December 18, 2014

USDA Announces $150 Million Investment Fund for Rural Businesses

usda headquarters

The U.S. Department of Agriculture has announced a $150 million fund the agency will use to invest in small rural businesses. The fund establishes a new Rural Business Investment Program with a new wrinkle for investment in rural ag-related companies.

The new investment fund was announced as part of the Obama administration’s “Made in Rural America” initiative. Agriculture Secretary Tom Vilsack said the money will go to “innovative” rural small businesses with an emphasis on those with job creating potential.

Vilsack told ABC News examples of such businesses might include small biotechnology firms, businesses creating ag-related products for export and regional food hubs. (So this isn’t necessarily money going to investment in small family farms here.)

Small agricultural businesses can already access funds through loans and loan guarantees from the USDA. But the agency says the  new fund will allow “cutting-edge” businesses to access equity investment funds, too.

In a statement announcing the fund, Vilsack said:

“One of USDA’s top priorities is to help reenergize the rural economy, and we now have a powerful new tool available to help achieve that goal. This new partnership will allow us to facilitate private investment in businesses working in bio-manufacturing, advanced energy production, local and regional food systems, improved farming technologies and other cutting-edge fields.”

The money will be managed by a private firm, Advantage Capital Partners, and will come from eight designated Farm Credit banks. These banks are part of the national Farm Credit System, a federally sponsored group of lenders to farmers and other ag-related businesses.

The money will be invested by the newly created privately owned USDA licensed Rural Business Investment Company.

Some critics are understandably skeptical of the “Made in Rural America” initiative. They say it promotes export of food items that the U.S. already imports in large quantity. Critics argue the initiative has also not really benefited small farmers, ag-related businesses or the consumer.

Journalist Brett Barth reports at The Cornucopia Institute blog:

“The prime beneficiaries of global trade aren’t farmers but corporate middlemen, the distributors, transporters, and traders who take a combined profit of over 90 percent of every food dollar. With such a large combined profit at stake, trade-for-the-sake-of-trade has become an economic engine that drives worldwide agribusiness to needless and illogical ends.”

Image: Wikipedia

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Joshua Sophy - Staff Writer


Joshua Sophy Joshua Sophy is a staff writer for Small Business Trends, covering technology and business news. He is a journalist and editor with 15 years experience in media. A former newspaper reporter and editor, Joshua also serves as President of the Board of Directors of a curling club and is editor of a regional newsletter focused on the sport of curling in the Eastern U.S.

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