As You Sow, So Shall You Reap

As You Sow, So Shall You Reap

by Elisha Greeley Smith, Center for Rural Affairs, elishas@cfra.org

In 1978 there were 350,000 farmers and ranchers 35 years old or younger in America. It’s estimated that by 2007 there will be less than 70,000 such farmers nationwide. Farm bill rhetoric always focuses on retaining farmers. But the rapidly shrinking number of younger farmers and ranchers means that the passage of time alone will claim a vast majority of America’s farms and ranches, unless we act now.

Rural communities must realize the importance of a new generation of farmers and ranchers. New agriculturalists are imperative to the future of rural communities. New generations of farmers and ranchers mean viability of rural businesses, schools, and communities.

There are many young people who dream of farming and ranching. But land prices, artificially inflated by unlimited commodity program payments and 1031 tax exchanges, make that dream impossible for many.

The Beginning Farmer and Rancher Development Program, authorized in the 2002 farm bill but never funded, was designed to support training, mentoring, linking, education, and planning activities to assist beginning farmers and ranchers. The next farm bill should invest at least $15 million per year in this concept.

Beginning Farmer and Rancher Land Contracts allow USDA to provide loan guarantees to sellers who assume the higher risk of selling land on contract to beginning farmers and ranchers in Nebraska, Minnesota, and California. The 2007 farm bill should reauthorize this as a nationwide program.

There are many other ways to invest in the rural America’s next generation, but the time to act is now.

post a question or comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action.

Rural America Can Thrive with Smarter Investments

Rural America Can Thrive with Smarter Investments

By Chuck Hassebrook, Center for Rural Affairs, chuckh@cfra.org

America can invest in creating a future for its rural communities, or we can continue the misplaced federal priorities that are destroying them. The choice is ours. If rural people and our representatives lead, we can create a better rural future. There are practical strategies that work to revitalize 21st century rural communities. But local initiative must be matched by federal policies that support rural revitalization, rather than hinder it.

The 2007 farm bill provides the vehicle to set a new direction. The debate is starting. We must begin by building on what has worked. Small-scale entrepreneurship has been the most successful strategy for creating genuine opportunity and drawing young families to rural America. While overall private employment has fallen in rural Arkansas, employment has grown in micro enterprises—businesses with five or fewer employees.

Small business development and active citizens are creating success stories across rural America. For example, a Nebraska community of 2,200 – hours from the nearest metropolitan area – recently drew 10 young professional couples to live and $ 20 million of new investment.

It could not have happened without local people taking responsibility for the future of their community. But also critical was outside support from federal and private funders, including the Kellogg Foundation.

Similar opportunities exist in Arkansas and across the nation – wherever communities can muster the necessary combination of local initiative and investment to support them. But funding is limited.

The 2007 farm bill is our chance to right the priorities. We must begin by supporting the small businesses that have been the economic backbone of small communities. One early version of the last federal farm bill proposed a $ 15 million program to provide loans, technical assistance and training to rural micro enterprise.

But in the end, the program was stripped and instead the federal government spent that much money in annual subsidies to just five mega farms. The next farm bill should resurrect the program to support rural micro enterprise.

The farm bill should also support community initiative. A Nebraska pilot program offers a model. It provides grants to communities to nurture small business, develop new leaders, engage youth and foster local philanthropy to support community development. A better-funded federal program could revitalize communities across rural America.

The next farm bill should also foster agricultural entrepreneurship. The last farm bill created a $ 40 million Value Added Producers Grants programs to help family farmers tap higher value markets and add value to their products. It has provided grants to several Arkansas initiatives. But after just one year, Congress cut most of the money to meet federal budget targets without restraining payments to mega farms.

It’s all about the money. But we do not have to choose between having effective farm programs and effective rural development programs. We just need a reasonable balance between spending on immediate income support and investment in our future. The single most effective thing Congress could do to strengthen family farms is to cap federal farm subsidies—subsidies used by mega farms to bid land away from smaller farms and drive land prices to higher levels that squeeze profit margins.

A payment cap that cut farm program costs by just eight percent would free money to more than double spending on rural development and make a ten-fold increase in support for rural small business development. It would provide rural people the support they need to shape their own destiny and restore vitality to their communities. And it would strengthen, not hurt, small and mid-size farms.

But efforts to cap mega farm payments have been blocked by southern opposition. It is critical that southern leaders come forward with alternative approaches for reducing mega farm subsidies that work in the South. If we continue the current misguided federal policies we’ll continue rural decline. But it does not have to be that way. The 2007 farm bill is our opportunity to set a new direction that offers hope for a better future to rural people and communities. It will be largely written by members of Congress from rural states, including Arkansas. It is our opportunity to shape our destiny.

post a question or comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action.

Lower Skilled Workers in Rural America Face Permanent Job Loss

The Carsey Institute - Amy Glasmeir and Priscilla Salant

Summary

Increases in productivity and international competition are changing the nature of work in rural America. Job losses are mounting in communities where low-skill employment has dominated the economy. From 1997 through 2003, over 1.5 million rural workers lost their jobs due to fundamental changes in industries that have historically been the mainstay of the rural economy.

The rate of this job loss is increasing as firms seek to lower their costs through automation and the use of cheaper labor outside the U.S. In rural America, workers in manufacturing were hardest hit – from 2001 to 2003, one in ten displaced workers were employed in manufacturing.

Looking ahead, the data show that workers with only a high school education, regardless of the industry in which they work, are especially vulnerable. Job loss has devastating impacts on families and children. The lack of security that accompanies displacement creates severe stress on the previously employed individual.

Loss of a long held job and limited prospects for immediate reemployment create economic insecurity for the family and can lead to a loss of self esteem, declining health, increased marital discord, a reduction in the ability to parent, an increase in abuse of alcohol and other substances, and an increased likelihood of divorce.

In families where an unexpected loss of a long held job occurs and reemployment is slow, children experience a decline in school performance, increased anxiety and emotional maladjustment.

This policy brief reviews data on job displacement nationally and in rural communities, with a focus on regions of the country where job losses due to displacement are significant and the rate of displacement has been increasing. The findings shed light on the distinct experience of rural America and have clear implications for public policy that impacts workers, families and communities.

to see the full report, go to -
www.carseyinstitute.unh.edu

post a question or comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action.

Center Launches Rural Development Virtual Libraray

Rural Development and Rural Asset-Building Virtual Library

Enhancing opportunity through the building of assets and wealth is the most promising strategy for creating a future for rural communities and their residents. This "virtual library" contains resources we have developed to champion such strategies.

Our research into rural development and rural asset-building strategies is made possible through the support of the Ford Foundation and the Otto Bremer Foundation.

“Assets like businesses and houses bond one to a place and help to build sustainable communities. Individuals and families build an asset base that lifts the veil of poverty and dependence on low-wage work. Communities become stronger and more viable as opportunities and ownership are expanded to a wider group of people.”

Jon Bailey, Director of Rural Research and Analysis Program, Center for Rural Affairs

The Center for Rural Affairs has several resources available on rural development and rural asset and wealth-building. Links are to Adobe Acrobat PDF files.

Building Wealth in Rural Communities: The New Homestead Act and Individual Homestead Accounts examines the potential Individual Homestead Accounts have to bring about positive impacts to individual well-being and community welfare – business startups and expansions, job creation, education and skill enhancement, improved housing and greater retirement security.

Building Wealth in Rural Communities: USDA’s Value-Added Producer Grant Program examines the U.S. Department of Agriculture's Value-Added Producer Grants Program, which helps to leverage private dollars for critical investments in business enterprises that strengthen struggling rural communities.

Fresh Promises: Highlighting Promising Strategies of the Rural Great Plains and Beyond a report on examples of good rural development efforts by individuals, communities, and organizations. We include six categories of rural economic and community development that are crucial for viable rural communities, especially those that are agriculturally-based.

Strategies to Revitalize Rural America a compilation of a special series of articles from the Center for Rural Affairs newsletter answers the question, "What can we do to reverse decline in agricultural communities?" We outline 7 strategies, ranging from from federal policy to entrepreneurship.

2007 Farm Bill Rural Development White Paper a look at what the Center for Rural Affairs is proposing for the Rural Development Title of the next farm bill.

Health Care in Rural America a two-part series from the Center's August and September 2004 newsletters. Part I looks at the health care status of rural Americans, and Part II discusses possible solutions.

Rural-Urban Business Links: Previous Efforts and Lessons Learned examines past efforts on linking rural and urban businesses, focusing on lessons learned. Attempts in Nebraska are concentrated upon, but efforts in other states (and some lessons learned in international initiatives) are also highlighted.

Related items on rural development and rural asset and wealth-building:

Rural Action Briefs are published quarterly and on special occasions and analyze Federal Executive, Legislative, and Administrative action concerning rural development and asset-building programs and initiatives. They use a 6-page newsletter format.

Issue Briefs provide analysis and comment on critical and emerging issues of significance to rural people and rural places. They offer quick information and analysis people can use to get more up-to-date on a particular issue.

Contact Jon Bailey, jonb@cfra.org or Kim Preston, kimp@cfra.org for more information on the Center's Rural Development and Rural Asset-Building Virtual Library. You may also request to be added to our email distribution list that lets you know when new resources have been added.

post a question or comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action.

Nebraska Unicameral Update

LEGISLATIVE UPDATE - Nebraska Unicameral
MARCH 27, 2006

Budget Bill Heads to Final Approval

On March 23, the Legislature gave second-round approval to LB 1060, the main budget bill, by a 36-0 vote. The Final Round vote will likely take place this week.

During Select File debate, the Legislature voted to delete $500,000 sought by the Governor and recommended by the Appropriations Committee for a study of the state’s child welfare system. The amendment to delete this funding was offered by Sen. Howard and approved by a 25-11 vote. The amendments’ winning argument centered on the existence of previous studies of the child welfare system containing recommendations that have not been enacted or implemented (including some in legislation killed during this session).

The Legislature also voted to delete provisions approved during first-round debate concerning funding for women’s health care services. These were the provisions offered by Sen. Foley that became mired in abortion politics. The Legislature voted 26-5 on Select File to reverse course, with several Senators changing their votes. Sen. Pederson, Appropriations Committee chair, stated that the Health and Human Services Committee will conduct an interim study of the issue.

Finally, the Legislature approved adding $428,000 in state funds for multiagency drug task forces across the state to replace funding cut at the federal level.

Tax Bill Sailing Along

On March 22, the Legislature voted 28-1 to send LB 968 – the Revenue Committee’s tax cut package – to Select File.

Most of the General File debate dealt with whether the package is sustainable and whether it would leave the state’s reserve fund at risk. Sen. Beutler argued that the package was too large and would leave the state only $19 million above the legally mandated reserve at the end of fiscal year 2006-07 and the state budget over $194 million out of balance in fiscal year 2008-09. Sen. Landis, chair of the Revenue Committee, argued that the package was meant to appeal to a broad range of taxpayers and that the budget could be adjusted to fit the tax cuts if the Legislature considered it a spending priority.

Sen. Landis offered an amendment to appropriate an additional $5 million in each of the next two years to the Ethanol Production Incentive Cash Fund (EPIC). There is a projected shortfall of up to nearly $93 million by FY 2011-12 in the EPIC fund. Sen. Chambers offered an amendment that would have eliminated the additional EPIC funding, claiming that ethanol subsidies should be unnecessary and that the ethanol industry should depend on the marketplace. Sen. Chambers’ amendment failed on a 1-28 vote, and Sen. Landis’ amendment was adopted 32-1 (Sen. Landis’ amendment also would permit the sales tax exemption on construction labor – one of the largest portions of the tax cut package – to begin in July rather than October).

Select File debate of LB 968 will likely commence this week.

Clock Ticking … Big Issues Remain

In a sure sign that the Legislature is nearing the end of the session, evening sessions began last week with more scheduled this week.

Though the budget and tax cut proposals are nearing completion, some major items that were on the Legislature’s agenda in January have yet to see debate; with 13 days remaining in the session, time grows short for the consideration of some. The dispute between the Omaha and suburban school districts has yet to find a consensus resolution, and efforts failed last week to advance a proposal out of the Education Committee. On March 24, a special committee voted to recommend impeachment of University of Nebraska Regent David Hergert. The recommendation now goes to the Executive Board of the Legislature, a majority of whom are already on record as supporting impeachment. If the Executive Board approves drawing up articles of impeachment, the issue would then be sent to the entire Legislature for consideration. This issue has the potential to use much of the rest of the session’s days.

Legislative Lingo

Throughout the course of these updates, we will be using certain terms that describe where a bill is in the legislative process. Here is a brief guide to those terms and some basic legislative procedure:

Committees have a number of options for each bill – send as introduced to the full Legislature for General File, send to General File with amendments, Indefinitely Postpone (or kill) the bill, or hold the bill over to the 2006 session.
Once a bill is sent to the full Legislature out of committee, it faces three possible stages – General File, Select File and Final Reading.
At the General File and Select File stages a bill can be amended; a bill cannot be amended at the Final Reading stage.

As bills are killed in committee or become law through floor stages, they will be deleted from the Legislative Update.

Bills Update

As in the past, we will divide into categories the bills we are working on or tracking. Any bill designated a Priority Bill will also have a “P” attached to its number (for example, LB 123P). The chief sponsor of the bill is listed in parentheses.

The words Support or Oppose after a bill description indicate where the Center for Rural Affairs has taken a position on the bill. If neither word is indicated, the Center has not taken a position at this time.

Based on further analysis and Priority Bill designations, this week we’ve added a few bills to our list.

Agriculture/Livestock

LB 132 (Cunningham) –This bill modifies the Nebraska Pasteurized Milk Law. The bill sits on General File. Support
LB 346P (Agriculture Committee) – Would modify several provisions of the Beginning Farmer Tax Credit Act all with the goal to increase utilization of the tax credit. The bill sits on General File. Support
LB 834 (Kremer) – Would preempt any local government action to regulate the registration, labeling or sale of seed based on the “type, nature or genetic makeup.” The bill awaits action on General File. Oppose
LB 916 (Kremer) – Would implement the state Competitive Livestock Markets Act (passed by the Legislature in 1995) in the event the federal mandatory price reporting law is not re-authorized by Congress. The bill awaits action on General File. Support.
LB 990P (Wehrbein and others) – Would allow tax credits for livestock modernization projects under the Nebraska Advantage Rural Development Act. On March 22, the bill was advanced to Select File on a 41-0 vote. Sen. Kremer has proposed amending LB 346 (above) into the bill. The bill awaits action on Select File.
LB 1004 (Hudkins) – Would allow for promotion of Nebraska-made wine and liquor by allowing holders of farm winery licenses to obtain a special license to sell or consume alcohol. The bill awaits action on General File.
LB 1109 (Schrock) – Would modify rules for the rejection, suspension or revocation of livestock waste permits. The bill awaits action on General File.
LB 1195 (Schrock and others) – Would require counties to allow permits or variances to existing livestock facilities to construct or modify livestock waste facilities if the purpose of the permit or variance is to comply with state or federal regulations. The bill awaits action on General File (though it is unlikely to receive further attention since a similar provision was amended into LB 975, which was signed into law).

Education/Schools

Note: Several mentions are made below to LB 126 – a reminder this was the bill passed by the Legislature, vetoed by the Governor and overridden by the Legislature in 2005 that requires all Class I (elementary-only) school districts to assimilate with a K-12 district. A citizen’s petition seeking the repeal of LB 126 will be on the November 2006 General Election ballot.

LB 129P (Education Committee) – An overhaul of the formula for state aid to schools. The bill is awaiting action in the Education Committee.
LB 839 (Hudkins) – Would order the State Committee for the Reorganization of School Districts to issue orders reestablishing Class I and Class VI (high school-only) districts if 2005’s LB 126 is repealed in November. The bill awaits action by the Education Committee. Support
LB 1050 (Wehrbein) – Would establish a study committee on the costs and benefits of countywide school districts. The bill awaits action by the Education Committee.
LB 1119 (Heidemann and others) – Would delay all provisions of LB 126 until 2007. The bill awaits action by the Education Committee. Support
LR 253CA (Hudkins and Fischer) – A proposed constitutional amendment that would require a vote of the people in affected districts on school mergers, dissolutions or affiliations. This is similar to a petition proposed by a group of Class I supporters for which signatures are being sought. The bill awaits action by the Education Committee. Support

Taxes

LB 775 (Wehrbein) – Would reduce the sales tax rate to 5% after October 1, 2006 (from 5.5%). The bill awaits action by the Revenue Committee.
LB 849 (Redfield and others) – This is the Governor’s income tax reduction proposal. The bill awaits action by the Revenue Committee.
LB 896 (Preister) – Would establish a renewable energy tax credit against the income tax of the producer of electricity by renewable means. The bill awaits action on General File.
LB 968P (Redfield) – This is now the Revenue Committee’s tax relief proposal. The bill awaits action on Select File.
LB 1006P (Bourne and others) – The Governor’s school property tax levy proposal. The bill awaits action by the Revenue Committee (though a similar provision is included in LB 968).
LB 1239 (Raikes) – An income tax “simplification” plan. Would collapse income tax brackets into two rather than four – above and below $75,000 for estates and trusts and single and married filing separate taxpayers, and above and below $150,000 for joint and head-of-household taxpayers. The bill awaits action by the Revenue Committee.

Other

LB 188P (Beutler) – Modifications to the Nebraska Campaign Finance Limitation Act. On March 23, the bill was advanced to Final Reading on a 33-2 vote (Senators Erdman and Smith voting ‘no”). The bill awaits action on Final Reading. Support
LB 554P (Beutler) – Would increase the state minimum wage. The bill awaits action on General File.
LB 1198 (Connealy) – Would authorize on-farm sales and use of biofuels by adding “microscale producer” to the definition of “producer” in existing motor fuels laws. The bill awaits action on General File. Support

post a question or comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action

A Young, Southern, Cotton Farmer's Perspective

A Young, Southern, Cotton Farmer’s Perspective

by Steve, a beginning cotton farmer in Georgia

I find the more I look the average age of the American farmer is rising sharply. Why is that important? Just like any other creature, if its habitat is destroyed it soon dies off. The habitat for young and small farmers is disappearing very fast. Land prices have gone through the roof and USDA payments are going to larger and larger farms.

The estimate from the Environmental Working Group is 10% of farms receive 80% of government payments. People argue that isn’t right but I can tell you in my area it’s pretty accurate. Partnerships are allowed to draw as much money as they can get partners for. Four 10,000-acre partnership farms that seem to have an endless supply of relatives and foremen who want to be their partners surround me.

Because of the competition for land from the large farms almost all of the USDA program payments in my area are bid into cash rent and land prices, making the government subsides basically useless or harmful to me. I consider myself pretty optimistic but with the current farm bill I don’t see much of a future in agriculture for small or young farmers unless you are willing to lend your name and social security number to a partnership farm.

I wish my situation could be blamed on poor farming or management at least then some young farmers would make it. I am however a good manager and farmer. Three weeks ago I was at the first ever Georgia Quality Cotton Awards and my cotton had the highest loan value in the state and a yield well over two bales. If I can’t make it who can?

I don’t feel overly optimistic about my future as a farmer even though I have been able to build some equity in my equipment over the last few years. Land prices and large partnership farms drawing unlimited government payments are the two largest obstacles for me. The Georgia Farm Bureau Young Farmer Committee this year listed land availability as the biggest challenge facing their operations so at least I know I’m not alone.

I am currently in Washington DC participating in a National Farmers Union fly-in to lobby Congress on farm and rural policy. By the end of my trip to Washington I will have spent over a thousand dollars of my own money and four days of my time. I’m sure I will learn a lot and meet a lot of great people while here but my main hope is to inform the people representing the farmers of our country the effects of the large loopholes in the current farm bills payment limits and the inability of young and small farmers to acquire land, our habitat.

Two things congress can do to help the future of young and small farmers.

First put a payment cap of no more than 360,000 without allowing the three-entity rule in any extension of the farm bill. If the current farm bill is not extended, the payment limit loopholes need to be closed in the new farm bill and USDA needs to enforce the payment limits, not help mega-farms find a way around them. The Three entity rule is one of the main tools farmers use to become larger than average and circumvent payment limits.

Second through tax incentives and targeted lending make it attractive to sell land to young and small farmers. It should be possible to give tax credits to people who sell to small or young farmers. It should also be possible to tax people at a high rate who take farm and timber land out of production for development. Also the IRS 1031 tax exchange should be taken away from people who use farm and timber land as tax shelters and are hunting a place to reinvest their money to avoid paying taxes after making millions on real estate development deals.

Each year the land of my community is being purchased by people from Atlanta and Florida who can buy three to ten times as much land as they just sold. The problem with this is that land costs for farmers are rising rapidly because these 1031 tax exchanges and purchases by large, aggressively expanding mega-farms are setting the land market. Cash rents rise accordingly and farmers’ rent checks are leaving town and not coming back, leaving less local money to circulate in the community.

The vicious cycle caused by unlimited federal farm commodity programs:

1. unlimited government payments finance expansion, big farms get bigger;
2. well financed operations use capital to gain higher and higher yields;
3. over production results, and prices drop;
4. competition for land causes land costs to rise (mega-farms bid up cash rents);
5. neighbors have to outbid each other for land, while prices drop – this causes friction;
6. higher yields and low prices = higher government payments;
7. high cash rents and artificially inflated land values invites speculation, foreign & domestic;
8. less and less local ownership of land; as prices get higher locals know the profitability of the land cannot sustain the selling price;
9. less circulation of local money, more rent money going out of town, less of a chance for local communities to survive, beginning and small farmers struggle to survive;
10. further consolidation occurs, and the cycle repeats

The end result is that our current farm legislation is devastating rural America. About 80% of payments are going to the top 10% of recipients. It is causing a rapid consolidation of our farms and land. This in turn leaves rural America with fewer small businesses. It replaces them with no jobs or minimum wage jobs working for mega farms. This creates less and less of a sense of community and fewer and fewer of rural America’s children returning to the farm. As a result of this failed farm policy, the average age is rising and small towns are dying all across rural America.

post a question or comment here, or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action.

A Place To Live - A voice from the past

Consider this, as the debate over another farm bill begins...

-- from a newsletter from Orville Freeman, Governor of Minnesota from 1955 to 1961, Secretary of Agriculture under Presidents Kennedy and Johnson and one of the founders of the modern Democratic-Farmer-Labor party in Minnesota.

A Place to Live, the Yearbook of Agriculture, 1963 --- Forward:

This is a time and this is a book that call for discussion, cooperation and vision to channel great forces of change in directions that ensure that America will always be a good place to live.

The signs of change are everywhere. We see them in the growth or decline of communities, the building of highways and other facilities, the moving of people to new homes and jobs, the renewal of cities and the growth of suburbs, the enlargement of some farms and the disappearance of others, questions about the place of family farms as a dynamic force in agricultural production, shifts in the uses of land, and changes in our human relationships, institutions, and aspirations in rural and urban America alike.

But the meaning and the relentless force of the changes and their diversity become fully clear only if we fit them into a broad perspective, just as we need a map of all major highways, not only the roads in our own county, when we start a long trip.

A perspective, such as this book aims to give, discloses that a new economic order is taking shape on American farms, in rural America, and in cities. It is a product of a technological-scientific revolution, which began 200 years ago and has speeded up tremendously in the past few years.

Its effect on agricultural production has been almost beyond belief. Its effect on farmers and communities that could not keep up with its fast pace has been sorrowful. It has made agriculture miraculously successful, but it is a warning signal if the changes, like an automobile out of control, are so fast, so undirected, or so unmindful of traffic signs and lights as to jeopardize the well-being of people.

I give some examples. The farmer whose fields are too small or too rugged or too poor for machines cannot compete with bigger farmers. Economic slowdown has hurt some rural communities. Many of the people who have quit farming since 1950 have moved to cities. But cities, too, have had problems, and many of their residents have gone to the suburbs to seek a better place to live. Nationally a new situation has arisen, compounded of changing and growing needs for more land for industry and more water for everybody; for more and better community services; for a reevaluation of the uses of land; and for plans for the wise, enduring use of land, water, forests, open spaces, air, rivers, and seashores.

All such changes are challenges to direct American energy, American dynamism, American ability, and, yes, American humanitarianism toward a greater fulfillment of the American goal. We have an opportunity to bring closer together all parts of our population, our economy, and our geography and so to help us realize that the prosperity of city people is tied closely to the well-being of rural people, that many distinctions between city and country no longer are true, and that the United States is one Nation, indivisible.

Another opportunity, related to all the others, is to plan for our future and the future of later generations as individuals, as communities, and as a Nation: How can we best use our abundance for the good of all?

We can extend and speed up our efforts to conserve our wealth of human and physical resources for tomorrow's needs and today's unmet needs. As President Kennedy said, "In the work of conservation, time should be made our friend, not our adversary. Actions deferred are frequently opportunities lost, and, in terms of financial outlay, dollars invested today will yield great benefits in the years to come".

Of all our resources, the most valuable are people. Changes in rural America left many rural people disadvantaged. Less than a third of our population is rural, but more than half of the 8 million American families whose yearly incomes are below 2,500 dollars live in rural areas. More than one-fifth of the 22 million youths who live in rural America are members of poor families. Many of our people are unemployed. Many are underemployed. Many need training for new work. Many need help.

To help people, the Department of Agriculture, which has a long and glorious history of service to all Americans, has embarked on Rural Areas Development programs. Their aims are to revitalize and recapitalize town and country, to improve or redevelop physical resources, to put the resources to work for all America, and to provide new or improve public facilities and new economic opportunities….

They will have a great and good effect on our family farms, which as productive units have met the test of time but which have been threatened by forces outside of farming. As I said in a statement before the Subcommittee on Family Farms of the House Committee on Agriculture on July 11, 1963: 'I believe the family farm system is worth preserving because it has social worth as well as economic value. But if we are realistic, we must recognize that the family farm will continue only if it is an efficient producer of agricultural products in terms of current scientific, technological, and management practices.' Most of the people on these farms want to be farmers. It is their chosen profession. They want to stay on the land and in their community. We should help them realize their desire, but where the farming resources are clearly inadequate, we should make available additional opportunities so that such families can have a decent American standard of living.

All America will benefit in many ways. It is in the spirit of the American tradition of giving every man a chance.

We have also the opportunity to assess the function of government in the work before us. I, myself, believe the Federal Government must take a leading part in rural economic development because of its wide scope. But the work also requires investment capital and the help of commerce and industry. It will require the resources of State and local governments, but it can succeed only with the initiative and leadership of local people.

To the fulfillment of these opportunities, we commit our imagination, technical skills, and powers. Let us not seek tasks to fit our talents. Let us rather pray that our talents fit the obligations before us."

--U.S. Secretary of Agriculture and former Minnesota Governor Orville L. Freeman

post a question or comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action.

The Corporate Sow Ain't Won Yet

There have been many so called “experts” who have recently opined that the days of anti-corporate farming laws are numbers. This opinion is a product of an over simplified analysis of the fact that a federal judge struck down South Dakota’s anti-corporate farming law, commonly known as Amendment E, and that Nebraska is currently appealing a federal judge’s order striking down Initiative 300, Nebraska’s constitutional prohibition of corporate farming.

But anti-corporate farming laws, ordinances and related policies do not seem to be waning, numerically at least. In Pennsylvania, 12 townships and five counties have passed anti-corporate farming legislation. In North Dakota, three counties have recently adopted rigorous guidelines for industrial livestock facilities in response to efforts to site large operations there.

And while states such as Iowa and Illinois have eliminated the rights of counties to utilize zoning to exercise some control over the type of livestock production in their jurisdiction, in other states, like Nebraska and North Dakota zoning is alive and well, and on the increase in North Dakota.

In Missouri, local battles over industrial livestock operations continue to rage. Fourteen counties have passed ordinances restricting the expansion of industrial operations and nine more counties are exploring similar ordinances.

In Macon County, Missouri, county commissioners approved a health ordinance in late December that severely limits the siting of additional industrial operations in the county. After passage of the ordinance, Macon County Commissioner Craig Jones said, “One thing that scares citizens to death is to be told that you’re going to be living 3,000 feet from on of these operations. I’ve lived here fifty years, and I don’t want to be run out by one of them.”

The response of certain agricultural interests was swift and severe, including suggestions that counties that restrict livestock facilities might be denied investments in new ethanol and biodiesel plants, and pressure on the Missouri Legislature to take away counties’ rights to zone livestock confinements.

“Farmers are not effete, tailpipe sniffers,” said Missouri Attorney General Jay Nixon, supporter of local ordinance effort. “When they complain, it’s real.”

Nebraska Legislative Update

LEGISLATIVE UPDATE
MARCH 21, 2006

Budget Bill Approved on First Round

After two often contentious days of debate, LB 1060, the main budget modification bill, was advanced to Select File by a 42-0 vote. Most of the contention revolved around Sen. Foley’s attempts to change funding for women’s health and reproductive services and his connection to pro-life politics. Ultimately, an amendment offered by Sen. Jensen to increase funding for women’s health and reproductive services by over $200,000 was approved. This issue is likely to resurface during Select File debate.

On General File the Legislature also agreed to amend the Appropriations Committee budget bill by reducing funding for the Cultural Preservation Endowment Fund from $5 million to $2 million, to increase funding for AIDS medication by $500,000, and to provide state funds for Native-American education positions in the Department of Education to replace federal funds.

Debate on tax Relief Bill to Begin This Week

General File debate on LB 968, the Revenue Committee tax relief package, is scheduled to begin March 22nd. The Legislature cancelled its March 21st session due to the statewide snowstorm. March 22 will be the 46th day of the 2006 session; including March 22, there are 15 days remaining in the session.

Legislative Lingo

Throughout the course of these updates, we will be using certain terms that describe where a bill is in the legislative process. Here is a brief guide to those terms and some basic legislative procedure:

Committees have a number of options for each bill – send as introduced to the full Legislature for General File, send to General File with amendments, Indefinitely Postpone (or kill) the bill, or hold the bill over to the 2006 session .

Once a bill is sent to the full Legislature out of committee, it faces three possible stages – General File, Select File and Final Reading.

At the General File and Select File stages a bill can be amended; a bill cannot be amended at the Final Reading stage.

As bills are killed in committee or become law through floor stages, they will be deleted from the Legislative Update.

Bills Update

As in the past, we will divide into categories the bills we are working on or tracking. Any bill designated a Priority Bill will also have a “P” attached to its number (for example, LB 123P). The chief sponsor of the bill is listed in parentheses.

The words Support or Oppose after a bill description indicate where the Center for Rural Affairs has taken a position on the bill. If neither word is indicated, the Center has not taken a position at this time.

Based on further analysis and Priority Bill designations, this week we’ve added a few bills to our list.

Agriculture/Livestock

LB 132 (Cunningham) –This bill modifies the Nebraska Pasteurized Milk Law. The bill sits on General File. Support
LB 346P (Agriculture Committee) – Would modify several provisions of the Beginning Farmer Tax Credit Act all with the goal to increase utilization of the tax credit. The bill sits on General File. Support
LB 834 (Kremer) – Would preempt any local government action to regulate the registration, labeling or sale of seed based on the “type, nature or genetic makeup.” The bill awaits action on General File. Oppose
LB 916 (Kremer) – Would implement the state Competitive Livestock Markets Act (passed by the Legislature in 1995) in the event the federal mandatory price reporting law is not re-authorized by Congress. The bill awaits action on General File. Support.
LB 975P (Natural Resources Committee) – Modifies the Livestock Waste Management Act and decouples the state permit process from the federal EPA permit process. The bill also includes a mandate to counties to grant permits or variances if the purpose of the request was to comply with state or federal regulations (similar language to LB 1195 below). On March 16, the Governor signed the bill into law.
LB 990P (Wehrbein and others) – Would allow tax credits for livestock modernization projects under the Nebraska Advantage Rural Development Act. Sen. Landis has filed an amendment to limit the tax credits to 10% of the modernization investment with a cap of $30,000 (rather than $300,000 as came out of committee). The bill awaits action on General File.
LB 1004 (Hudkins) – Would allow for promotion of Nebraska-made wine and liquor by allowing holders of farm winery licenses to obtain a special license to sell or consume alcohol. The bill awaits action on General File.
LB 1109 (Schrock) – Would modify rules for the rejection, suspension or revocation of livestock waste permits. The bill awaits action on General File.
LB 1195 (Schrock and others) – Would require counties to allow permits or variances to existing livestock facilities to construct or modify livestock waste facilities if the purpose of the permit or variance is to comply with state or federal regulations. The bill awaits action on General File (though it is unlikely to receive further attention since a similar provision was amended into LB 975).

Education/Schools

Note: Several mentions are made below to LB 126 – a reminder this was the bill passed by the Legislature, vetoed by the Governor and overridden by the Legislature in 2005 that requires all Class I (elementary-only) school districts to assimilate with a K-12 district. A citizen’s petition seeking the repeal of LB 126 will be on the November 2006 General Election ballot.

LB 129P (Education Committee) – An overhaul of the formula for state aid to schools. The bill is awaiting action in the Education Committee.
LB 839 (Hudkins) – Would order the State Committee for the Reorganization of School Districts to issue orders reestablishing Class I and Class VI (high school-only) districts if 2005’s LB 126 is repealed in November. The bill awaits action by the Education Committee. Support
LB 1050 (Wehrbein) – Would establish a study committee on the costs and benefits of countywide school districts. The bill awaits action by the Education Committee.
LB 1119 (Heidemann and others) – Would delay all provisions of LB 126 until 2007. The bill awaits action by the Education Committee. Support
LR 253CA (Hudkins and Fischer) – A proposed constitutional amendment that would require a vote of the people in affected districts on school mergers, dissolutions or affiliations. This is similar to a petition proposed by a group of Class I supporters for which signatures are being sought. The bill awaits action by the Education Committee. Support

Taxes

LB 775 (Wehrbein) – Would reduce the sales tax rate to 5% after October 1, 2006 (from 5.5%). The bill awaits action by the Revenue Committee.
LB 849 (Redfield and others) – This is the Governor’s income tax reduction proposal. The bill awaits action by the Revenue Committee.
LB 896 (Preister) – Would establish a renewable energy tax credit against the income tax of the producer of electricity by renewable means. The bill awaits action on General File.
LB 968P (Redfield) – This is now the Revenue Committee’s tax relief proposal. On March 7, it was unanimously advanced to the floor by the Revenue Committee. The bill awaits action on General File.
LB 1006P (Bourne and others) – The Governor’s school property tax levy proposal. The bill awaits action by the Revenue Committee (though a similar provision is included in LB 968).
LB 1239 (Raikes) – An income tax “simplification” plan. Would collapse income tax brackets into two rather than four – above and below $75,000 for estates and trusts and single and married filing separate taxpayers, and above and below $150,000 for joint and head-of-household taxpayers. The bill awaits action by the Revenue Committee.

Other

LB 188P (Beutler) – Modifications to the Nebraska Campaign Finance Limitation Act. The bill awaits action on Select File. Support
LB 554P (Beutler) – Would increase the state minimum wage. The bill awaits action on General File.
LB 1198 (Connealy) – Would authorize on-farm sales and use of biofuels by adding “microscale producer” to the definition of “producer” in existing motor fuels laws. The bill awaits action on General File. Support

post a question or comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action.

President's Budget Endangers Rural Programs

President’s FY07 Budget Endangers Rural Asset-Building Programs

by Jon Bailey, Center for Rural Affairs, jonb@cfra.org

The Fiscal Year 2007 budget proposal released by President Bush on February 6, 2006, makes another attempt at dismantling any federal role in rural economic and community development.

As with the FY06 budget proposal, the president’s FY07 budget proposal again recommends the termination of nearly every rural economic development program. Small Business Administration programs that provide capital and technical assistance for rural small businesses are also again recommended for elimination. And the president’s budget again proposes a new initiative that will reduce the federal investment in economic and community development and which, we have shown, will not work well in many rural areas of the nation.

With that background, following are selected highlights of the president’s FY07 budget proposal:
>> Rural Development. The rural development portion of the USDA budget would suffer a $433 million cut in program funds from the FY06 budget, a 22 percent reduction. As it did last year, the budget proposal recommends the elimination of several rural economic development programs, including several that assist in the development of rural small businesses. In fact, the budget proposal recommends a 40 percent cut in the Rural Business-Cooperative Service, a collection of USDA programs that assist in rural businesses and job creation. The budget proposal also recommends cutting nearly half the funding and half the staff of the Resource Conservation and Development (RC&D) program, a private-public partnership that assists local communities on community and economic development projects.

>> Entrepreneurial Agriculture. The budget proposal would scale back the Value Added Producer Grant program from $40 million to $20.3 million, a 49 percent reduction. For the past two years, the president’s budget has requested the same amount as the previous year’s actual appropriation.

>> Small Business Development. As happens annually, the president’s budget recommends the termination of three microenterprise programs administered by the Small Business Administration – the MicroLoan program, the MicroLoan Technical Assistance program, and the Program for Investment in Microentrepreneurs (PRIME).

These programs are crucial to rural economic development because they focus on rural low and modest-income and start-up businesses in a way that no other SBA program does. In the interest of full disclosure, the Center’s REAP program is a beneficiary of these programs.

>> Rural Housing. The budget would also eliminate two programs that help community organizations develop affordable housing in rural communities, the Department of Housing and Urban Development’s Rural Housing and Economic Development program and the Department of Agriculture’s Rural Community Development Initiative.

These programs are crucial to creating assets in rural communities through funding local affordable housing projects and addressing the issue of aging and deteriorating housing stock in rural communities. The budget proposal would also eliminate rural rental housing loan programs and severely decrease rural rental grant programs. While home ownership rates are high in rural areas, the availability of affordable and decent rental housing is a challenge.

>> Community Development. As he proposed in his FY06 budget, President Bush again proposes a major community development initiative in his FY07 budget. Again, this proposal appears to fail many rural communities.

The FY07 budget proposes to reduce funding for the Community Development Block Grant (CDBG) program by over 27 percent. This would take another $300 million out of the rural economy, funds that are used to modernize crumbling infrastructure and to create businesses and jobs in rural communities. In addition, the budget proposes changing how these funds are distributed to communities. While details are sketchy at this time, the budget proposal speaks to linking funding to community indicators that will not serve many rural communities well (unemployment and low home ownership rates, for example).

The budget proposal also seeks to implement the Strengthening America’s Communities Initiative (SACI) proposed in the president’s FY06 proposal. SACI calls for the termination of numerous community and economic development programs. The budget calls for the eventual merging of all federal economic and community development programs into one competitive grant program tailored toward technology-based economic development.

Our analysis of SACI last year found it would not meet the needs of many rural communities – particularly those in the Midwest and Plains – because of its emphasis on job loss and unemployment. One omnibus economic and community development program also may not meet the needs of rural communities suffering from aging infrastructure and housing, low-wage work, and declining and aging populations. Several federal agencies will be developing this initiative in FY07 if President Bush has his way.

The silver lining of this budget proposal is that many of the same ideas were proposed and rejected by Congress in the FY06 budget deliberations and appropriations. As that process begins anew for FY07 we will keep you informed. A convenient way to stay on top of these important issues is through our Rural Action Briefs. Contact Jon Bailey, jonb@cfra.org or 402.687.2103 x 1013 to be added to the Rural Action Brief.

post a question or comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action.

Customers Keep a Business Going

HAPPY SAINT PATRICK'S DAY!

Customers Keep a Business Going — Keep Yours Close to You

by Monica Braun, Center for Rural Affairs, mbraun@alltel.net

The Center for Rural Affairs' Rural Enterprise Assistance Project (REAP) advises rural entrepreneurs in the development of their small businesses and microenterprises. We offer regular columns, such as this one, from our REAP staff with advice for rural microentrepreneurs.

All businesses believe they are very close to their customers, but often they know very little about them. This is the most important group of people to a business.

Customer turnover is frequently high, but usually this turnover is not analyzed. Rather than find out why customers cease to buy their products/services, most businesses increase promotion to find new customers. Usually, this is very costly.

Customers determine the success or failure of a business. Without them a business cannot exist. To capture customers, a business owner must find out what customers want and will buy.

Expectations and demands are influenced by non-economic as well as economic factors, such as attitudes, desires, and expectations. Also, people want as much as possible for their money.Evidence indicates that staying close to customers can pay off. A sale never ends, but continues to make customers come back. Customer satisfaction must be continuously monitored.

A few questions you might want to ask include:
- Are your customers satisfied or not satisfied with your present products/services?
- Do your products/services have the features they need/like/dislike?
- Do you provide a needed product/service or one that is considered a luxury?
- Are they satisfied with the price range of products/services?
- Do they understand why your prices are set as they are?
- Are customers’ expectations being met?
- Do they feel they are getting value for their dollars?

Ways to obtain information from customers include customer surveys, conversations with customers, observing customers, keeping track of customer’s questions, requesting customer suggestions, etc.

It takes some time and effort but a business owner can know his/her customers well and be able to solve their problems and retain their business.

post a question or comment here, or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action.

Campaign Finance Reform Needs to Address More than Lobbying

Campaign Finance Reform Needs to Address More than Lobbying

Campaign contributions are as seductive as personal gifts to those in power; federal government should look to states for reform

by Chuck Hassebrook, Center for Rural Affairs, chuckh@cfra.org

Washington is once again awash in scandal and talk of reform over free gifts from lobbyists.
But no reform will reduce the excessive influence of money in politics unless it reduces the dependence of both political parties on moneyed interests and personal wealth to finance campaigns.

The current debate seems to assume that acceptance of personal gifts from lobbyists is more corrupting than the way campaigns are legally financed. But is it?

Most individuals elected to high office are more interested in securing power than personal wealth. There are better ways to make money. They have chosen to pursue power – whether for its own sake or to do good. Given that reality, most elected officials can be seduced at least as well by campaign cash as personal gifts.

Policymakers frequently take positions or avoid stands based on their impact on campaign fund raising. Weeks ago, the staff of an elected official acknowledged to me the enormous popularity of Nebraska’s anti corporate farm law – Initiative 300 – but said they would not take a stand because it would hurt campaign fund raising.

It’s affecting each of us. Campaign contributions are having a profound influence on a wide range of policies from regulation of meatpackers to drug companies.

We’ve almost come to accept what should be profoundly troubling. But we cannot accept it. For the democratic process to have integrity, it must be responsive to all citizens, regardless of their capacity to write large checks.

No less important, elected office must be reasonably open to qualified citizens dedicated to public service. But today, many who would provide excellent representation for ordinary Americans would not even think of running because they cannot raise and do not have the money.

The use of personal wealth in campaigns has equally troubling effects. It puts ordinary citizens at a disadvantage in running for office and has left us with a U.S. Senate of millionaires.

Furthermore, elected officials fear the wealthy in their districts because they know their next credible opponent will most likely come from their ranks. Most ordinary citizens don’t pose that threat.

The most promising models for taming the excessive influence of money are in the states. In Nebraska, candidates who agree to abide by voluntary limits get matching funds if their opponents exceed them. The law needs fine-tuning to allow more effective enforcement and to provide matching funds when independent groups campaign against a candidate who abides by the limits.

Most people who run for office want to do good and serve their neighbors and country well. But the campaign finance system often pushes them in the wrong direction. If we want democracy to work well for all Americans, we have to fix it.

post a question or comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action.

Conservation Security Program Sign Up In March

Conservation Security Program Sign Up Underway through March
Eligible watersheds were scaled back to 60, not the 110 originally promised;
Center’s Conservation Hotline available for questions

by Traci Bruckner, tracib@cfra.org

The 2006 Conservation Security Program (CSP) sign up is underway. It began February 13 and continues through March 31, 2006. CSP was originally supposed to be available in 110 watersheds across the country this year, but it was scaled back to only 60 watersheds. The Natural Resource Conservation Service (NRCS) claims the scale back was necessary due to limited funding availability.

Nonetheless, this scaling back has undoubtedly led to confusion and disappointment for those in watersheds that have been cut. Farmers and ranchers were told the watershed approach would allow them to put in place what they needed so as to be ready when CSP came to their area. For those who listened to such advice – and happen to be in the areas that were cut – they will have to continue to wait.

Moreover, sustainable farmers and ranchers who do not fall into qualified areas and who have had their conservation systems in place for years – the ones this program was designed to serve – will now be waiting longer too. In fact, they could be waiting a long time unless the watershed numbers begin to increase instead of decrease.

If the current watershed rate is extended to future sign ups, CSP would go from an 8-year rotation to roughly a 37-year rotation. That is simply unacceptable.

We will again be hosting our Conservation Hotline to assist farmers and ranchers with the CSP during this sign up – call 402.687.2100. There are always a few changes from one sign up to the next, so we encourage those needing assistance to contact our hotline.

We also would like to learn about your experience with CSP. With each sign up we compile the lessons we learn from farmers and ranchers who go through the process, including those who were told they don’t qualify, and we work to improve program implementation.

Lessons from previous sign ups indicate that NRCS needs to improve the program by giving more emphasis to sustainable farming systems. An even more urgent need is for the White House and Congress to stop reducing the size and scope of the program so it can benefit the farmers and ranchers who deserve to participate.

To view the watersheds for the 2006 sign up and for more information on the CSP, go to the following NRCS webpage: http://www.nrcs.usda.gov/programs/csp/

post a question or comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action.

An Investment in Rural America

An Investment in Rural America

By John Crabtree, johnc@cfra.org

In the rural Great Plains, nearly 70 percent of job growth in the 1990s came from people creating their own job by starting a small business.

The Center’s Rural Enterprise Assistance Program provides a model for all of rural America. We have helped over 4,000 rural small businesses by providing loans, technical assistance, and training – with funding from the U.S. Small Business Administration (SBA) and Nebraska Department of Economic Development.

Nebraska is the only state where such SBA funded services are available statewide, but we are still unable to reach all the rural entrepreneurs that could benefit. The farm bill should provide $40 million annually through new USDA programs for research and education on rural entrepreneurship; community grants to foster entrepreneurial development; and funding for small business loans, technical assistance, training, and other initiatives to support entrepreneurship across rural America.

Current public resources do not meet the entrepreneurial demand in many communities, and those that do exist, especially federal programs, are in a constant defensive posture to salvage their existence from the annual circus of proposed cuts and last minute, downsized funding.

According to the National Association for the Self-Employed, personal savings and credit cards are the primary sources of start-up capital for 70 percent of microentrepreneurs and only six percent employed loans from financial institutions or the government.

Rural entrepreneurship is where “the rubber meets the road” in rural economic development. Rural entrepreneurs emptying savings accounts and maxing out credit cards to startup their business is poor public policy. It is time for a better investment in rural America.

post a question or comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action.

Localists vs. Globalists

Localists vs. Globalists

by Jon Bailey, jonb@cfra.org

Many political and social commentators have written that the political debate in the United States is not really between democrats and republicans or between liberals and conservatives, but rather between localists and globalists. This debate can be seen in numerous issues – Wal-Mart vs. local retailers, trade agreements, and agriculture.

This debate is also rearing its head in several bills in the Nebraska Legislature that seek to restrict or preempt local control in favor of control or regulation at the state level. The debates over school consolidation and the control by local people over school restructuring resurface almost annually (as they will this year). This year the Legislature is dabbling in new ways to restrict local authority, primarily in agriculture and environmental regulation.

LB 834 is a perfect example. It would preempt counties and municipalities from regulating the registration, labeling, and sale (thus the planting) of crop seed. It is a reaction to efforts in other states (notably California) of local governments prohibiting the sale or planting of GMO seed within the boundaries of the county or municipality. LB 834 is apparently part of a state-by-state effort by some corporations to head off such local regulations.

Putting aside the GMO debate and the fact no local regulation prohibiting the sale or planting of any sort of seed has been proposed in any municipality or county of Nebraska, LB 834 is really about removing the power of the citizenry within a geographic area to influence and decide issues related to the life and economy of that area. The Legislature should be careful in creating precedent of preempting local authority. Taking away the authority of local people and officials to act and centralizing that authority in the hands of a higher level of government has potential serious consequences.

post a question or comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action.

White House Proposes Ethanol Research

Administration Proposes Increasing Ethanol Production Research

by Chuck Hassebrook, chuckh@cfra.org

President Bush’s proposal to increase research on ethanol production from cellulose – switch grass, crop residues, etc. – holds promise. But it must be accompanied by appropriate conservation policies to protect the land.

The president proposes a two-thirds increase in federal research on cellulose-based ethanol production to $150 million annually. With the right break-through, an acre of switch grass could produce three times as much ethanol as corn. And it offers real potential for rural development.

Switch grass and crop residue are expensive to ship, so processing plants would have to be decentralized in many communities across the country. Cellulose-based ethanol production also has the environmental benefit of offering an income-earning conserving use for highly erodible land. And mixed grass plantings for ethanol production could benefit wildlife.

But cellulose-based ethanol production also presents some threats to natural resources if not accompanied by appropriate conservation policies. Removing crop residues could increase erosion and almost certainly reduce soil organic matter. Soil organic matter is essential in drought tolerance and reducing erosion because it increases the soil’s water holding capacity.

Furthermore, we should be increasing soil organic matter to combat the build-up of atmospheric carbon dioxide that is contributing to climate change and unstable weather. Soil is the earth’s biggest carbon sink.

Finally, we must protect wildlife habitat and natural space. If all wild land is harvested, we’ll lose opportunities to enjoy the rural environment. That would undermine rural community development because access to uncrowded natural space is one of the amenities we have to draw young families.

Conservation policies to prevent the use of every stalk and acre for ethanol production would also benefit farmers. If everything is harvested, the price will be driven down to dismally low levels.

The president’s initiative is positive and promising, but it must be accompanied by conservation policies to prevent potential pitfalls.

post a question or comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action.

Harkin Calls for Sweeping Changes at USDA

Harkin Calls for Sweeping Changes at USDA
to Remedy Failures in Protecting Livestock Producers

Senator Tom Harkin (D-IA) today called for broad and sweeping changes at the Department of Agriculture (USDA) to remedy failures to enforce laws designed to protect livestock and poultry producers from unfair, deceptive or anti-competitive market practices. Today, the Senate Committee on Agriculture, Nutrition and Forestry is considering a recent Harkin commissioned investigation by the USDA Inspector General that found widespread inaction and efforts to cover up this inaction at USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA). In response, Harkin has introduced legislation that would reorganize USDA to more aggressively pursue unfair, deceptive and anti-competitive market behavior.

“Failures to protect livestock producers reach all levels of USDA,” Harkin said. “For over five years, the Department essentially took no action against unfair market practices and high-level USDA officials let it happen. We need changes at USDA to better confront bad actors in livestock and poultry markets.”

Harkin’s bill would reorganize USDA to establish an Office of Special Counsel whose sole responsibility will be to investigate and prosecute violations of the Packers and Stockyards Act and similar laws which protect producers. Currently, the Administrator of GIPSA oversees the Packers and Stockyards program and has the responsibility of enforcing the Packers and Stockyards Act. GIPSA personnel responsible for investigating violations of the Packers and Stockyards Act would be transferred to The Office of Special Counsel. The Special Counsel would be appointed by the President and confirmed by the Senate. This position will also serve as a liaison between the Department of Justice and Federal Trade Commission.

Opening statement of Senator Tom Harkin, Ranking Democratic Member, to the Senate Agriculture Committee on USDA’s management and oversight of the Packers and Stockyards Act:

In 1921, Congress passed the Packers and Stockyards Act to protect livestock and poultry producers from unfair, unjustly discriminatory, or deceptive and anti-competitive practices in the marketplace. Since enactment of this important law, the livestock and poultry industry has changed dramatically—especially in the past 15 years. Packing companies have become larger and the industry more consolidated and vertically integrated, often leaving producers with just a handful of buyers for their livestock and poultry. This imbalance of economic power increases the potential for unfair or discriminatory practices in the market. That is why enforcement of the Packers and Stockyards Act is so critically important. Producers depend on this law to protect them. So I commend the Chairman for holding this hearing today to examine USDA’s authority and commitment to enforcing this important law.

I had heard from a lot of producers that USDA was failing to act on their complaints of unfair and anti-competitive practices by packers. I was also hearing that USDA was purposely misrepresenting its enforcement activities to give the appearance it was in fact enforcing the Packers and Stockyards Act when it was not. So I asked the Inspector General to investigate. The Inspector General found that USDA management was preventing employees from investigating complaints of anti-competitive conduct and even covering up its inaction by inflating the number of investigations listed in annual reports.

I’m sure USDA officials will promise today to do a better job of enforcing the Packers and Stockyards Act. And for the sake of America’s producers, I hope they do. But it is important to remember that USDA has a long history of agreeing to make changes but never following through with them. The Inspector General made recommendations to improve USDA’s ability to investigate violations of anti-competitive behavior in 1997, and the Government Accountability Office made similar recommendations again in 2000. I led efforts in Congress to provide funds to carry out GAO’s recommendations. It is now 2006, yet those recommendations were never implemented and the Grain Inspection, Packers and Stockyards Administration (GIPSA) is now in complete disarray.

It is also troubling that while GIPSA was failing to enforce the Packers and Stockyards Act, no one above the level of deputy administrator took corrective action. Where was the governmental oversight? Where was the GIPSA Administrator, the Under Secretary for Marketing and Regulatory programs or the Secretary of Agriculture? Most importantly, where was USDA’s Office of General Counsel (OGC). OGC has a history of inaction on enforcement of the Packers and Stockyards Act. Perhaps it comes as no surprise that OGC was not sending up red flags when GIPSA only referred two investigations of anti-competitive practices to them over the course of several years. Surely OGC has a responsibility to enforce the law.

Recently, I introduced with bipartisan backing the “Competitive and Fair Agricultural Markets Act of 2006" to spur USDA enforcement action and strengthen producer protections against anti-competitive practices. My legislation will create an office of special counsel for competition matters at USDA whose sole responsibility is to investigate and punish unfair, anti-competitive behavior in agricultural markets. This high-profile person will be appointed by the President and confirmed by the Senate to create new accountability for enforcing the Packers and Stockyards Act. The fact that the upper levels of USDA were unresponsive to the problems at GIPSA—despite the fact I was sending letters to the Secretary pointing out that such problems did exist–and the failure to implement past OIG and GAO recommendations, supports my assertion that a reorganization at USDA is badly needed.

USDA officials have a lot of explaining to do in this hearing. We need to hear pledges and specific plans to reconstruct this broken agency. I call on USDA to support the changes I have proposed in my bill to remove layers of bureaucracy and reverse USDA’s longstanding apathy toward enforcing the law. I look forward to working with the Chairman and members of the Committee to enact these needed reforms.

National Animal ID - USDA's Corporate Clanger

The National Animal Identification System (NAIS)
USDA’s Corporate Clanger

by John Crabtree, johnc@cfra.org

After strong opposition from farmers and ranchers, USDA announced in February they will reconsider proposed privatization of portions of the National Animal Identification System (NAIS).

USDA maintains that the Animal Health Protection Act passed in the 2002 farm bill gives them the authority to develop a national animal identification system. But their attorneys are reconsidering conclusions regarding their authority to require producers to report to a private entity.

There are manifold failings of USDA’s NAIS proposal.

For example:
- privatization invites bias, perhaps even graft and corruption, and could be distorted in favor of meatpackers to the detriment of farmers and ranchers;
- privatization through the National Cattlemen’s Beef Association and National Pork Producers Council is clearly no guarantee against such a meatpacker bias;
- no adequate safeguards have been proposed to ensure that NAIS information could not be used by packers to discriminate against small and mid-sized producers;
- financial impacts on producers are inequitable – with much higher per head costs likely for small and mid-sized farmers and ranchers.

Animal identification for the purpose of keeping our food safe has merit. But USDA is proposing a system that is too easily corrupted; discriminatory and injurious to small and mid-sized farmers and ranchers; and too expensive for taxpayers, consumers, and producers.

The aggressive implementation of NAIS while country of origin labeling of beef, pork and lamb (COOL) languishes reflects the likelihood that a more expensive NAIS system will benefit meatpackers while COOL would create potential benefits for farmers, ranchers and consumers.

We have come a long way since President Abraham Lincoln dubbed USDA "the people's department."

Natural Meat Market Ripe for Farmers and Ranchers

Natural Meat Market Ripe for Farmers and Ranchers

Family farmers and ranchers have a competitive advantage in the fast-growing natural meat market – they have earned consumers’ trust

by Wyatt Fraas, Center for Rural Affairs, wyattf@cfra.org

Family farms have a ripe opportunity to capture a growing segment of the livestock market – the natural market – if they band together. But if they don’t act, that market will be lost to the corporate giants.

A new cooperative of Iowa, Nebraska, and South Dakota cattle and hog producers has formed to address the need and is looking for members.

The natural market is the fastest growing segment of the meat market. It ranges from hormone-free beef to pork raised on natural bedding. It offers premium prices and potentially much higher returns.

What makes the natural market most intriguing is that it offers smaller producers a competitive advantage with consumers over corporate farms. A nationwide Roper poll found that consumers trust small farms more than large industrial farms to produce safe food responsibly by a 2:1 margin.

This is a market based on trust. The families paying premiums for natural are doing so to get a product they trust. The farms that have their trust can win the opportunity to supply them.

Consumer trust in small family farms gives them an edge as suppliers of natural food companies. The natural food company that demonstrates that its meat comes from the small operations that consumers trust most will win consumers’ dollars. And mega farms won’t be able to take it away. They cannot offer that.

But to fully exploit that competitive advantage and capture the opportunity, family-size operations must band together to overcome a disadvantage. Natural food companies like to deal in volume. Like the rest of corporate America, they like suppliers that can provide them the volume they need when they need it. The mega producers can offer that. A family-size operation cannot offer it alone.

But an association of family farmers and ranchers jointly marketing could provide the volume and secure supply that natural meat companies need – along with a product that can win the trust of consumers.

Family operations do not have to make high-risk investments in building packing plants and brand names or battling for shelf space in supermarket chains. They simply need to band together to agree on standards, coordinate production, and negotiate price.

Producers must take the lead. Natural food companies won’t negotiate with family farms and ranches until they get together to offer sufficient volume to give them leverage.

The opportunity is ripe. But that which is ripe never lasts for long. The threat is illustrated by the rush of corporate farms to capture the organic milk market, setting off a critical debate over whether organic farming means corporate farming. It is time to act to protect natural livestock markets for family farms.

The new Family Farmers and Ranchers Meat (FFARM) cooperative was established for that very purpose and is open to producers in Iowa, Nebraska, and South Dakota. To learn more, contact Wyatt Fraas at the Center’s Hartington, Nebraska office, 402-254-6893 or by email at wyattf@cfra.org.

post a question or comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action.

National Animal ID System

After strong opposition from farmers and ranchers, USDA announced in February they will reconsider proposed privatization of portions of the National Animal Identification System (NAIS).

USDA maintains that the Animal Health Protection Act passed in the 2002 farm bill gives them the authority to develop a national animal identification system. But their attorneys are reconsidering earlier conclusions regarding the legal authority to require producers to report to a private entity.

There are manifold failings of USDA’s NAIS proposal, including:
- Privatization invites bias, perhaps even graft and corruption, and could be distorted in favor of meatpackers and to the detriment of farmers and ranchers.
- Privatization through the National Cattlemen’s Beef Association and National Pork Producers Council is clearly no guarantee that such a meatpacker bias would not occur.
- No adequate safeguards have been proposed to ensure that NAIS information could not be used by packers to discriminate against small and mid-sized producers.
- Financial impacts on producers are inequitable – with much higher per head costs likely for small and mid-sized farmers and ranchers.

Animal identification for the purpose of keeping our food safe has merit. But USDA is proposing a system too easily corruptible; discriminatory and injurious to small and mid-sized farmers and ranchers; and too expensive for taxpayers, consumers, and producers.

post a question or comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action.

Financing Our Future Through Children

Financing Our Future through Children the Focus of New Program
Because child care is a vital community development issue, South Dakota is offering capital for child care providers and centers

by Michael Holton, michaellh@cfra.org

Last month’s article dealt with children and child care in rural areas, or maybe more importantly, the lack of both. The article also looked at the lack of qualified child care givers. South Dakota has come up with a unique and novel way to address this need and help people attain financial capital to be used for child care.

On December 29, 2005, the Development Corporation for Children in partnership with the South Dakota Rural Enterprise, Inc. announced that loans will be made available for the purpose of working with child care providers and licensed child care centers in South Dakota. The program is known as First Children’s Finance – South Dakota.

As Beth Davis, president of South Dakota Rural Enterprise, Inc. made very clear, child care services are a vital element in successful community development. Now with opportunities to get financing for start-ups in this field, people will have more opportunity to put their children in qualified and professionally run facilities.

Eligibility requirements for the program include:

- Must be a registered family child care provider, licensed child care center, Head Start, or other early education program located in South Dakota.
- Start-up family providers who could become registered child care providers are also eligible to apply.
- Start-up child care centers who could become licensed child care providers are also eligible to apply.
- The provider must be willing to care for children from households with incomes meeting South Dakota Child Care Subsidy guidelines.
- Family child care applicants must own the home for which an improvement loan is being sought.
- Applicants must demonstrate that they are unable to secure a loan from a bank or other conventional lender.
- An eligible applicant will make or have made an investment in their business and be able to offer collateral for the loan.

The loan amounts are available from $1,000 to $25,000 for family providers and up to $75,000 for centers. There is also assistance with such areas as technical assistance for business plans, completing loan applications, and developing a cash flow.

The non-refundable cost to the applicant is $25 or $100 if the applicant is a child care center. There may also be some out-of-pocket expenses that would be required at the time of closing the loan. The actual loans may be used for cash flow, facility improvement, fences, curriculum, equipment, toys, remodeling, and other child care related needs.

For more information on this program, call 866-562-6801 or 605-978-2804.

post a question or comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action.

Small Business Starved for Financing

Small Businesses Starved for Financing
A new survey shows a lack of available capital for small and start-up businesses

by Jon Bailey, jonb@cfra.org

A recent survey of the self-employed and microbusiness owners shows the need for public policy attention to the capitalization of such businesses. The National Association for the Self-Employed (NASE) survey revealed that only one in ten self-employed or small business owners thought there were adequate funding resources for microbusinesses.

This lack of small business capital was also revealed in the primary sources of start-up capital for self-employment and small businesses. Personal savings and credit cards are the primary sources of start-up capital for 70 percent of the surveyed businesses. Only six percent employed loans from financial institutions or the government as the primary source of start-up capital.

Ongoing capital for small businesses or self-employment was little different. Personal savings (40 percent) and credit cards (19 percent) were identified as the primary sources of ongoing capital. Lending institutions provided a bit more capital for established businesses, but still less than 10 percent.

The obstacles faced in gaining access to capital by the surveyed businesses are familiar ones to those providing services to entrepreneurs. Credit rating, lack of collateral, and bank regulations and paperwork (these items were identified as the largest obstacle to capital by over two-thirds of the survey respondents) are obstacles faced by many entrepreneurs, particularly low and modest-income and start-up entrepreneurs.

The results of the NASE survey demonstrate the public policy needs for small businesses and entrepreneurship development. Despite the demonstrated validity of small business development in rural areas of the nation, there still exists a lack of public and private capital available to entrepreneurs, particularly start-up entrepreneurs.

Public resources through state and federal programs are not extensive enough to meet the entrepreneurial demand in many communities, and those that do exist are in a constant defensive posture to salvage their existence and some degree of resources. This is particularly true at the federal level where Small Business Administration programs for microbusiness capital are annually served up for elimination by the President’s budget and then saved but downsized by Congress. Meanwhile, the demand for such capital, particularly in rural areas starved for economic development resources, increases.

A nation that depends on entrepreneurship for job growth and economic vitality should not have to depend on maxed out plastic and penniless savings to build and maintain its business and asset infrastructure.

post a question or comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action.

Budget Proposal Slashes Microenterise Development

President’s 2007 Budget Proposal Slashes Microenterprise Development, Again

Despite the proven success of the SBA Microloan Program and SBA PRIME Programs, the President has requested that Congress discontinue funding for these programs and also reduce funding for the SBA Women’s Business Center in Fiscal Year 2007. The potential loss of these vital federal funding sources represents a critical threat to the future of the American microenterprise industry (businesses with five or fewer employees) and microentrepreneurs across the nation and would obviously be detrimental to the REAP program in Nebraska.

Since 1992, the SBA Microloan Program has been successful in serving many communities across America, specifically in those areas suffering from a lack of credit due to economic downturn. In 2005, the Microloan Intermediaries across the country provided over $32 million in new 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 2007 Budget Proposal.

The Rural Enterprise Assistance Project (REAP) has been an SBA Microloan Intermediary since 1992. The SBA Microloan program is the place where REAP and close to 200 other similar organizations in the United States receives their loan capital and technical assistance funds in order to serve rural entrepreneurs. REAP is also proud to operate Nebraska’s only SBA Women’s Business Center.

The President has also requested severe funding cuts for the Community Development Block Grant (CDBG) and Rural Business Enterprise Grant (RBEG) programs, both of which help to fund the work of REAP.

While federal funding for microenterprise has decreased steadily over the past 5 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 microentrepreneurs account for 17% 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.

We need you to take action now and help get these critical programs back in the FY 2007 budget.

There are several ways you can take action:

1) If you have access to the web, you can go to http://capwiz.com/aeo/dbq/officials/, enter your zip code and automatically submit the “Entrepreneur’s Message to Congress” letter through the Association for Enterprise Opportunity (AEO) website. AEO is the national trade association for programs like REAP in the US.
2) You can call your Congressional offices at 202-224-3121 and let them know that these programs are vitally important to America’s job growth and economy and let them know how REAP and other microenterprise programs have helped you, your community, and rural America.

REAP and other microloan programs are making a difference in rural America because of individuals just like you. We look forward to serving you, your community, and future entrepreneurs well into the future. Many entrepreneurs would not be able to receive critical lending, training and technical assistance services without programs like REAP.

Please feel free to call us if you need further information or explanation. The time to advocate is now and hopeful of your participation. Let’s show Congress that rural America does have a voice and wants these key programs back in the FY 2007 budget. Thank you in advance for taking action.