Long before the COVID-19 pandemic ravaged small businesses across the country, rural Main Streets were struggling. Rural populations have declined as small farms closed or consolidated; manufacturers moved overseas; and mining, timber, and other extractive industries dried up. Around rural town centers, new extractive industries moved in: dollar stores, superstores, and national chains offering low prices to undercut local downtown businesses and putting even more of them out of business. 52 percent of a dollar spent at locally owned businesses recirculates in the region and builds the tax base, while profits from chain stores flow out to corporate headquarters, with only 16 percent of revenue staying in the local community. Supporting workforce training and business services in “distressed” communities helps to grow small businesses and an entrepreneurial ecosystem of independently owned local businesses.
Create Good Jobs and Strong Economies
State policymakers can support rural Main Streets in a variety of ways. Enacting a state version of the federal Startup Opportunity Accelerator Act would support rural entrepreneurs and build entrepreneurial ecosystems through investment in startup accelerators and incubators in rural, low-income, and other underserved communities. There are also opportunities for business development paired with strategies to address other community needs, such as lack of affordable healthy food.
Regional Food Economies
Both consumer demand for local food and the interest of new and established farmers in producing it have skyrocketed in the last decade, but the supply is still often limited by the lack of physical processing infrastructure. Many local and regional canneries, slaughterhouses, butchers, dairies, and similar food processors closed in the 1980s and 1990s, eliminating a critical part of a local food system. Investment in building or rebuilding this infrastructure has significant economic benefits, supporting local farmers and creating jobs.
While meat processing is regulated at the federal level, there is a great deal that states can do. In 27 states, the state departments of agriculture have the authority to inspect meat processing facilities, rather than requiring inspection by USDA, as in the remaining states. Meat processed at state-inspected facilities may be sold within the state. States with these programs can ensure that they are robust and well-funded; they may also apply for the Cooperative Interstate Shipment (CIS) program, which allows meat from state-inspected plants to be sold in other states. Labor can be a major sticking point for developing processing capacity. Some community colleges, high schools, and other institutions are investing in vocational programs to train workers in the skills that a small meat processing plant requires.
Cottage Food and Food Hubs
To support the interest and economic potential of local food economies, many states updated their cottage food laws in recent years to allow home cooks and bakers to sell homemade products. Another route is public investment in community commercial kitchens that are available for local food producers to make their food products. These are often developed by a nonprofit, with collaboration from local and regional governments and businesses. USDA grants can be a key to getting the facilities built. State funding can play a role too.
Food hubs can be another key element of developing and strengthening local food systems. As with commercial kitchens, development of a food hub is not generally driven by a state initiative, but it can be supported and funded by state action. For example, a Georgia state senator was able to direct state funds to a new food hub in a predominantly Black rural Georgia county by working closely with local community members. There is also an opportunity for states to earmark federal dollars, such as from the COVID-19 relief or infrastructure packages, for local food infrastructure.
Food policy councils or advisory boards can help to coordinate efforts across agencies and between states and the federal government, which can bolster sustainable agriculture and food networks across the country. States can significantly increase demand for local food through procurement policies, whether directly through procurement requirements by state-run agencies or incentives for institutions run by other entities.
SNAP and EBT
Another way that states are expanding access to local food is through increasing use of Supplemental Nutrition Assistance Program (SNAP) funds through Electronic Benefit Transfer (EBT) cards used at farmers markets. SNAP benefits are paid for entirely by federal funds, though administrative costs are shared equally between the federal and state governments. States must appropriate funds to establish and administer programs to accept EBT at farmers markets. These authorizations and appropriations often must be extended in order to maintain the program; some states have failed to do so and have lost the ability to accept EBT at markets. At least 29 states have a version of Double Up Food Bucks, a 2-for-1 farmers market matching program for produce started by the Michigan-based Fair Food Network and now adopted and adapted around the country.
Agriculture and Worker Cooperatives
Cooperatives play an important role in U.S. history, in agriculture and beyond. Historically, they served to address general economic problems of under- or overproduction, business uncertainty, and excessive costs, while giving more control of resources to those who produce them. Cooperatives continue to be a tool to support fair economic development and growth in rural communities.
There are several types of cooperatives, and nearly any business or other relationship can be established as a cooperative. Financial and farmer cooperatives that support agricultural producers are well-established, and some states are exploring ways to expand worker cooperatives to support economic recovery, build community wealth, strengthen retirement security, improve job satisfaction, and ensure that rural businesses continue following an ownership transition.
- Federal: Pass the 21st Century Civilian Conservation Corps Act, which expands upon provisions in the Climate Stewardship Act to resource a wide range of federal agencies to create good conservation jobs.
- Federal: Overhaul the U.S. Small Business Administration (SBA) to better support new and growing businesses, especially those in rural areas, the very small, and those owned by women and people of color. This means shifting a significant share of the SBA’s loan programs to finance entrepreneurs in communities that have been left behind, as well as rethinking SBA’s training programs to serve rural and minority entrepreneurs better. Finally, the SBA’s Office of Advocacy should be transformed to provide much-needed analysis and advocacy on the most pressing policy issues hindering independent businesses, including unchecked monopoly power and policies that spur corporate consolidation.
- Federal: Ensure that rural economic development and job training prioritize rural jobs. Too often, economic development and job training programs prepare workers and entrepreneurs to leave rural communities rather than create opportunities to stay and thrive. Development efforts must prioritize building strong rural communities. This is especially important as the rural workforce transitions away from fossil fuel-based industries.
- Federal: Create and fund “jobs of the future” and “industries of the future” apprenticeship programs. Job training and business development must envision the next generation of rural economies and focus on preparing and supporting the development of those industries, including information technology and new commodities like hemp. This focus on a just transition from extractive industries to local wealth creation and well-paying jobs should be a critical part of rural economies.
The RECOMPETE Pilot Program, passed in the CHIPS and Science Act in 2022, authorizes $1 Billion in new investments to distressed communities, nine out of ten of which are rural. Tribal governments are targeted as eligible entities for this funding. A second win in 2022: the pilot program appropriated with $200 Million for fiscal year 2023.
The American Rescue Plan Act funded $4 billion to bring food prices down, and help family farmers and small businesses feed their neighbors. This investment empowers local businesses to compete in the meat processing sector against the giant multinational corporations that dominate the industry and helps local schools purchase local food to make the American food system more resilient. The Biden Administration has utilized those resources to promote competition in the meat processing sector, expand grants to fund local food system development, supplement school and institution purchasing of local food, and much more outlined in USDA’s Framework.
- Federal: Reform federal procurement and contracting. Support the Federal Good Food Purchasing Coalition’s request to President Biden to issue an Executive Order to expand the scope of federal procurement laws to a robust values-based procurement approach, which includes giving a preference to federal contractors who respect workers’ rights. Procurement should not only include “Buy American,” but “Buy Local,” “Buy Rural,” and “Buy from Small Business” initiatives that channel the procurement power of government spending to create rural opportunities. “Stewardship Contracting” should be mandatory where possible to promote local business and economic development. Additionally, the federal government should be mandated to ensure that all food procurement contracts go to food processing companies that respect workers’ rights to freedom of association, to organize a union, and to bargain collectively, free from reprisal, for living wages, and a safe workplace, while treating their workers with dignity.
- State: Create Departments of Rural Prosperity that work to balance economic growth with rural livability and a clean environment.
- State: Increase access to and reliability of public transportation.
- State: Invest in public recreation and green spaces that promote rural livability while attracting tourism.
- State: Pass right to food legislation that gives state residents the unalienable right to grow, produce and consume food of their choice.
- State: Create food policy councils or advisory boards to coordinate and oversee regional food economy efforts.
- State: Establish benchmarks for local procurement.
- State: Increase use of Supplemental Nutrition Assistance Program (SNAP) at farmers markets.
- State: Supplement and match spending of low-income consumers at farmers markets.
- State: Invest in local meat processing infrastructure.
- State: Update cottage food laws.
- State: Invest in food hubs.
- State: Pass legislation similar to the Startup Opportunity Accelerator Act.
- State: Address access to healthy foods by boosting small businesses.
- State: Recognize, establish, and support producer and worker cooperatives.
- State: Provide financial incentives and opportunities for cooperative development.
- States without a state inspection program can consider legislation to create one, as Arkansas (2021 AR HB 1315) recently did and Massachusetts (2021 MA HB 3926) is considering.
- Pursuing a multipronged strategy to improve meat processing for its ranchers, Wyoming (2021 WY HB 54) directed a council to expand the state’s meat processing infrastructure in a variety of ways, and also passed a “herd share” law (2020 WY HB 155), which allows ranchers to sell shares of an animal or herd to shareholders who receive cuts of meat when the animals are processed, without the need for USDA-inspected slaughter. Vermont has a similar herd share law (Vt. Stat. Ann. tit. 6, § 3311a).
- Butchering training programs like in Iowa, Montana, and Arizona, can be developed in partnership with state agencies and funding.
Connecticut (2015 CT HB 5027) recently updated its cottage food laws.
- States like California (2021 CA AB 1144), Illinois (2021 IL SB 2007), and Florida (2021 FL HB 663) that have existing cottage food laws have recently expanded or clarified them in light of the increased interest in this kind of small business.
- A bill enacted in Utah (2021 UT HB 94) granted authority to local health departments to license and regulate what the bills calls “microenterprise home kitchens.”
- California (2021 CA AB 1009) enacted legislation to establish the Farm to Community Food Hub program. Hawaii (2021 HI SB 338) lawmakers have introduced legislation to establish a five-year food hub pilot program, which would increase local food access and provide grant funding for applicants wishing to establish or expand a food hub.
- Massachusetts set aside part of its American Rescue Plan funding for municipalities to invest in infrastructure including food hubs.
Maryland (2021 MD SB 723) is one of the newest states to consider legislation to create a state food council, particularly in light of the COVID-19 pandemic.
- California (2021 CA AB 778) and Hawaii (2021 HI SB 1251) have made efforts to establish benchmarks for procurement of local products in schools; New York (2018 NY SB 7503/AB 9503) did the same through its budget process. New York’s budget also incentivized the benchmark by offering a higher school lunch reimbursement rate for districts that sourced 30 percent local food.
- Maine’s (2018 ME LD 1584) comprehensive local foods economy bill increased access and consumption of local foods by expanding use of SNAP funds at farmers markets.
- Oregon (2019 OR HB 2579) expanded the farm-to-school grant program. Michigan (2019 MI SB 927) expanded their 10 cents per meal program to reimburse schools for local food purchasing, and Hawaii (2021 HI SB 1316) has legislation to establish an agricultural production tax credit for growers who produce at least 50 percent of food crops for local consumption.
- There are also opportunities in local procurement policy to increase farmer equity, such as a 2021 Illinois bill (2021 IL HB 3089) that would have required that 20 percent of state-purchased food come from local socially disadvantaged farmers.
- In Oregon (2019 OR SB 727), legislators partnered with advocates to propose an appropriation of state funds to expand their Double Up Food Bucks program. Using COVID-19 as an impetus, Hawaii (2021 HI SB 512) expanded their Double Up Food Bucks program past the $10 matched limit; this is just one of many ways the program can be adapted.
- Colorado, often seen as a model for cooperative incorporation, has statutory language on renewable energy cooperatives (Colo. Rev. Stat. § 7-56-210), health care coverage cooperatives (Colo. Rev. Stat. § 10-16-1004), and uniform limited cooperative associations (Colo. Rev. Stat. § 7-58-104).
- California (2015 CA AB 816), Illinois (2019 IL HB 3663), Massachusetts (MA Gen. Laws Chapter 157A), Nevada (2019 NV AB 432), and Virginia (2020 VA HB 55) have passed legislation to effectively recognize and establish worker cooperatives as a distinct category of cooperative associations.
- Some states have expanded membership eligibility. A bill passed in Connecticut (2018 CT HB 5442) allows a nonprofit corporation to become a member of a worker cooperative and to serve on the cooperative’s board, and a bill in New York (2021 NY SB S 6394) would have added microbusiness worker cooperatives with five or fewer full-time employees to the list of eligible worker cooperatives to receive financial assistance.
- Colorado (2021 CO HB 1311) recently created a temporary income tax credit for the transaction costs to convert the business to a worker-owned cooperative, an employee stock ownership plan (ESOP), or an employee ownership trust.
- Missouri (2016 MO HB 2030) passed an income tax deduction for the net capital gain from the sale or exchange of employer securities to ESOP.
- Massachusetts (MA Gen. Laws Chapter 23D § 16) has an employee-ownership revolving loan fund.
- Massachusetts (2021 MA SB 261) is also one state that proposed funding a state employee ownership center, which would have provided education, outreach, and technical assistance to businesses interested in the cooperative model.
- States have integrated employee ownership into existing technical assistance and support provided to businesses by state agencies, such as in Colorado (Colo. Rev. Stat. § 24-48.5-102), Montana (Mont. Code Ann. § 90-5-304), New York (N.Y. Econ. Dev. Law § 104-A), and Washington (Wash. Rev. Code § 43.63A.230).
- New Jersey (2020 NJ AB 2595) legislators are considering a bill that would authorize political subdivisions to require recipients of economic development incentives to enter into community benefits agreements that support local small businesses.
- Texas (2021 TX HB 4054) lawmakers introduced a bill that would establish a community development grocery store grant program to provide grants to businesses proposing to operate a grocery store in a food desert. To be eligible for grant funds, businesses would be required to provide health insurance benefits and a prevailing wage to workers.
- Legislators in Missouri (2021 MO SB 188) introduced a bill that would establish a tax credit for expenses incurred in establishing a grocery store in a food desert.