The United States has had a long history of supporting entrepreneurial efforts that create jobs and enable evolving industries to thrive. The construction of the national rail system, the interstate highway system, the electric utility lines and broadband internet are good examples of where federal and/or state governments have built or supported the building of the backbone of our current economic system.
Farming has not been left out. Today’s industrial agriculture system has benefited from billions of dollars invested in agriculture since the first farm bill in 1932. Its purpose was to address crop prices, national hunger, soil erosion, lack of credit and unfair export practices. Since then, there have been 15 Farm Bills signed into law, each of which have addressed these issues. Big Ag has also benefited from our interstate highway system, our ports, our international trade agreements facilitate foreign trade and it has benefited from land-grant universities that provide ag research and from university extension systems that disseminate research information to farmers.
To say the least, the farm bills have allowed large-scale commodity farmers to be much more competitive in the international markets, have addressed national hunger through programs such as the Supplemental Nutrition Assistance Program (SNAP), have addressed soil erosion and other environmental issues, and have addressed credit issues and provided federal insurance for certain commodity crops.
In the last ten years or so, a new trend in agriculture has emerged, locally-sourced food sales. Many of these are small to mid-sized farms. Direct-to-consumer food sales was estimated to be $7 billion in 2011 and 89% of fine dining restaurants surveyed in 2008 reported serving locally sourced food. However, demand has outgrown supply, which has been acerbated by a shortage of new farmers, the lack of local food distribution systems, and the lack of farm credit for these new agricultural enterprises that defy traditional agricultural norms.
Where can we find financial support for these new endeavors? On November 13th, I attended a meeting sponsored by the Maryland Agricultural & Resource-Based Industry Development Corporation (MARBIDCO), the Tri-County Council for Southern Maryland (TCCSMD), and Southern Maryland Agricultural Development Commission (SMADC) entitled “Rural Business Service Providers Forum.” Its purpose was to bring together agencies that support rural businesses, including agriculture, and learn how they work and what they are accomplishing. Although many types of farmer services were covered, I will focus on financing and new farmer programs. With a few caveats, the news was encouraging.
In attendance were representatives from the United States Department of Agriculture (USDA). The Farm Services Agency, a branch of USDA, provides loans for new farm operations, including young and beginning farmers and the Rural Development provides value-added grants. However, most new USDA funding for projects is on hold as a result of the expiration of the Farm Bill. The USDA also supports the preparation of soil conservation plans through Maryland Soil Conservation Districts. Another federal agency, the Small Business Administration, provides free farm business counseling and small business loans.
At the state level, MARBIDCO was established in 2004 as a quasi-public corporation to develop agricultural industries and markets; support appropriate commercialization of agricultural processes and technology; to assist with rural land preservation efforts; and alleviate the shortage of nontraditional capital and credit available at affordable interest rates for investment in agricultural and resource-based businesses. Since then, it has funded 209 rural projects for $15.6 million. and helped 58 young farmers get started. MARBIDCO utilizes 90% of its annual state allocation to low-interest loans and 10% in competitive grants.
Also at the state level, the Department of Business and Economic Development has employees who specialize in farm based businesses and issue loans. Maryland Department of Agriculture provides conflict resolution with farm neighbors and helps to market farm products and promote sales to restaurants and institutions. This year, Secretary Hance developed and featured the popular Ice Cream Trail to state creameries. The Department of Natural Resources has a forest products utilization manager and a fisheries marketing manager to support these resource industries. The Maryland Energy Administration supports farm energy audits and provides grants for clean energy.
At the local and regional level, we know that SMADC was created as a result of the “tobacco buyout program,” which has provided grants, research, and training to help farmers to start grape production, local meat retail and processing operations, and many other diversified operations. It also helped make available farm equipment for rent by the local Soil Conservation Districts. However, some are not aware that the College of Southern Maryland’s Small Business Development Center does business planning assistance and helps rural businesses navigate through regulatory processes and that assistance in the permitting processes is also offered by most of the counties in their departments of economic development.
Finally, one of the biggest financial resources for new farm ventures is the Farm Credit System, a nationwide network of cooperative lending institutions that provides credit and financial services to farmers, ranchers, rural homeowners, agricultural cooperatives, rural utility systems and agribusinesses.
Is there enough support to address the challenges facing this new local food movement? We don’t know. However, we do know that innovation rarely occurs without a backbone of infrastructure, financing and resources to test new economies. The new locally-sourced agricultural economies deserve that support as they can help build local economies, create jobs and promote a better quality of life.