Volume 3, Number 4 – December 2006

Opportunities for Innovation Policy in 2007
Volume 1: The Farm Bill 

As a new Congress gets set to convene next month, there are high expectations for big changes from Washington.   Tight domestic budgets and an consuming (and appropriate) focus on Iraq will likely mean that, while many new ideas may get a public airing, it will still be difficult to generate significant changes in Federal policy.  Nonetheless, there are a few areas where we might see major changes affecting efforts to foster innovation and regional competitiveness.   We’re going to take a look at these opportunities in the next 2 editions of EntreWorks Insights.  Here in Volume 1, we’ll take a look at the upcoming debate on the 2007 Farm Bill.  Our next edition will examine new proposals to support technology development, and to promote science and engineering education.

When it comes to Federal policy toward rural America, the Farm Bill is the big kahuna.  Pretty much every federal program targeting agriculture and rural development is authorized by the Farm Bill, which is considered by Congress every five years.  This debate will begin anew in 2007, and this year’s decisions will greatly affect not only how Washington deals with rural America but also how Washington deals with larger questions of regional development for all kinds of communities.  So, this year’s Farm Bill debate will not just be of interest to farmers.  It will affect all of us. 

So, what’s at stake?  At the most basic level, we’re talking about how Washington plans to invest tens of billions of dollars in programs affecting crop supports, conservation, food stamps, nutrition, and the like. Also at stake is how Washington can best support the development of a strong business climate and livable communities in rural America.  Rural development is not a big-ticket item when compared to, say, crop supports, but it will be an important component in this year’s debate.    

Fortunately, there has been a good level of debate about how the Farm Bill can and should affect rural development.  The House and Senate Agriculture Committees have held numerous field hearings, and Secretary of Agriculture Mike Johanns deserves credit for holding a comprehensive series of “Farm Bill Forums” across the US (see www.usda.gov/farmbill) to solicit public input.   In a paper (available at http://futureofinnovation.org) designed to summarize these discussions as they relate to rural development, US Department of Agriculture (USDA) researchers presented three generic options:

1. Maintain current rural development programs but alter their targeting so they are more relevant to pressing needs or sustainability.
2. Revise programs to focus more on generating more new business formation and more private investment in rural communities.
3. Provide more funds on a regional basis. 

These three generic options are not really mutually exclusive.  In reality, we ought to try to pursue all three approaches at once.   While rural development programs need updating and revising, we should also avoid throwing out the baby with the bathwater.  We need to retain existing programs that address critical needs, such as ongoing investments in broadband and affordable housing.  But, rural development policies do need to be updated so that they are both more entrepreneurial and more regional in focus.

By “more entrepreneurial,” we mean that USDA needs to recognize a critical reality.  In many places, the rural economy is no longer driven by agriculture.  Instead, the rural economy looks a lot like the economy elsewhere—driven by a mix of businesses, large and small, that operate across many sectors.  How do you help support such an economy?  By helping individuals and businesses built wealth and prosperity.   This can occur through several kinds of initiatives:

• Increasing the availability of investment capital by expanding microenterprise programs and other business finance efforts in rural communities.
• Helping individuals build assets through targeted individual development accounts.   This concept, at least as it pertains to rural areas, comes from the New Homestead Act, legislation introduced in the last Congress by a bipartisan coalition of Senators from the Great Plains region.
• Diversifying the farm economy by supporting efforts to promote value-added agriculture production, help develop alternative industries (e.g. agri-tourism, organic farming, alternative energy), and to invest in product and process innovations at existing farm operations.

By “more regional,” we mean that rural development policies must find ways to build scale so that rural communities can compete in the global economy.  Individual towns and counties do not compete in the world economy; regions do.  Yet, federal policies still tend to provide targeted assistance to individuals towns and other political jurisdictions.  While this support can be helpful, it fails to help small towns prepare for competition on a global scale.   Regional strategies help generate economies of scale, help improve the quality and breadth of support services, and also help encourage collaboration.   Recent research (available at http://www.kc.frb.org) from the Federal Reserve Bank of Kansas City indicates that regional partnerships can contribute to improved economic development outcomes.  

Other federal agencies are already moving in this direction.  The Department of Labor’s WIRED (Workforce Innovation in Regional Economic Development) program offers one example of such a regional approach (see www.doleta.gov).  Regional partnerships need not be limited to economic development.  Regional approaches also yield benefits in areas such as border security, water conservation, and environmental stewardship.

So, what’s next?  The Farm Bill is going to stimulate some fascinating and critical policy debates.  It’s not just going to be about soil conservation or support prices for cotton.  If you have an interest in how Washington supports and invests in regional economic development, you should closely monitor – and, if possible, get engaged —in this debate. 

What’s New at EntreWorks Consulting?

EntreWorks Consulting has had a busy and productive year.  Thanks to all of our friends, colleagues, and customers who have supported and promoted our work.  Here’s a sampling of some of our recent and upcoming projects:

Arkansas Capital Corporation:  Assisting ACC with the creation of the Arkansas Economic Acceleration Corporation, a privately led initiative to support Arkansas’s small business owners and entrepreneurs.  (www.arcapital.com)

Appalachian Regional Commission:  Along with the RUPRI Center for Rural Entrepreneurship, EntreWorks is evaluating the impact of ARC’s Entrepreneurship Initiative, a multi-year investment in local initiatives across the 13 state ARC region.  (www.arc.gov)

North Carolina Department of Commerce:  EntreWorks is assisting the Department in a new effort to update its website and other materials designed to support new and growing businesses in the state.  (www.nccommerce.com)

Northern Virginia Workforce Investment Board/Skill Source Group: Along with the Center for Regional Economic Competitiveness, EntreWorks is assisting key workforce leaders in Northern Virginia to assess the impact of upcoming military base expansions at Fort Belvoir and Quantico Marine Base.  (www.myskillsource.org)

Pacific Mountain Workforce Development Council:  Working with the National Center for Education and the Economy, EntreWorks is aiding the Olympia, Washington-based Council in its efforts to craft a regional workforce development strategy.