On policy recommendations…

Fluharty said the Senate Agriculture Committee should consider three specific policy recommendations. His first: Given current budgetary challenges, it is critical that this committee create a more innovative, streamlined, flexible, and regional approach to enable USDA RD (Rural Development) to administer the remaining suite of recently-downsized, but very effective economic development programs in a more integrated, aligned, and leveraged framework, and wherever possible, in a regional context.

“There are a lot of RD programs. There are over 40 different economic development programs in the RD suite. Many of your readers have likely used them for energy infrastructure, to build a critical access hospital, a community center or the like.

“There are Rural Business Opportunity grants, Rural Business Enterprise grants, the Intermediary Relending Program, the Rural Community Development Initiative, the Micro Enterprise Loan Program, on and on. These are mid-sized, ‘boutique’ policy – almost project design and development programs – that, frankly, are very hard to qualify for. It’s rather onerous to secure an RD loan.

“So, in a lot of cases, the last shot for an economic development director in, say, the Kansas region is ‘well, maybe we’ll have to go with the USDA.’ That isn’t because of the people running the programs – they’re great public servants. But the committee has created a statue situation that makes the programs really hard to qualify for, to seek grants under and to follow through on. If you’re a small county with a limited research staff and no grant writer (it’s too difficult).

“If you go to the Small Business Administration or the like, the process is a heck of a lot simpler and responds more quickly.

“We need to say ‘instead of all these programs, let’s figure out a way to give the state RD directors and the regional USDA program folks more flexibility to work with county commissioners and economic development practitioners. Let’s create a set of options that will streamline the process, make program application less onerous.’”

Fluharty’s second recommendation: The regional framework should advance asset-based innovation and entrepreneurship, and above all else, align much more effectively and efficiently with other programs at sister federal agencies addressing similar needs.

“Again, there is no money. We must think about linking various investment streams.

“For example, the Economic Development Administration (under the Commerce Department) has a program called Comprehensive Economic Development Strategy (CEDS). It used to be that a region had to fill out an application to get a grant. It was pro forma and you have to slap some stuff together showing some statistics and you’d get a grant.

“That has changed with the recognition that value chains and the global economy means rural regions really must think about competitive advantage. CEDS has gotten good – it’s rigorous, the private sector has bought in and local jurisdictions are, as well. Those projects are being built all over the country.

“So, why not align USDA grants to CEDS or a similar program where there’s some rigor? The reality is there are a lot of folks trying to bring projects to rural areas but it isn’t their full-time job. It isn’t like what’s happening in cities. And they’re trying to make good decisions with limited tools.

“We must align these programs better. And it’s starting to happen. The (Obama) administration has done a really good job trying to align Small Business, Commerce and the USDA. There have been several GAO (Government Accountability Office) studies that have backed that effort. My hope is the agriculture committees will provide USDA with the ability to be more flexible.”

Fluharty’s third recommendation, which he says is the “most critical” of the bunch:Given past, current and future RD funding reductions, this committee must ensure a sufficient level of rural debt, venture and equity capital, as well as an appropriate and flexible suite of federal instruments through which they are delivered, to meet rural financing need. In addition, the committee should also explore why there continues to be a glaring lack of rural investment by our nation’s major foundations.

“The Economic Research Service just released their Farm Household Income report. It showed that in 2010 the median farm household income was $54,000. Almost $50,000 was earned off the farm.

“Those operating larger farms with $250,000 in sales earned 75 percent of their income off the farm. Even on the largest farms it’s still 20 percent.

“In 2010, if the federal government had returned the same level of tax resources to rural areas, per capita, that urban areas received, we’d have had $28 billion more for economic and community development. That’s a very stark differential.

“And that discrepancy is bound to get worse. The budget authority for RD has gone down and down and down. We all recognize – just as the folks working on direct payments do – we’ll have to move to risk-management because of a lack of money.

“The reality, though, is that folks trying to build rural economies have been squeezed for the last decade. That’s a huge disadvantage and we’re talking about the main federal programs for economic and community developments.

“These numbers mean almost $600 per person less is provided to rural America.”