James N. Barnes
The continuing transformation of U.S. agriculture profoundly affects the economies in rural America. A snapshot of the agricultural sector reveals some troubling, persistent trends, none of which bode well for the economic development of rural regions. Consider the changes on-farm operations have experienced in the last 40 to 50 years. Less than 10 percent of the rural population lives on farms; only 7 percent of employment can be attributed to farming; and farm income represents only 2 percent of total rural income. Farming counties, those where 20 percent or more of the total county income is derived from farming, represent 18 percent of total U.S. counties and 25 percent of rural counties. Since the 1950s, the number of farming counties has steadily declined due in part to increased global competition in commodity markets. At the same time, U.S. agricultural subsidy programs continue to be phased out, thereby creating more pressure on rural economies. In concert with recent higher fuel prices and other rising inputs costs such as fertilizer, these economic pressures continue to marshal the attention of all U.S. livestock, vegetable and grain producers.
However, there is also pressure on nonagricultural businesses located in rural regions of the United States. According to the Institute for Strategy and Competitiveness at the Harvard Business School, the business environment in rural areas tends to be weaker than in most metropolitan regions. A weaker business environment means rural economies will struggle to recruit and retain enterprises. The factors contributing to a weaker rural business environment can largely be contributed to low population densities. As a result, rural economies often face multiple challenges to improve their business environments including: (1) a higher cost to maintain basic infrastructures; (2) fewer resources to recruit and retain clusters of companies; (3) a greater dependency on government intervention in the form of subsidies; and (4) a rising wage gap (currently 33 percent) between rural and metropolitan regions. Unfortunately, these results of a declin ing agricultural sector coupled with a weaker business environment mean rural economies will continue to struggle.
By now this story of economic hardship is all too familiar to people living in the delta states of Louisiana, Arkansas and Mississippi, where poverty has persisted for decades. For example, compared to the U.S. average, Louisiana ranked 49th in annual export growth (minus 3.65 percent compared to 4.41, 1995-1999); 46th in wage growth per year (3.03 compared to 4.03, 1990-1999); and 37th in average wages ($26,259 compared to $32,109, 1999). Arkansas and Mississippi do not fare much better. Such economic difficulties have long been recognized in the delta. Observing the paltry economic performance of the delta is easy; counteracting poor economic performance is not.
To strengthen the business environment for agricultural and other entrepreneurs in the delta, the LSU AgCenter has taken an active role by establishing a rural economic development center, the Delta Rural Development Center (DRDC). Armed with rural development educational programs and other technical assistance capabilities, DRDC has begun working with local governments, nonprofit and for-profit organizations. With its eye on improving the quality of life for people in the delta, DRDC took roots in 2004. But tackling the economic challenges of the delta requires a nontraditional, hands-on strategy of rural development, one driven by some new rules to promote innovation in the region. Rule Number One:
Start with a new location and a great alliance partner
The mission of DRDC, which is located within the Thomas J. Lingo Community Center at Oak Grove, La., is to enhance economic opportunities for people in the Louisiana delta. DRDC provides executive education programs for boards of any type, management teams in public and private organizations, and assistance with grant writing, among other services.
By locating in the region to be served rather than on the LSU campus, DRDC has taken a more hands-on approach to rural development. Its rural location provides some distinct advantages for economic development, which include: (1) greater involvement with coordinating regional efforts among multiple agencies and organizations involved in development efforts; (2) increased learning capabilities about economic opportunities in local areas because of proximity to clients; (3) increased ability to develop long-term trust with local governments; (4) improved coordination to work with rural farm and nonfarm businesses; and (5) communities have a lower cost access point for information, technology and other resources needed to effectively assist with development efforts.
Because of its rural location, DRDC has also been able to establish local alliance partners, such as the Northeast Educational Development (NEED) Foundation. The NEED foundation was established on April 14, 1997, as local entrepreneurs Shelton and Patsy Ruffin and James Gregory decided to take a proactive role to improve economic conditions in Northeast Louisiana. The NEED foundation was established as a nonprofit corporation and has three primary purposes: (1) assist in the development of educational opportunities for students in the area; (2) enhance the local farming community; and (3) enhance economic opportunities for residents in Northeast Louisiana.
The NEED foundation has successfully completed a number of economic development projects in the area, including the construction of a new vocational agricultural building for the Oak Grove High School, funding an after-school tutoring program for elementary and high school students in West Carroll Parish and the construction of a multi-million dollar facility, the Thomas J. Lingo Community Center, which houses NEED, the West Carroll Cooperative Extension office and DRDC. The most recent project is the Oak Grove Hotel, a $1.5 million dollar investment, which will open in 2006 and boast a mix of almost 40 rooms and suites.
The NEED foundation is managed by directors John Mercer and Sheila Pepmiller. The NEED foundation alliance has provided many resources to enable DRDC to emerge as a new rural development center, such as rental space and other infrastructure necessities. DRDC continues to develop other alliances, all of which will further rural economic development efforts. Rule Number Two:
Start with a new team-based approach
Rural development efforts at DRDC require teamwork. DRDC works with the LSU AgCenter’s Community Economic Development team represented by Cynthia Pilcher, Kay Lynn Tettleton and Dora Ann Hatch. One of the most popular workshops has been customer relations, a hands-on learning experience for front-line employees to learn communication skills, business protocol, workplace ethics, interpersonal relationships, human relations skills and community pride. In addition, the team has played a vital role in the development of an initiative to promote tourism in Northeast Louisiana. The team provided organizational assistance to several interested entrepreneurs who eventually formed the Delta Outdoors and Wildlife Association. The primary mission of this initiative is to promote and facilitate economic diversification, environmental-resource sustainability and economic revitalization through alternative land use in the delta region of Northeast Louisiana.
DRDC also has begun collaborating with other academic institutions, including Southern University. Working with Glenn Dixon, a community economic development agent, DRDC recently delivered one of its executive education programs to assist Heifer International with training needs for its board members. Rule Number Three:
It’s all about promoting innovation
Most of the economic development research emphasizes the importance of innovation as a fundamental driving force for revitalization of rural communities. DRDC promotes three types of innovation – organizational, community and entrepreneurial.
Organizational Innovation refers to new ways of governing organizations or allocating resources to produce new products, services or to improve coordination of existing markets. DRDC activities support both agricultural and nonagricultural organizations. DRDC provides executive education workshops, such as Healthy Boards. These workshops are suitable for board members who serve on any type of board. The workshop teaches board members how they can govern using principles of healthy governance, which strengthen accountability and build trust among members. The program has been delivered to hospitals, chambers of commerce, and agricultural organizations such as Heifer International. Executive Director of Heifer International in Louisiana, Emily King, said the HB program was “a real help in giving the board members a better understanding of their roles and oblications to the organizations they serve. I’ll be working this coming year to find ways to get this training to all groups in Louisiana.”
In West Carroll, the Healthy Boards workshop was attended by members of the Oak Grove Chamber of Commerce. Sheila Costello, Agency Manager for West Carroll Farm Bureau, said, “The board training provided by DRDC was a tremendous asset. We had the best of intentions but needed the guidance to know exactly what our positions entailed. The workshop gave us boundaries and a direction. We now have a better grasp of our responsibilities as a Board. I believe this training could benefit any group that wants to use their time most effectively for those they are representing.”
Other DRDC activities have supported alternative types of organizational innovation among agricultural producers in Northeast Louisiana. DRDC has begun to work with local vegetable producers to explore value-added agricultural ventures. To further these efforts, DRDC is pursuing grant funding to create a new cluster of agricultural producers in Louisiana, Arkansas and Mississippi. The grant funding will be used for strategic planning to organize new value-added agricultural ventures. In addition, some grant funding will be used for conducting workshops to further support organizational development of the cluster. Risk management, legal forms of ownership, contracting best practices and financial management are the primary set of workshops that will be delivered.
Community Innovation refers to new, improved ways of coordinating regional projects or providing technical assistance to improve infrastructure assets. For example, DRDC has begun working with other Louisiana institutions, such as Louisiana Economic Development and the Northeast Louisiana Economic Alliance organization. The collaboration involved collecting data from residents in Northeast Louisiana, starting with West Carroll Parish. The data collected characterizes labor supply and skill sets of local residents. The data can be used to better coordinate efforts to recruit and retain businesses among institutions in Northeast Louisiana.
“We know that if we can document the people of West Carroll, we will have a tremendous asset from an economic development perspective. It was imperative that we have a good team to work on this effort and the basis for the team needed to have a local presence. DRDC provided that base. On top of a good team we had a team that enjoyed working together because we all have one goal and that is to show what this great community of Oak Grove and the larger West Carroll, Louisiana has to offer,” said Miriam Russell, Northeast Regional Director, Louisiana Economic Development.
Other DRDC activities include working with a feed mill to develop a business plan for expansion of its product lines, supporting infrastructure expansion of the Oak Grove airport, providing technical assistance for business plan development for entrepreneurs wanting to move their businesses to Northeast Louisiana, and finding potential grants that the local school system in West Carroll could pursue to purchase computers for classrooms. And finally, DRDC continues to work with the local West Carroll police jury to identify grants that could be used to improve infrastructure.
Entrepreneurial Innovation refers to new ways to promote small business development. DRDC offers a number of executive education workshops designed for small businesses, which include high performance teams, agribusiness management, conflict resolution, entrepreneurship, business ethics, customer relations and contract economics for community leaders, among others. In addition, DRDC is actively involved in developing an entrepreneurship program for youth. The entrepreneurship program will feature the use of simulation games to teach high school students business principles to learn techniques for managing people and complexity within a business environment. DRDC is pursuing grant funding from numerous sources to pilot such a program in the delta. Taking Stock, Looking Ahead
The easy work of DRDC has been taking stock of the problems faced by businesses, residents, local institutions and organizations such as police juries, chambers of commerce and agricultural enterprises. The challenge ahead is to help people find solutions to improve the quality of life in rural communities of the Delta.
The LSU AgCenter is committed to helping people in the rural areas of the Louisiana delta overcome poverty and the other barriers to economic prosperity. The establishment of DRDC marks a new, hands-on strategy to begin the difficult task of improving economic conditions in the delta. DRDC will continue to work with its agricultural economists, social scientists and other economic development agencies in the region to conduct research and extension programs that contribute to improving economic conditions. Specifically, DRDC will continue to assist boards, organizations and local governments with organizational development workshops. DRDC will continue to assist agricultural entrepreneurs with finding new markets, and new ways of organizing their resources to boost on-farm incomes. And finally, DRDC will continue to promote entrepreneurship throughout the delta, especially working among youth involved in 4-H and FFA clubs.
Three core values of DRDC shape how its activities will be developed and delivered in the future. These values represent the three “Ps” of DRDC work:
- Passion – having a strong professional will to do whatever it takes.
- Purpose – knowing rural development is important because improving the welfare of people is important.
- Persistence – always applying the new rules of rural development to make a difference in the lives of the people living in the delta.
Obviously promoting organizational, community and entrepreneurial innovation won’t solve all of the economic problems in the delta. But it’s a good start.
James N. Barnes, Director and Assistant Professor, Delta Rural Development Center, Department of Agricultural Economics and Agribusiness, LSU AgCenter, Oak Grove, La.
(This article appeared in the fall 2005 issue of Louisiana Agriculture.)