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Review of Key USDA Competitive Grant Programs
Center briefs Congress: improvements needed to enhance beginning and mid-size farm profitability and community success USDA grant programs earned low scores in a new Center study examining effective expenditure in four federal agricultural research, marketing, and business development programs serving small and mid-size farmers and ranchers. Combined funding for the two-year study period totaled $500 million.
On May 19, Kim Leval, senior research analyst, and Amanda Tuttle, project assistant, held Congressional briefings in Washington DC on The Impact and Benefits of USDA Research and Grant Programs to Enhance Mid-Size Farm Profitability and Rural Community Success: A Preliminary Report.
Using the Freedom of Information Act, 2001 and 2002 proposals were requested for the Rural Business Enterprise Grant (RBEG) Program, National Research Initiative (NRI), Initiative for Future Agriculture and Food Systems (IFAFS) and Value Added Producer Grant (VAPG) Program. |
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>> Practical Farmers of Iowa has plans for 20 field days this season. PFI
marks its 20th Anniversary and, iIn celebration, Ron and Maria Rosmann will host an
event on June 30. The Rodale Institute’s George DeVault and PFI co-founder Dick Thompson will share memories of the research collaboration that laid the groundwork for PFI’s later work. For more information, call 515.232.5661or go to
www.practicalfarmers.org.
>> The Leopold Center for Sustainable Agriculture at Iowa State University invites proposals addressing their three initiatives: ecology, marketing and food systems, and policy. Check the Leopold website for the specific issues they will consider funding,
www.leopold.iastate.edu . Pre-proposals are due July 15.
>> Heritage Organics, an agricultural for-profit earned income venture of Heritage Conservancy, a nonprofit regional land trust located in Southeastern Pennsylvania, is looking for a Director.
Their focus is sustainable agriculture, with a significant emphasis on farmland preservation. Send a letter of interest including salary requirements with resume to: Heritage Conservancy, c/o Human Resources, 85 Old Dublin Pike, Doylestown, PA 18901-2489.
>> The National Campaign for Sustainable Agriculture has hired Deb Burd as executive director. A University of Maine graduate, Burd was named after
a nationwide search. The Campaign is an alliance of hundreds of organizations, including the Center. |
Insufficient data for the VAPG Program resulted in its exclusion from preliminary results. Proposals from the other programs were reviewed on measures relevant to rural community impacts, small and mid-size farm and ranch profitability, and affects on agricultural structure and beginning farmers and ranchers.
Projects were scored on a traditional letter grade scale to judge the relative contributions to intended recipients. Overall merits of the project were not addressed.
Marks for the three programs were disappointing. IFAFS scored the highest, with an average of 76 percent of a perfect score. RBEG and NRI projects received an average score of 47 percent each.
RBEG projects scored highest for creating marketing and consumer relationships. Many of the high-scoring projects concerned creation of local and regional farmers’ markets, direct marketing vehicles, and farmer-consumer links.
NRI projects did not score high on any measure. Their highest marks were appropriate scale of research and technology and reducing environmental compliance costs. They scored lowest in building rural business infrastructures and farmer-consumer links.
IFAFS projects generally scored higher than RBEG in building rural business infrastructures, creating farmer-consumer links, and creating economic choices for rural people.
All three programs were generally lacking in projects benefiting beginning farmers and ranchers. Given the demographics of agriculture in America, the inability of major USDA research and grant programs to address the topic of beginning farmers and ranchers is disappointing.
The Center undertook this project in cooperation with Iowa State Extension with funding from the Leopold Center for Sustainable Agriculture. The report is available on the Center’s website,
The Impacts and Benefits of USDA
Research and Grant Programs (16pp pdf file).
Contact: Jon Bailey, jonb@cfra.org
for more information or to request the Rural Action Brief series.
With Business Sense, Dollars Follow Statistics show small businesses are the economic generator for local income. Frequently, that means starting your own business. But the key is using business sense
before you make the leap into your own business.
It’s all about the cash. Point one on your ‘important things to know’ list: You can lose money for years and still have a company. But when you are out of cash, you are out of business – period. So realize that creating a great product or service is vitally important, but getting the cash into the bank has to be your focus or you won’t be around long.
To that end, here are things you need to know, or do, before you open your door on Main Street or on the Internet.
Understand how profit and loss works. The facts on this point are stark: a recent study found 70 percent of business successes had taken a course in accounting basics, and 90 percent of failures had not. Don’t handicap yourself before you get started!
Make a financial plan. This is also known as a Business Plan. Don’t shudder. This is the most important pre-launch time you can spend if you want your business to be a success. Your business plan is your road map to success and the method to avoid the dangerous dead ends that eat time and money. Done correctly, it will force you to look at reality.
Simple questions lead you to dig for important answers. Who needs my product?
How often will they need to buy it and how much will it cost me to purchase the raw materials or to provide the service?
Where are my customers located? What will it cost me to reach them?
These questions will help you plan for success, since it will also help anticipate needs and avoid surprises.
Planning means access to help. Your business may take time to grow into profit, yet perhaps you have upfront costs for equipment or inventory. Loans and investment money are the way you bridge the gap in money, but banks and investors like to know that you know what you are doing.
Of course, they only loan money to people that have proven they will try to use it wisely. Your business plan tells them you have given the matter serious thought. It is also vital information before you can ever borrow money from a bank, small business lending association, or qualify for economic development funding.
More importantly, it is another key to avoid failure. Again, businesses that don’t start with a business plan are the most likely to fail.
Many organizations and institutions are available to help you with this, including local economic development operations, some community colleges, and Small Business Association (SBA) lenders. In Nebraska, our Rural Enterprise Assistance Program (REAP) sponsors classes on how to write a business plan.
Maintain your personal balance. Too often, only the checkbook balance figures into your business plan. Starting your own business will require your time and your money – and lots more of both than you think.
Be upfront with your family and yourself, and recognize that you need to maintain the balance between work, self, and family to achieve real success. Otherwise, overwork and burnout cause you to lose everything. Remember to enjoy the journey as much as the result!
Contact: Russ Gifford,
russg@cfra.org or 402.687.2103 x 1009 for more
details.
Invitation to Discuss Facts about Rural Revitalization
I have been writing articles for the newsletter for about three years and have been actively involved in community development with over 20 communities in some way or another. Over that time, five undeniable facts have emerged that need to be addressed.
These facts, plainly stated, are:
- Trends that show little to no hope for small rural communities are wrong. It takes great effort, but small rural communities can survive and even flourish. That is clear from our involvement with the HOPE project and other community revitalization efforts.
- Rural youth want to return and live in the area where they grew up. Every survey we have conducted through the Center indicates that youth do care about the community and want what is best for it and for them.
- Youth do not want to be “retained.” They want to be given opportunities for growth and prosperity like their parents had, better known as “youth attraction.”
- Entrepreneurial growth is the strongest mechanism for small community
survival, not industrial business attraction. Traditional economic development still leans on industrial recruitment as the main form of economic growth, and it has clearly not worked. For every home run, there have been countless strikeouts. Even if a business is lured to a small rural community, the incentives needed may be too high a cost for the community to bear. There are no guarantees the business will stay long anyway.
- Small rural communities don’t all suffer from the same problems. No model can fix the woes of all small rural communities. It may come down to leadership or it may be as simple as a housing issue.
We, as community development providers, must recognize that only the community can address their problems. The best we can do is to provide the resources for them to get the job done.
I will be starting an email dialogue with people interested in community development. If you
want to participate, please contact Michael L. Holton at the Center (see below).
Contact: Michael L. Holton, michaellh@cfra.org
or 402.687.2103 x 1015 for information.
Mandatory Binding Arbitration Contracts Opposed by Growers
Center signs on to a ‘friend of the court’ brief supporting a Mississippi court decision ruling a binding arbitration clause unenforceable
Mandatory binding arbitration clauses in poultry and livestock contracts are being challenged in court. The Rural Advancement Foundation International
(RAFI-USA) filed a friend of the court brief to the Mississippi Supreme Court in the case of Kenny Austin v Sanderson Farms Inc. The Center and 25 other organizations signed on to the brief.
The Chancery Court of Jefferson Davis County, Mississippi ruled that a binding arbitration clause in Sanderson Farms’ hatching egg contract was unenforceable. The ‘friend of the court’ brief supported the Chancery Court’s ruling.
The plaintiffs in this case want to take Sanderson Farms to court for using an unfair payment scheme. A similar case was successfully settled against another Mississippi poultry integrator, Choctaw Maid. That settlement resulted in an objective payment system for the growers.
Since the Sanderson Farms contract has a mandatory binding arbitration clause, the courts must rule the clause is unenforceable before the farmers have the right to pursue their complaint of unfair practices in court. Poultry and livestock integrators are inserting binding mandatory arbitration clauses in production contracts to prevent farmers from using legal action if they have been somehow cheated, discriminated against, or harmed by company actions.
If allowed to go unchallenged, these clauses will rob farmers of their right to seek justice through the public courts. Legislation is also being pursued to offer farmers a choice of venues to resolve disputes with livestock and poultry contracts. For more information, contact Laura
Klauke, RAFI USA, 919.845.4615 or laura@rafiusa.org
Contact: Traci Bruckner, tracib@cfra.org
or 402.687.2103 x 1016 for more information.
Farmers’ Markets Grow Revenue and Profits
Think farmers’ markets are small time? Think again.
Farmers’ markets in Iowa generated an estimated $20.8 million in sales and more than 325 jobs for the Iowa economy in 2004. Those are big dollars in anyone’s book, but they are especially telling in rural America.
These figures are from an economic analysis prepared for the Regional Food Systems Working Group
(RFSWG) led by the Leopold Center for Sustainable Agriculture. According to Rich
Pirog, director of the Leopold Center’s Marketing and Food Systems Initiative, “There’s more hidden economic value in Iowa’s farmers’ markets than meets the eye.”
In 2004, Iowa had around 160 farmers’ markets, the highest per capita in the nation. At least 55,000 people went to a farmers market every week, with total seasonal attendance set at 135,000. An additional 12 markets are expected to open in 2005.
The report estimates that the $20.8 million in sales at farmers’ markets resulted in an additional $4.3 million in supplies and services purchased by vendors and growers, and $7.2 million in induced (payroll) effects. In all, the Leopold report estimates the markets generated $12.2 million in ‘roll over’ dollar activity.
The analysis also noted that farmers’ markets represent an estimated 325 jobs in Iowa, plus an additional 146 full-time jobs created by the secondary impacts of the farmers’ markets.
“This study really shows the multiplier effect of farmers’ markets in a community,” said Virginia
Gieseke of Des Moines, who manages the Drake Neighborhood Farmers Market. “But farmers’ markets have many other impacts that cannot be measured, such as the ability to gather people in a community and provide fun and educational activities.”
Fresh Promises, a study by the Center for Rural Affairs of rural economic development practices, clearly shows the key to ‘holding on to the profits’ is in the preparation and delivery of the final product. As this news about farmers’ markets demonstrates, this is not small change, but major revenue for rural areas.
For more information on economic development practices for rural areas, find the
Fresh Promises report on our website.
Contact: Russ Gifford, 402.687.2103 x 1009 or
russg@cfra.org for more information.
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Feature
article:
SACI: Weakening America’s Rural Communities
Editor’s note: Last month we described the President's Strengthening America’s Communities Initiative (SACI) as “the wrong idea for community development in most of rural America.” This month we present our analysis of the details of the initiative.
Summary of the New Initiative
The major economic and community development policy initiative in the President’s FY2006 budget is the Strengthening America’s Communities Initiative (SACI). The SACI proposal would eliminate 18 economic and community programs and consolidate their activities into the new program.
The President’s proposal would also cut funding from $5.6 billion for the 18 programs to $3.7 billion for SACI, 65 percent of the current funding for the programs targeted for elimination and consolidation.
SACI will replace the following USDA programs:
- CDBG Formula Grants
- National Community Development Initiative
- CDBG Set Asides
- Brownfields Economic Development Initiative
- Rural Housing and Economic Development
- Urban Empowerment Zones Round II Grants
- Community Development Loan Guarantees
- Economic Development Administration
- Rural Business Enterprise Grants
- Rural Business Opportunity Grants
- Economic Impact Grants
- Rural Empowerment Zones (EZ)/Enterprise Communities (EC)
- Community Development Financial Institutions (CDFI)
- Bank Enterprise Award (BEA)
- CDFI Native Initiatives
- Community Services Block Grant
- Urban and Rural Community and Economic Development
- Rural Community Facilities
Summary of Findings and Analysis
- Only 0.3 percent of the population in a six-state Great Plains/Midwest region live in areas that may qualify for SACI funding.
- SACI may provide funding to only 2 percent of municipalities in the Great Plains/Midwest region and 1 percent of the region’s counties.
- Low unemployment is the reason for the lack of SACI-qualifying municipalities and counties in the region. Nearly 23 percent of the region’s municipalities have income low enough to meet the definition of “distress.”
- All municipalities and counties meeting the definition of “distress” and the income criterion for “distress” are rural (except for one metropolitan county in Kansas that meets the income criterion).
- South Dakota may receive the most benefit from SACI, with 2.2 percent of its population residing in areas that meet the “distress” definition. Iowa, Kansas, and Minnesota may receive the least SACI funding relative to population.
The SACI criteria of low-income, poverty, unemployment, and job loss will not work for most rural municipalities and counties because of low unemployment rates and the lack of significant job loss (due to a lack of large employers).
Who Qualifies for the Initiative?
According to the administration, SACI is intended to target assistance to “economically-distressed areas.” Eligibility criteria for SACI will include job loss, unemployment levels, and poverty. Beyond these general statements, specific criteria and measurements have not been established.
The federal government, however, has already established a definition of “economic distress” for other economic and community development programs, including the Community Development Financial Institutions (CDFI) program (one of the programs being eliminated by SACI). According to statements from economic development experts and federal officials, any SACI definition of “economic distress” will likely be similar to the CDFI definition.
The existing federal definition of “economic distress” for any geographic unit is:
- 20 percent of the population living in poverty (as determined by the most recent census)
- median family income at or below 80 percent of the metropolitan area median family income, the national metropolitan area family median income, the statewide non-metropolitan area median family income, or the national non-metropolitan median family income, whichever is greater and whichever applies (most recent census)
- an unemployment rate at least 1.5 times the national average.
With that definition, we will examine how many counties and municipalities in the rural Great Plains and Midwest would qualify for SACI funding.
Qualifying Municipalities and Counties
Using data from the 2000 Census (and the current national unemployment rate), we found that very few municipalities or counties in the Great Plains and Midwest will qualify for the SACI program if the income, poverty and unemployment measures discussed above are used.
(See tables with this information in the Rural
Action Brief.)
Of the qualifying municipalities, 27 are “CDPs” or “Census Designated Places,” unincorporated population centers (1 in Nebraska, 3 in Minnesota, 7 in North Dakota, and 16 in South Dakota). It is not known if CDPs would qualify for SACI, but if they do not the number of qualifying municipalities is further reduced.
Of the 13.6 million population of these states (based on the 2000 Census), only 0.3 percent of the region’s residents reside in municipalities or counties that may qualify for SACI funding. While only about 2 percent of the region’s municipalities may qualify for SACI funding, nearly 23 percent of the region’s municipalities have income levels low enough to qualify.
Congressional Action on SACI
Both the House and Senate adopted their budget resolutions on March 17, 2005. The House Budget Resolution includes language that would provide an additional $1.1 billion “to accommodate higher appropriations for programs such as the Community Development Block Grant. The resolution makes no assumption regarding implementation of the President’s Strengthening America’s Communities Block Grant.”
The Senate Budget Resolution includes an amendment that would restore $2 billion in funding for CDBG and related programs that would be eliminated under the President’s proposal. The House and Senate will need to reconcile their budget resolutions. Then House and Senate Appropriations Committees will consider appropriation levels for programs, including SACI and the 18 programs it would replace.
Implications for the Rural Great Plains
- Unless the qualifying criteria are changed, SACI will not work for rural areas of the Great Plains and Midwest because of low unemployment and a lack of large job losses.
- The number of low-income municipalities and counties demonstrates that low-incomes and low-paying work are the real issues facing the rural Great Plains and Midwest; SACI-qualifying criteria should recognize this.
- Many low-income municipalities and counties may lose crucial funding to assist in modernizing community infrastructure, developing small businesses, and creating jobs; this loss of funding will make these communities less economically viable.
- Rural towns and counties – generally without full-scale economic development departments – will compete with fully-staffed economic development departments serving qualifying metropolitan areas, and the competition will be over fewer funds.
- Funds would also be lost to non-governmental organizations that provide community and economic development services to rural areas.
- Economic development, community development, and infrastructure investments for the vast majority of the region’s residents will have to come from increasingly strapped municipal, county, and state governments, often necessitating increased property taxes.
Contact: Jon Bailey, jonb@cfra.org
or 402.687.2103 x 1013; Kim Preston, kimp@cfra.org
or 402.687.2103 x 1022.
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Rural People Must Have a Say over Land Use in Ecotourism
Grasslands 2010 would preserve large expanses of grassland for ecotourism and could help to diversify rural economies
Natural space in farm and ranch communities is becoming a precious commodity to urban dwellers who yearn to reconnect with nature.
The Grassland Foundation of Lincoln, Nebraska, and the World Wildlife Fund office in Bozeman, Mont., are launching a program called Grasslands 2010. They propose blocks of at least 100,000 acres of grasslands managed for native wildlife and plants open to ecotourists and other forms of outdoor recreation.
That could attract new families to rural America to start new business and revitalize communities. And it could draw tourism dollars to support the local economy.
But how it is approached can make all the difference. Pursued in the wrong way, it could undermine family ranches and shift ownership, control, and income out of the rural community. But approached right, it could be a community controlled initiative working with family agriculture to diversify the local economy.
Two factors are critical. First, any tourism-based development must be part of a strategy to foster small, locally-owned businesses. Tourism-based economies tend to be notoriously inequitable. They often create big profits for multinational companies that control hotels and concessions – but only minimum wage jobs for community members.
Most important, rural people must be brought to the table to shape these initiatives. We have the biggest stake in these developments. In a democracy, that should entitle us to some say. For more information, contact Chuck Hassebrook, 402.687.2103 x 1018 or
chuckh@cfra.org
Rural Community Development in Nebraska Legislature
A promising legislative package to revitalize rural communities has the support of the Governor and rural legislators
This session of the Nebraska Legislature may end as one of the most positive for rural community development, though it will be weeks before anything is finalized. For other states, it could provide legislative and strategic models.
The months leading up to the session were not especially promising. Corporate leaders were unifying around expensive enhancements to corporate job creation and relocation tax subsidies. Rural development and small entrepreneurship were scarcely mentioned.
But things changed. The Nebraska Rural Development Commission presented a legislative package to revitalize rural Nebraska through small business development and value-added agriculture for family farms – including several provisions initiated by the Center. Key rural legislators demanded action and pledged that no economic development package would gain their support if it didn’t help rural Nebraska.
The tax incentive package created to address corporate concerns now also includes a microenterprise tax credit for businesses with fewer than six employees in rural and inner cities areas. A coalition of rural legislators has developed a package of proposals to support value-added agriculture, ethanol, and entrepreneurial community development. Rural legislators have secured the support of the governor.
We’ll report on the outcome in our July newsletter.
Contact: Chuck
Hassebrook, 402.687.2103 x 1018 or chuckh@cfra.org
for more information.
Small Town Ideas Generator Premieres
Minnesota Public Radio has created an online collaboration to generate enthusiasm and good ideas for overcoming the many challenges facing small towns. You can find it at
http://minnesota.publicradio.org/smalltowns
.
Participants can help determine the best ideas by rating and commenting on submissions. Ideas will be incorporated into the third annual Symposium for Small Towns, sponsored by the University of Minnesota-Morris and Minnesota Public Radio. For more information go to
www.morris.umn.edu/services/cst/symposium/2005/index.htm
The Small Town Ideas Generator will also help Minnesota Public Radio News track key and emerging issues facing small towns. “This is a great chance for us to tap the knowledge and insight of folks who live in small towns and who care about their future,” says Andrew Haeg, senior producer and analyst for Minnesota Public Radio’s Public Insight Journalism initiative.
Two More Heifer Livestock Loans Awarded During May, the Center for Rural Affairs and Heifer Project International worked together to help two beginning farmers get access to livestock – something they normally wouldn’t have been able to do.
Heifer Project International’s mission is to work with communities and people to end hunger and poverty and to care for the Earth. In the United States, the work of HPI has traditionally focused on economically depressed rural areas and, more recently, in urban settings.
During the last year, the Center combined with Pennsylvania Farm Link, the University of Vermont Center for Sustainable Agriculture, and the Minnesota-based Land Stewardship Project to form Farmers – A New Generation (FANG). The concept of this arrangement is to empower young beginning farmers to overcome barriers in access to livestock and to help them get started.
In the winter of 2004, the Center hosted a training session based on the “Tilling the Soil” curriculum. The extensive training, one of the requirements of the Heifer loan, assists in business plan development and in understanding the program. Two young Nebraska men,
Shawn Satorie of rural Decatur and Klint Stewart of rural Stanton attended these classes.
Eric and Konnie Frederick of Randolph attended a similar training in Plainview, Neb., which prepared them to receive a Heifer loan. In the spring of 2004, the Center made our first loan to the Fredericks to raise Boer goats.
Subsequent loans were scheduled for the following fall or winter. Both Shawn and Klint applied, submitting business plans to raise different types of cattle. Given the loan maximum of $10,000 apiece, the young farmers had to convince a committee of bankers how they could make this work.
(Photo shows Klint Stewart's new heifers.)
Their plans also had to be reviewed by a committee of their peers, along with those of other heifer applicants, to see if the business plans were feasible. After passing these rigorous requirements along with the intensive 10-week course, they then had to find the livestock they wanted to purchase with the funds.
Heifer Project International helped train Center staff in the philosophy of their program to better understand their mission. The cornerstones of the Heifer organization are:
- Passing on the Gift
- Accountability
- Sharing and Caring
- Sustainability and Self-reliance
- Improved Animal Management
- Nutrition and Income
- Gender and Family Focus
- Genuine Need and Justice
- Improving the Environment
- Full Participation
- Training and Education
- Spirituality
If you take the first letter of each cornerstone of Heifer, you will come up with ‘passing gifts.’ All organizations and farmer groups are evaluated according to these principles.
We congratulate Shawn Satorie and Klint Stewart for their successful acquisition of a loan and the livestock needed to give them a good start in farming. Contact Michael L. Holton for more information,
402.687.2103 x 1015 or michaellh@cfra.org
REAP Grants $9,000 in Awards to Women Nine women microentrepreneurs in Halsey, Naper, Seward, Central City, Fairbury, Peru, O’Neill, and Roca, Nebraska each received a $1,000 cash equity award from the Center’s Rural Enterprise Assistance Project (REAP).
REAP is one of only eight Local Partners to the national Women and Company Microenterprise Boost Program, which provided the cash equity awards to assist the women in growing and developing their businesses.
REAP clients who received the awards include:
- Diane Goodier, Halsey Stockade Inn, Halsey
- Linda Goodman, Lynn’s Upholstery, Naper
- Pat Coldiron, Liberty House B & B, Antiques and Gifts, Seward
- Missy Hillmer, Hillmer Photography, Central City
- Ann Yates, Honey Creek Vineyards & Bakery, Peru
- Keri York, Therapeutic Dimensions, Fairbury
- Linda Tynon, IADA (International Assoc. of Destination Agents), Peru
- Jan McNichols, The Emerald Spa, O’Neill
- Rose Templeton, Body Wise Health /Nutrition, Roca
Recipients were selected through an application process. Awards can be used for essential business development activities such as marketing, technology, website development, inventory, or professional services. Recipients also receive technical training and assistance from REAP on growing their business and maximizing their equity award.
Women and Company®, a division of Citigroup, provides access to financial education and resources for women, and is working with AEO to implement and promote this program.
New REAP Northeast Business Specialist Please help us welcome Adriana Dungan to the Center’s REAP staff. Adriana is the new Northeast Nebraska REAP Business Specialist replacing Karen Linnenbrink, who took a position based in Norfolk, Nebraska after several years of stellar service to REAP.
Adriana most recently worked as the Health Promoter for the NAF Multicultural Human Development Corporation at South Sioux City and was Director of Training at Mission Mateo 25 at Sioux City, Iowa.
She instructed REAP’s Spanish-version business plan training at South Sioux City and was instrumental in helping to form the new REAP Asociación de Comercio Latino (REAP Latino Business Association) Roundtable group there. Adriana will be based in South Sioux City. Welcome aboard!
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