Presentation to the Maryland Agriculture Stewardship Commission by Robert Frazee Chairman, MARBIDCO President, Mid Atlantic Farm Credit November 8, 2005 Maryland Agricultural and Resource-Based Industry Development Corporation

Introducing Introducing MARBIDCO Maryland Agricultural and Resource-Based Industry Development Corporation

Background Resource-based industries underpin the economy in many rural counties – including those in Western Maryland and on the Eastern Shore Resource-based industries underpin the economy in many rural counties – including those in Western Maryland and on the Eastern Shore

Development pressure threatens existing farmland and woodland Development pressure threatens existing farmland and woodland Price of land also makes it difficult for new farmers to enter the field Price of land also makes it difficult for new farmers to enter the field Land Development Pressure

Support for Ag/RBI Business is Fragmented Long-standing disconnect between traditional and agricultural economic development strategies Traditional strategies focus on recruiting new companies and creating (high wage) jobs

Rural economic development requires sharper focus on business retention and entrepreneurship Food and fiber production and resource- based industry is a key component of the rural economic mix (and keeping working lands from being converted)

Top AG/RBI Business Development Concerns Access to Capital (Low-Interest Loans & Loan Guarantees) Business Planning Assistance Appropriate Information/Referral Help for Young/Beginning Farmers

Solution: A nimble and collaborative service provider to focus exclusively on enhancing viability and profitability of resource-based businesses and industries

Modeled on: MEDCO (MD Economic Development Corporation) – which focuses primarily on real estate development TEDCO (MD Technology Development Corporation) – which focuses on high technology development Ag financing authorities in other states

2004 legislation created MARBIDCO to provide targeted development services in nimble, non- bureaucratic fashion MARBIDCO is a quasi-public corporation governed by 17-member Board of Directors

MARBIDCO Vision To ensure that Marylands resource-based businesses survive and thrive well into the 21 st Century

MARBIDCO Mission Help farm, forestry, and seafood businesses achieve profitability and sustainability. Provide targeted services and a specialized infrastructure that helps retain existing business and commerce Promote rural entrepreneurship and nurture emerging Ag/RBI industries

In short... MARBIDCO will become the go to place for rural heritage business development assistance by becoming a fully integrated information and financial services hub. The key players are engaged….

2004 Legislation authorizes MARBIDCO to: –Alleviate shortage of affordable, non-traditional capital and credit –Develop ag industries & markets –Support appropriate tech transfer and commercialization Additional Aim: Leverage knowledge, human and financial resources – both public & private

MARBIDCO Board MD Dept. of Ag Dept. Natural Resources Dept. Business & Economic Development MD Cooperative Extension MD Food Center Authority Rural MD Council Governor appoints 11 from dairy, forest, equine, poultry, horticultural and seafood industries; and experts in food processing, commercial finance and rural economic development.

Other Partners USDA (and other Federal Agencies) MD Ag Land Preservation Foundation Commercial Banks Farm and Commodity groups Rural Industry Associations Rural Regional Development Councils Local economic development agencies Local land trusts

Rural Maryland Council is providing interim staffing and other support to MARBIDCO In FY 2007, MARBIDCO should have its own staff, offices, etc., and be operational

Coming in 2006 (Planned) Maryland Farm and Producer Viability Program and Fund Maryland Resource Based Industry Financing Fund Critical Farms Program (w/ MALPF) Installment Purchase Agreement (w/ MALPF) Next Generation Farmland Acquisition Program

MARBIDCO Rural Business Development Programs

Basic Operating Philosophy Concerning MARBIDCO Loans Commercial lender and/or another public financing institution must be involved MARBIDCOs participation will not exceed that of a commercial lenders

Maryland Farm and Producer Viability Program and Fund Business plan development grants up to $17,000 Low interest business implementation grants and loans up to $200,000 for working capital and equipment. (No more than $50,000 may be used for working capital.) Landowners contractually agree to keep land and/or facilities in use at least five years Goal: Improve financial viability of small producers

Maryland Resource-Based Industry Financing Fund Provide low interest loans and loan guarantees to Ag/RBI-industry firms for land and capital equipment (10-15 years) Help finance environmental or water-quality enhancement projects MARBIDCO would provide up to 35% of needed project financing (Participation in deals initially limited to about $500,000)

House Bill 1594 (2005) reaffirmed the General Assemblys intent to try to fully capitalize MARBIDCO by the Year 2020 (up to $45 million for rural business development). House Bill 1594 (2005) reaffirmed the General Assemblys intent to try to fully capitalize MARBIDCO by the Year 2020 (up to $45 million for rural business development).

$4 to $5 million in FY 2007 for business development and loan programs. Includes about $500,000 for staffing and start-up. MARBIDCO FY 2007 Operating Budget Request:

Farmland Preservation Programs Two programs done in conjunction with MALPF One freestanding program to help young farmers

Legislation was enacted in 2005 establishing a Critical Farms Program (under MALPF) Additional Legislation enacted in 2005 (HB 1594) authorizes MARBIDCO to assist with the Critical Farms Program

Critical Farms Program In cooperation with the Maryland Ag Land Preservation Foundation Will facilitate financing for ag preservation easements or fee simple purchases of land under immediate threat of conversion.

Installment Purchase Agreements Program (IPAs) Also done in partnership with MALPF Provides structured tax-advantaged financial arrangements to help purchase easements on agricultural property likely to otherwise be lost to development Typically term lengths between 15 and 30 years (25- to 30-year terms preferable, MALPF cannot legally do)

Next Generation Farmland Acquisition Program MARBIDCO to work with commercial lenders to assist young and beginning farmers purchase farmland which would be placed under easement Program details currently under development (including easement purchase options)

.$10 to $15 million for Critical Farms and Young Farmers Land Acquisition (approximately a split between MALPF and MARBIDCO) Existing MALPF revenue streams can fund the IPA program (clarifying legislation may be needed). MARBIDCO FY 2007 Special Funds Request for Land Preservation:

....helping Marylands agricultural and rural industries survive and thrive in the 21 st Century THANK YOU!

Questions? Maryland Agricultural and Resource-Based Industry Development Corporation