Highlighting Economic Opportunities in Rural America
Highlighting Economic Opportunities in Rural America
November 5, 1999
TODAY, PRESIDENT CLINTON WILL VISIT RURAL ARKANSAS ON THE THIRD LEG OF HIS NEW MARKETS TRIP. President Clinton continues his New Markets tour today by visiting Hermitage, Arkansas, touring the Hermitage Tomato Cooperative Association to highlight the economic opportunities available in rural America.
President Clinton’s New Markets Initiative, builds on the Clinton/Gore Administration’s strong record of promoting economic development, which includes the creation of the Empowerment Zone/Enterprise Community Initiative in 1993. This second New Markets trip comes four months to the date after his first trip, and again highlights the untapped potential in America’s underserved markets. This second trip puts a special emphasis on how corporations and communities can leverage that potential through long term, sustainable partnerships. Through the New Markets Initiative, President Clinton is helping to mobilize corporate America and encouraging the private sector to invest in our rural communities so that all communities can share in the prosperity of this economic expansion.
HERMITAGE FACES ECONOMIC CHALLENGES, LIKE MUCH OF RURAL AMERICA. Despite a growing economy throughout the 1990’s, many of the farmers and ranchers that helped to create this new prosperity are not reaping its benefits. Many of the operators of smaller farms have not shared in the success that they helped make possible by helping to produce the world’s most affordable and abundant food supply. However, as the President will demonstrate today, the public and private sector can work together to create new economic opportunities for family farmers across America. Bradley County, Arkansas, in which Hermitage is located, faces:
Unemployment. In August 1999, the unemployment rate in Bradley County was 8.5%, down from 10.7% in August 1998, and 10.6% in August 1997. (Economic Research Service, USDA). (Economic Research Service, USDA).
Poverty. The poverty rate in Bradley County has dropped to 22.5% from 24.9% in 1990. (Economic Research Service, USDA).
Low Median Income. In 1997, the median household income in Bradley County was $21,644. (Economic Research Service, USDA).
IN HERMITAGE, PRESIDENT CLINTON WILL BE JOINED BY CORPORATE EXECUTIVES AND OTHER LEADERS. Randy Clayton (President, Hermitage Tomato Cooperative Association); Rick Silva (Senior Vice President & General Counsel, Burger King); Dan Terry (District Zone Manager, Krogers); Leory Hendricks (District Zone Manager, Krogers), John Haag (International Paper); Joe Harrington (Georgia Pacific d/b/a The Timber Company), Ignazio Urrabazo, Jr. (Chair, National Bankers Association), Rev. Jesse Jackson, Hugh Price (President, Urban League), and Al From (Executive Director, Democratic Leadership Council).
THE PRESIDENT WILL HIGHLIGHT THE HERMITAGE TOMATO COOPERATIVE ASSOCIATION. In 1996, a group of fifteen farmers with limited resources and land, some of whom were on the verge of bankruptcy, formed the Hermitage Tomato Cooperative Association. Also in 1996, Burger King signed a Memorandum of Understanding with the Rural Business-Cooperative Service of the USDA through which Burger King committed to buying locally produced commodities, including tomatoes from the Hermitage Tomato Cooperative Association. Today the Cooperative has nearly $4 million in annual sales and a waiting list for new members.
Prior to the formation of the Cooperative, the individual farmers were marketing their tomatoes through two larger farms or at auctions. Although some members had limited processing equipment on their farms, their equipment was neither modern nor large enough to handle a significant volume of tomatoes. In 1996, prior to the formation of the Cooperative, the individual farmers collectively produced about 300,000 cartons of tomatoes, which sold for about $2.25 million.
Once formed, the Cooperative obtained USDA-guaranteed financing to buy its own processing and packaging equipment, and built sufficient capacity to sell to truckloads of tomatoes to large customers.
By 1998 the Cooperative had sales of nearly $3.9 million; its members produced 412,000 twenty-pound cartons of tomatoes from about 300 acres of land. In 1999, they produced about 570,000 cartons of tomatoes, including 88,000 cartons that were sold to Burger King, as a result of the USDA-Burger King MOU.
The Cooperative also sells to regional super markets such as Kroger, SuperValu, Fleming Foods, and the Associated Wholesale Grocers all large customers that the individual farmers could not supply on their own.
Loans to the Cooperative have created 116 jobs. Future expansion could add an additional 100 jobs.
This Cooperative has not only helped small scale producers to access markets and contracts that had previously been beyond their reach, but also provides jobs in the processing.
The Cooperative may never have formed were it not for the participation of Burger King and its strong commitment to purchase locally grown commodities for use in its restaurants
TODAY, AS PART OF PRESIDENT CLINTON’S NEW MARKETS INITIATIVE, THE FOLLOWING ANNOUNCEMENTS WERE MADE:
The Farmer’s Bank (Hamburg Arkansas) is finalizing a $4.8 million loan to the Hermitage Tomato Cooperative Association, which will be guaranteed by the Department of Agriculture. The loan will allow the Cooperative to construct processing and packaging facilities that will enable the Cooperative to increase the value of its crop and operate on a year-round basis, a farm supply store, and a convenience store.
Restaurant Services Inc., (the purchasing agent for Burger King) the Hermitage Tomato Cooperative Association’s largest customer, announced a commitment to purchase up to 200 acre of cucumbers (3.2 million pounds of cucumbers) from the Mississippi Association of Cooperatives, a group of minority-owned cooperatives in the Mississippi Delta.
International Paper and Georgia Pacific (d/b/a The Timber Company) announced contracts with Growing Quality Forestry, to provide forestry services to privately-owned forests in Southern Arkansas. Growing Quality Forestry, is a new Hispanic-owned partnership, which was financed through a loan from Heartland Community Bank (Monticello, Arkansas) and guaranteed by the Small Business Administration. The company will hire approximately 60 employees during the planting and pruning/trimming season.
The National Bankers Association, a national trade association for minority- and women-owned banks, reached an agreement with USDA that seeks to help limited resource farmers and ranchers and minority-owned rural businesses obtain access to needed credit. The Association expects that its members will make available over $18 million to qualified borrowers beginning next summer as the result of the agreement.
The signing of a MOU between the Departments of Labor and Agriculture, in which they agree to coordinate resources to address the economic development needs of rural communities.
THESE ANNOUNCEMENTS BUILD ON PAST ASSISTANCE TO THE HERMITAGE TOMATO COOPERATIVE. The U.S Department of Agriculture provided technical assistance in the formation of the Hermitage Tomato Cooperative Association and guaranteed the loans that have enabled it to succeed.
A $3 million loan guarantee from the Rural Business Service enabled the Cooperative to purchase and modernize the processing plant where the tomatoes are cleaned and packaged.
An additional $1 million loan guarantee financed the Cooperative’s second processing facility.
A small local bank, the Farmers Bank of Hamburg, Arkansas, originated the loans. Loans of this size are difficult for small banks that do not have the deposit base to generate very many or very large loans. However, this bank is committed to helping local businesses and utilized the loan guarantees available through Rural Development’s Rural Business-Cooperative Service. The lender may sell much of the guaranteed portion of the loan to the secondary market and not have it count against the regulated loan to deposit ratios the bank must maintain.
COOPERATIVES REPRESENT A PATH FOR SMALL FARMERS TO REACH LARGER MARKETS AND BETTER ECONOMIC OPPORTUNITIES.
Strong cooperatives are an essential part of a healthy rural economy. They provide an opportunity for small farmers to band together and achieve that which they could not achieve individually.
Cooperatives allow smaller producers to unite so that they can achieve scales of economy and compete against larger agricultural concerns.
Cooperatives enable producers to produce value-added agricultural products, thereby capturing for themselves a greater share of the dollar that consumers spend on the prepared food that they prefer.
Cooperatives enable farmers to exert more influence on the marketplace in order to increase their profitability.
OTHER DEVELOPMENTS IN HERMITAGE
The growth of the Cooperative has contributed to the need for the expansion of the local highway. The Department of Transportation is assisting the State in improving state highway 15 and building a bypass in Hermitage, which passes through cooperative land. The bypass is known as the “Co-op Road”. The new frontage not only compliments the expansion plans of the Cooperative, but also has stimulates other development including plans for a full line, full service, farm supply store and a convenience store. Improvements to State Highway 15 and the Hermitage bypass have made it easier for trucks to travel to and through Hermitage.