By Todd Van Hoose @ToddVanHoose
As members of the communities we serve, Farm Credit has seen first-hand the powerful role that entrepreneurship can play in transforming communities. Just like their urban counterparts, rural communities benefit from the influx of fresh ideas and innovative businesses. Rural entrepreneurs, however, oftentimes face unique challenges: inadequate access to broadband, higher transportation costs and lack of access to a business network. The onset of COVID-19 has only compounded the stress facing these rural enterprises, turning the economy upside down and forcing many of them to alter their business models dramatically to remain in operation.
That’s why Farm Credit partners with the American Farm Bureau Federation to host the annual Ag Innovation Challenge, a national competition for entrepreneurs who are solving challenges faced by farmers and rural communities. The Ag Innovation Challenge raises the profile of ten rural start-ups each year through extensive social media promotion, connecting these entrepreneurs to networks of rural innovation professionals and providing $145,000 in start-up capital, helping propel these new businesses toward success. Learn more and apply online at fb.org/challenge by Aug. 14.
We’re proud to partner with the American Farm Bureau to celebrate entrepreneurs and to be a partner in rural America’s success for 104 years and counting.
For rural businesses looking to grow, outside investment – particularly from entities that understand the unique challenges and opportunities rural America faces – can be hard to find. But rural entrepreneurs have an important tool they need to succeed right in their home communities, through the Agriculture Department’s Rural Business Investment Companies. These equity funds, uniquely structured to serve rural America, enhance the flow of capital to innovative small rural businesses, spurring economic development and creating job opportunities for rural families.
Authorized by Congress in the 2008 farm bill, the Rural Business Investment Program grants licenses to newly formed venture capital organizations. To qualify, they must invest 75% of their funds in areas with a population of 50,000 or less and 50% of their funds in small enterprises. They also must raise $10 million in private equity. And that’s where Farm Credit plays a role. Farm Credit institutions across the country continue to invest millions of dollars in RBICs – funds that have supported the food and agriculture value chain, technology-enabled agribusiness and more. We’re proud of these investments, just as we’re proud to provide reliable, consistent credit and financial services, from operating loans and farm mortgages for farmers and ranchers, to financing capital improvement projects in essential rural community facilities, such as hospitals, electrical cooperatives, wastewater treatment plants and more.
Midwest Growth Partners is an RBIC that focuses its investments on growth-oriented companies in the upper Midwest. MGP was founded by native Iowans and supports businesses like Maytag Dairy Farms, a family-owned company that formed its first wheels of handcrafted, artisan blue cheese in Newton, Iowa, in 1941.
Maytag Blue Cheese was on menus all over the world for decades. But, in recent years, its growth had stalled. Family members had moved out of the area, making it difficult for them to provide hands-on oversight of the business. And, in 2016, a voluntary product recall forced a closure of the cheese plant for more than 10 months, affecting wholesale and retail relationships built over generations. Faced with such challenges, the family decided to sell the business on the condition that the new buyer would honor Maytag’s heritage through continued investment and maintain its presence in rural Iowa.
Maytag’s history, and its importance to the town of Newton, made it a perfect fit for MGP’s Midwest-focused investments. The businesses in which MGP invests typically rank as the largest employers in their small communities, and MGP is dedicated to boosting rural employment and sustaining the health of rural economies. In January 2019, MGP purchased Maytag Dairy Farms and immediately began investing in the operation to ensure Maytag’s future success.
In order to sustain our rural communities for generations to come, we need a steady pipeline of companies like Maytag.
Now, more than ever, rural companies – and the communities on which they depend – need both the resources and expertise that RBICs can provide.
Todd Van Hoose is president and CEO of the Farm Credit Council.