The Agricultural Value Chain:

Transcription

1 Committed to the future of rural communities The Agricultural Value Chain: Creating Jobs and Economic Growth Dr. Glenda Humiston, State Director USDA California Rural Development

2 Committed to the future of rural communities RD Provides Funding for: Business & Cooperatives Development Community Facilities & Rural Utilities Water, Sewer & Solid Waste Systems Single and Multi-Family Housing Loans, Guaranteed Loans, Grants Technical Assistance CA Portfolio: $ 6.8 Billion

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10 Multiplier Effect is Powerful SOURCE: Local Works: Examining the Impact of Local Business on the Economy Case Studies from Arizona, Hawaii, Maine, New York, Michigan and Wisconsin

11 How Do We Get There??

12 Industry clusters of opportunity: similar, related, or complementary businesses linked by core products or services. These businesses are economically interdependent and may have common supply chains, labor needs, technologies, and markets.

13 Economic Gardening nurtures the local economy. Roughly 2% of annual state job gains is due to business relocations, most is from: expansion of existing businesses 42% creation of new establishments 56%

14 SOURCE: IMPLAN CEW, Applied Development Economics

15 SJV Cluster vs. Non-Cluster Employment Growth, SOURCE: IMPLAN CEW, Applied Development Economics

16 Clusters Within the Agriculture Value Chain Water Technology Cluster Local / Regional Food Systems Food / Nutrition Agri-Tourism Culinary Tourism AG Tech Innovation Clean Energy Cluster Renewable Energy Processing

17 Clusters Within the Agriculture Value Chain

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19 Pursue Import Substitution Encourage local production for local consumption; this strategy creates jobs, stimulates innovation and buffers regional economy from external forces. Reverse past trends and build local equity!

20 JOBS! HUSBANDRY HARVEST PROCESS COOLING CUT & WRAP PACKAGE STORAGE TRANSPORT MANAGE DISTRIBUTE MARKET WHOLESALE RETAIL TOURISM SERVICE SUPPORT RESEARCH

21 Chico, California Locally-Owned Local Manufacture OPPORTUNITY: biodiesel from livestock offal to support specialty meat cluster.

22 Founded in 2009 by undergraduate business majors from Haas School of Business at UC Berkeley. Daily collections of coffee ground waste. Utilized for gourmet pearl oyster mushrooms and growit-at-home mushroom kits. Substrate becomes premium soil amendment. Sold in Home Depot, Peet s Coffee, Whole Food, etc. Over 3,000 Accounts in Two Years Named to Forbes 30 Under 30

23 Farmgate Value: $1.6 Billion Agriculture Value-Added: $3.3 Billion 21,000 Jobs Working for more jobs! Local markets Export markets

24 National Average: just under 1% of food is local.

25 Moving Food Along the Value Chain: Innovations in Regional Food Distribution 8 U.S. Case Studies Supplying the growing demand for local and regional food products Creating additional economic opportunities Expanding healthy food access SOURCE: USDA Agricultural Marketing Service

26 Improve Produce Distribution Models Feenstra, G., P. Allen, S. Hardesty, J. Ohmart, and J. Perez., Using Supply Chain Analysis to Assess Sustainability of Farm-to-Institution Programs. Journal of Agriculture, Food Systems, and Community Development

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29 David Albers turns manure from his 2,600-cow dairy in Fresno into biomethane, a renewable natural gas delivered to PG&E to power about 1,200 homes. His Bakersfieldbased company, BioEnergy Solutions, wants to link neighboring dairies to achieve economies of scale. Russ Lester converts 800,000 pounds of walnut shells into renewable energy each year. His biomass-powered generator produces a gas similar to propane that fuels the farm's drying system, generates electricity and heats buildings. Gills Onions converts 100% of its 1.6 million pounds of onion waste into ultra-clean heat, electricity and high-value cattle feed creating biogas to power two 300-kilowatt fuel cells (enough power for 300 homes) -- and saving the processing facility $700,000 in annual electricity costs.

30 Power for the People Shade for the Cows!

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32 Dr. Glenda Humiston September 10, 2012 East Bay League of Women Voters

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36 SC2 Agriculture Technology Cluster Local Universities, Livermore Labs, SJV Broadband Consortium, CA Emerging Technology Fund, White House Office of Science and Technology and commercial partners. Transportation, logistics, water and energy conservation, food safety, manufacturing, environmental monitoring, telemedicine, and more. State-of-the-art water and energy test facilities, business launch support and a network of industry leaders, economic development professionals and university faculty turn entrepreneurial ideas into solutions to better manage our water and energy resources. Leading firms collaborate with Fresno State Center for Irrigation Technology to develop technologies.

37 Average Water Use Decreased by 10% Average Production Increased by 10% Water Savings 5 Times More Per $ Invested Than Changing From Flood to Drip Irrigation

38 Supply management - Manufacturing, logistics, and sourcing. Demand management - Marketing, sales, and service. Product management - R&D, engineering, and product development. Every Aspect of Supply Chain Management & Logistics Require Information / Communication Technologies! aaa SOURCE: The Top 25 Supply Chains: Leadership in Action, Debra Hofman, Oct. 2011

39 Every additional billion dollars of agricultural export sales helps to generate 8,400 jobs at home. Secretary Vilsack on the 2012 Farm Bill, October 24, 2012

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41 Equity capital in rural areas is as successful as equity capital in tech-oriented metro regions. A study of 18,000 investments found no statistical difference between rural and metro regions measuring key variables: jobs created, type of industry, length of investment, exit type, or performance. Patricia Scruggs et al, The Role of Equity Capital in Rural Communities, March 2010,

42 SJV Lacks Infrastructure to Support Private Equity Investing Category Sacramento Valley San Joaquin Valley Columbus, OH Population 2.7M 3.8M 1.8M Industries Information, Govt. & Educational services, Construction Manufacturing, Agriculture, Health care, Logistics Finance & Insurance, Waste, Accommodation & Food Services Universities UC Davis, Sac State, Chico State UOP, Fresno State, UC Merced Ohio State & others Publicly-traded firms (Non-bank) Publicly-traded firms (Bank) Professional Firms Adequate Evolving Strong Investment Bankers Limited Evolving Moderate Private Equity Firms Evolving None Strong SOURCE: José Blanco, Central Valley Fund

43 Kauffman FastTrac Survey June 27, 2012

44 34 Ways to Access Capital Recommendations on Policy and Resources Over 130 top experts and activists representing financial institutions, private businesses, economic development organizations and government agencies pledged to implement!

45 California Organized Investment Network State Assistance Fund for Enterprise Business and Industrial Development Corporation (SAFE-BIDCO) Tax-Exempt Industrial Development Revenue Bonds Revolving Loan Funds Social Impact Bonds Crowdfunding and even more!

46 Direct Public Offerings

47 Employee Stock Ownership Plans The U.S. has about 11,000 ESOP companies and about 11 million employee participants. ESOP companies, as a whole and by industry, tend to outperform their non-esop counterparts. SOURCE: Pugh, W., Oswald, S. & Jahera, J., The effect of ESOP adoptions on corporate performance: Are there really performance changes? Managerial and Decision Economics, 21(5): 167, 2000

48 EB-5 Visa for Immigrant Investors Immigrants who invest $1 million in a business that creates or preserves 10 U.S. jobs over two years receive residency along with their family. This can be reduced to $500,000 by investing in a regional center or establishing businesses in a Targeted Employment Area (i.e. Rural). 1,600 1,400 1,200 1,000 Receipts Approvals Denials

49 Corporate Investment in Shared Value

50 New Model for Financing Regions and/or Sectors Goal: $90 Million Funds Raised to Date: $270 Million

51 California Community Capital Collaborative

52 Start Invest Local Initiatives California Citizens Hold $859 Billion in Retirement Accounts $43 Billion for Investment in California if Residents SOURCE: Employee Benefit Research Institute, May 2010 Data from Averaging National Statistics Brought 5% of Their Retirement Accounts Home

53 Committed to the future of rural communities California Rural Development U.S. Department of Agriculture 430 G Street, Agency 4169 Davis, CA Phone: