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Projects funded by the Agriculture Development Council stimulate rural economies, spur job growth in Montana
Economic development in rural Montana, at least on the surface, may appear nonexistent.
By JIM GRANSBERY
Of The Gazette Staff
However, a state program begun in 1989 and funded by money from the coal-severance tax has unobtrusively moved a number of projects forward, providing an economic and job boost for rural Montana communities. A couple of projects have helped solidify the agricultural economic base of Billings and Great Falls.
For numerous projects that include a goat cheese factory in Belgrade, a malt barley elevator in Sidney, a sugar beet factory in Billings, a malt house in Great Falls and a hot cereal factory in Harlowton, Growth Through Agriculture dollars have provided the seed money for feasibility and marketing studies, grants and loans to more than 225 ventures.
"The state of Montana has no venture capital," said Bob Hanson, a rancher at White Sulphur Springs and member of the Agriculture Development Council, which disperses the economic-development funds.
"We’re the only one," he said.
Hanson said the program is limited to a maximum of $50,000 per applicant, and that can be renewed twice.
That limitation is good and bad, he said, because some projects could use more than $150,000. "The council has been diligent in assessing the requests," he said.
Hanson said a proposal for a mushroom farm near Clancy did not engender much enthusiasm at first, but "it has been one of the more successful things we’ve done."
He expressed some dismay at the "quantum leap expectations" brought forward, too.
"It is difficult to run with the ‘Big Boys,’ " he said referring to a project request that included a fully integrated beef processing business.
He said the screening process is thorough and projects are turned down.
Since 1989, the council has distributed $6.3 million with matching funds from applicants and others totaling $33.6 million. Annual economic impact from GTA projects is estimated at $80.3 million a year.
"Size is not the determinant," said Brent Poppe, bureau chief of the Montana Department of Agriculture’s marketing and business development unit. "It is for the little guys, big guys and everyone in between."
Among the smaller projects is a Belgrade business milking 260 goats and producing cheese in a new factory.
"It’s beautiful," said Susan Brown, who with her husband, Melvyn, received a low-interest loan that went toward the cost of the new plant.
The couple began milking goats in the fall of 2000 and selling the milk to a Bozeman company that made the cheese. A year later, the Browns began making the cheese, marketing it through a California firm.
"Last summer we developed our own label, our own products," Brown said. "It is a good product and it sells itself."
Called Amaltheia after the Greek mythological goat character that fed Zeus, the company makes six cheeses, including feta and ricotta.
She said the state’s support was vital.
A project on the larger end was a two-year effort by sugar beet growers to buy the Western Sugar Co. from its British parent.
Two grants of $50,000 each provided the funding for feasibility and marketing studies.
"It was a darn sure good seed money," said Roger Needens, a Hardin beet farmer and a board member of the farmer co-op that now owns the sugar company including a factory in Billings, a plant that has a $50 million a year direct economic impact on the city, Yellowstone County and surrounding counties.
Agriculture still economic engine
Montana farmers and ranchers, long the top creators of new wealth in Montana, remain first among the state’s resource industries.
However, tourists are gaining on them, and the health-care industry now produces an income one-third greater.
According to the Bureau of Business and Economic Research at the University of Montana, the state’s health-care industry realized $3.3 billion in spending during 2002 and employed 40,800 workers. Wages paid exceeded 1.2 billion. Health care is the largest employer in the private business sector in the state’s economy.
In 2001, Agriculture overshadowed the mining, gas and oil and lumber industries.
Tourism remained steady with a contribution of $1.75 billion or $556 million less than agriculture’s receipts from the sale of crops and livestock plus direct payments from the federal government. Net government transactions run about $500 million a year.
During the drought years of 1999 through 2001, those federal payments equaled net farm income, or about $500 million a year, according to the state Farm Service Agency in Bozeman.
Needens said one of the spin-off effects of the purchase is that a Billings insurance company was given the contract for insuring the growers.
"That was a payback, right away," Needens said. "They had to add people to service the account."
The processing of malt barley, the essential ingredient in beer, experienced a significant development in 2002-03.
In October, Anheuser-Busch announced the construction of a $6.8 million barley handling and storage facility in Sidney. Construction is under way.
In January, Gov. Judy Martz announced during her state of the state address that International Malting Co. would build a malt house in Great Falls. Groundbreaking is expected soon, and completion is scheduled for the fall of 2005. Production capacity is pegged at 8 million to 12 million bushels a year. Construction costs are estimated between $52 million and $72 million.
In both instances, GTA grants to local groups for engineering studies helped move the projects along.
In Sidney, local efforts to assist Anheuser-Busch make a decision were critical, said state Sen. Walt McNutt, R-Sidney.
"There was not a lot of state money involved," he said. A key tax-abatement plan offered by the county commissioners and negotiations for the land were dealt with locally.
McNutt said Anheuser-Busch anticipates about 15 million bushels of malt barley to go through the storage and handling facility this year.
A spokesman for Anheuser-Busch was not available for comment.
A ripple effect of the barley production and expanded irrigation along the lower Missouri and Yellowstone Rivers would mean cheaper feed for cattle feeders such as Lynn Cornwell of Glasgow.
"We can feed the by-products (off the malting process)" he said. "It would be wonderful, great for us to have it."
The assistance of GTA helped a small group of grain producers in central Montana take over an existing value-added agricultural product.
Cream of the West, a Billings company began in 1915, was taken over in 1987 by Molt wheat grower Bud Leuthold and Billings attorney Dave Veeder.
The company was sold in January to Cereal West LLC of Harlowton.
Richard Moe, one of the owners, said a struggling economy aggravated by drought "forced us to do something."
A feasibility study, funded by a GTA grant, on the production of canola oil as lubricant "wasn’t as positive as we thought," Moe said. "We were out beating the bush for something else when the opportunity of the possible sale of Cream of the West came up.
A second feasibility grant from the GTA to develop a marketing plan was a "big help" and the group put up its own money plus a loan from a private lender.
Transportation logistics from Harlowton, 100 miles northwest of Billings, is a current challenge.
"We’re still learning, working on various ways to deal with that," Moe said.
"We’re having our grand opening May 30," he said.
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Development council well represented
The Agricultural Development Council, a five-member group that oversees the Growth Through Agriculture Program, is made up of farmers, ranchers and agricultural entrepreneurs, as well as the directors of the Montana Department of Agriculture and the Montana Department of Commerce.
This ensures producers’ and business perspective, as well as a state government tie. The council is attached to the Montana Department of Agriculture for administrative purposes only.
The council’s goal is to strengthen and diversify Montana’s agricultural industry by establishing a public-private partnership to help develop agricultural business organizational improvements. The council also focuses on the commercialization and marketing of new agricultural products. The goal is to keep pace with the transforming agricultural industry and to create new jobs and expand small business opportunities.
The council makes investments or loans in agricultural development projects that have a short- or long-term ability to stimulate agriculture development and diversification in Montana.
Funded with coal-severance tax proceeds, the Montana Growth Through Agriculture Program since 1989 has paid for more than 225 projects for a total of $6,279,225. The initial match for the projects was $33,611,093 (in both time and dollars). This equals $5.35 in matching investments for every dollar invested by the Growth Through Agriculture Program.
According to applicant surveys, the annual local economic impact of projects funded by the Growth Through Agriculture Program now stands at $80,277,213. This means that for every dollar invested just once by the program, $12.78 is seen annually in economic impact to local communities.
According to participant surveys, Growth Through Agriculture dollars have helped to create 327 full time jobs.
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