Can AgStar Save Rural Minnesota?

Today, only about 3 percent of Minnesotans are farmers. Another 25 percent or so are rural residents living in towns of 10,000 or less. (“For every farmer, there are five or six rural residents,” Monson sums up.) If those towns cannot retain and attract replacement population, farmers will have to travel farther for services and goods. What’s more, farm workers will be more difficult to attract due to longer commute times.

The middle tier of farmers in particular is steadily disappearing. “Midsize farms are either getting bigger and there are fewer of them, or they are getting smaller,” Monson says. “It’s very difficult to sustain farms in the hundreds of acres anymore, and a 200-cow dairy will likely struggle to survive at this point.” Owning fewer than 500 sows is also considered pretty small, he adds—perhaps unsustainably so, by today’s standards.

At the same time, DeBriyn notes, there has been a resurgence of people who are moving into some rural communities. Rural population growth is not only coming from the increasing number of Hispanic farm workers and employees in meat-processing plants and other facilities, but also from retirees who are moving to recreational areas of the state, particularly the north-central lakes region outside of Brainerd.

“But they also want a better quality of life,” DeBriyn says, and are demanding more services than many of these communities can offer or afford. “Because of this, the whole area of mission-related investments will continue to be a larger part of what we are about.”

What Rural Minnesota Needs

John Monson is no stranger to rural decline, having grown up in a mining family in the Iron Range town of Hoyt Lakes. He has been working in rural communities for the past two decades—before joining AgStar, he was Minnesota director for the Farm Service Agency of the U.S. Department of Agriculture. 

In getting started at his new job, Monson went on a fact-finding mission, visiting farmers, businesspeople, and other rural residents in AgStar’s 69-county market area. (In his previous work, Monson says, he visited each county in Minnesota four times.) During his travels for AgStar, Monson heard concerns over the lack of available long-term interest rates for rural development projects.

“In the Twin Cities, long-term fixed rates are readily available,” Monson says. “But in rural communities, there are not as many people willing to fill that need.”

In total, AgStar expects to invest $250 million in rural development projects in the next two to four years. Because local, state, and federal funding as well as financing from other community banks will likely be a part of each project, AgStar expects to leverage that $250 million into $500 million or more.

That may not seem like a lot of money, particularly in light of the $240 million– plus price tag for a new I-35W bridge that will eventually reconnect the northeastern suburbs to downtown Minneapolis. But Monson says that $500 million buys a lot in rural Minnesota.