Regional Network Boosts Competitiveness

Diverse interests in southernMinnesota come together
to tap new business opportunities, markets

By Anne Todd,
USDA Rural Development

Note: USDA’s 2010 Agricultural Outlook
Forum included a session that examined
how the investment strategies of
organizations from government, private
and nonprofit sectors are helping to support
business development and job creation in
rural America. This article draws from the
presentation of AgStar’s John Monson
about efforts to build a strategic, long-term
regional network to increase business
opportunities for southern Minnesotans

ur perspective in how we invest matters greatly. Informing our investment decisions from a regional perspective is a cultural shift in thinking,” says John Monson, vice president of the AgStar Rural Capital Network, referring to the Southern Minnesota Regional Competitiveness Project. This initiative was launched in 2008 to encourage strategic planning for southern Minnesota on a regional, collaborative basis to better spur investment and sustainable economic growth.

For 90 years, AgStar Financial Services, a financial services cooperative serving rural Minnesota and northwest Wisconsin, has worked to enhance life for its customers who work in agriculture and live in rural America. In 2007, to further its mission, AgStar formed the Rural Capital Network — a team devoted to supporting community and economic development, infrastructure needs and revitalization projects.

In 2008, AgStar’s Rural Capital Network (RCN) began focusing on the concept of tying rural economic opportunity to economic research. The ultimate objective is to strengthen the region’s economy by forging a common regional perspective and providing support for sustained private leadership. The result should be that local businesses become more competitive on a global scale, rather than just operating in a “survival” mode.

To launch the initiative, RCN introduced the concept to a group of organizations. The group hired staff from the Rural Policy Research Institute (RUPRI), based at the University of Missouri-Columbia and led by Mark Drabenstott, to research a new regional investment plan for southern Minnesota. Thus, the Southern Minnesota Regional Competitiveness Project was born.

Local solution to
global challenge

The Southern Minnesota Regional Competitiveness Project is a partnership of organizations, businesses and government agencies that are working together to create a strategic economic development plan for southern Minnesota.

The project encompasses a region made up of 38 counties with a population of 988,000 people. Southern Minnesota is ag-intensive and has a strong manufacturing base and worldrenowned medical research facilities, including the Mayo Clinic and the Hormel Institute.

The project is self-funded and led by AgStar, RCN and 15 other partners from the private sector, nonprofit groups and government agencies. This collaborative project made funds available to RUPRI to provide the analysis and facilitative leadership at regional roundtable meetings. Private investment and leadership has been a big differentiator of the process, compared to many other initiatives, Monson notes.

The project’s goals are for southern Minnesota to be able to better compete in the global economy, to form partnerships to cooperate on a regional basis, to identify investment opportunities and to enhance the region’s ability to innovate and grow wealth.

Project leaders have collected background data and held 13 regional meetings throughout southern Minnesota with stakeholders to identify the region’s economic potential and most promising economic opportunities. The project was kickstarted when it received broad bipartisan support from major political leaders across the state at the Future’s Summit in Mankato, Minn.

The project has identified six sectors of opportunity for the region.

Core sectors are: Monson says that the best opportunities for job creation and economic growth are found where sectors converge. Project leaders are looking for ways to create synergy between southern Minnesota’s base industries of agriculture, manufacturing and healthcare in order to help them tap into business opportunities that arise from the emerging sectors.

What’s next for the project?
Next steps for the project include creation of a region-wide debt capital fund to spur business development, recycle wealth and create more wealth for southern Minnesota. The debt side of the regional capital fund is currently operational.

The fund leverages a developing regional debt-capital network comprised of community banks, farm credit associations, real estate agents and regional consultants. The collaborative investments so far total more than $20 million. It is also responsible for 290 new jobs and 320 saved jobs.

Monson says using USDA Rural Development programs are a vital part of the effort, because its loan guarantees serve as a key to spreading capital investment and help lengthen the lending terms for borrowers.

Project leaders will also be working to set up a Regional Equity Fund to attract outside seed and venture capital to southern Minnesota. To achieve this, the group is interviewing multiple equity fund investors and will develop the new regional equity fund in a way that potentially “shadows” and leverages other venture capital funds — made up of community funds and investors.

Further plans include development of a Southern Minnesota Business Accelerator. Entrepreneurs and researchers are currently developing business models which capture synergy between key sectors of opportunity. The accelerator will benefit small, rural business owners by offering expertise in areas they may lack, such as new business development and certain management perspectives. The accelerator will connect and develop regional business capacity — leveraging the region’s best business consultants.

“The farmer-members who own AgStar understand the interdependence of agriculture and rural communities,” says Monson. “The right regional strategy based on solid analytics, regional leadership and sustainable economic investment in emerging markets allows them to be globally competitive.”

For more information on the Southern Minnesota Regional Competitiveness Project, visit the project Website at: ruralmn/regcomp.html. Information about the AgStar Rural Capital Network mission is at: http://rural

Rural Capital Network:
small team, big results

The Rural Capital Network (RCN), a division of AgStar Financial Services, serves public and private for-profit and nonprofit organizations, primarily through investing in bonds issued by local communities, organizations or businesses. RCN’s area of focus includes light manufacturing, nonagriculture businesses, multi-family housing, low- to moderate-income housing, apartment complexes and cooperative housing. It also focuses on hospitals, assisted-living facilities, dental facilities and other such health-related facilities.

RCN works closely with all parties involved to help rural communities leverage existing, locally-based resources and skills to put these programs and facilities in place. RCN has also worked to establish a network of community banks to help finance projects. Since its inception in 2007, RCN has established 27 community bank relationships in Minnesota and Wisconsin. AgStar boasts 150 such relationships nationwide, and its overall rural bond investments totaled $127 million in the last three years. It has more than $200 million in managed assets.

March/April Table of Contents