Pearson:Despite some positive signs in Shenandoah, southwest Iowa and rural America, for that matter, has not entirely escaped the worst economic downturn since the Great Depression. Here to help us assess the impact and prepare for the future are some of the top experts in key sectors of the rural economy. Kim Greenland is the Market President for Great Western Bank in nearby Mount Ayr, Iowa. As a member of the American Bankers Association's agriculture and rural bankers committee, Kim is on the front lines of agricultural lending. Sue Martin has been a fixture on Market to Market for more than three decades. She was among the first women in her field and regularly speaks to national audiences on price trends and marketing strategies. Tim Eggers is a field agricultural economist with Iowa State Extension. In addition to helping farmers with agricultural decisions, he is actively involved with Annie's project, a program fostering problem solving, recordkeeping, and decision making skills in farm women. And Gregg Connell, Executive Director of Shenandoah Chamber and Industry Association. Gregg spearheaded local efforts to attract investment capital for a cutting edge biofuel project here in Shenandoah. And we'll have more on that coming up in just a few moments. First of all, panel, thank you so much for being here, appreciate it, joining us here in the high school of the Shenandoah Mustang's Auditorium. What a beautiful facility it is down here, so some great schools. Let's get started. Let's take the temperature here in rural America And, Gregg, as you mentioned on the feature, this is a rural area. You're not a bedroom community to anyone. You have to survive and thrive based on your own skills. Kind of give us the temperature of rural economic development, the rural economy here in southwest Iowa and Shenandoah.
Connell:Well, the rural economy has changed. Twenty years ago, thirty years ago, it was possible to attract industries. A lot of times they were leaving the city, leaving union environments, and coming to these small towns. Today if a company is looking to leave someplace, they're looking to leave the country. So as a result of that, it's important that we recruit companies that are tied to the Midwest. For example, ethanol plants, any of the biofuel plants. And it's important to think outside the box. The algae project that we have in Shenandoah is, again, that outside the box thinking that is absolutely necessary for survival in rural America today.
Pearson:You're not immune from unemployment issues down here in this area, and I know you're doing a lot to try and counteract that with some of the economic projects that you have going on right now. We just saw the new hotel going up.
Connell:Well, and that's what you said earlier about everybody working together. In difficult times and in all times, but especially in difficult times, it's just absolutely necessary that your city work with your economic development group, your school. And we just have a great synergy in Shenandoah. We have a great mayor. We have an outstanding city council. We have a school superintendent. They all get it and they all realize that if we roll in the same direction, we're going to get there a lot quicker.
Pearson:That's good to hear. Gregg, let's switch over. Kim, talk a little bit from the ag perspective and ag lending perspective. Obviously it was the collapse of the capital markets that drove this global recession that we're dealing with. It's impacting us in agriculture. Huge decline in net farm income for 2009-2010. Fro ma capital standpoint, give us the temperature of agricultural banking in rural areas in 2009.
Greenland:The general condition of Iowa banks, rural banks is strong, well capitalized. I'd rate us good to excellent. We've had strong earnings in the past. Continue to have strong earnings. A lot of our borrowers in past years with a good ag economy have bolstered their financial statements, their balance sheets, good equity positions, good debt positions on them. And Iowa banks have followed that through their long-standing tradition of having well capitalized banks, good liquidity, good equity in our banks. We have ample funds to lend to folks with good credit. So banks, we've endured, come through some good years, good balance sheets, much like our farmers, though.
Pearson:Good point. Of course, agriculture has run counter to a lot of the general economic trends, strong commodity prices. Sue Martin, we're going to talk in detail about prices coming up in just a moment. But as you surveyed the scene in the fall of 2009, it's a challenging environment for producers. Latest corn harvest in 17 years here in the Corn Belt.
Martin:That's right, Mark. It is the slowest harvest that we have seen even since probably 1992. What it's done is what was previously thought to be a harvest surplus glut all at once, which was driving prices lower and giving anticipation for sharply lower prices, it has now spread that crop out to where you aren't going to have any harvest glut and it's going to come in very orderly, very slow. And that's keeping end users having to bid, so it's propping up the prices.
Pearson:All right. So kind of some good news there too. Tim, you work with a lot of farmers through your role through extension and getting the word out there. What are your priorities in 2009 when talking to farmers and gathering them together and talking about getting that technology transfer that Iowa State Extension is doing for them?
Eggers:Well, last year we really focused quite a bit on margins, because what was happening was those nitrogen prices going up is that profits were being squeezed just tremendously. This year, of course, nitrogen price is going back down, and so we have a little bit more profitability there. And also it's really nice to look at those estimated costs of production for the next year and looking at the corn and beans and seeing economic profit. You know, in the past we'd look at those Iowa State University Extension budgets for corn and soybeans and we'd think, wow, the market prices are not anywhere near those costs of production because we were counting everything. Now we still county everything and those market prices are up and are solid. Even though there's a lot of volatility, we're still veering those costs of production for corn and soybean production.
Shenandoah, Iowa is located in the state's southwest corner and in the middle of corn and soybean country. Unlike similar communities that have lost many of their mainstay companies, Shenandoah is still home to an Eaton truck transmission facility, a Pella windows manufacturing plant, a modern ethanol plant, and a still-bustling Main Street.
Gregg Connell, President, Shenandoah Chamber of Commerce: "I think Shenandoah is a very unique community in the ruralist of rural America. We're not a county seat. We're 30 miles from the closest interstate, we have no college, we don't have a casino, we aren't a tourist center, and yet we are a vibrant town of 5500 people. You know I don't think you can find very many places in rural America that beat all those odds."
Gregg Connell, President of the Shenandoah Chamber of Commerce, is perhaps the town's strongest cheerleader. His small town leadership philosophy is simple: make sure all community leaders are working in the same direction, outwork everyone else, and establish economic mainstays on Main Street.
Gregg Connell, President, Shenandoah Chamber of Commerce: "…when I was a child and we'd go on vacations I would always judge a community by the downtown. If you went through a downtown and it looked old and tired I always thought the community was old and tired."
When trade groups complained Shenandoah lacked the necessary hotel rooms to support conventions, investors stepped forward to build a brand new multi-million dollar hotel on Main Street – now under construction.
Local leaders are hoping to develop a nearby dam and recreational lake project that, if realized, could draw tens of thousands of new visitors to Shenandoah businesses and support the community's tax base.
The town of 5500 is not immune to the common issues of rural flight, an increasingly elderly population, and falling tax revenues for county services. But Connell insists decline in rural communities is an option that leaders choose to make.
Gregg Connell, President, Shenandoah Chamber of Commerce: "It's easy to believe all the pundents that say that rural America is declining and gone, but there is only one person, you know, that can change that and that's you, and that's stepping up in leadership positions and it's just simply saying you know not on my watch."