Rethinking Economic DevelopmentUsing Standard Tools to Promote a Local Food Economy
Closing the Loop
COABC’s 2010 Conference
Kamloops, British Columbia
March 5, 2010
Rob MarquseeDirector, Rural Economic
Development712.279.6609
“Economic development … includes the process
and policies by which a nation improves the
economic, political, and social well-being of its
people.” – O’Sullivan, Arthur, Steven M. Sheffrin (2003): Economics: Principles in Action
I submit that local Economic Development is all
about achieving a high Quality of Life for the
regional population as a whole.
When we measure economic development
solely in terms of ‘Gross Domestic Product’ at
a national level, we forfeit a knowledge of our
land, destroy the middle class, hinder
entrepreneurship, and cause the demise of
our rural communities.
The Irony Of It All
Local Food Production has a much higher return
per acre than the highly specialized industrial
food system based upon large economies of
scale.
Scenario #1
Locally growing fruits and vegetables in a rural 10
county area for one growing season results in the
following increase over industrial corn/soybean
farming:
• 902 acres of new fruit and vegetable production required to replace imports
• The farm-gate value of that production would be $2.42 million in sales
• Potential retail value of that produce would be $5.2 million
• Yields a total of $928,373 in labor incomes and nearly 16 more jobs for the
region
Source: David Swenson, The Economic Impact of Fruit and Vegetable Production in Southwest Iowa
Considering Local and Nearby Metropolitan Markets, January 2010
Scenario #2
Locally growing fruits and vegetables for service to
‘Urban Customer Centers’, for one growing season,
results in the following increase over industrial
corn/soybean farming:
• 2,107 acres of new fruit and vegetable production required to replace imports
• The farm-gate value of that production would be $4.62M
• Potential Retail Value of that produce would be $11.41M
• Yields a total $1.75 million in labor incomes and nearly 29 more jobs for the
region
Source: David Swenson, The Economic Impact of Fruit and Vegetable Production in Southwest Iowa
Considering Local and Nearby Metropolitan Markets, January 2010
Additional Benefits
• The study does not consider local meat or dairy production
that could replace imports
• The study does not include additional off-farm jobs that
would necessarily be created for a local food system
• The study does not consider development to secure off-
season production
• The study does not include consideration of other benefits:
increased knowledge of land, health, community spending,
water treatment, etc.
Educated Guess
For local food system sustainability, you can
assume a 10% broker markup.
Thus, for every $1M in retail sales, $100K could
be used for off-farm food system services.
Traditional Economic Development
“No official tally of business subsidies exists, but inseparate studies Peter S. Fisher of the University of Iowaand Kenneth F. Thomas of the University of Missouriestimated that state and local subsidies aimed at creatingjobs total about $50 billion annually.
More subtle subsidies … are not counted in those figuresand may be even larger.”
Assisting the Good Life 6/15/07
Tools of Economic Development
The general tools of traditional economic developers are:
• Tax Credits
• Tax Abatement
• Sales Tax Refunds
• Direct Cash Payments
• Tax Increment Financing (TIF)
• Low Interest Loan Programs
• Loan Guarantee Programs
• Private Capital Investment Funds
• Bonds (General Obligation, Revenue)
Traditional Development
Priorities, Focus, & Criteria for Incentives
Economic Development Programs Are Based On:
Priority: Urban Projects (i.e., Industrial, Commercial, Residential)
Focus: Outside Prospects – Attracting Business From Outside (Including Chains)
Criteria: Wage/Benefits Criteria
Criteria: Number of Jobs Created
Criteria: Capital Expenditures for a New or Renovated Facility
Rural Economic Development Programs Are Based On:
Focus: Transforming Rural Communities Into Another Purpose (Service Centers)
Criteria: Rural Programs Subject To Grant Writing Process (a disadvantage)
Excluded:Small Farm Production Not A Business/Object of Business Retention
Examples of Current Economic
Development Strategies & Impacts
Billions of Taxpayer Dollars (“…without a peep”)•Biodiesel Project: IDED Gives $535K to Major Corp: 4-9 Jobs
•Ethanol Supports: Five Subsidies ($4M): Sioux City Example
•Regulations Favor Large Processing Houses/Seed Patents
•Ethanol: 70¢ / per Gallon : $70M on 100M Gal. Facility (Mostly Non-Local)
•Farm Subsidies: $275B / 10 yrs Average
With Stated Impact on Local Economies•Primary Beneficiary: Non-Local Owners/Processing
•Environment is Severely Compromised: Water/Top Soil
•Less “Local” Control
•National Health/Obesity Crises
There is no proof that funds offered for
traditional economic development projects
yield an overall net positive impact.
However, this is proof that current economic
development practices cause substantial harm.
Statistical Impact of Policies
Woodbury County Ag - Rural Statistics
Sales of Livestock & Livestock Products
1969: $358M vs. 2003: $80M78 percent decline over 35 years
Sales of Crops & Livestock
1998-2003: $145M loss from crops & livestock
Farms & Average Farm Sizes (Farms/Acreage)
1975: 1,930/268 vs. 2004: 1,140/38778% Increase in Number of Farms 1000 Acres+
Woodbury County Losses & Subsidies
Annual Loss: $24M Annual Subsidy: $23MDifference of $1M Made Up By Additional Jobs(Statistics Provided By: Ken, Meter, Crossroads Resource Center, 2005 & U.S. Census)
Woodbury County
Population Breakdown
Loss In Population: Unincorporated Areas: 11.2%/Rural Cities: 9.7%
1970-2000 However: 20%+ Decline Outside of Corridor
Forecast: Accelerated Decline After 2000 (DM Reg)
Iowa Ag Stats & Forecast
Iowa Ag Statistics
50%+ Of Farmland To Transfer in 10 Yrs
25% Farmland Belong to Those >75 Age
Average Farmer Age 55+ (Woodbury: 60+)
Iowa Forecast
Fewer Owners of Land
Faster Decline in Rural Population
Less Income in Rural Areas
More Strain on Environment
(Des Moines Register: July 17 & July 24, 2005)
Non-Localized Food SystemMoney Flowing Out of Local Area
Federal Government
Farmers
Non-LocalCorporate Ag Processing
Consumers
Money Flows From Federal Government to Farmers to Grow CropsAt A Loss (Cost of Production > Price Paid)
Ag Interests Buys At Low Price = Makes Lion’s Share of Profit on Food ProductsIn Effect: Federal Government Provides Indirect Subsidy of Large Corporate Ag
Interests
Non-Local“Inputs” Manufacturers
$
$
A Better Economic Development
Option
Woodbury County Approach
Policies & Programs
Woodbury Policies
Organics Conversion Policy: 6.28.05
100% Tax Rebate on Ag Land Converted to Organic
Sustainability, Environmental, Diversification
Smaller Farms, More Labor, Higher Income
Woodbury Health Initiative: 8.2.05 (Sen. Harkin)
Local Foods/Mobile Farmers Market Rural County
School Wellness Food Programs & Attack Obesity
Local Food Purchase Policy: 1.10.06
Mandatory Purchase of Locally Grown Organic
Supports Local Farmer, Local Broker & Markets
Regional Food Systems
Farmers Markets
Requirements of Vendors, Listing of
Vendors & Production
Schools, Institutions, Nutrition
Rules, Policy, How to Get Sales Info
Mid Tier Value Chain
Processing,
Distribution, Coops
Consumer/Producer Education
Website, Funding, Marketing, Training
Policy
Local, State, & National Policies,
Incentives, Purchasing
Woodbury’s Tax Rebate Policy
Details
• 100% Real Property Tax Rebate - 5 Years
• Application Process
• Land Owner Must Reside in County
• County: $50K p/yr Total Potential Investment
• Certification Required After Third Year
• Refund Penalty: If Fails to Comply With Program
• Source of Funds: Option Sales Tax/Gen. Funds
Woodbury’s Tax Rebate Policy
Sale to County
• Zero Up Front Cost to County
• Size of Potential Food Market in Area
• Increase Number of Farmers
• County Markets Local Products (Brand)
• Marketing of County
Woodbury’s Mandatory
Local Food Purchase Policy
• ‘Mandatory’ for County Government Facilities• Creates Immediate ‘Market’ for Products• Creates Need for Local Foods Broker (POC)• Negotiations With Food Service Contractor(s)• Local = 100 mile radius/beyond if no production• Pricing & Reporting Provisions
Anatomy of Woodbury
LFPP Policy
• Create First Market: Immediate $300K Market• Lead By Example - Schools/Hospitals• Multiplier Effect to General Economy: 1.5%• Insure Policy Cost Does Not Exceed Benefit• Instill Discipline in Broker• Opening Up Markets for Producers
Obstacles: Woodbury
Tax LFPP Policy
• Practical Barrier: Working With Food Services(general industrial food system barriers)
• Learning the Food Business• “Processing & Presentation” Issues• Supply Dependability Issues• Menu Obstacles to Use More Local• Practical Barrier: Qualified People• Practical Barrier: Demand - Then Supply
The Big Hurdle: Where are the Farmers?
• Grocer Tax Credits to Provide Secure Markets
• Micro-Loans to Support a New Generation of Farmer
• Treat New Farmers As a Traditional Business
• Local Incentives to Buy Locally Grown Organic Food
• Real Property Tax Rebates/Abatements to Incentivize Local
Objectives
• Local Government Support for Farmers Market Managers
• Initial Support for Establishing a Local Broker
What Came First?
Markets or the Farmer
Programs In Action
&
Accolades
Partnership Between Woodbury County, City of Sioux City, and Siouxland Chamber of Commerce
www.woodburyorganics.com
NACo Award Winner
Testimony Before
U.S. House of Representatives
Organic Farming Is Economic Development!
What we are doing, as a community, is supporting our farmers and giving them a fair opportunity to
serve our citizens and provide food at fair, competitive prices and making a decent living in
the process.
We are in the business of value development!
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