STATE POLICY VALUE-ADDED DIVERSIFICATION
Nearly every state legislature in the country has acted to develop the value-added sector of agriculture. Mississippi’s Food and Fiber Center was one of the first and commercialization of catfish was one result. Texas, North Dakota and Minnesota have been the most successful. Wheat producers never owned a pasta plant, until North Dakota’s value-added program helped farmers attract private financing for a $41 million plant which returned $2 million in profits to the farmer-owners last year. This plant is one of over seventy value-added farmer-owned enterprises which have arisen through the Agricultural Products Utilization Commission in North Dakota.
In order to assess the impact that APUC programs have had on the North Dakota economy, in 1996 the North Dakota State University’s (NDSU) Department of Agricultural Economics analyzed 11 projects that had been funded under the Cooperative Marketing grant category. Included among these 11 projects were Dakota Growers Pasta Company and North American Bison Cooperative. The study found that total APUC funds of $867,381 granted to these 11 projects helped create businesses that directly added $84.5 million to North Dakota’s annual economy. Secondary economic benefits amounted to an additional $160 million each year. Thus, APUC asserted that its direct annual return on investment for these 11 projects was $97 for each dollar spent, and its total return (including secondary benefits) was $297 for each dollar spent.
This 1996 study performed by NDSU concluded by saying, “the projects sponsored by the North Dakota Agricultural Products Utilization Commission are adding value to the state’s agricultural commodities and thereby creating new jobs, gross business volume, and tax revenues for the state economy. The economic contributions of these projects is substantial on a statewide basis, and even more impressive at the local level”.
This impact occurred because small towns in North Dakota and Minnesota have been transformed with high-paying, skilled jobs created by new value-added industries. Minnesota’s Agricultural Utilization Research Institute (AURI) has helped create over 190 new products and over 100 new value- added businesses.
Nearly all Midwestern states have established value-added programs. Iowa, for example, recently transferred road tax funds to create a $4 million per year diversification/value-added program. Among Southern states, Texas is the most ambitious with a $225 million revolving loan program for agricultural value-added businesses.
Successful state value-added diversification programs are tiered: assistance is given at various stages, but only on successful completion of previous stage:
- assistance in initial organizing
- competitive grant funds for feasibility analysis
- mentors from profitable ag processing efforts
- funding for business plans and equity drives
- access to low interest capital for construction
For more details, contact:
Texas Agricultural Finance Authority
Lee Deviney, Director 512-463-8607
Mississippi Food and Fiber Center
Virgil Culver, Director, 662-325-2160
Agricultural Products Utilization Commission
Lance Gaebe, Director 701-328-5350
Agricultural Utilization Research Institute
Dan Lemke, Director, 507-835-8990
Iowa REVAMP (Mentoring program)
Pat Paustian, Coordinator, 515-281-6936
Missouri Value-Added Grant, Loan and Tax Credit Programs
Tony Stafford, Director, 573-751-4211