An unsung farm bill hero, rural development needs more champions: Agri

WASHINGTON, March 19, 2017 – U.S. farmers are getting grayer, their national numbers are on the decline and fewer young people are moving back to farms and ranches. The average age of a principal operator of a U.S. farm is now over 58 years old.

Absent opportunities for manufacturing, recreation or other industries, many of their surrounding small towns are dying off, too. It’s a vicious depopulation cycle in some areas: Young people move out for job opportunities and don’t ever move back, schools consolidate, basic services start to crumble, and the tax base erodes.

The rural population in 2015 stood at 46.2 million – just 14 percent of the U.S. population on 72 percent of the land mass. That represents a decline of 136,000 people between 2010 and 2014, according to USDA’s Economic Research Service. The number of principal operators on farms has been dropping, too – from 2.2 million in 2007 to 2.1 million in 2012.

Is rural America destined to decline? Some say the answer is “no,” but will also argue that attitudes will have to change.

“It’s been very difficult to get people in rural America to believe – particularly within the agriculture production community – that this is not a zero-sum game,” notes Tom Dorr, an Iowa farmer and former USDA under secretary for Rural Development.

“If you get creative and have people work together there is a big opportunity to grow the (economic) pie.”

Dorr says that the projected growth in the middle class globally is going to dramatically alter how U.S. agriculture and rural America should view the opportunities in food and agriculture and energy.

“But until we have a serious conversation about that potential, it will be very difficult to reverse those trends on a broad scale.”

RD help available

There are several places where farmers, rural entrepreneurs and small-town business owners can seek help to create jobs and stimulate the economy in rural areas through farm bill programs, but the most prominent is USDA’s Rural Development (RD) mission area.

It’s an unsung and some would say underappreciated farm bill “hero” of sorts. With names like “Individual Water & Wastewater Grants,” “Community Facilities Guaranteed Loan Program,” and “Value-Added Producer Grants,” the offerings are not particularly sexy or flashy. But with more than a $216 billion loan portfolio, there’s plenty of potential. And rural leaders say there is plenty of need.

Shortly before President Donald Trump was inaugurated, leaders of over 200 organizations wrote that the “scope of the investment needed is staggering” across rural America.

The letter states that “transportation infrastructure improvement is the most obvious need in rural communities,” but also highlights the “critical needs” that “exist in providing clean water for rural families, expanding broadband to connect rural communities to the outside world, and enhancing the ability to supply affordable, reliable and secure power for the rural economy.”

Bob Fox, a Minnesota farmer and Renville County commissioner says that businesses looking to plant roots in a rural community often ask about the quality of roads first and the speed of broadband, second.

Bob Fox“It just makes a world of difference in what you can do as a business person with that broadband speed,” he told Agri-Pulse. “We have to find a way to get broadband across all of the United States.”

A study conducted for Cornell University’s Community and Regional Development Institute underscores his point. It found that rural counties with the highest levels of broadband have the highest levels of income and education and lower levels of unemployment and poverty.

But according to the most recent Broadband Progress Report, 34 million Americans still lack access to broadband benchmark speeds. This baseline map (below) visualizes broadband access at the county level and identifies connectivity gaps — the lighter the color, the lower the percentage of households with broadband access.

Building out high-speed broadband in rural areas is not easy or cheap, as Catherine Moyer, CEO of Pioneer Communications, pointed out during a recent Senate Agriculture Committee field hearing.

Pioneer is a local telecommunications provider located in southwestern Kansas, serving a 5,000 square mile area – roughly the size of Connecticut but with over three million fewer people than that state.

“We provide 21,000 total connections to wireline voice, high-speed broadband and video services over a network that utilizes a mix of fiber, copper and coax facilities,” Moyer testified. “On average, we have just over two subscribers per square mile. However, when considering that 81 percent of our customers live in our small population centers, the “density” of our rural subscribers per square mile drops to just under 0.5.

“Put another way, 81 percent of our customers reside in approximately 15 square miles, while the remaining 19 percent reside in the other 4,985 square miles.

One might ask why we serve these areas, she noted in her testimony. “We are the provider of last resort –in addition to legal obligations to serve these consumers and businesses who were left behind long ago when larger companies picked first where to serve. If Pioneer does not provide them now with service, there is no one else available to do so.”

Distance, density make a difference

USDA has long history of bringing essential services to remote rural areas where few private investors fear to tread – often because of distance and population density.

Some of the federal government’s early efforts to help farmers and rural residents started during the depths of the Great Depression. In 1932, the Federal Emergency Relief Administration started aiding rural families, followed by the Farm Security Administration and the Work Projects Administration, the Congressional Research Service points out in an overview of USDA Rural Development Programs.

Most of the early federal focus was on farmers, who generated the majority of the rural economic activity at that time and who often lacked basic services. The Rural Electrification Act of 1936 provided subsidized loans and grants to rural electric cooperatives, eventually providing access to electricity all across rural America. A similar build-out occurred in 1949, when telephone cooperatives also became part of the program.

In 1964, the Farmers Home Administration (FmHA) was established to replace the Farm Security Administration. The agency offered loan and grant programs, for farms, water systems, rural housing and emergency relief.

But as farms consolidated as a result of economic conditions, mechanization and the adoption of new technologies, the federal focus expanded beyond the farm gate to the wider rural landscape. So did program management.

When Congress passed the Consolidated Farm and Rural Development Act of 1961, it authorized a major expansion of USDA lending. The title was changed in 1972 to the Consolidated Farm and Rural Development Act, often referred to as the “Con Act.” As amended, the Con Act currently serves as the authorizing statute for USDA’s rural development lending programs.

As part of the 1990 farm bill, the Rural Development Administration was established and absorbed all non-farm FmHA programs. By 1994, the FmHA programs were transferred to the Farm Service Agency, and Rural Development underwent more streamlining and reforms.

The Federal Crop Insurance Reform and Department of Agriculture Reorganization Act of 1994 authorized creation of the position of Under Secretary for Rural Economic and Community Development within USDA, and further consolidated the USDA RD portfolio into four mission areas:  the Rural Housing Service, the Rural Utilities Service, the Rural Business Cooperative Service, and the Office of Community Development.

Title VII of the 1996 farm bill expanded the portfolio to include telemedicine and distance learning, increased grant funding for water and waste facilities and established the Rural Community Advancement Program (RCAP) and the Fund for Rural America, one of the first USDA RD programs established with mandatory funding.

In the 2002 farm bill, lawmakers expanded the number of USDA RD initiatives funded with mandatory spending, including the Rural Strategic Investment Program. However, most RD loan and grant programs are still funded through discretionary appropriations on an annual basis.

Silos of support

While a wide array of Rural Development programs can offer many options for helping keep farmers on the land and rural businesses growing, this part of the farm bill is often not considered to be a high priority for national farm organizations. For commodity groups, it’s usually something that surfaces after the commodity, crop insurance, and conservation titles.

And even among its most stalwart advocates, congressional staff say that support for RD is often splintered in respective silos. For example, rural water advocates do a great job lobbying for water programs and the same is true with the rural electric cooperatives, advocating for low-interest loans. And organizations like NTCA-The Rural Broadband Associationhave been actively promoting expansion of broadband.

But during the last farm bill debate, rural advocates say there was not a strong enough coalition of all rural and farm groups “beating the drum” for a more comprehensive approach to job creation in rural areas. 

“Everybody has their top-line interests. It’s not that those interested in Title one aren’t interested in RD (Title Six), it’s just that they may be more interested in protecting some parts of the farm bill more than others,” recalled a source who worked on the last farm bill.

Long-time staff members remember seeing some renewed interest in RD from farm leaders, starting in early 2000.

Farm groups have RD history

“The lack of profitability in production agriculture has many growers looking for ways to extract greater value from their production.”

While this quote could have been echoed just about anywhere in 2017, that was National Corn Growers Association President Lee Klein, testifying before the House Agriculture Committee in 2000.

At the time, Klein said that “value-added is perhaps the most talked about trend at the coffee shop today.” And NCGA was at the forefront of looking for new ways for growers to make a buck.He went on to describe how the 1980 farm crisis caused a spurt of interest in rural development and alternative agriculture, both of which tend to move people away from or out of traditional crop production. But two decades later, the value-added discussion seemed to be “geared toward using modern technology to extract more value as opposed to getting out of production agriculture.”

Klein led one of the nation’s largest commodity organizations, focused primarily on helping corn farmers. NCGA saw how the Renewable Fuel Standard, created as part of the Energy Policy Act of 2005, later helped spark an ethanol boom. As a result, small ethanol plants started popping up in small towns across Nebraska and the Midwest. For some communities, it was the only new employer they’d seen in decades.

But Klein also understood how difficult it was to create jobs and opportunities to draw young people back to farms and, more broadly, rural America. At that time, he lived near the small town of Battle Creek – population 1,158 – in Madison County, Nebraska. (See highlighted county on map.)

In general, value-added companies create jobs for rural America and help reverse population declines. Oftentimes, these jobs serve as a pathway to savings or skills that can help some of those younger residents generate enough income to take over the next generation of farms. 

However, Klein was quick to point out to lawmaker another cultural barrier that could hamper rural job creation – “fears of change.”

“Concentration issues could very easily prevent growers from forming alliances and partnerships with corporate America,” Klein noted in his testimony.

Klein didn’t offer specifics, but most people who live in rural areas understand the complexity. Rural citizens may want new jobs, but they don’t want just “any” type of farms or companies moving in with promises of job creation. That’s why attracting new businesses – even with high paying jobs – is somewhat of a slippery slope.

For example, the prospect for a big new dairy operation or meat processing plant coming into the area raises red flags about the potential for more immigrant workers and environmental hazards. And discussion about improving roads, sewers and sidewalks isn’t usually a welcome discussion for those who live on fixed incomes. Instead of seeing “job creation” they see the potential for a local tax increase to pay for the improvements.

Another corn grower leader described the dilemma more bluntly when asked to explain the cultural challenges associated with rural business development.

“Some people want their small town to live only one day longer than they do.”

Building a broader coalition 

As Under Secretary of Rural Development under President George W. Bush, Tom Dorr was an outspoken critic of business as usual. While some saw rural declines, he saw rural opportunities. One of his outreach efforts was to brand Rural Development as a solution to a multitude of problems, rather than a set of isolated programs. He knew he needed a broader coalition of support to make changes.

At one point, he recruited 28 members of organizations that touched both farmers and rural America for a visit to Europe in an effort to gain understanding and support for the interconnectivity of rural economic development and farm economic development. The trip was sponsored by the German Marshall Fund and the Rural Policy Institute Research (RUPRI) at the University of Missouri.

For Don Villwock, who served as president of the Indiana Farm Bureau at that time, it was a chance to “personally witness what a public policy commitment could do to promote and establish pristine small rural towns where the best and brightest citizens wanted to live. Their rural landscapes were breathtaking and the pride of local officials was outstanding. Representatives from corn, wheat, soybean, pork, cotton, beef, as well as the National Farmers Union, American Farm Bureau Federation and the National Association of Counties were invited to see how the European Union was moving away from direct supports for commodities to programs that paid to develop and sustain rural areas.

“Rural development is about building a community in which residents want to live, work and have their children and grandchildren play,” Villwock told Agri-Pulse“If we expect our communities to grow and thrive they need some of the basic infrastructure that urban towns and cities take for granted. These underdeveloped small towns need adequate water and sewer resources.

“Today, having high speed internet is as critical for economic development as access to rail and roads.Having excellent and close-by health and child care is key as well to retaining professional workers. Grants by the public sector and assistance by USDA economic specialists can be the spark needed to turn around rural communities and change the lives all across rural America.”

RUPRI Director Chuck Fluharty also participated in that EU tour and wanted farm leaders to think differently about the rural development challenges they faced back home.

“The rural America that existed when the first Rural Development Act was passed in 1972 is gone. The ensuing four decades have forever altered the economic, demographic, social and political fabric of the American countryside,” Fluharty said.

“And, as we all know, the nature of farming, and its relative importance to broad, rural economic development, has also radically changed,” Fluharty wrote in the Drake Law Journal while addressing rural development issues. “Until the 1970s, most agreed that a solid agricultural development program was the best rural development policy that could be envisioned.

“However, this is no longer the case. As the maps show, even in 1969, a great swath of rural America was very minimally impacted by agricultural employment. (As a map below) starkly illustrates, even in 1969, a great swath of rural America was very minimally impacted by agricultural employment.

“Four decades later, no one argues that employment in farming is a meaningful rural economic driver.”

Fluharty pushed for a regional approach to rural development, where not every community wins independently but communities within a region win collectively. Testifying before the House Committee on Agriculture, he had outlined a plan for moving USDA toward a Regional Rural Innovation framework, based on three core tenets:

  • It should center upon rural innovation, entrepreneurship, collaboration and strategic investments.
  • It must incent public, private and philanthropic investment cooperation, and build regional frameworks for action.
  • Special attention must be given to diversity, gender, poverty and immigration concerns.

In several states, farm leaders were already embracing the important interdependence between farm and rural.

In 2006, the Iowa Farm Bureau Federation launched “Renew Rural Iowa,” to provide education, mentoring, recognition, connections and financing for rural entrepreneurs.

“Nearly 90 percent of Iowa’s farmers rely on off-farm income, so it’s important to encourage entrepreneurs as well as helping existing businesses grow,” said IFBF President Craig Hill in a release noting the 10-year anniversary of the program.  “Encouraging small businesses helps maintain young families in rural Iowa, which keeps schools alive and Main Street open, which is integral to Iowa’s rural heritage.”

At the national level, the American Farm Bureau Federation was coming to the same conclusion. After studying rural development issues, then-AFBF President Bob Stallman said his organization gained a better understanding about the importance of investing in rural America.

“Our study showed that, for the business of agriculture, rural America was more important to agriculture than agriculture was to rural America, in terms of economics,” Stallman explained.

“The light bulb went on that we needed to focus more on rural development and infrastructure issues because, at the end of the day, that was going to allow agriculture to be more successful than it was otherwise.”

That led to AFBF adding a full-time staff member to address rural development issues in 2008. They could not have found a more passionate rural advocate in their first hire.

Sabrina Matteson, the American Farm Bureau Federation’s director of rural affairs, understood that rural development was a relatively small part of the whole farm bill, but it was still significant.

Rural development is really important because it makes our country a more secure nation,” said Matteson shortly after being hired. “We are very productive agriculturally. We can feed ourselves and there aren’t very many countries that can make that claim. Most of the food for our country comes from rural places. But where farmers live has to have a high enough quality of life in those rural communities so that the next generation will be willing to live and work there.”

After Matteson’s death, AFBF’s new director of Rural Development Dr. Lisa Benson continued the organization’s rural development push. AFBF – together with Georgetown University’s McDonough School of Business Global Social Enterprise Initiative and the Georgetown Entrepreneurship Initiative’s StartupHoyas – launched the Farm Bureau Rural Entrepreneurship Challenge – the first national business competition focused exclusively on rural entrepreneurs working on food and agriculture businesses. Rural entrepreneurs pitch innovative business ideas to a team of judges with expertise in business development and agribusiness. These business owners compete for $145,000 of startup funds.

But even as more farm organizations were embracing their “inner rural,” the topic continued to receive relatively little attention compared to other farm bill titles. 

 “The farm economy was strong enough to encourage more young people to look at agriculture,” recalled a commodity group leader. “Few people were focused on the cyclical nature of agriculture, and the next downturn.”As the last farm bill was being developed in 2011 and 2012, farmers were once again receiving record prices for their crops and livestock. For many of them, thoughts about investing more in rural development once again moved to the back burner.

“Everybody is for things like research and rural development, but when it comes to writing a new farm bill, there is no question that the priorities are on the basic farm programs, crop insurance, risk management…. the payment system,” former Secretary of Agriculture Dan Glickman told Agri-Pulse.

Focus on streamlining, simplification

Starting with the Super Committee process in 2011, then Senate Ag Committee Chairman Debbie Stabenow knew there would have to be cuts in a new farm bill. One of the ways to do that was to streamline and consolidate programs.

Rural Development, with dozens of programs that sometimes overlapped, was ripe for that type of effort. There were 11 different definitions of “rural” and it was often difficult to figure out which program could best apply where.

“We really need a simple system for rural counties to get the resources we need,” Bob Fox, the county commissioner from Minnesota, told Agri-Pulse. “We don’t have a lot of resources or the employees with time for going after grants.”

Throughout 2011, 2012, and 2013, agriculture committee staff pushed hard to make several farm bill reforms that could simplify Title VI, as well as build on the regional approach that Fluharty had long advocated for. The final conference report embraced a few of these changes.

For example, the rural development title authorized a new Strategic Economic and Community Development initiative to prioritize projects that support economic development plans involving multiple jurisdictions. Ten percent of the appropriation for this program was carved out for projects that met the new criteria for strategic development.

Other programs were eliminated or combined. For example, he Rural Business Enterprise grant program and the Rural Business Opportunity grant program were eliminated and their functions were combined in the new Rural Business Development Grants program.

More focus was given to “local” foods – those products that travel less than 400 miles from farm to consumer. Section 6014 re-authorized loans and loan guarantees for locally or regionally produced food products, with the program targeting low-income and underserved communities without access to fresh fruits and vegetables.

A new Rural Gigabit Network Pilot Program was created to bring ultra-high-speed broadband to more rural areas. And an Essential Community Facilities Technical Assistance Training Program was authorized to provide technical assistance and training for those who need to prepare reports and surveys needed to request federal funds.

But one of the biggest opportunities for change – a reorganization and restructuring of the Consolidated Farm and Rural Development Act (the Con Act) never made it into the final bill. It was included in the Senate-passed 2013 farm bill, but there were no similar provisions in the House-passed version of the bill. In conference, the proposal was dropped.

Likewise, the effort to streamline the definition of “rural” and other revisions ended up on the conference room floor, as a Congressional Research Service Report on the RD title indicates in a side-by-side comparison of the House and Senate passed versions of the bill.

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“There was good buy-in on the Senate side to make a number of changes in the RD title,” explains a source close to the 2013 farm bill debate. “But there was a lot of skepticism on the House side and ultimately, many reforms were dropped.”

Committee members also discovered that, while they had many RD advocates, they also had strong lobbyists working against provisions like broadband.

“Some of the major telecommunications companies, like Comcast, have a lot of lobbyists working to make sure that they are not disadvantaged by any programs designed to help smaller rural providers expand broadband,” recalls a source who worked on the last farm bill.

“When you go into a farm bill debate, you are always looking for ways to convince other committee members to take a specific action. You need to recognize that there is always someone working equally as hard against you.”

Looking forward, rural development advocates are looking for more champions – both within the agriculture committees and within the broader farming communities.

“I just wish the major farm groups would not forget about RD when it comes to the next farm bill,” says a former lobbyist. “If you don’t have someone standing up as a champion on a daily basis, it really hurts the cause.”

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