Charles W. Fluharty, President Rural Policy Research Institute http://www.rupri.org

1. Leading the Rural Renaissance: Accepting the R.D. Challenge! Presented to the Iowa State USDA Rural Development Meeting Des Moines, IowaApril 3, 2007 Charles W. Fluharty, President Rural Policy Research Institute http://www.rupri.org

2. Framing the USDA / R.D. Farm Bill Alternatives (Executive Summary – July, 2006): • Alternative Approaches to Rural Development • Maintain the structure and tools of existing programs, but refine program targeting. • Focus on new business formation, supported with rural private investment. • Move toward greater regionalized funding.

3. Policies and budgets are ultimately about visions and values. So several questions should frame our approach to this issue:

4. Three Farm Bill Questions • What are the principal policy goals of rural initiatives and farm programs? • Who are the constituencies of each, and how are they benefited by public investments? • Since almost all producers are rural people, why have these programs historically been viewed as inherently competitive or contradictory?

5. Several issues to ponder, in seeking a better reframing of this question: • The current rural policy context • The impacts of globalization on domestic farm and rural policy considerations • Key drivers which offer the potential to forge new, more integrative policy options

6. “If you do the same things, over and over, you’ll probably get the same outcomes!”

7. 1999 1950 Ag Policy and Rural AmericaFarm Dependent Counties The rural economy is too diverse for ag policy to be effective “rural development policy.” Source: USDA Center for the Study of Rural America, FRBKC

8. Ag Policy and Rural America Top 25% of counties dependent on ag payments

9. Ag Policy and Rural America Commodity payments do not spur rural economic growth. Employment Growth, 1992-2002 Negative Growth Zero to Average (19%) Above Average (19-463%) *Note: Dependency determined by Farm Payments as share of Personal Income, 2000-2002 average Source: Bureau of Economic Analysis, REIS Center for the Study of Rural America, FRBKC

10. Ag Policy and Rural America The Catch 22 of Ag Policy: Commodity subsidies wed regions to commodities and thwart innovation. Change in Number of Establishments Top 25% of counties (92 to 1790 est.) 25-50% (27 to 92) 50-75% (1-27) Bottom 25% (-242 to 1) Metro counties Source: County Business Patterns 1990-2002 Center for the Study of Rural America, FRBKC

11. A Quarter Century Snapshot: • 160 counties across the U.S. are most commodity dependent. • They collected $141 billion in farm payments (over 50% of all payments). • Over these 25 years: • In these counties, job growth was .05% per year. • In all other rural counties, job growth was 1.3% per year – two and a half times higher.

12. “The social and economic institutions of the open country are not keeping pace with the development of the nation as a whole . . . ” - President Teddy Roosevelt’s Country Life Commission

13. Four Key Questions for Rural Policy Change: • Why should America care? • Can a meta-policy shift occur? • What are the key elements in such a shift? • Where are the current and future opportunities for such an approach?

14. Why Should America Care? • Structural challenges in rural community and economic development capacity: • Current federal policy • Foundation grantmaking • Corporate grantmaking

15. Structural Rural Disadvantage in U.S. Federalism • 2003 Consolidated Federal Funds Report (SRDI): • $7,242 per capita (metropolitan) • $6,694 per capita (nonmetropolitan) • $548 per capital less • Nature of these Federal Funds • Income Security: • 52.9% metropolitan • 67.0% nonmetropolitan • This 14% differential builds much of urban community capacity / infrastructure

16. The Federal Rural Community Capacity Disadvantage • Federal spending on urban community development 2-5 times higher than rural, per capita • Federal spending on community resources is: • 14.5% of metro funding • Only 8.9% of non-met • $1,051per capita metro, $598 per capita non-metro ($454 per person difference)

17. The Rural Disadvantage in Foundation and Corporate Grantmaking • $30 billion annual foundation giving • Only $100 million committed to rural development • 65,000 active grantmaking foundations • Only 184 engaged in rural development • 20 foundations account for 80% of total • W.K. Kellogg Foundation and the Ford Foundation account for 42% • $12 billion annually in corporate philanthropy • 1% of total to rural organizations • 153 of 10,905 grants

18. Globalization is changing the framework for rural policy and programs: • Commodity industries driven by cost pressures • Widespread consolidation • Impacts are most often regional in character

19. Capturing regional competitive advantage must be the new rural development goal: • Regional assets identification • Niche approaches • Innovation / entrepreneurship / collaboration / new governance • From single firms, single sectors, single places toward a regional, systems approach

20. Three questions will determine whether this vision is achieved: • Will public sector champion(s) step up? • Will institutional innovator(s) accept the challenge of building new intermediary structures? • Can a constituency for change be built, to support these public risk-takers?

21. A new rural policy should: • Acknowledge current ag policy has many goals, but has failed to adequately assure broad-based rural economic growth • Build innovative new regional approaches for global competition • Support necessary institutional innovation • Assist in easing current agricultural trade conflicts

22. Reframing the question: • “What policy framework will best integrate rural initiatives and farm programs, to advantage producers, their rural communities and regions, and their childrens’ opportunities to thrive there in the 21st Century?”

23. Key drivers which offer the potential for a new “win-win” approach: • New Farm Bill • WTO dynamics • New regional innovation / entrepreneurship vision within USDA Rural Development • A second generation Rural Strategic Investment Program (2002 Farm Bill) • Micropolitan Statistical Areas (CDBG)

24. Micropolitan Areas: An Opportunity for Targeted Investment in Rural America

25. Defining Rural America • The metro/nonmetro definitions used in most policy targeting are not the same as urban/rural definitions. • Metropolitan areas contain rural places and nonmetropolitan areas contain urban places. • In fact, 51% of all rural residents (30 million people) live in metropolitan counties! • These people are excluded from almost all rural policy/program eligibility • Rural programs usually target only nonmetropolitan counties • Urban programs usually target only cities

26. 48.8 million people live in nonmetropolitan counties + 30 million people live in rural portions of metro counties. Actually, the U.S. rural population is 78.8 million. note: Urban and Rural Population figures from Census 2000; CBSA status for the December 2005 Classifications

27. County level designations are a good place to start…

28. But we can’t ignore the 30 million rural people living in metro counties!

31. Source: U.S. Census Bureau, Census 2000

32. Source: Population: U.S. Census Bureau, Census 2000 County Classifications: U.S. Census Bureau, December 2005

33. A U.S. Rural Policy Renaissance: Four Critical Components • Maintain Current Level of Federal Rural Investment • Create a New Rural Policy Framework: Regional Rural Innovation • Support Key Operational Principles • Develop and Sustain a National Dialogue on Rural America

34. Maintain Current Level of Federal Rural Investment • Essential public services • Infrastructure • Broadband • Community capacity • Overcome Rural Funding Disadvantage • CDBG / CSBG • Micropolitan Regions / RSIP • Reverse Recent Disinvestments in Rural Programs

35. Create a New Rural Policy Framework: Regional Rural Innovation • Federal Departmental Collaboration / Funding Alignment • Federal / State / Regional / Local Cooperation (Programs / Funding) • Incent Public / Private / Philanthropic Investment Cooperation • Regional Framework • Innovation / Entrepreneurship Focus • Attention to Diversity, Gender, Poverty and Immigration Concerns

36. Support Key Operational Principles • Asset-Based Development • Flexibility / Local Input • Research / TA: Public Decision Support Tool • Investment in New Intermediaries: Community Colleges, Faith-Based Organizations, etc. • Attention to the Importance of Working Landscapes • Renewable Energy and Entrepreneurial Agriculture • Natural Resources • Arts / Heritage / Culture

37. Develop and Sustain a National Dialogue on Rural America • Rediscovering the Social Contract with Rural America • A New Declaration of Interdependence (Urban / Rural) • Crafting Constituency Engagement • Building Gravitas and Scale

38. Final Concerns and Considerations for USDA / R.D. • A global R.D. consensus • The critical challenges • Celebrating the way forward • It’s all about the people

39. The New Rural Policy Framework: An Emergent Global Consensus • Realigning, and better integrating, agriculture and rural economic development • Moving from sectoral, through multi-sectoral, to regional considerations • Addressing the asymmetry between top-down and bottom-up “workings” • Building local evaluative frameworks which actually influence central government action • Valuing participatory process concerns as well as cost effectiveness considerations

40. The Critical Challenges • Rethinking core missions • Redefining roles and responsibilities • Created a renaissanced leadership cadre • Engaging and supporting the “border crossers!” • Redefining “we” and “they,” with special attention to diversity

41. Celebrating the Way Forward! • Lessons learned, given this new rural policy paradigm • Challenging the naysayers • Process as destiny • Keeping on, keeping on!

42. What lies behind us and what lies before us are tiny matters compared to what lies within us. Ralph Waldo Emerson