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The Visible and Not-So-Visible Impacts of Value-Added Programs

The Visible and Not-So-Visible Impacts of Value-Added Programs. Rodney B. Holcomb Food & Agricultural Products Center Oklahoma State University. How Did We Get Here?. Earlier state programs served as a template for other states as well as USDA

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The Visible and Not-So-Visible Impacts of Value-Added Programs

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  1. The Visible and Not-So-Visible Impacts of Value-Added Programs Rodney B. Holcomb Food & Agricultural Products Center Oklahoma State University

  2. How Did We Get Here? • Earlier state programs served as a template for other states as well as USDA • Agricultural Products Utilization Commission (APUC) • ND in 1979 with an emphasis on, of all things, ETHANOL! • Grant funding for research, prototype development, marketing, and farm diversification • Agricultural Utilization Research Initiative (AURI) • MN in 1987 as a non-profit entity • Mix of funding and technical/business support • The New Millennium and the “Grassley Fund” • $25 million for Ag Marketing Resource Center (AgMRC) • $40 million for what became known as the Value-Added Producer Grant (VAPG) program

  3. More Value-Added Programs • Agricultural Innovation Center grants (AIC) • 2002 Farm Bill • Rural Business Enterprise Grants (RBEG) • RD entities apply, benefit for-profit operations • Rural Business Opportunity Grants (RBOG) • Training & tech. assistance, studies, incubators • Rural Cooperative Development Grants (RCDG) • USDA Business & Industry Guaranteed Loans (B&IGUAR) • Other programs and special initiatives • Several state programs have leveraged their funding via one or more of these USDA programs

  4. Measuring What Can Be Seen – Jobs and Income • Woods & Hoagland (JFDR, March 2000) • Client reports/evaluations • Job and wealth creation • Hodur, Leistritz, and Hertsgaard (NDSU, November 2006) • APUC’s mission is to “create new wealth and jobs…” • Chiappe & Nelson (SWOSU, December 2003) • OK AEDP’s goal is to “encourage the creation of jobs and industry within the agricultural economy”

  5. OK Ag Enhancement & Diversification Program • As an example, looking at impacts over first three years of operation • Direct, indirect, induced employment impact = 604 jobs • Output impacts = $25.8 million • DPI impacts = $8.4 million • State income tax = $0.3 million • Population impact = 200 people retained

  6. Who Deserves the Biggest Pat on the Back? • Value-added efforts generally supported by a variety of programs/efforts • Monetary support (local, state, federal) • Technical assistance, in-kind support • Impact assessments generally don’t distinguish – and often can’t • Ex: VAPG requires a match from non-federal funds • State program dollars, in-kind services • Ex: State programs leveraging funds with RBEG • How can individual impacts be distinguished?

  7. OSU Food & Ag Products Center 10-Year Impacts • Technical/business support, not financial • Start with basic economic impact of those assisted by FAPC (2006) • Direct: 8,700 full-time jobs, 325 part-time jobs, and $1.9 billion in sales • Total: 52,000 jobs and $6.3 billion in economic activity • Then ask for FAPC-specific impacts • Direct: 157 jobs and $93 million in sales • Total: 800 jobs and $308 million in economic activity

  8. Appreciating What Often Can’t Be Seen/Measured • Preventing financial failures • Relationships, networks, and synergies • The rise of local “champions” • Government entities actually working together (local, county, state, federal) • Network development within an industry • Picture-worthy moments • Strange bedfellows • Once-in-a-lifetime working agreements

  9. Examples from Oklahoma: VAP Co-op • $19 million frozen dough plant in Alva, OK • Over 900 member-owners • OK’s first VAPG recipient, B&IGUAR • Three local banks and their presidents working together • Every planning meeting, equity drive meeting • Three vastly different personalities • Collectively negotiated bridge funding when B&IGUAR was delayed • Never happened before, probably never again

  10. Another Example: PGI • Plains Grains Incorporated (PGI) • Non-profit HRW wheat marketing center • Support from OK, KS, TX, CO, NE, SD, WY and MT wheat commissions • Creates annual quality reports for U.S. Wheat • Original board consisted of OK’s largest private and co-op elevator reps • Extremely fierce competitors • Collectively created the concept of “grainsheds” • Work together to make trade shipments happen

  11. Public Perceptions and Common Misconceptions • Generally positive perceptions – assuming people know about them • Concepts are publicly appealing • Programs aren’t marketed well • Can’t cash the “big check” • Reimbursement method for VAPG • Payouts in installments, reports required for state programs • Don’t understand costs of “free” money • Time and expense of application, waiting

  12. Why Good Projects Don’t Apply - General • Funding needs don’t match the program • No plant, property, and equipment • Match requirements • Acquisition and documentation • Eligibility • Organization structure/control • Location (for certain rural-based programs) • “I’m not a grant writer.” • Nor a grant administrator

  13. Why Programs Are (and Will Be) Supported • Biofuels projects • Ex: APUC still assisting ethanol/biofuels • New technologies, feedstock options • Chasing the latest food trend • Natural/organic • Otherwise green/sustainable ag products • Demands of “locavores” • Producers always excited by the notion of vertical integration

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