[Congressional Record Volume 146, Number 135 (Wednesday, October 25, 2000)]
[Senate]
[Page S10999]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HARKIN (for himself, Mr. Craig, Mr. Daschle, Mr. Jeffords, 
        and Mr. Johnson):
  S. 3242. A bill to amend the Consolidated Farm and Rural Development 
Act to encourage equity investment in rural cooperatives and other 
rural businesses, and for other purposes; to the Committee on 
Agriculture, Nutrition, and Forestry.


        national rural cooperative and business equity fund act

  Mr. HARKIN. Mr. President, today, Senator Craig and I are introducing 
the National Rural Cooperative and Business Equity Fund Act to create a 
new public/private partnership designed to attract equity investment in 
cooperatives and other businesses in rural America. Senators Daschle, 
Jeffords, and Johnson are cosponsoring this bipartisan measure.
  The Iowa 2010 Strategic Planning Council was commissioned by Governor 
Vilsack to identify barriers to Iowa's economic development progress 
over the next ten years. The council found that two very significant 
hurdles were lack of venture funding and access to capital.
  The situation is no different in many other rural areas. Many new 
rural businesses, particularly cooperatives and farmer-owned 
businesses, have tremendous difficulty acquiring equity capital--
especially those involving value-added agricultural processing.
  In Iowa alone, I have seen many cases where equity capital would have 
made a big difference in the future of a rural business. And every time 
we lose an opportunity to help a business, it means fewer jobs, fewer 
well-paying jobs, and less income for rural and small town America.
  In fact, just recently, in eastern Iowa, a group of turkey producers 
joined together to purchase the soon-to-be-closed West Liberty packing 
plant from Louis Rich. Ultimately--with the assistance of a USDA loan 
guarantee and state and private support--the co-op successfully 
purchased the plant. However, they almost went under because of limited 
equity. Only by the skin of our teeth are those jobs still in Iowa and 
those farmers still enjoying the benefits of cooperative ownership of 
that plant. In too many other cases, good ideas have been shattered 
because of a lack of equity.
  My state has made some progress through the Iowa Department of 
Economic Development's ``Community Economic Betterment Account'' or 
CEBA, which recently set aside some funding for venture capital. But 
far more resources are needed in Iowa and across Rural America.
  That's why this legislation is so important. If we pass the National 
Rural Cooperative and Business Equity Fund Act, we will help quality 
rural cooperatives and businesses succeed and expand, and we will 
create jobs and raise the incomes of employees and farmers.
  We're opening this bill up to discussion today with the hope of 
passing it in the next Congress. I believe this legislation has a 
strong start in the support of Senators Craig, Daschle, Jeffords, and 
Johnson. We also have the support of a number of national organizations 
that are key players in rural economic development including: Agribank, 
the American Bankers Association, CoBank, the Farm Credit Council, the 
Independent Community Bankers Association, the National Cooperative 
Business Association, the National Cooperative Bank, National Farmers 
Union, the National Rural Electric Cooperative Association, and the 
National Rural Utilities Cooperative Finance Cooperation.
  The equity fund created by this legislation will have a 12-person 
Board of Directors that would decide which proposals to fund. This 
board would include the Secretary of Agriculture and two of his or her 
appointees, and the remainder of the Board would be made up of private 
investors in the fund. The first $150 million in private sector 
investments will be matched dollar for dollar by the U.S. Department of 
Agriculture over a three year period. As a compensation for the lower 
rate of return in the equity fund relative to other investments, the 
Department of Agriculture will guarantee up to 50 percent of an 
investment. Debentures, which would be guaranteed, could also be 
issued.
  Businesses applying for equity from the fund must be sponsored by a 
local entity, such as a bank, a regional or local development council, 
or a cooperative or economic development group. The businesses must be 
based in rural areas, and they cannot be primarily retail businesses. 
Cooperatives and other businesses receiving an equity investment from 
the fund will be required to invest a substantial amount of their own 
capital.
  The Fund is intended to support projects that will provide off-farm 
income, additional markets for agricultural products, and new business 
opportunities in rural communities. A diverse range of viable projects, 
representing a variety of business structures, operating in rural 
communities of various sizes would be encouraged.
  Mr. President, I urge my colleagues and those concerned about rural 
economic development to examine this measure between Congresses and at 
the beginning of the coming Congress. I am hopeful that we will be able 
to make the National Rural Cooperative and Business Equity Fund a 
reality.

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