Entrepreneurship and Rural Development

(Project Leaders: Eric Thompson and John Anderson)

Background/Justification. Farming and ranching are by their nature entrepreneurial activities. This implies that agricultural producers are an important part of the entrepreneurial community of any rural, agricultural region, and are likely to be an important part of any effort to enhance local economic development through entrepreneurship. Several existing USDA rural development programs explicitly promote local entrepreneurs through support of marketing programs (Value-Added Producer Grants) or other efforts to train local entrepreneurs (Rural Business Opportunity Grants). However, other USDA programs also implicitly influence entrepreneurial activity by agricultural producers. In particular, entrepreneurial activity beyond agricultural production in areas such as value-added agriculture can help agricultural producers stabilize as well as grow their income stream. For example, the profitability of value-added agricultural products provides a hedge against the price of agricultural commodities. The consequence is that USDA programs, when seen in the context of the entire income and businesses portfolio of agricultural families, can influence investment, formation, and maintenance of these other businesses.

Objective: This project will examine how major farm programs impact economic development by influencing the entrepreneurial activities of farmers and ranchers for the case of value-added agriculture. Examples of value-added agriculture could include storage or transportation of crops (such as grain), food processing businesses (pickled asparagus, wineries for grapes, or butchering of livestock or poultry), or direct sales via farmers markets, butcher shops in nearby cities, or internet retailing. The research team will develop a framework with heterogeneous agricultural producers and consumers and use that framework to examine how agricultural policies (e.g., crop and income insurance, the Conservation Reserve Program) influence the value-added businesses.