Rethinking Economic Development

Transcription

1 Rob Marqusee Director, Rural Economic Development Rethinking Economic Development Using Standard Tools to Promote a Local Food Economy Closing the Loop COABC s 2010 Conference Kamloops, British Columbia March 5, 2010

2 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 Lifefor the regional population as a whole.

3 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.

4 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.

5 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

6 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

7 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 offseason production The study does not include consideration of other benefits: increased knowledge of land, health, community spending, water treatment, etc.

8 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.

9 Traditional Economic Development

10 Assisting the Good Life 6/15/07 No official tally of business subsidies exists, but in separate studies Peter S. Fisher of the University of Iowa and Kenneth F. Thomas of the University of Missouri estimated that state and local subsidies aimed at creating jobs total about $50 billion annually. More subtle subsidies are not counted in those figures andmaybeevenlarger.

11 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)

12 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

13 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

14 There is no proofthat 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.

15 Statistical Impact of Policies Woodbury County Ag - Rural Statistics Sales of Livestock & Livestock Products 1969: $358M vs. 2003: $80M 78 percent decline over 35 years Sales of Crops & Livestock : $145M loss from crops & livestock Farms & Average Farm Sizes (Farms/Acreage) 1975: 1,930/268 vs. 2004: 1,140/387 78% Increase in Number of Farms 1000 Acres+ Woodbury County Losses & Subsidies Annual Loss: $24M Annual Subsidy: $23M Difference of $1M Made Up By Additional Jobs (Statistics Provided By: Ken, Meter, Crossroads Resource Center, 2005 & U.S. Census)

16 Woodbury County Population Breakdown Loss In Population: Unincorporated Areas: 11.2%/Rural Cities: 9.7% However: 20%+ Decline Outside of Corridor Forecast: Accelerated Decline After 2000 (DM Reg)

17 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)

18 Non-Localized Food System Money Flowing Out of Local Area Federal Government Non-Local Corporate Ag Processing Farmers $ $ Non-Local Inputs Manufacturers Consumers Money Flows From Federal Government to Farmers to Grow Crops At A Loss (Cost of Production > Price Paid) Ag Interests Buys At Low Price = Makes Lion s Share of Profit on Food Products In Effect: Federal Government Provides Indirect Subsidy of Large Corporate Ag Interests

19 A Better Economic Development Option

20 Woodbury County Approach Policies & Programs

21 Woodbury Policies Organics Conversion Policy: % Tax Rebate on Ag Land Converted to Organic Sustainability, Environmental, Diversification Smaller Farms, More Labor, Higher Income Woodbury Health Initiative: (Sen. Harkin) Local Foods/Mobile Farmers Market Rural County School Wellness Food Programs & Attack Obesity Local Food Purchase Policy: Mandatory Purchase of Locally Grown Organic Supports Local Farmer, Local Broker & Markets

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23 Regional Food Systems Farmers Markets Schools, Institutions, Nutrition Mid Tier Value Chain Consumer/Producer Education Policy Requirements of Vendors, Listing of Vendors & Production Rules, Policy, How to Get Sales Info Processing, Distribution, Coops Website, Funding, Marketing, Training Local, State, & National Policies, Incentives, Purchasing

24 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

25 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

26 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

27 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

28 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

29 What Came First? Markets or the Farmer 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

30 Programs In Action & Accolades

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32 Partnership Between Woodbury County, City of Sioux City, and Siouxland Chamber of Commerce

33 NACo Award Winner

34 Testimony Before U.S. House of Representatives

35 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!