The Capital Conundrum of Rural Economic Development
In Edible-Alpha® Podcast Episode #17, Tera talks with Sam Rikkers, former Administrator of the Rural Business Cooperative Service at the USDA. Sam talks about how the USDA’s programs serve not just agricultural producers but also rural businesses and rural people more broadly since farmers need strong small-town economies, institutions and infrastructure. And, many of the USDA’s programs, like its Value-Added Producer grant program, help with non-production aspects of agricultural businesses like business planning and marketing.
Sam recently returned to Wisconsin to lead the Small World Initiative at UW-Madison’s Wisconsin Institute for Discovery and continues to work with Georgetown’s Rural Opportunity Initiative (ROI). One of ROI’s objectives is to connect and educate sources of capital about the opportunities to invest in rural America. Georgetown is partnering with Purdue, Iowa State and Mississippi State to implement the initiative.
Sam sees opportunities to leverage private dollars with public dollars for many types of rural investment, with the tradeoff of involving public dollars being that it is often uncertain when those dollars, if awarded, will actually be disbursed. There are programs in place now, like the Rural Business Investment Program (RBIP) license program, that allow venture capital funds to access equity investments from the farm credit system and receive Community Reinvestment Act (CRA) credits in exchange for investing at least ½ of their funds into rural, small businesses.
Both Tera and Sam see a big need to educate investors about the opportunities for investment in rural America as well as a big need to help potential businesses with financial technical assistance so they are ready to receive loans and equity investments when the time is right. In addition, they felt there are still opportunities for people interested in rural development and the local/regional food movement to learn about the types of businesses that will work and are well suited for rural areas.