{As prepared for delivery}

Remarks for

Thomas C. Dorr

Under Secretary for Rural Development

“Entrepreneurship: A Winning Game Plan for Rural Communities”

6^th Annual Minnesota Rural Summit

Tuesday, August 6, 2003

• Thank You Steve Wenzel, thank you Jane Leonard and thanks to all of you for the extraordinary effort you’ve put forth to make this summit a reality.

· I’ve had the opportunity to meet with a number of Minnesotans committed to rural development over the past 2 years, and all of them – all of you have been articulate, extremely thoughtful, and very focused. 

· If anyone or any group deserves to and should succeed at refocusing economic opportunity and policy so that it better effects rural America, I suspect it will be those of you working so diligently at it here in Minnesota

· But let me make it clear that when I say “deserves to succeed in refocusing economic opportunity”, it is not intended to be patronizing.

· Quite the contrary, I am convinced that I may be the luckiest political leader involved in rural development in many years.  Timing is everything, and I believe a combination of political, economic and social events are about to intersect that may foster a rural economic revitalization that may surprise most everyone.  Although I doubt it will surprise many of you at this event.

· To succeed at this revitalization you will need to be prepared and planned a number of strategies…..you clearly appear to be doing that.

· To be successful you need a team of individuals and organizations, whose resources, experiences, and tenacity - commitment will enable them to both recognize and capitalize on the unfolding opportunities.

· I know that many of your elected officials – especially Governor Pawlenty and Senator Coleman share this common goal with you…..with all of us.

· When you have leadership of this caliber, committed to a vision as sound and enlightened as yours, the opportunity for success is significantly enhanced.

· It is evident that Minnesota is a national resource for leadership in rural development.  Although a number of other areas are as well, you have some unique talents…right here in Minnesota…albeit just North of River City.  (Although I won’t bore you with any Minnesota/Iowa jokes, I do have to get at least one plug in for my home state of Iowa.)

But why do I feel this way?

· I believe we are close to the alignment of the R.D. stars.

o Cusp of 2 policies:

§ Ag Policy

§ Rural Development Policy

· First to bring this into focus…we presently have about 2.5 million rural Americans involved in production agriculture.

· That means that Title I – the commodity title of the farm bill, and Title II – the conservation title of the bill at best directly affect 2.5 million rural landowners and producers.

· So what about the other 62 -63 million rural Americans? What programs at USDA directly impact them?  We do.  Rural Development.

· Until USDA underwent two major reorganizations in the 1990’s, RD was known as FmHA – also frequently known as the “Lender of last resort.” 

· But with reorganization that all changed.  We are no longer involved in Farm Operating and Farm Real Estate lending.  That responsibility shifted to the Farm Service Agency.

WHAT IS RURAL DEVELOMENT?

· We are a sizable development bank.  We have an $86 billion dollar portfolio of loans and we will administer nearly $16 billion in program loans, loan guarantees, and grants through our 3 primary mission areas of RHS, RUS, and the RBCS.

· We are really a Venture Capital firm for rural America….and we have two goals.

o Increase Economic Opportunity

o Improve Quality of Life for all rural Americans

HOW

· Increase Economic Opportunity by

o Increasing flow of capital to rural America;

o Maintaining, sustaining, and rebuilding the existing infrastructure in rural America;

o Fostering and enhancing the build out of the technological infrastructure necessary to enable rural America to compete both domestically and globally; and 

o By capitalizing on the emerging industries related to bio-mass and renewable resource development.

· Improve the quality of life by addressing the Basic, Essential, and Necessary needs in rural America

o Basic – Housing, Water and waste water treatment, and infrastructure needs;

o Essential – Access to quality health care and education; and

o Necessary – Enabling Access to needed cultural and recreational amenities.

· Essentially we are placing $16 billion dollars into the rural development arena to be leveraged and developed at a time when some of the brightest and most dedicated local – rural citizens, policy makers, and frequently interested and dedicated urbanites are looking at exactly the same things as are you.

· Now why is this significant?  Why is this summit and its focus or the emerging programs at USDA important?

TWO EXAMPLES:

· In the lastest edition of FORBES magazine Publisher, Rich Karlgaard wrote his monthly column “Digital Rules”.  The title of the column was “Peaks and Valleys”. 

· Apparently he flies his own Cessna airplane to many of his interviews, and on this particular trip made two stops, one to Microsoft in Redmond, WA, and the other in Missoula, MT. 

· The gist of the article was that although a lot of folks would like to see a rekindling of the tech IPO market similar to that what occurred in the late 1990’s, it probably won’t happen again soon. 

· He pointed out that Microsoft is a much more mature company – than a go-go startup.  Times have changed as have the economics and the maturity of the tech industry.  The result is that high quality talent is less scarce than it was five years ago – in other words not as inclined to move and that the tech IPO bonanza that resulted in over 200 IPO’s in 1999 & 2000 will not likely settle out at much more than 20 – 30 per year.

· The second stop was a follow-up to this point – that of a reduction in Tech IPO’s – but it also took an interesting RD twist. 

· He flew to Missoula to meet with Jonathan Weber – the founding editor of “The Industry Standard”.  During the late 1990’s it was a must read if you followed the tech IPO market.  Its success was due in large part to Weber and apparently in 2000 he sold 7,558 ad pages – more than any other magazine in America that year.

· Yet in 2001 “The Industry Standard” went out of business.  As Karlgaard said…”a spectacular flameout”.  Then he went on to point out that Weber was worn out from 70-hour workweeks – just chasing his tale – and I quote… “He also needed to lower his cost of living. So in 2002 he moved his family from pricey San Francisco to Missoula, his wife’s hometown….

· Today he lectures at the university part time and writes reports for Off The Record Research, an independent stock tracker. 

· The beauty of living in the 21^st century is that Weber can write about European wireless companies from a small American university town.  He hops a Northwest Airlines jet to Europe every six weeks or so.  Most days he rises at 5:30 a.m., grabs a strong cup of coffee, toddles to his home office, fires up the computer with its 1.5 megabit-per second wireless Internet connection and opens up the world.” 

· Then Weber talked at length about his typical day in Missoula in glowing terms, and Karlgaard completed the story with the following line

· “Nice life.  Maybe for some the tech bust was a splendid opportunity for rebirth.”

NOW FOR MY SECOND VIGNETTE

· Tom Pfotzer.  Northern VA. Farmers market operator

o 15 years in Dot.com….left and bought 40 acre farm

o Chased his tail, consumerism, poor quality of life

o Overhead expenses kill IT industry…2 hours a day in car, overpriced real estate and housing (100,000 vs. 800,000)

o IT industry moving overseas…too much overhead…

o We’ve forgotten what the tech industry was all about

WE CAN NOW TAKE THE JOBS TO THE PEOPLE……NO NEED TO TAKE THE PEOPLE TO THE JOBS……IMMEDIATELY COMPETITIVE

o Geigo example

o Trademark and Patent office in Alexandria – 14 acres accommodate 75 acres of office and 12,000 plus jobs…in excess of 1,300 parking spaces and no real room.

· We can if done right and our resources used effectively….compete globally while living locally.

• But, we have to capitalize and bring institutional support to create policies and environment in Rural America to be successful.

HOW CAN WE DO THIS?

• In order to make this happen we must have and change in both our institutional and business mindset that allows us to take the next step.

• Embracing the benefits of technology will not alone provide our producers and rural business ventures the competitive edge needed in today’s markets.  We need to look at agriculture as a business, and in America that is easier said than done.

• Let me give you an example.  I recently had a discussion with a Midwest farmer.  He spent 20 minutes with me rationalizing why he tore down a building on his farm.  It was the barn his grandfather built.  He said he couldn’t put big doors on it, the facility wasn’t usable, etc.  He felt guilty.

• My point is – maintaining traditions sometimes create problems in remaining competitive.  Progressive companies eliminate obsolete structures and replace them with efficient ones.

• Now saying this isn’t easy --  I like the traditions of rural America – but again, if agriculture is to be competitive we must be resourceful and creative.

• The harsh global economic realities that we face -- forces us to understand and accept – that while we hold dear the attributes of the American Gothic way of life – we have a responsibility to our families and the future of rural America to paint a new picture -- one that allows us to respect our traditions, but expand our tolerance and acceptance of new and innovative approaches to support our farmers and ranchers and the rural communities in which they live.  It is time we paint an American Gothic for the 21^st Century.

Cooperative Institutional Leveraging:

· We must also look at the effectiveness of the current cooperative model for assisting farmers and ranchers. I believe the traditional model was developed with good intentions.

· However, cooperatives are now struggling to convert the equity and dreams of many rural Americans into the kinds of economic opportunity they need and desire.  Rural Development’s Rural Business-Cooperative Service group should be at the focal point of this discussion and we intend to be.

· As Under Secretary, I will be looking at ways to increase profitability for producers who use cooperatives as an investment vehicle.  If we begin to look at cooperatives with the idea that they can serve not only as a form of security, but also as an investment vehicle that pays dividends to its members – one that is focused on creating an acceptable return on investment – we will have gone a long way to strengthening rural America.

• It is this type of creative thinking that will enable all of rural America to participate in the opportunities of the 21st century.  It is that kind of thinking that we need to become adept at working through here at Rural Development's Coop Services.  It is what we intend to do as we look for ways to facilitate rural America's growth.

Conclusion:

• Let me close by saying that rural America is awash in capital – it simply must find ways to judiciously and responsibly unleash it for purposes that will allow rural America to exploit the potential of new rural economic opportunities.

• This is our challenge. 

• Thank you for the opportunity to be with you today.