MD Strategic Plan for Agriculture

1. MD Strategic Plan for Agriculture Business Assistance and Development Kenny Bounds

2. MD Strategic Plan for Agriculture Recommendation: “Increase Economic Development Assistance through MARBIDCO, MAERDAF (Maryland Agricultural Education and Rural Development Assistance Fund) and other initiatives.”

3. MARBIDCO Mission Maryland Agriculture and Resource Based Industry Development Corporation • Help farm, forestry, and seafood businesses achieve profitability and sustainability. • Provide targeted services and a specialized support infrastructure that helps retain existing rural businesses and commerce. • Promote rural entrepreneurship and nurture emerging Ag/RBI industries. • Sustain the rural working landscape

4. MARBIDCO • First loan made in September 2007 • $2,637,000 loans made to date • 10 Maryland Resource Based Industry Financing Fund loans • 6 Emergency Drought Assistance loans • 21 Grants in three programs for $280,000 • Approx. 2/3 of requests approved • $3.25 million appropriated for FY 09

5. MARBIDCO Maryland Resource Based Industry Financing Fund • Offers low-interest loans to established Ag/RBI firms for the purchase of land and capital equipment for production and processing activities. • Maximum Loan Amount - $250,000 or $350,000 if a purchase. • A commercial lender and/or a public instrumentality must have an equal financial commitment in the project. • MARBIDCO takes second position on the collateral security.

6. MARBIDCO Rural Business Working Capital Loan • USDA Rural Development and state dollars fund this program. • Offers low-interest loans to established Ag/RBI firms for working capital and equipment purchases. • Maximum Loan Amount - $50,000. • A letter of referral from a commercial lender is required.

7. MARBIDCO • Grant Programs • Rural Business Energy Efficiency Grant and Rate Buy-down • facilitates the purchase of equipment or technology related to lowering business-related energy consumption. • grant of up to 10% (not to exceed $5,000) of the cost of purchasing and installing equipment or technology. • A copy of a report provided by a qualified third-party energy consultant is required. g

8. MARBIDCO Grant Programs MD Farm and Producer Viability Grant • designed to improve the financial viability of producers/processors or assist fledging rural entrepreneurs through specialized business planning assistance and preferred access to MARBIDCO’s low-interest loan programs.

9. MARBIDCO Grant Programs MD Value Added Producer Grant • Compliments USDA Value Added Producer Grants • MARBIDCO will provide up to 1/3 of the non-federal matching requirement under USDA • Funds will be required to be used for planning or working capital purposes in accordance with USDA regulations.  • Eligible purposes include determining appropriate marketing techniques and creating business plans or paying operating costs before a business has sufficient cash flow from operations. 

10. MARBIDCO Local Government Cost Share Program • Designed to lend support to local rural business development efforts • Must assist Maryland’s farming, fishing, forestry or seafood industries • MARBIDCO contribution may not exceed the local government contribution unless the county is a “One Maryland” county • “One Maryland” counties qualify for a 2X MARBIDCO match

11. MARBIDCO Rural Land Preservation Installment Purchase Agreements • In conjunction with MALPF • Jim Conrad will give details in the late morning session Next Generation Farmland Acquisition Program • Funding source approved this past legislative session • Likely no funds available until early 2009

12. MAERDAF Maryland Agricultural Education and Rural Development Assistance Fund Financial support to rural focused nonprofit organizations that promote statewide and regional planning, economic and community development and ag/forestry education • Funding approx the same as FY 08 • Approx. $230- $250,000

13. MidAtlantic Farm Credit- Start Right • New program developed this spring to offer aggressive new programs for Young, Beginning, Small or Minority Farmers • $32 million initial program amount with strong support of the board and staff for continuance beyond this amount • Many features in the program designed to compliment MARBIDCO loan and land preservation programs • Designed to partner with others, such as the University of Maryland, for education, mentoring and financial planning

14. MidAtlantic Farm Credit- Start Right • Credit Program • Designed to help YBSM borrowers access credit and build the foundations for a successful operation • Mentoring and Resources • Introduce those individuals to other people and agencies who can act as mentors and resources for their business development • Educational Program • Help YBSM borrowers and prospects develop their skills, whether or not they are currently managing an operation

15. MidAtlantic Farm Credit- Start Right Start Right Farmland Financing Program – eligible for all borrowers Term and Operating Loans and loans for BMP’s– must qualify as YBSM • Low interest loans for farmland, equipment, operating • Concession on underwriting standards Low Interest Loans for Agricultural Conservation – new bond issue of $3 million coming this month.

16. MD Strategic Plan for Agriculture Recommendation: “Support expansion of rural broadband.”

17. Rural Broadband Rural Broadband Assistance Fund • $10 million over 3 years-state • $6 million federal Five Regional Economic Development Councils formed the Maryland Broadband Cooperative • Using the electric coop model • Other users have joined such as ISP providers giving service to the last mile

18. Rural Broadband Tremendous Progress • Already run from Wallops Island, VA to the Chesapeake Bay Bridge and from Patuxent Naval Air Station to Southern Maryland • Bringing full IT potential to Maryland’s rural communities and farms

19. MD Strategic Plan for Agriculture Recommendation: “Identify business planning resources to assist farmers looking to diversify and implement value-added strategies.” “Support market studies and research to improve profit margins and enable diversification.”

20. Business Planning Resources University of Maryland – Maryland Cooperative Extension MREDC Maryland Rural Enterprise Development Center “To provide entrepreneurs, new and beginning farmers, and start-up and maturing businesses with the highest level of educational support for ensuring developmental success”

21. Business Planning Resources - MREDC • Web and staff based program providing RBI businesses with business planning assistance • Business and product development • Business planning and marketing • Includes financial management training and assistance • Entrepreneurship • Expertise Database • New and beginning farmer programs • Rural/urban interface

22. Business Planning Resources - MREDC • Ginger Myers • Western Maryland Research & Education Center (WMREC) - Regional Extension Marketing Specialist • Dale Johnson • Western Maryland Research & Education Center (WMREC) - Farm Management Specialist

23. Business Planning Resources – SBDC’s An opportunity exists for incorporating the resources and expertise found within the Small Business Development Centers. Agriculture and the SBDC’s have not been in close contact in most regions of the state in the past.

24. Business Planning Resources - DBED Jorge Austrich, COO of the Small Business Division, has been appointed to be the interface between DBED and Resource Based Industries Greg Cole serves on the MARBIDCO Board of Directors and Credit Committee

25. Poultry Profitability Study • DPI conducted a study of poultry profitability • Dan Cunningham from the University of Georgia updated a study that he had done 10 years ago on Delmarva • Wes Musser is working on new cash flow numbers for Maryland producers with the help of Jennifer Timmons, Jennifer Rhodes, Eddie Johnson and myself

26. MD Strategic Plan for Agriculture Recommendation: “Ensure that issues of importance to the equine industry are given careful attention.”

27. Equine • Maryland Horse Park did not work out for Anne Arundel County. • Numerous other counties are looking at horse parks. They include Cecil, Harford and counties on the Eastern Shore but MHIB has tabled working on the park until after November • Feasibility study about to be released will show that it will most likely have to be coupled with another public/private entity to justify it.

28. Equine • A lot of equine and ag organizations are in the process of garnering/assessing support for the slots referendum to be held this fall. • Maryland Dept of Agriculture and the College Park Animal Health Diagnostic Lab have announced a new PCR test for the Rhino virus. • Will allow the industry and MDA to respond more effectively if there is an outbreak, reducing the adverse economic impact if there is an event.

29. MD Strategic Plan for Agriculture Recommendation: “Attract insurance underwriters who will provide affordable liability insurance.” “Develop ways to reduce health insurance costs and increase availability for farm families.”

30. Insurance Some work has been done on this but it remain an issue in Maryland as well as nationwide. MD Insurance Admin. produced a brochure designed to help farmers access coverage. Direct Marketing Association is doing a market study to determine need, availability and costs

31. MD Strategic Plan for Agriculture • Recommendation: Business Assistance Costs • Adjust weight limit restrictions for agricultural products. • Maryland passed HB 420 to create an exceptional hauling permit but some hauler do not want to spend the $$ for the additional axle • Issues still remain on the Interstates. MDA is working with our Federal legislators

32. Business Assistance: Costs • Waive amusement tax for agritourism • State legislation failed the past two years • State does not want to dictate to the counties and deny them a revenue source • Decision needs to be made locally • Farm Bureau is working on a plan to communicate with counties and to help those interested in drafting legislation

33. Business Assistance: Costs • Support reform of H2A and H2B • Federal issue • New proposal to index wages to local may be worse than present. • Increase funding levels, participation and types of crops eligible for crop insurance • Increase in policies in MD by over 1,000 from 2002 – 2008 • New coverage coming out, including LGM for dairy • Premium subsidy changed from a fixed amount to a percentage of premium

34. Tax Issues A host of tax reform proposals were made during the listening sessions. The Incentives for Agriculture Task Force, chaired by Senator Roy Dyson and Representative Rudy Cane, had a significant package of tax reforms come out of their efforts but because of budget issues nearly all of these proposals did not pass this year. When economic prosperity returns, the work done by this Task Force should be brought to the forefront.

35. Thank You!