NSAC's Blog

What’s At Stake: Farm and Rural Business Development

September 17, 2018

Local economies already facing hardships from the rural downturn face complications if programs that support jobs and development do not receive funding through the farm bill. Photo Credit: USDA

Local economies, already facing hardships from the rural downturn, face complications if programs that support jobs and development do not receive funding through the farm bill. Photo Credit: USDA

Editor’s Note: The 2014 Farm Bill expires on September 30th. If the next farm bill is not finalized before that date, numerous “tiny but mighty” farm bill programs that support family farmers and food-producing communities will effectively shut down in terms of new funding and grant opportunities for fiscal year 2019. These workhorse programs, which have small price tags but big impacts, touch nearly every part of the American food and farm sectors. This is the fourth post of the National Sustainable Agriculture Coalition’s “What’s at Stake?” series, which highlights soon-to-expire farm bill programs and details what their absence could mean for farmers and communities nationwide. 

In recent years, farmers selling into traditional commodity markets have experienced a sustained drop in prices and a depressed farm economy. A handful of farm bill programs, however, have helped open up new opportunities for farmers to expand their businesses, create jobs, and serve their communities, despite the broader rural economic downturn. These programs include the Value-Added Producer Grants (VAPG) Program and the Rural Microentrepreneur Assistance Program (RMAP), which provide technical assistance and start up capital to farmers, ranchers, and rural entrepreneurs seeking to build and expand rural businesses, and if you go here you could find the definition of LLC and how these business can use it.

These programs have a proven track record of success, and fill an important gap left by private sector lenders and investors. They also represent the farm bill’s only direct investment in rural business creation — the 2014 Farm Bill provided $63 million for VAPG and $15 million for RMAP in mandatory funding for the five year farm bill cycle.

Like the other programs covered in our What’s at Stake series, these two programs run out of farm bill funding on September 30. This is different from many of the major farm bill programs, such as crop insurance, commodity programs, and conservation programs, most of which have “permanent baseline” and do not lose funding after September 30.

If no new funding is provided for RMAP, the U.S. Department of Agriculture (USDA) will be unable to offer rural enterprise development loans and grants beginning on October 1. This would be a huge hit to rural communities, where very small businesses make up the backbone of rural economies.

VAPG is in a slightly different situation in that it depends on both annual discretionary appropriations and direct farm bill funding — two different funding mechanisms through two different legislative processes. So while the program does not have permanent baseline and runs out of farm bill funding on September 30, USDA would nonetheless be able to continue to a make a smaller number of awards using appropriated dollars, unless there is no farm bill extension (for more details, see our previous post).

The National Sustainable Agriculture Coalition (NSAC) is urging Congress to secure mandatory farm bill funding for both RMAP and VAPG as part of any farm bill reauthorization or extension that passes in the coming weeks.

How the Farm Bill Supports Farm and Rural Business Development

Small rural businesses are vital to sustaining rural jobs and economies, but starting and growing them isn’t easy. USDA rural development policies and programs play a critical role in revitalizing agricultural communities in an equitable manner, one that provides meaningful employment and gives people a lasting stake in their communities.

For farmers looking to generate additional economic activity during tough times, innovation is key. When farmers and entrepreneurs take raw agricultural products like vegetables, grains, or milk and turn them into something value-added – like jams, bread, or cheese – they not only improve their income, but also contribute to community and rural economic development and enhance food choices for consumers.

The VAPG program provides competitively awarded grants to individual independent agricultural producers and farmer or rancher cooperatives to create or develop value-added producer-owned businesses. Grants are used to fund business and marketing plans and feasibility studies or to acquire working capital to operate a value-added business venture or alliance.

For example, Clay Oliver and his family run a multi-generational, centennial farm in the small town of Pitts, Georgia, but the artisan, cold-pressed oils they produce as Oliver Oil Company are found in kitchens across the country. It was assistance from the VAPG program, plus their creativity and hard work, that enabled Oliver Oil Company to grow into the successful business it is today. 

For many years the family made its living growing commodities, but drought and volatile prices convinced them of the need to diversify, and they eventually found a strong market for cold-pressed artisan cooking oils. So in 2015, Clay pooled his matching funds and applied for a VAPG investment in Oliver Oil Company. The grant was exactly the stimulus he needed.

“It’s awesome when a farmer can grow something and then take it another step further and manufacture their own product,” says Clay on the value of VAPG. “VAPG feeds that entrepreneurial spirit and helps farmers like me take a risk.”

Today, Clay’s oils can be bought in more than 30 states and have been used in some of the most famous kitchens in the US, but with most of the work done right on the farm, creating good jobs that cannot be outsourced and supporting the vitality of their community.

Like VAPG, RMAP provides start up capital and planning assistance to the type of rural entrepreneurs that the private sector often overlooks.

Created in the 2008 farm bill, RMAP provides funds to third parties, such as community development financial institutions, to provide training, technical assistance, and loans to rural entrepreneurs.

The Center for Rural Affairs tells the story of one RMAP beneficiary in a recent blog post. Cindy Chatt and Britney Hansen, owners of Chatterbox Brews, a restaurant in Tekamah, Nebraska, saw an opportunity to invest in Cindy’s rural hometown and to give back to the community by offering a new type of establishment, a brewpub serving craft beers and home-style food.

With support from RMAP, loan experts from the Center for Rural Affairs provided the two entrepreneurs with one-on-one counseling and technical assistance to secure financing and realize their dream. Today, Chatterbox Brews is thriving with daily lunch specials and a seasonal farmers market. And, neighbors are responding. The excitement has spurred even more development in the rural community.

What’s Next for Farm and Rural Business Development?

The House and Senate are currently in the process of negotiating the 2018 Farm Bill. As a reminder, the House bill eliminates all farm bill funding for VAPG, while the Senate bill increases funding for the development of value-added agriculture businesses through a new program called the Local Agriculture Market Program (LAMP).

NSAC and many other organizations are strongly supportive of including LAMP in the final farm bill; in fact, we recently joined with over 300 organizations, including over 50 national organizations, on a letter asking the leaders of the 2018 Farm Bill Conference Committee to do so. Clay Oliver of Oliver Oils recently wrote to Congress telling his story and urging the adoption of LAMP in the final bill.

Unfortunately, both the House and Senate bills fail to renew farm bill funding for RMAP. NSAC is strongly urging conferees to fund RMAP in the final farm bill.

With the House out this week and only four legislative days remaining to pass a new farm bill on time, it is becoming increasingly likely that the 2014 Farm Bill may need to be temporarily extended. NSAC will be working with allies and Congressional champions to ensure that essential resources for our nation’s farmers remain intact as part of any final farm bill or short-term extension. Stay tuned for our final post in this series, which delves into key research and cost-share programs that support organic farmers and businesses.

Categories: Farm Bill, Grants and Programs, Local & Regional Food Systems, Rural Development

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