CENTER FOR RURAL AFFAIRS STATEMENT at the NATIONAL RURAL NETWORK PRESS AND CONGRESSIONAL BRIEFING

STATEMENT OF JON BAILEY
DIRECTOR, RURAL RESEARCH AND ANALYSIS PROGRAM
CENTERFOR RURAL AFFAIRS
NATIONAL RURAL NETWORK PRESS AND CONGRESSIONAL BRIEFING
MARCH 15, 2005


Good afternoon. My name is Jon Bailey, Director of the Rural Research and Analysis Program at the Center for Rural Affairs in Lyons, Nebraska.

I am here today because rural communities – especially those in the Midwest and Great Plains – are suffering.

Many rural communities are becoming the repositories of the poor and aged. The entire middle of this country is emptying out, devoid of young people, schools, churches, businesses and other institutions. And devoid of a most important ingredient – Opportunity.

The future of much of rural America lies in creating an economic policy focused on asset-building strategies, providing both opportunity and ownership. Only this type of framework will build the broad prosperity needed in rural America.

The President’s FY06 budget proposal speaks of creating an “ownership society,” but it neglects to provide opportunity. The budget proposal will do nothing to address the issues of economic distress and depopulation present in much of rural America. Many of the programs targeted for elimination hit rural people and rural places the hardest. In fact, the budget proposal will exacerbate the economic distress in rural America and accelerate rural depopulation.

One budget example of this effect is the Small Business Administration Microloan Program. It provides assistance to entrepreneurs with a dream but little collateral, business experience or capital. The Microloan Program specifically serves low-income entrepreneurs who are in abundance in rural America. Over 40 percent of the loans in the Microloan Program go to rural entrepreneurs compared to only 6 percent in other SBA programs.

The Microloan Program is vital to rural communities. Our research shows 70 percent of job creation in the 1990s in the rural Midwest and Great Plains came from non-farm small businesses like those served by the Microloan Program.

Without programs that serve the unique needs of entrepreneurs and small business owners who live and work in rural communities, the economic dreams and opportunities of rural people will vanish. Yet the SBA Microloan Program is targeted for elimination.

Another example of how the budget proposal does not serve the needs of rural America is the slashing of funding for the Value-Added Producer Grant Program. Value-added agriculture is the other piece of the entrepreneurial-based economy that represents the economic future of much of rural America. Value-added agriculture allows farm and ranch families to remain on the land by taking advantage of emerging markets for specialized products. Programs such as the Value-Added Producer Grant Program are vital for small- and moderate-size farm and ranch operations to compete in a world of low commodity prices and global marketing. Since 2002, the Value-Added Grant Program has lost over 60 percent of its Farm Bill funding level.

The President’s FY06 budget proposal represents a retreat from what can truly bring about a revitalization of rural communities – a combination of public resources to modernize and enhance community infrastructure and economic development built on asset-building strategies. Such a combination would build a true Opportunity and Ownership Society in rural America.

Unfortunately, the FY06 budget proposal neither recognizes this possibility nor makes it a priority.

2006NRNBudgetAnalysis.pdf