstands, and all other forms of direct marketing.

Senator Marcy Kaptur provided an amendment on the floor during debate of the appropriations bill that would have provided $6 million for the implementation of the FMPP. This amendment failed by only seven votes.

Now we await the Senate’s version of the 2005 agriculture appropriations bill. It may be a long wait. Barring a miracle, it is unlikely the Senate will act prior to the election or even the next calendar year.

Contact: Traci Bruckner, tracib@cfra.org to find out how your Representative voted on the Kaptur amendment, contact. To find a farmer’s market near you, go to www.ams.usda.gov/farmersmarkets 

A Discussion of the Differences between Rural and Urban Lifestyles
Over the past half century, differences between rural and urban have blurred, and some of the peace of rural living has dimmed.

Even as recently as 50 years ago, the distinction between rural and urban was extremely pronounced. Those in rural areas were mostly identified with production, while those in urban areas were viewed as consumers. That pattern has changed, and rural areas have been left with a confused identity.

It’s dangerous to generalize, but here goes. Fifty years ago, rural folk tended to shop at the general store and consume what the land would produce. Eating patterns were seasonal, and needs were much simpler.

Urban residents bought their clothing from retail stores and often consumed their meals from cafes and restaurants that dotted cities. When and why did the patterns and trends separating rural from urban become fuzzy?

Technology and transportation have had the largest impact on our culture and have literally brought the urban to the rural. Many consider this progress. Rural residents can now travel to work if needed and earn income to help support their family’s changing requirements.

Television gave rural residents a better glimpse of what urban folks identified as fads and trends. Those in cities were the trendsetters, while rural residents often struggled to catch up. Our eating patterns now mirror our urban counterparts, and a steady year-around supply of the same products once available only seasonally has become the norm.

Rural people have been given many more opportunities in the last 50 years, and the lifestyle they had wasn’t complete. They have become as much consumers as their urban counterparts.

None of what I have mentioned is necessarily wrong or bad, but it has changed the way we perceive rural. Consolidation of consumer goods at a cheaper and more affordable price has forced most of us to take a closer look at why our ancestors settled in to become rural residents in the first place.

Balancing our needs as rural consumers (which we are) with the production aspect of our existence is a great challenge. Right now we are out of balance, and the victim is the rural way of life we worked so hard to get away from in the last 50 years.

While it may sound easy, few of us are willing to give up some of the luxuries we gained in trying to become more urbanized.

Ironic, isn’t it?

Contact: Michael L. Holton, michaellh@cfra.org or 402.687.2100 x 1015 for more information.

Corporate Farming Notes
Local control at issue in a Kansas Supreme Court ruling and in the Minnesota Governor’s Advisory Task Force recommendations.

In May the Kansas Supreme Court ruled against county-level authority to regulate feedlots, stating counties cannot enforce regulations that are stricter than state-based regulations.

This decision upholds the lower court decision from an October 2002 case where the Kansas Livestock Association and individual feedlot operations disputed Norton County regulations.

The opinion of the Court was based on a 1998 law that, in their view, grants the state government sole power to regulate feedlots. In shifting power this way – by increasing the state’s authority through decreasing the local government’s power – the Kansas Supreme Court has taken away the ability of local citizens to have a stake in the landscape and resources of their locality.

In June, Governor Tim Pawlenty released the Minnesota Animal Agriculture Industry Report compiled by the Governor-appointed Advisory Task Force.

A major theme coming from the report relates to local control and the “barrier” it creates for the livestock industry. The report suggests the task force needs to continue to investigate and “develop recommendations on ways to increase predictability and uniformity for livestock producers in siting operations….” The recommendations will be completed this fall in preparation for the 2005 Minnesota legislative season.

The report also states that until the Governor has had an opportunity to review these specific recommendations, local governments should refrain from implementing county and township-level moratoria or other restrictive actions that limit livestock production.

One only has to look at the make-up of this Advisory Task Force – stacked with industry representation – to assume what those recommendations will include: elimination of local control. If the task force was to be considered legitimate, it would have been wise to include members that truly represented the interests of family farms and rural communities.

The Land Stewardship Project and other organizations have formed their own task force looking to support the scale of farming that elevates family farms and rural communities. Maintaining local control as a function of an active democracy is a cornerstone to this approach.

Contact: Traci Bruckner, tracib@cfra.org for more information.

1. environmental management
2. high returns in production, processing, and distribution
3. adoption of new agricultural technology, management, or rural agribusiness development; or
4. growing opportunities and threats for small and medium-sized farms and rural communities will be given more weight.

Project awards are limited to $500,000 for 2 to 4 years of support. No matching funds are required unless the project is commodity-specific and not of national scope. State experiment stations, colleges and universities, federal research agencies, non-profit and private research organizations with the capacity to perform research are eligible to receive grants.

The Center and many others worked long and hard for this new national program, which resulted from an amendment sponsored by Iowa’s Senator Tom Harkin to the 2004 agricultural appropriations bill.

The amendment effectively required CSREES to solicit research projects to improve farm profitability and small and moderate-sized farm viability and to enhance rural economic and community development.

These research goals originally came from the Initiative for Future Agriculture and Food Systems (IFAFS), which has gone unfunded in recent years. Merged into the larger NRI, the IFAFS was still supposed to receive 20 percent of NRI funds.

NRI Program Leaders are available for consultation about the suitability of proposal topics. Contact Siva Sureshwaran, 202.720.3310 or ssureshwarant@csrees.esda.gov or Diana Jerkins, 202.401.6996 or djerkins@csrees.usda.gov 

Contact: Kim Leval, kimleval@qwest.net for more information.

Fresh Promises for America’s Rural Places
Presenting strategies and practices that are helping to revitalize rural communities

Miner County Community Revitalization (MCCR) – small towns working to improve local economies, strengthen families, expand financial assets, create quality jobs, and build affordable housing options...

In trying to address the local economy, the Howard School District, located 50 miles northwest of Sioux Falls, South Dakota, began receiving funding from the Annenberg Rural Challenge for projects to connect rural schools with their communities.

Students studied area residents and their spending habits as well as their views of local business. Through making residents and businesses more aware of each other’s needs, gross sales in Howard increased 41.1 percent.

Further work led to community vision meetings in the fall of 1997, which brought together people from around the county to discuss concerns and issues. Students and adults worked together setting up the agenda and presentations, discussed Miner County’s weaknesses and strengths, and got to know each other.

Through these meetings, the Miner County Task Force evolved, with members from different parts of the county. Economic development and county beautification emerged as top priorities.

All this work was the foundation of a planning grant submitted to the Northwest Area Foundation, http://www.nwaf.org, which resulted in a $500,000 grant. MCCR was born. Beginning with the 22 members of the Task Force, it has since grown to over 100 members. Membership is open to any resident in Miner County.

For more information about MCCR, visit http://www.mccr.net/ or call 605.772.5153. MCCR is directed by Randy Parry. 

Contact: Kim Preston, kimp@cfra.org or 402.687.2100 extension 1022.

Hoop Buildings the Focus of Conference

Iowa State University’s “Hoop Group” has put together an innovative conference on using hoop buildings for hogs and cattle, scheduled September 14 in Ames. This group of researchers will bring together local, national, and international experience in the latest research and practical information on expanded uses for hoop barns and reasons why these structures make economic sense for many farmers.

Hoops are attracting increasing attention for their low capital cost, competitive returns, and flexibility. Recent innovations have expanded hoop production beyond the initial focus on swine finishing. Alternatives include providing shelter to sows and piglets, dairy and beef cattle, and other livestock systems.

Conference topics include design of bedded systems, production costs, air quality management, animal health and welfare issues, pork quality, and marketing considerations. A panel from Australia, Canada, and the Ukraine will describe hoop structures from countries where they are mainstream practices.

The conference will be at the Gateway Center (Hwy 30 and Elwood) in Ames, Iowa on September 14. Preregistration (before Sept. 1) is $25 by calling 515.294.0557 or visiting the website: http://www.abe.iastate.edu/ABLS/ 

An International Scientific Symposium is being held on September 15 in conjunction with the conference. The symposium will allow scientists and engineers working with a variety of innovative swine housing systems to share results and discuss research needs.

Researchers from Australia, Canada, The Netherlands, the United Kingdom, and across the United States will attend. For more information, contact Wayne Martin, Minnesota Institute for Sustainable Agriculture, 612.625.6224.

Turning over the Reins
The older couple turned the reins over to the young family with an informal agreement to purchase the cattle during the first five years, followed by the equipment in the next five years. An independent appraiser established the value of the cows and equipment prior to the purchases. The Buxenbaums financed the sales.

The final five-year phase, buying the land, began in the tenth year of the agreement. The amount was based on an appraised sale price, and was to be financed with a seller contract as well.

During the first year the dairy was completely run by the younger couple. From the start, all dairy expenses were theirs and have been covered with income from the milk.

Ronald provided mentoring on a limited on-call basis in the beginning. He remained active in the crop production during the first two years, providing up to half of the labor while Terry concentrated on animal husbandry.

Financially Speaking
Farm income to the older couple is from wheat and oats sales on a cropshare basis, and cash rent on the corn and alfalfa acres. The older couple also receives regular income from cattle sales, and charges enough rent on the facilities to cover taxes and insurance on the farm. Amy and Terry reimburse the Buxenbaums for expenses related to crops and equipment repair.

Ronald has shifted his energy from farming to crop dusting and providing flight instruction services with a small plane he owns. Trudy continues to teach school on a regular basis and helps out on the farm by caring for her grandchildren when Amy’s attention is needed elsewhere.

This family is happy with a buyout plan that set targets over time, allowed some decision making to transfer immediately, included objective valuation of property, and defined roles for all family members.

Excerpt from the report Profitable Practices and Strategies for a New Generation, available on the web at http://www.farmprofitability.org 

“Three things ultimately happen to most company/farm/ranch owners: they live too long, they die too soon, or they become disabled,” said rancher and estate/investment planner John McGlynn Jr. recently. “Succession planning can deal with such personal and business difficulties.”

It’s not unusual for a company to have a policy that prohibits two or more of its top managers from traveling together. Many know that a loss of top management can adversely affect the financial strength of the company, as well as hinder future growth and profitability.

Each day you climb into your tractor, climb onto your horse, or take off in your car for another day’s work. You may be wearing all the top management hats for your farm, ranch, or small business: CEO, CFO, Director of Marketing, and so on. Ask yourself, “What would happen to my operation if it lost all of its top management today?”

A written Successor Plan is a method that spells out exactly what is to occur with your operation in the event of your death or disability. Your Plan may be simple or complex depending on your individual circumstances.

Successor Planning is NOT age related. It is NEEDS related, and all businesses need such planning if the business and the families are to survive.

A young married couple may need only a simple Plan. A Will for each, along with written instructions for the surviving spouse as to their agriculture interests, may be all that is needed for several years. A married middle-aged couple with adult children, some of whom are involved with the operation, others that are not, may require a more complex Plan.

Simple or complex, it is important that you include in the planning process all adults who will be affected. Their input is important; their wishes, wants, and needs may vary from yours. Listen to them, appreciate them, and respect them as you move along. Your Plan needs to be in writing and all people affected should have copies.

This is not a tax-driven process, but rather a process that includes your heart and your head. A well-designed, flexible Plan can satisfy both. The very worst thing you can do is NOTHING.

Start your Plan in your own home. Have your family discussions, then a rough draft of your Plan in hand before you visit your lawyer and your accountant. Instruct them to get you where you want to go with your operation under various scenarios: death, disability, and retirement. Planning is truly an act of love. Love for your family and your land.

Contact: John McGlynn Jr., who works from his Omaha office and can be reached at 402.891.2309.

Editor: Marie Powell

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Rural Community Listening Sessions Begin
Center staff will tour Nebraska to hear directly from rural people about their concerns

Ready to speak your piece? The Center for Rural Affairs hosts a series of statewide listening sessions in Nebraska beginning September 13. The sessions will focus on rural, community, and economic development in Nebraska. Special emphasis will be placed on state legislation for rural development.

“The listening sessions are designed to encourage rural Nebraskans to let their voices be heard,” says Chuck Hayes, Director of Constituency Building, Organizing, and Special Initiatives for the Center. “These meetings assist us in defining the most pressing policy/legislative issues affecting our communities.”

The success of this effort, says Hayes, will be determined by a broad-based turnout of concerned citizens. The Center encourages the participation of everyone living in rural areas – business owners, farmers, ranchers, educators, clergy, laborers, town officials, school board members, youth, seniors, and all other concerned citizens, whether they are familiar with the Center or not.

We hope to attract new faces and voices by conducting these sessions. All Nebraska-based Center supporters can assist by inviting friends and family to attend. “We’ll promote the sessions through local radio and newspapers. But you can greatly aid our efforts by spreading the word in your community,” says Russ Gifford, Director of Communications for the Center.

Chuck and Russ have extensive experience in facilitating community listening sessions – so the result should be an exciting evening of give and take, and the discussions should be enlightening! We’ll analyze the results of the listening sessions and share them with all participants and Center staff. This is an opportunity for our supporters to let us know if we are pursuing the issues that matter to our rural communities.

We cannot fight every battle, but we want to make sure we are fighting the ones that matter most to rural Nebraskans. After all, only by citizens coming together to speak with a strong and unified voice can we turn our hopes into reality.

Contact: Chuck Hayes, chuckch@cfra.org or Russ Gifford, russg@cfra.org for more information.

Proposed Sale of Farm Credit Services Raises Concerns

The proposed purchase of Farm Credit Services of America by Dutch banking conglomerate Rabobank raises critical issues that cry for the attention of Congress, as well as the farmer stockholders and federal regulators being asked to approve the sale.

Omaha-based Farm Credit Services is a producer-owned cooperative that lends to farmers and ranchers in Iowa, Nebraska, South Dakota, and Wyoming. The banks were initially created with federal money (since repaid) and to this day enjoy competitive advantages over local rural banks. System banks are tax exempt, and the feds back the bonds issued to raise money to loan to farmers.

But Farm Credit Services has not always used those advantages in the interest of all of agriculture. It has positioned itself as a leading financier of industrial agriculture. It has financed some of the biggest corporate hog operations and has a reputation for cherry picking the biggest and most lucrative farm borrowers.

Furthermore, the extraordinarily strong $1.3 billon of capital reserves held by Farm Credit Services suggests that it was using its preferred status to build capital rather than to keep interest rates low or pay patronage dividends. In theory, that capital provides a means to buy off the federal Farm Credit Administration, which regulates System banks and must approve the sale.

Under the proposed sale, $500 million of that capital plus a $100 million premium from Rabobank would be paid to the stockholders (borrowers), averaging over $10,000 per borrower. The remaining $800 million of reserves would be paid back to the federal Farm Credit Administration’s insurance corporation and used to lower interest rates or increase patronage dividends to borrowers of other system banks.

What is the motive for the sale? Farm Credit Services CEO Jack Webster says the bank wants to be free of the legal limits that prevent it from expanding beyond its four-state region and providing home mortgage loans in larger towns and cities.

Now that the bank has used federal backing to establish a dominant position in the region, Webster wants to transfer that dominance to a commercial bank free to do whatever it wants to turn a profit. (We wonder whether Mr. Webster might gain a position with Rabobank, should the sale go through.)
Before passing on the sale, farmer stockholders should ask some fundamental questions. First, why relinquish their share of a bank with $1.3 billion of capital for just $600 million – less than 50 cents on the dollar?

Keeping the system intact would enable them to use its strong capital reserves, together with the continued backing of the feds, to lower interest rates or pay patronage dividends. It would also preserve borrowers’ rights to appeal foreclosure and the right of first refusal to rent or buyback any land they lose through foreclosure. Those rights would be lost under the sale.

Congress should be safeguarding the public interest. Would turning the dominant position of Farm Credit Services over to an international banking conglomerate damage competition? Would Rabobank use its size and power to subsidize loans in the short term to drive out competitors – particularly smaller community banks?

Surely Congress did not create and subsidize a farmer-owned lending institution only to hand a dominant market position to an international banking conglomerate. Finally, Congress should examine the aggressive focus of Farm Credit Services on industrial agriculture and explore new avenues for ensuring adequate credit availability to the rest of agriculture.

One place to start would be the $800 million that would be transferred back to Farm Credit Insurance Corporation if the buyout goes through. Instead of using that to subsidize Farm Credit System borrowers in the rest of the country – corporate farms and all – Congress should instead redirect that money to a beginning farmer fund. That fund could support initiatives to open opportunity to a new generation of farmers.

Even if the sale does not go through, Congress could direct the system to create such a fund by levying a small surcharge on future Farm Credit System bonds. That would transfer a portion of the subsidy that federal backing now grants industrial agriculture back to family farming.

Finally, Congress should enhance competition in agricultural lending by enabling locally-owned community banks to also raise money for farm loans through government-backed Farm Credit System bonds – not just Systems banks. That would enable local banks to be more competitive. It would prevent government backing from being used by Farm Credit System banks to build a dominant position in farm lending only to be turned over to an international conglomerate.

COUNTER OFFER FOR FARM CREDIT SERVICES
As the above article was going to press, Minnesota-based Ag Star Financial Services announced a competing and larger offer – $650 million – to buy Farm Credit Services. Ag Star would keep the remaining $800 million of capital within the System and use it to pay patronage dividends to members.

 Ag Star is also a farmer-owned Farm Credit System Bank currently serving Minnesota and Wisconsin. CEO Webster downplayed the offer in an Omaha World Herald article for coming from a smaller association with the same regulatory constraints, significantly different he said from “the opportunity to be part of a global [financial] provider” with a strong track record and the flexibility to offer a full array of services.

That statement causes us to ask, is the objective to serve the interests of farmer members, or to advance the growth aspirations of management?

FARMERS FOR FARM CREDIT WEBSITE
A group of stockholders of Farm Credit Services of America has formed to oppose the acquisition of Farm Credit Services of America by Dutch banking conglomerate Rabobank. They are urging farmers and others interested in rural issues to join them. Find out more at http://www.farmersforfarmcredit.com 

Contact: Chuck Hassebrook, chuckh@cfra.org for more information.

Strategic Planning Helps Find Ways to Build Strong Communities
Good strategic planning begins with three key questions, and the answers lead to eight crucial, continuous planning steps

An often-heard phrase in most town council or village board meetings is, “What is our/your strategic plan?” Most officials have very little idea what a strategic plan consists of, let alone having one.

Strategic planning, if done right, asks three questions of communities:

• Where is our community today?
• What do we want our community to be like in the future?
• How can we effectively move toward the future?

Simple and easy, right? The truth is that this type of goal setting and planning is a continuous process that is never done. Development decisions must be based on the resources available to the community and its needs.

Crucial steps to good strategic planning include:

1. Organizing
2. Scanning the Environment
3. Identifying the Key Issues
4. Developing Goals and Recommending Strategies
5. Formulating Action Plans
6. Implementing Action Plans
7. Monitoring the Results
8. Scanning the Environment

Notice the pattern: the strategic planning process has a continual loop by always being aware of the environment. Promoting rural economic development is hard work and requires understanding community resources and the opportunities available for using those resources.

Trends in state and national economics are also likely to affect those decisions. By scanning the environment, communities can identify the strengths, weaknesses, opportunities, and threats that are always present.

Local governments in rural areas are often caught between demands for more government services while experiencing continuous reductions in state and federal funding. This makes the planning process even more necessary and more difficult. Strategic planning helps communities look for alternative ways to create a strong community and provide a solid economic base.

Strategic planning cannot cure what ails most communities today, but it can help them to focus on problems and address them. Making a plan and keeping it orderly allows people in rural counties and towns to take control of their situation and future.

Contact: Michael L. Holton, michaellh@cfra.org for more information on community revitalization.

Granite Falls, Minnesota Hosts Lively Town Hall Meeting

On June 28, Congressman Collin Peterson (D, MN, 7th district) and 60 town hall participants that included farmers, main street business owners, and local elected officials shared concerns and ideas in a rousing discussion on how to revitalize rural areas.

Full funding for the Conservation Security Program, farm program payment limits, mandatory country of origin labeling (COOL), better beginning farmer loans, funding for value added and new market development, and renewable energy assistance were among topics raised by area citizens.

Congressman Peterson, a senior member of the House agricultural committee, responded to each concern raised and shared that he helped push for a mandatory COOL Bill. The town hall meeting was cosponsored by the Center and the Land Stewardship Project.

If you are located in western Minnesota and would like to host or help with a town hall meeting in your area, contact Kim Leval at her Oregon office, 541.687.1490 or kimleval@qwest.net 

Pacific and Inland Northwest Farm Bill Training, Outreach

Help with farm bill programs and access to funding is now available in the Northwest. With funding from the Bullitt Foundation, Kim Leval, Senior Policy Analyst based in Eugene, Oregon is available to provide outreach and to help with ideas or questions related to federal farm policy and funding.

The Center and other area partners are especially interested in working with farmers and ranchers, agricultural commodity groups and commissions unique to the Northwest (i.e. berry and horticultural commissions), boards and staff of environmental groups, state and federal agency staff including Resource Conservation and Development Districts (RC and D’s), extension staff working with direct market clientele, and others.

Groups and individuals in Idaho, Oregon, western Montana, or Washington can contact Kim to sign up for tailored outreach presentations, activities, and/or materials to meet their needs. Reach Kim Leval at 541.687.1490 or kimleval@qwest.net 

Corporate Farming Notes
Agribusiness in charge at USDA?

A report titled, USDA INC., released at the Organization for Competitive Markets (OCM) annual conference examines the extent to which USDA has been hijacked by corporate agribusiness. The report finds the agency inundated with high-level appointees with ties to corporate agribusiness, while essentially no one represents family farmers or other public interest groups.

The report identified five case studies in which policies adopted directly reflect the special interest ties of the people establishing those policies. They were Bovine Spongiform Encephalopathy (BSE), Captive Supply, Meat Inspection, Biotech Foods, and Concentrated Animal Feeding Operations (CAFOs).

The report offers recommendations to address its findings. You can view it at http://www.competitivemarkets.com 

Contact: Traci Bruckner, tracib@cfra.org for more information.

Fresh Promises for America’s Rural Places
Presenting strategies and practices that are helping to revitalize rural communities

Swaledale Bio-Village – Business in rural Iowa using available resources ...

Rural communities face challenges in keeping their small towns alive and vital. State spending cuts, school consolidations, and more affect small cities daily. To combat the challenges facing their community, several leaders from Swaledale, Iowa are working together to help their town reverse a downward trend and begin to grow.

Swaledale, population 174, has no grocery store or gas station. Through town meetings held in June 2003, a committee of concerned citizens developed a concept to draw people and businesses to their community. John Drury, former Swaledale mayor, and a team of community members developed an idea for a bio- and regular fuel gas station, certified kitchen, and Iowa products store and restaurant called the Swaledale Bio-Village.

The Bio-Village, located near the I-35 Interstate, will sell both unleaded and diesel fuel, bio-diesel fuel made from soybeans, and up to 85 percent ethanol fuel. The Swaledale Bio-Village will also offer a certified kitchen for people with a food product they would like to sell in a retail store.

The certified kitchen will serve as a business incubator, allowing cooks to turn their small-scale food processing into a business. Retail stores wishing to sell “home grown” products are limited to products prepared in a regulated environment. A certified kitchen meets these legal requirements.

Drury explained, “If someone from North Iowa grows a lot of tomatoes and makes salsa or spaghetti sauce, they cannot sell their product in stores. When the product is produced in a certified kitchen, it can be offered in a retail environment.”

For more information, contact John Drury, 205 6th Street South, Swaledale, IA 50477 or by e-mail at jdrury@frontiernet.net 

Contact: Kim Preston, kimp@cfra.org for more information or to submit ideas for this column.

For a fun-filled, unique experience, St. James Marketplace in St. James, Nebraska (in northern Cedar County) is the place to be on Sunday, September 26, 2004. The 4th annual Heritage Fest will take place on the grounds of the former Ss. Philip and James Parochial School. The event celebrates the heritage of German pioneers who settled northern Cedar County during the middle 1800’s.

On that day you can experience life as it was many years ago. See a classroom of the early 20th century; watch buffalo hair being spun into fabric; watch how homemade ice cream was made – and then TASTE it; watch an old apple press in action; watch how corn used to be ground; participate in wood-cutting contests; visit the Wiseman Monument (site of the massacre of five children of Henson Wiseman in 1863); and walk the area where Pvt. George Shannon was lost during the Lewis and Clark Expedition nearly 200 years ago.

You can let the kids experience old time childhood games, including three-legged races, watermelon-seed spitting contests, and sack races. And throughout the day, you can “shop ’til you drop” and eat real homemade food until you can’t consume another bite! Meat products from Main Bow Farms will be on the grill for most of the afternoon, so bring your appetite.

St. James is located less than ¼ mile north of Scenic Byway 12 in northern Cedar County. The marketplace is WEST of the junction of Highway 15 and Scenic Byway 12, and EAST of the junction of Highway 57 and Scenic Byway 12. Highways 15 and 57 recently swapped places, and older road maps don’t show that.

Contact: Mike Heavrin, mikeh@cfra.org  for more information, or visit www.stjamesmarketplace.com

Editor: Marie Powell

You are viewing the Center for Rural Affairs newsletter archive for 2002-2006.
Visit the current newsletter and recent archive pages.
Visit the Center for Rural Affairs Home Page.

Now, however, the federal government is proposing changes to CRA that have the potential to harm many rural communities.

FDIC is proposing the definition of “small” bank be changed to mean a bank with less than $1 billion in assets (“small” is now defined as having less than $250 million in assets) and to allow banks to choose how they meet CRA requirements rather than following Congress’ intent.

These definitional changes will be acutely felt in rural America. An estimated 99 percent of rural FDIC banks would be able to limit CRA involvement, and no rural FDIC banks in 28 states would be required to follow CRA requirements.

This withdrawal will have a massive impact on programs benefiting low and moderate-income rural people – nearly $10 billion in rural affordable housing and community development initiatives will be lost.
In an era where bottom-line economics dominate so much of our culture, this is a blatant example of yanking the rug from under the communities and people most in need – in need of small business and farm loans, affordable housing, and financial assistance for higher education.

The proposed amendments to CRA will deny many of our rural neighbors and friends an opportunity to realize their dreams and deny many of our communities a last, best chance for a better future.
Killing hope is what this comes down to – that and the loss of yet another tool to make the lives of rural people and the future of rural communities better. The Center and other rural advocates provided comments to the FDIC. We hope they are listening. We’ll let you know.

Contact: Jon Bailey, jonb@cfra.org for more information.

Risk for Agriculture in Climate Change
Biggest winner in a carbon dioxide-rich atmosphere may be farmers’ weeds

In a significant shift, the Bush Administration has issued a new report attributing hotter global temperatures over the last 30 years to atmospheric gases released by human activity – and suggesting troubling consequences for agriculture.

The report is based on the growing body of federal research on climate change. That research cites a challenge for farmers under higher concentrations of carbon dioxide – intensified weed problems. Carbon dioxide is the leading greenhouse gas and is released by burning fossil fuels, removing forests, and breaking down organic matter.

Plants grow better in a carbon dioxide rich atmosphere. But the study found that weeds benefit more than most crops and thus will become more competitive as carbon dioxide levels increase.

The report reminds us how much farmers and ranchers have at stake in climate change. Earlier studies predicted increased extreme weather events and shifts in rainfall. Farmers and ranchers face serious risks in climate change – arguably more than any other industry with the possible exception of the insurance industry.

Yet, some agricultural organizations have rallied farmers and ranchers to oppose efforts to address climate change, fearing efforts to curb emissions would lead to increased fuel and fertilizer costs. That is short sighted.

Farmers and ranchers have a profound interest in addressing climate change. Further, it is a mistake to conclude that any action to address climate change will necessarily impose burdensome short-term costs on farmers and ranchers.

Several years ago, the Center for Rural Affairs convened a task force of farmers and ranchers to study the issue. Their report Climate Change and Agriculture concluded that agriculture could contribute to reducing greenhouse gases through measures that don’t impose high costs, but to the contrary save money – better fertilizer management and fuel conservation. (Climate Change and Agriculture is available on our website.)

They saw new opportunities for farmers and ranchers to be paid for building soil organic matter (carbon), as a means of reducing the carbon dioxide level in the atmosphere. In addition, rural areas are enjoying some new economic activity from the growth of wind power generation as an alternative to fossil fuel powered electric plants. You can find the Bush Administration report at www.climatescience.gov 

Contact: Chuck Hassebrook, chuckh@cfra.org for more information.

Teaching Schools and Communities How to Work as Partners
Three main models have emerged to draw students and their communities closer together

Traditional boundaries exist in many small communities between the community and the school system educating their youth. Very little connects the two in a sustainable and positive way. To make a community vibrant and progressive, youth and adults need to work together to address the needs of “community.”

The subject of incorporating schools into the community more effectively has been extensively researched. While models are varied, communities are choosing three major ways to integrate with schools, especially in small rural areas.

The first approach uses the school as a community center. In this model, the school becomes the lifeblood of the community and a major resource. School facilities, technology, and staff provide opportunities for the whole community to participate.

Using technology available in schools, health care and social services may also participate and benefit. Training can be held at the school, and networking provides the social arena needed for helping the community use these services more effectively.

The second approach uses the community as an empirical learning environment. Students help the community by conducting needs assessment, researching environmental issues, and monitoring land-use patterns, for example. By getting students involved with local residents and issues, they value their community more highly and understand the role they play in its future.

The third approach is the school-based enterprise method. The school encourages development of entrepreneurial skills with students in the community. This curriculum encourages students to establish businesses through programs like REAL (Rural Entrepreneurship through Action Learning) or “Mind Your Own Business,” the Center’s entrepreneurship class. Through programs like this, students have started businesses like shoe repair, delicatessens, and day-care centers.

The ultimate test of community and school approaches is the impact they have on the lives of rural youth and adults over an extended partnership. Changing the fundamental nature of interaction between schools and communities helps to prepare rural youth for their futures and to develop skilled leaders for tomorrow.

Contact: Michael L. Holton, michaellh@cfra.org for more information on community revitalization.

Senate Ag Appropriations Subcommittee Approves Spending Bill
U.S. Senate finally acts on agricultural appropriations and fully funds Conservation Security Program, cuts Value-Added Grants

The Senate Agriculture Appropriations Subcommittee approved their FY 05 spending bill on September 8. The full Senate Appropriations Committee took up the bill on September 14. As reported earlier, the House of Representatives passed their annual agriculture spending bill in July.

Some good news: unlike the House bill, which cut the Conservation Security Program (CSP*), the Senate bill restored full, uncapped funding for the new conservation program.

Unfortunately though, another program we have been advocating for – the Value Added Producer Grants Program (VAPG**) – was again cut, ending up with $15 million versus the $40 million authorized under the 2002 farm bill.

An amendment was also offered to remove the two-year delay on Country of Origin Labeling (COOL), which under the delay is not scheduled to go into effect until 2006. The amendment failed with a tie (14-14), a party-line vote with all Republican’s voting against the measure and all Democrats voting in favor.

It is unlikely this bill will make it to the full Senate for a vote. It may well be combined into one large package with other spending bills during a conference between House and Senate Appropriations Committee members.

The large package of spending bills would then go to the House and Senate floors for an up or down vote. Stay tuned for more information as things progress.

* The Conservation Security Program was authorized in the 2002 Farm Bill as a new comprehensive working lands conservation program designed to provide financial and technical assistance to farmers and ranchers nationwide who use conservation systems that contribute to clean water, clean air, wildlife habitat, soil improvement, and global warming mitigation.

** The Value-Added Producer Grants program provides funding to help develop new markets, products and cooperatives, returning a greater share of food system profits to farmers and their local communities. It includes funding for farmer-owned sustainable and organic farm enterprises and marketing efforts to add value to products.

Contact: Traci Bruckner, tracib@cfra.org for the latest news on agricultural appropriations.

Corporate Farming Notes
Farm Credit Administration plans field hearings; Senators and farmers concerned with livestock mandatory price reporting; groups oppose market concentration

>> The Farm Credit Administration (FCA) will hold public hearings on the controversy surrounding Omaha-based Farm Credit Services of America’s potential sellout to an international conglomerate.

FCA is the government regulator charged with overseeing the Farm Credit System. Plans are to hold hearings in the affected states – Nebraska, Iowa, South Dakota, and Wyoming. The hearings will require Farm Credit Services of America to explain why the board believes the Rabobank offer should be considered over the competing bid offered by AgStar, the Minnesota-based farm credit institution (see our September 2004 newsletter for more details).

If the offer submitted by AgStar were accepted, the newly merged entity would continue as a member of the Farm Credit System, and borrowers would retain the same rights and protections they currently have as System members. If the Rabobank offer were accepted, the FCSA would become a private lending corporation, which would not provide the same borrower protections.

Stay tuned for more information regarding hearing dates and locations.

>> Due to concerns over whether or not Livestock Mandatory Price Reporting (LMPR) is providing accurate information, Senators Harkin (D-IA) and Grassley (R-IA) have requested an investigation by the General Accounting Office (GAO).

Concerns that have surfaced include whether and how USDA branches are coordinated so that USDA can effectively enforce regulations governing the program, the degree of transparency in reporting, and the timing of packer reports.

The questions regarding the accuracy of reporting center on the base price the packers are reporting. Packers are allowed to pay premiums for different things including meeting certain quality or quantity standards. These premiums are not being figured into the base price the packers report to USDA. Base prices are used when figuring the formula sales price.

The LMPR is set to expire on October 30 unless Congress acts to extend the law.

>>The National Campaign for Sustainable Agriculture is sponsoring a sign-on letter to urge Congress to make agricultural competition and market concentration top priorities as Congress crafts agricultural legislation next year.

The letter calls for enactment of:

• Prohibition on Packer-Owned Livestock
• Producer Protection Act
• Transparency/Minimum Open Market Bill
• Captive Supply Reform Act
• Clarification of “Undue Preferences”
• Closing Poultry Loopholes in the Packers & Stockyards Act
• Bargaining Rights for Contract Farmers
• Mandatory Country of Origin Labeling

The letter states, “Today, a small handful of corporations overwhelmingly dominate the nation’s food supply. The market control of the top four firms in food retailing, grain processing, red meat processing, poultry processing, milk processing, and nearly every category of food manufacturing is at an all time high.” The Center is assisting the Campaign to gather signatures. See the sign-on letter on our website.

Contact: Traci Bruckner, tracib@cfra.org for more information.

The Center’s Rural Enterprise Assistance Program (REAP) created a Direct Loan Program in 1998 to complement their smaller, group-based Peer Loan Program. Businesses that had successfully used peer loans had growing needs beyond those loan levels yet not high enough to be served by traditional lenders. REAP also had new microentrepreneurs who needed more funds starting out than could be met by Peer Loans.

In the past fiscal year, REAP placed 38 Direct Loans totaling $514,900. These loans and extensive client technical assistance also leveraged over $640,900 in additional debt financing from traditional lenders, other revolving loan funds, and private sources during this time. Since inception of the Direct Loans, REAP has placed 139 Direct Loans totaling $1,948,408.

The REAP Direct Loan Program is helping to leverage other funds. REAP provides business planning services to REAP members. These services have resulted in leveraged lending in many instances. A REAP client has completed her or his business plan in consultation with the area REAP Business Specialist and has been able to secure loans from a traditional lender, development district, community action agency, or a local loan fund.

REAP staff have also helped in “packaging” loans that include other lenders in addition to REAP’s loan fund. Historically, REAP has “leveraged” loans totaling $4,009,820. Jeff Reynolds, REAP program director said, “It has always been REAP’s goal to meet the debt financing needs of all members – individually or by collaborating with partners. The REAP Direct Loan Program is effectively meeting this need.”

Reynolds also looks forward to adding additional lending products to the product mix. Current REAP lending products (REAP Direct, Peer, and Quick Grow) can be viewed on line. For more information about REAP loans, contact Jeff Reynolds at jeffr@alltel.net or 402.656.3091.

Fresh Promises for America’s Rural Places
Presenting strategies and practices that are helping to revitalize rural communities

Marketplace of Ideas has been at the forefront of North Dakota’s economic development efforts for 15 years. Their goals and mission speak volumes about what they have to offer to rural communities and the state of North Dakota.

An annual convention convenes each year in January; the 2005 convention will be held in the Bismarck/Mandan area on January 12-13. Marketplace has developed into a statewide institution connecting people who are looking for and using new ideas for growth in North Dakota’s rural economy. These ideas are presented and discussed at different times and events throughout the year.

The mission is simple: empower individuals and communities to pursue their economic development visions by providing a forum for ideas, information, and assistance. The goals reflect what states should be doing to help their communities accelerate community development in their most remote areas.

By stimulating, encouraging, and assisting North Dakotans of all ages and walks of life to envision and investigate ideas for supplementing income and creating new enterprises, community leaders will be inspired to take action and make their area and North Dakota an attractive place in which to live and to work.

First held in January 1989 with approximately 500 farmers and ranchers in attendance, the main goal was to encourage and assist them in becoming the trusted providers of the highest quality food in the world, add value to products, and diversify land use as the most promising way to raise net farm income, create employment, and assure community growth.

Today, the event strives to provide a network of information, assistance providers, and people who are already engaged in alternate activities to accelerate acceptance of innovative opportunities and to support those who have begun new enterprises.

The annual event has grown to a two-day attendance of more than 7,000 people. Visitors can choose from a variety of classes available, over 120 each year, and can visit over 250 exhibitors and presenters ready to serve them and their small business needs.

For more information, visit their website, www.marketplaceofideas.com or call 1.888.384.8410 or through email marketplace@btinet.net 

Contact: Kim Preston, kimp@cfra.org for more information or to submit ideas for this column.

Intern Energizes Beginning Farmer Work
The Center has a new, young face around the office until January. We are pleased to give our intern the opportunity to introduce herself below.

My name is Amanda Tuttle, and I am the new intern at the Center for Rural Affairs from Marshalltown, Iowa. I am a senior at the University of Iowa (Hawkeyes), and will soon receive my B.A. in International Studies with an emphasis on environmental policies.

At the Center I’m working on several projects. One is working with the Leopold Center to redirect federal grant loans to more small and mid-size farms. Another main effort is the beginning farmer Land Link program. I am trying to connect beginning farmers to retiring farmers to enable the beginning farmer to have a smooth and successful transition into their enterprise. I have also taken a keen interest in revision of Nebraska’s Beginning Farmer Tax Credit provision.

In my free time I am the Lyons-Decatur assistant cross-country coach for the boys and girls. I love to run, hike/backpack, and to socialize. My internship at the Center will finish in January of 2005.

Meanwhile you can contact Amanda at 402.687.2100, extension 1007 or through email at amandat@cfra.org  Welcome aboard!

Senator Chuck Grassley brought the U.S. Senate Finance Committee to Sioux City, Iowa in August for a hearing on tax incentives for rural revitalization – and invited the Center for Rural Affairs to testify. The Center’s recommendations included:

• Emphasize small business in rural development.

The Senate JOBS tax bill would provide Rural Investment Credits of $185,000 per eligible county – those that have suffered a 10 percent population decline. We urged the credit be adopted, but refined to allow more credits to go to small business.

As written, up to 10 percent of the credits could reward investments in small owner-operated businesses with five or fewer employees. The other 90 percent would go for investment in buildings.

• Change federal tax laws to enable state beginning farmer loan programs to help more people.

These programs fund low-interest loans by providing a federal income tax break to investors who buy the bonds that provide loan funds. Senator Grassley has introduced legislation to allow states to expand those programs.

The Center endorsed that proposal and suggested that USDA be allowed to guarantee loans made through state beginning farmer programs. That would allow retiring farmers who sell land on contract to beginning farmers to receive tax-free interest and a federal guarantee that they’ll be repaid.

• Exercise caution in creating new tax breaks in agriculture.

We urged careful scrutiny of proposed legislation to exempt livestock production cooperatives from federal income taxes. That could grant a competitive advantage to large industrial livestock operations over independent family farm livestock producers.

Agriculture was fertile ground for tax-shelter investments prior to the 1986 tax reform act, and the results were not good. It stimulated over investment that drove down profits and helped large farms and high-bracket investors squeeze out family farms and ranches.

In other testimony, Shane Tiernan of the Grundy National Bank of Grundy Center, Iowa proposed federal help for machinery cooperatives aimed at lowering machinery costs for mid-size and beginning farmers. Testifiers expressed support for the New Homestead Act, which was the source of the Rural Investment Tax Credits placed in the JOBS tax bill by Senator Grassley. The Senate JOBS tax bill is awaiting a conference committee to work out differences with the House bill.

The New Homestead Act is being promoted in the Senate by Byron Dorgan, Chuck Hagel, Tim Johnson, Sam Brownback and 13 others and in the House of Representatives by Tom Osborne and Earl Pomeroy.

Contact: Chuck Hassebrook, chuckh@cfra.org for more information on his testimony.

Editor: Marie Powell

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Conservation Security Program Funds Cut to Provide Drought Aid
Drought disaster assistance to come from $2.9 billion reduction in the CSP; hurricane assistance to come from emergency funding

Before heading home for the final weeks of campaign events, Congress attached disaster assistance to the Homeland Security spending bill for those struck by hurricanes and drought. The most pressing issue was whether drought assistance funding – unlike hurricane assistance – would have to be paid for by cutting funding for other farm bill programs.

Once again, the House Republican leadership aggressively pursued a route that treated the Conservation Security Program (CSP) as their slush fund. They blocked Representative Charlie Stenholm (D-TX) from introducing and getting a vote on a disaster assistance package that closely matched the Senate’s version.

That version treated both forms of disaster assistance equally by paying for them with emergency funding. The House, with the support of the Administration, ended up passing hurricane and drought disaster assistance with the funding for drought assistance being carved out of the CSP.

The House and Senate then met in conference to hammer out the differences between the two bills, with the biggest difference being how to pay for drought assistance. This issue was not easily resolved as a number of senators objected to capping the CSP.

In the end, the CSP was cut by $2.9 billion to pay for drought assistance. However, Senator Tom Harkin garnered an agreement with the Senate leadership stating they will restore the cut to the CSP when Congress reconvenes in November. This resolution agreement passed 71-14, demonstrating broad support for CSP.

We understand the short-term necessity of providing drought assistance to those farmers and ranchers severely impacted by such conditions. But cutting the CSP to pay for such assistance is purely bad policy.

The CSP rewards farmers and ranchers for their conservation efforts, including those that help them mitigate drought. Drought assistance should be on equal footing with hurricane assistance, paid for through emergency funding.

When Congress reconvenes this month, we need to be sure they hear the message loud and clear: CSP has broad, far-reaching support, and we expect them to restore funding.

Contact: Traci Bruckner, tracib@cfra.org for more information.

Center Hosts National Meeting Focused on Small Business Support
Folks came from six states to see how rural small business development programs link to effective local, state, and national policy

The Center for Rural Affairs recently played host to the Association for Enterprise Opportunity (AEO) Rural Policy Learning Cluster. The group met October 5-8 in Omaha, Lincoln, and Nebraska City, Neb. The AEO Rural Policy Learning Cluster consists of representatives from organizations in six states exploring rural policy issues and microenterprise development.

Jon Bailey is the Center’s representative to the AEO Rural Policy Learning Cluster. Other Learning Cluster representatives are from Iowa, Texas, Vermont, California, and Ohio.

Learning Cluster members and AEO staff visited and lunched with the Nebraska City REAP association and learned how local entrepreneurs who are REAP members become involved in issues of local, state, and federal policy. Learning Cluster members and AEO staff also learned how state and federal microenterprise public policy directly assists entrepreneurs such as those in Nebraska City.

REAP is the Rural Enterprise Assistance Project, the microenterprise development program of the Center. Entrepreneurs and small businesses may form local associations for networking, training, and loan programs offered by REAP.

Learning Cluster members and AEO staff next traveled to the State Capitol in Lincoln and heard from a panel on microenterprise issues in Nebraska and how organizations and the grassroots can influence public policy.

Panel members included REAP Director Jeff Reynolds, Nebraska Microenterprise Partnership Fund Director Rose Jaspersen, Legislative Aide Julia Holmquist, lobbyist Rich Lombardi, and NEON chair Maryanne Rouse (NEON is the trade association of Nebraska microenterprise organizations).

The Center recently published Big Jobs in Small Businesses: Microenterprise Employment in Nebraska, an examination of employment in all counties in businesses with five or fewer employees (the standard definition of microenterprise).

We found that rural counties in Nebraska have nearly 30 percent of their total private, non-farm employment from microenterprises, nearly twice the national average. This illustrates the need for good, effective public policy to promote and develop this type of economic development in rural communities across the nation.

Contact: Jon Bailey, jonb@cfra.org You can find more information on REAP at www.cfra.org/reap  You can learn more about the Association of Enterprise Opportunity (AEO) at www.microenterpriseworks.org 

Looking at the Big Picture: Home Town Competitiveness Program
Four pillars support long-term sustainable strategies for communities to adopt, using an “inside out” approach that works for them

In exploring different community development processes going on all over the country, it is apparent that the most successful efforts are locally driven. One of the most sought after development processes is a fresh effort called Home Town Competitiveness (HTC).

HTC is a comprehensive approach to long-term rural community sustainability. The Center’s Project HOPE, which worked in 12 different communities in northeast Nebraska, is very similar. The biggest difference between the two is that HTC includes wealth transfer and using foundations as a vehicle for a major part of its program.

The Home Town Competitiveness process was the creation of three organizations that banded together to offer their expertise in this model. They are the Heartland Center for Leadership Development, the Nebraska Community Foundation, and the Center for Rural Entrepreneurship. They worked to design a solid model that uses four pillars to achieve long-term strategies for communities to adopt and pursue. Those four strategies are: Entrepreneurship, Charitable Assets, Youth, and Leadership.

The design of the program is to look at the rural community and decide whether to use one, two, three, or all of the strategies in working with the community. An important aspect of the HTC process that mirrors several other efforts across the country, including the Center’s project HOPE, is that it needs to be driven locally and that development must come from the “inside out.”

HTC helps the community to focus on the following four interrelated strategies that depend on each other for ultimate success. They are:

• Building skilled and inclusive leadership in the community.
• Retaining and attracting youth and young families that are involved in community leadership.
• Acting NOW to capture a portion of the wealth that will transfer between generations.
• Using that transferred wealth in an entrepreneurial way to build local business and create jobs.

For more information on HTC, contact Jeff Yost at the Nebraska Community Foundation, 402.323.7330.

Contact: Michael L. Holton, michaellh@cfra.org for more information on community revitalization.

Iowa Farmland Ownership Trends
Less farmland is owned by young farmers and farm operators in Iowa today than in 1982, according to a recent analysis by Iowa State University Economist Mike Duffy published in the Leopold Letter.

• The share of land owned by people over the age of 65 increased from 29 percent in 1982 to 48 percent in 2002.
• The percentage of farmland owned by someone who does not live on a farm increased from 37 percent to 45 percent.
• Nineteen percent of Iowa farmland is owned by people who don’t even live in Iowa, up from six percent.
• Rented land increased from 43 percent of all land to 59 percent.
• Cash rental arrangements increased from about half of rented land to more than two-thirds.

Duffy says more cash rents will make it harder for young farmers to get started. And with more land owned by non Iowans, more farm program benefits will leave the state.

Under the current farm program, payments are tied to land. The more land you control, the greater the payment. As a result, virtually all of the benefits are captured by landowners, including landlords who receive higher rental payments. With farm operators owning less than half the land, they get less than half the benefit from farm programs.

To correct that, Congress should place strict limitations on payments to prevent large, aggressively expanding operations from bidding up cash rents. It should move toward greater reliance on payments that aren’t based on how much land a farmer controls, such as the Conservation Security Program, which bases payments on environmental management.

Contact: Chuck Hassebrook. chuckh@cfra.org for more information.

Corporate Farming Notes
Supreme Court to hear checkoff case; Smithfield porks up by acquiring competition

>> The Supreme Court will hear oral arguments on the mandatory beef checkoff program – a mandatory one dollar fee on the sale of every head of cattle – on December 8, 2004. The Court will likely issue a decision sometime early next year. Attorneys for the Western Organization of Resource Councils (WORC) and the Livestock Marketing Association (LMA) filed their brief on Friday, October 15, 2004.

In December 2000, WORC and LMA sued the U.S. Department of Agriculture (USDA) to gain a vote of cattle producers on the checkoff. The case was amended in August 2001 after the Supreme Court ended the mushroom checkoff.

In June 2002, U.S. District Judge Charles Kornmann ruled the beef checkoff violated cattle producers’ First Amendment rights by compelling them to pay for speech with which they disagreed. In July 2003, the 8th U.S. Circuit Court of Appeals affirmed Judge Kornmann’s decision, and in October they denied a petition for rehearing. In February 2004, the Justice Department asked the Supreme Court to review the decision; in May, the Court agreed.

>> Successful Farming magazine reported that Smithfield now owns more sows than 1994’s top 10 pork producers combined. The latest numbers show that Smithfield currently owns 808,000 sows, compared to 65,000 in 1994. Smithfield grew by 1,200 percent over the 10-year period.

The top 10 U.S. pork producers in 1994 were: 1) Murphy Family Farms; 2) Carroll’s Foods; 3) Premium Standard Farms; 4) Tyson Foods; 5) Cargill; 6) Prestage Farms; 7) Smithfield Foods; 8) National Farms; 9) Goldsboro Hog Farm; and 10) Sand Systems.

Smithfield’s substantial growth came from absorbing the largest of its competitors – Murphy Farms and Carroll’s Foods Inc. – as well as Farmland Foods and Alliance Farms, with a combined 68,000 sows. From 2003 to 2004, the number of sows for the top 30 largest pork producers increased by roughly 137,000. Yet slightly more than 92 percent of that increase was due to acquisition and industry consolidation, not to adding new sows. That’s a lot of pork!

Contact: Traci Bruckner, tracib@cfra.org for more information.

R-CALF USA Meeting in Northeast Nebraska

On November 15 at 7:00 p.m., the Creighton Livestock Market in Creighton, Neb. will host a meeting with R-CALF USA to give people the opportunity to learn more about the organization and to become members. November 16 at noon the Creighton Livestock Market will host a fund-raising auction for R-CALF USA. At such auctions, a calf is donated and auctioned. The first buyer typically re-donates the calf to be sold again with the process continuing until all donations are in.

R-CALF USA, the Ranchers-Cattlemen Action Legal Fund, United Stock Growers of America, represents thousands of U.S. cattle producers on domestic and international trade and marketing issues. R-CALF USA is a national, nonprofit dedicated to ensuring the continued profitability and viability of independent U.S. cattle producers. Members are located in 46 states, and the organization has over 60 local and state association affiliates, from both cattle and farm organizations. Various main street businesses are associate members of R-CALF USA.

Small schools across the country face consolidation nearly every day. Usually, two strong forces vie, one trying to close a school or center and another trying to keep it open. Reasons cited for consolidating range from political motivation to supposed cost savings to keeping a viable community.

Now there is a “toolkit” available from the Rural School and Community Trust for those trying to keep a school open. Six sections are included. They are briefly described below.

• Summary of an award winning look at school consolidation in West Virginia – West Virginia has aggressively pursued forced consolidation with little success. This looks at what has happened in the state since 1990.
• Alternative ways to achieve cost-effective schools – It is widely believed that consolidation will lead to more efficient administration. The truth is, when consolidation takes place the district becomes bigger with schools spread over a greater distance. The administration is removed from the communities, centers, and students for which they are responsible.
• School size, school climate, and student performance – Written by Kathleen Cotton, this is a comprehensive review of formal research studies on school size.
• Distance learning – When consolidation is being considered, an argument usually offered includes improving the curriculum for students. With today’s technology, distance learning and virtual classrooms are becoming an increasingly popular option for small, remote schools.
• Fiscal impact of school consolidation – Fifty years of research is showing that school consolidation doesn’t reduce per pupil costs, as many believe. A number of fixed expenses are not considered when looking at this small picture.
• School size and research-based conclusions – Small schools are able to do a lot for their students that many larger schools couldn’t possibly dream of. This section takes a look at those highlights.

To get a copy of the toolkit, call 703.243.1487 or visit the Rural School and Community Trust’s website, http://www.ruraledu.org/docs/consolidation/conskit.htm 

Fresh Promises for America’s Rural Places
Presenting strategies and practices that are helping to revitalize rural communities

Centerville Farmers’ Market was launched in the summer of 2003, in Lincoln, Nebraska’s Historic Haymarket District. It began as a joint effort of several Nebraska farmers and local business people who supported them.

The opening followed years of effort on the part of business partners, the State of Nebraska Department of Agriculture, Lincoln Action Programs, the Nebraska Cooperative Development Center, the University of Nebraska Food Processing Center, dozens of local and area food producers, and many others.

The Centerville Market is one of a kind in that it is an indoor farmers’ market. The market is housed in a 1901 Huber Tractor warehouse that offers 5,000 square feet of retail space. Approximately 40 vendors operate in Centerville, with as many as 70 during the regular growing season.

One of the primary goals of the Centerville Market is to increase the awareness of issues connected with the source of food. Through education and promotion, Centerville is building public support for sustainable, regional food systems; increasing consumer knowledge about alternative product choices; building demand for these products; and expanding to year-round markets.

The Centerville Market provides a diverse base of producers, processors, distributors, and consumers/customers of value-added agricultural products while also providing assistance to them to access new, more profitable markets for regionally grown foods.

Being established as a downtown, urban outlet for farm products has shown positive signs for consumer interest, farmer and small business involvement, and encouragement to new investment. A local restaurateur has emerged, wanting to help develop a local foods kitchen in the market.

A diversion from offering local products led to an organic coffee farmer through the Organic Crop Improvement Association (OCIA) with interest in roasting and marketing farm direct coffee. Through this collaboration, the market may be capable of offering organic bananas, pineapple, etc.

For more information, contact John Ellis, Market Manager at 402.477.2322 or by email, centervillemarket@alltel.net 

Contact: Kim Preston, kimp@cfra.org for more information or to submit ideas for this column.

Nebraska’s Property Tax Relief Falls Short

The lowest income areas of Nebraska shoulder tax burdens over 200 percent greater than Nebraska’s highest income areas, according to the newest issue brief released last month by the Center for Rural Affairs. “The data clearly show the regressive nature of the property tax,” said Jon Bailey, one of the report’s authors.

Regressive taxes mean that people of lower incomes shoulder a larger share of the public burden, which becomes very clear in the Digging Deeper in Shallow Pockets II Issue Brief. The study found the average taxpayer in high-income counties pays 3.28 percent of their income in property taxes, while property taxes for the 10 counties with the lowest per capita income was 10.62 percent of their income. Note that the low-income counties were all agriculturally dependent.

The Issue Brief recommends the Nebraska Legislature adopt property tax relief targeted to rural and urban property owners who are truly burdened by property taxes. In fact, since 2001 the Legislature and Governor have reversed course on property tax relief due to budget shortfalls, which has only increased pressure on property taxpayers.

Bailey suggests a “circuit breaker” concept adding an eligibility category based on income to provide property tax relief to those who are truly overburdened. The Center’s Brief recommends any type of circuit breaker legislation considered for Nebraska should:

• Apply the circuit breaker to both agricultural and residential property.
• Apply the circuit breaker only to owners/operators of property.
• Provide a strong definition of “income” so the circuit breaker does not become a shelter for income.

Want to know more? The Issue Brief is available on the Center’s website.

In 1989, 2000, and 2003, we published reports highlighting the socio-economic conditions of the rural Great Plains. Most of the findings in those reports were discouraging – declining populations, falling incomes and earnings, higher rural poverty rates, and a steady widening of the economic gap between urban and rural areas.

Fresh Promises, a new Center report headed to print as this is written, highlights what is right with many communities. It describes and analyzes essential rural and economic development measures that have led to real-life successes.

The report is divided into six categories of strategies, projects, and initiatives. We believe these categories of rural economic and community development are crucial for viable rural communities, especially ones that are agriculturally-based. They are:

• Community-wide development efforts based on local environment
• Community support for local farmers and ranchers
• Rural microenterprise programs
• Community-wide initiatives focused on quality of life variables
• Small and moderate-size farm and ranch processing and marketing
• Agricultural cooperatives for niche and specialty markets

A copy of the 40-page Fresh Promises report is available for $10.00 from the Center. Or look for it soon on our website, http://www.cfra.org.

Next month’s newsletter will cover the new report in more detail. For further information or to request your copy of Fresh Promises, contact Kim Preston at the Center, kimp@cfra.org 

Editor: Marie Powell

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• Nebraska’s share of the nation’s hog production has declined. But what really matters to communities is hog producers, and since 1982 Nebraska has increased its share of the nation’s hog producers from 3.33 percent to 4.2 percent.
• We have lost 79 percent of our hog producers since 1982, but the nation has lost 83 percent, and the leading corporate hog state – North Carolina – has lost 87 percent.
• Nebraska produces more pounds of livestock and feeds more corn to livestock than any state in the union. And we are third in ethanol production. With I-300 in place, Nebraska has become the nation’s leading state for adding value to feed grains.

But the positive impact I-300 has had on the state can be seen in more than just agricultural statistics. Even putting aside the benefits that our agricultural industry has realized from I-300, the initiative is still vitally important for its perhaps more crucial impact on Nebraskan’s quality of life.

What does banning factory-style corporate agriculture mean to a state’s citizens?

Researchers at Clarkson University and Cornell University published a 20 year study that compared the “agriculturally dependant counties” within the nine states nationwide with anti-corporate farming laws to counties in states without such laws.

The results were clear: communities in states with anti-corporate farming laws have lower poverty levels, lower unemployment, and a higher percentage of farms showing cash gains. Additionally, when examining only the nine states and comparing those with more restrictive laws to those with less, communities in the more-restrictive law states have lower unemployment and a higher percentage of farms with cash gains.

A 2000 study from Illinois State University on the economic impacts of large hog farms says, “the several models developed here consistently suggest that large hog farms tend to hinder economic growth in rural communities” and that economic growth rates were in fact higher in communities where traditional family farm hog production was dominant.

The Rural Development Institute (University of Wisconsin at River Falls) found that moderate-sized farms spend 75 percent locally. Its research further determined that one moderate-sized farm of $200 thousand gross income is worth $720 thousand to the community, and was equal to the impact of 8.3 households with $40 thousand incomes.

Virginia Tech University research found that family livestock farmers make 70 percent of purchases within 20-miles of their farms; the figure for corporate farms is 40 percent.

These facts demonstrate the reality that citizens, communities, and states do best when agricultural production is controlled by local farm and ranch families, and the more of them the better. But it is also true that I-300 alone cannot single-handedly guarantee the existence of healthy, independent small and midsize family farms and ranches.

Given the powerful forces of misdirected federal farm policy, the concentration in agribusinesses, and the subsequent constriction of market access, the ability of I-300 to protect producers as well as it has could easily be regarded as amazing.

Initiative 300 is not and was never intended to be the answer for all of rural Nebraska’s challenges. But it has meant that all farms must exist on a level playing field, requiring all owners of agricultural entities in Nebraska be liable for their actions and responsible to their communities. And it will never be necessary to discuss changing that.

Contact: Brad Redlin, bradr@cfra.org  or 402.846.5428, extension 24.

Wellstone Legacy Defies Conventional Politics
We still can elect good people to office who will fight for ordinary people and the common good.

That is the lesson of the life of Minnesota Senator Paul Wellstone, who died in an October plane crash. A fiery advocate for family farms, Wellstone championed reforms to provide fair and open livestock markets for family farmers, worked for reducing federal payments to mega farms, and fought to protect the nation’s soil and water. He fought, in his words, for the “little fellers, not the Rockefellers.”

Wellstone paid little heed to conventional political wisdom, which councils politicians to raise money, avoid alienating powerful interests (especially those that have money to fund campaigns), and avoid controversial stands that could be featured in opponents’ 30-second television attack advertisements. Wellstone proved that you can break the rules and succeed.

But it’s still the harder path. We make it harder by the way we collectively cast our votes. We pay too much attention to television advertising, which falls right into the hands of moneyed interests that fund expensive advertising.

We too often vote against people because they took a controversial position, rather than voting for those with the best vision for creating a future for rural America, protecting the interests of ordinary people, and serving the common good. We vote that way in part because we are inclined to believe criticism of politicians, while we are losing faith in the commitment or capacity of elected officials to do good.

Virtually everything we dislike about American politics is in place because it is effective at getting our votes. The majority of voters train elected officials to focus on raising money and attacking their opponents on television by responding with their votes. They train them to be gutless by voting against those who get hammered in attack ads for taking courageous stands.

The nation last year took a first, much needed and very modest step toward campaign finance reform. More is needed. But until it comes, we can institute our own private version of reform by tuning out the negative advertising wars that surround every election and instead voting for the candidate with the best positive vision for rural America and the strongest commitment to serving ordinary people and the common good.

We thank Paul Wellstone for restoring our faith that such candidates still exist.

Agree or Disagree? Contact Chuck Hassebrook with your comments or questions at chuckh@cfra.org or 402.846.5428, extension 28.

New Report Links Morality and Food Choices

We Are What We Eat, a report approved by the 214th General Assembly (2002), Presbyterian Church, demonstrates the connectedness between the consumer choices we make – with a particular focus on the choices surrounding our food consumption – and their affects on society. The report calls on the Presbyterian Congregation and all people of faith to be aware of how food production and agricultural policy relate to the plight of family farms, ranches, and rural communities.

The report recognizes agriculture and food production have changed profoundly, with small, independent family farms and ranches being pushed out of business by larger corporate interests. The consequences of the transformation include enormous financial hardships for family farmers and ranchers and the decline of many rural communities.

The study is to serve as a call to the Christian community, encouraging their engagement to work towards a new and better agricultural policy, one that moves in the direction that best serves the common good and reduces the negative impacts being placed on family farms and ranches as well as our rural communities.

The philosophical nature of morality is at the center of the report. It cannot be separate from the choices we make. Morality needs to be a part of our everyday choices, and it certainly must be present within this country’s public policies.

Making the Best of a Tough Situation in Small Rural Communities
All small rural communities have special assets. It takes leadership, open expression, and planning to connect them for the future.

In working with communities through project HOPE, five major assets stand out:

1. The knowledge and ability of the local people.
2. The relationships and communication within the community.
3. A strong sense of community initiative, responsibility, and adaptability.
4. A sustainable, healthy ecosystem with community benefits.
5. Diverse and healthy economies.

The process that leads to sustainability and growth begins with a holistic approach to working in the community. Current trends show a disconnection between a community and its assets. Project HOPE works through a “packaging” concept to examine the community and bring all its attributes together.

All communities have the knowledge and abilities of their people as an asset, although these mostly go unrecognized. Even if the skills have all been identified, a good leadership program can serve to mobilize people and strengthen the internal resources to move on.

A step in strengthening a community is to encourage the expression of its citizens. Suppression of people’s views and ideas leads to stagnation and little innovation. Respect, active outreach, and information sharing lead to collaborative ventures no single group could accomplish alone.

Human communities are a part of the natural ecosystem. Establishing an emotional, symbolic, or economic bond to the natural system is essential to making decisions about the resources available to help a community survive and even thrive. The best communities plan and act in concert with the natural system in which they are located.

A major step in building a community lies with a healthy economy. This is the pressure small, rural communities feel the most. In healthy economies, community residents move toward self-sufficiency and prosperity and invest in the community and themselves.

Changes in farming and greater consolidation have led to the degradation of local economies as we once knew them. Vital economies must encourage financial, natural, and human resources to create or maintain local livelihoods.

The key to survival is to plan for success. Small, rural communities are facing literal extinction and have no plans for the future. Visioning and working through a well crafted plan can help create a strategic path for survival. Resiliency and adaptability will allow communities to improve and sustain themselves for the future.

Contact: Michael L. Holton, michaellh@cfra.org or 402.846.5428, extension 27 for more information about Project HOPE.

Corporate Farming Notes
EPA issues new CAFO water pollution rules while its CAFO air pollution rules are scorned.

The Environmental Protection Agency issued its new rule on concentrated animal feeding operations (CAFO) on December 15. The new rule triples the number of CAFOs required to get a permit under the Clean Water Act from 4,500 to 15,500.

The rule goes into effect in mid-February and requires hog, cattle, and poultry CAFOs to have nutrient management plans by Dec. 31, 2006. Plans will be mandatory for operations with more than 1,000 animal units.

EPA says the rule will cost operators $326 million annually, but Congress authorized $120 million in 2002, increasing to $780 million in 2007, in EQIP funds that CAFOs may use to pay for waste management.

Further, the new rule fails to require packers to obtain water pollution permits for the farms they contract to grow chickens and hogs, some 39,000 possible permits.

The new rule is at: http://cfpub.epa.gov/npdes/afo/cafofinalrule.cfm
Source: Associated Press, Washington DC

The National Research Council, part of the National Academy of Sciences and the National Academy of Engineering, recently delivered a report commissioned by the EPA and USDA. The report examined each agency’s performance in governing CAFOs.

The report found the EPA and USDA failed to deliver financial or technical resources to gaining estimates on how much air pollution is being emitted from CAFOs, nor to developing ways to reduce emissions.

The report concluded that the EPA’s estimating of the air emissions isn’t scientifically adequate, and the agency’s proposed rules on CAFO waste management for water may increase the pollutants spewed into the air. The report is at: http://www.nap.edu/catalog/10586.html
Source: Wall Street Journal

Contact: Brad Redlin, Media and Outreach Coordinator at bradr@cfra.org or 402.846.5428, extension 24 for more information.

Value-Added Development Grant Program
A new USDA program created by the 2002 farm bill could mean dollars to farmers who are organizing value-added efforts and helping develop emerging markets.

The 2002 Farm Bill authorized the U.S. Department of Agriculture to award $240,000,000 over the next six years ($40,000,000 per year) to producers or producer groups that engage in value-added ag operations. The Value-Added Development Grant (VADG) program offers two types of grants:

PLANNING: Grants will be awarded to proposals requesting funds for organizational activities – feasibility studies, business plans, marketing plans, legal expenses, and other expenses associated with beginning a VADG business.

WORKING CAPITAL: To be eligible for a working capital grant, a feasibility study and a business plan MUST be completed prior to requesting funds. USDA will want a copy of both before a working capital award is given. Working Capital funds cannot be used for “brick and mortar” or for equipment.

The maximum dollar amount for one of these VADG awards is $500,000. A dollar-for-dollar match is required. Match funds can either be in cash or in-kind – the more cash, the better. None of the match can come from other federal dollars.

Producer Categories
Producers must fall into one of these categories to be eligible for funds:

• Individual Producer or a producer group (groups must be 100 percent producer owned)
• Farmer/Rancher Cooperatives
• Agriculture Producer Groups (Trade Association or commodity group as examples)
• Majority-Controlled Producer Based Business Ventures (producers must own 51 percent or more of this type of business)

The VADG program will fund only those proposals that include development of an EMERGING MARKET. The program will not fund proposals that concentrate on expanding an existing market. It is critical that anyone submitting a proposal clearly identify an emerging market!

Eligible Activities
Value-Added Eligibility is another critical element in developing a proposal. According to USDA, four distinct activities are considered to be value-added – and all activities must fall within one or more of these four activities (we quote USDA):

• A change in the physical state or form of the product (such as milling wheat into flour).
• The production of a product in a manner that enhances its value, as demonstrated through a business plan (such as organically produced products).
• The physical segregation of an agricultural commodity or product in a manner that results in the enhancement of the value of that commodity or product (such as an identity preserved marketing system).
• The term value-added also includes using any agricultural product or commodity to produce renewable energy on a farm or ranch (example is collecting and converting methane from animal waste to energy).

Deb Yocum of USDA Rural Development in Beatrice, Nebraska provided the Center with copies of a handout with more details about the VADG program. Contact the Center if you would like a copy of the handout.

First-Year Awards
The first year of VADG funding was recently completed. The Center helped four groups prepare their proposals, and two of them were funded.

St. James Marketplace was awarded a planning grant of $34,500. The farm women who began St. James Marketplace in Cedar County will use the funds to complete a feasibility study, a business plan, and to legally organize as a business in Nebraska.

Small Farms Cooperative, headquartered in West Point, was awarded a working capital grant of $250,000. This marketing cooperative is developing a Non-Hormone Treated Cattle program so they can supply meat to the European Union. They will be entering the U.S. natural meat market also.

Contact: Mike Heavrin, mikeh@cfra.org or 402.846.5428, ext. 15 for more information or help in applying for the VADG program.

Rural Advantage Workshop
The Rural Advantage Workshop brings a host of ideas on profits from rural enterprises on January 17 and 18. Randy Cantrell, an event organizer and Extension educator says, “Profit opportunities in Nebraska agriculture can be found in a wide variety of enterprises outside of the traditional crops of corn and soybeans.”

Marketers and specialists will share experiences and strategies for grape production, cooperatives, agritourism and agritainment, goats, woody crops, farmers markets, festivals, and more.

Keynote speaker is retired University of Missouri ag economist John Ikerd, a renowned speaker on farm opportunities and rural values. Center staffer Michael Holton will address a session on value-added opportunities.

The Workshop will be held at the York, NE Holiday Inn. Registration is $50 (Friday night’s all-NE dinner and wine/cheese tasting is another $22) by January 7 at 402.362.5508. The schedule is available online at http://ardc.unl.edu/ruraladvantage.htm

For members of farmer/rancher groups, the Nebraska Cooperative Development Center offers a limited number of travel/registration scholarships to events like this one. Contact Jo Lowe at 877.496.5235 or look online at http://ncdc.unl.edu/

Farmers Want to Know How to Manage Risk: New Seminars Will Help
Are you a risk taker or a risk avoider?

Surveys indicate nearly one-third of Nebraska farmers are uncomfortable with their knowledge of risk management, and 42 percent have a strong interest in learning more about risk management tools.

The Center is responding to that need by providing seminars in early February to beginning farmers and ranchers, experienced farmers and ranchers, and their lending and insurance advisors. USDA is a partner in these workshops.

Joy Johnson, farm transfer specialist at the Center says, “Coupling education on crop insurance, financial management, and other traditional risk management tools with sustainable practices will serve a broader audience interest and will bring together a complete group of tools for innovative risk management strategizing.” Johnson is coordinating the day-long seminars.

Beginning February 3, Exploring Your Risk Management Toolbox will be presented across five regions of Nebraska. The seminars will provide information and interactive learning on risk management tools such as crop insurance, revenue insurance, financial management, basis contracts, forward contracting, sustainable systems, and futures and options.

Whether you are a risk taker or risk avoider, you’ll find the risk management tools that are right for you.

 Contact: Joy Johnson at 402.846.5428 or joyj@cfra.org for more information.

Big Trouble for Small Schools Again
Big Trouble IV, the Center’s annual report taking an in-depth look at the effects of Nebraska’s school state aid formula on funding for our schools is now available.

The Center has released the update of Big Trouble for Small Schools: An Analysis of the Effects of LB 806. As with past Big Trouble reports, there are clear winners and losers as a result of the school aid formula in Nebraska.

This year the report compares state aid for the 2001-02 and 2002-03 school years rather than the cumulative effect of state law since the 1997-98 school year. Circumstances in the 2001 and 2002 legislative sessions caused funds for public schools to be reduced rather than the previous normality of redistributing expanding resources.

The report also finds that larger schools are becoming increasingly impacted by the school aid formula. Despite the presence of a higher number of larger schools on this year’s list, small schools still dominate the list of schools suffering significant cuts in state aid.

Big Trouble for Small Schools IV is available on this website or by contacting Kim Preston at the Center for Rural Affairs, 402.846.5428, extension 31 or kimp@cfra.org .

Editor: Marie Powell