White House announces $10b fund for rural infrastructure

Combine harvesters and a tractor drawn grain cart are seen as they work a grain field while harvesting barley on June 17, 2014 in Milford, Delaware. BRENDAN SMIALOWSKI/AFP/Getty Images

WASHINGTON - Agriculture Secretary Tom Vilsack and CoBank CEO Robert Engel are announcing $10 billion in private funding to invest in rural infrastructure projects across the country.

The announcement is a part of a two-day "Rural Opportunity Investment Conference" that began Wednesday in Washington, D.C., which aims to bring together investment firms, government officials, and business leaders to promote investment in rural communities. Vilsack said the $10 billion fund will not only provide jobs to rural areas, but it will also be a catalyst for further private investments in infrastructure projects nation-wide.

"This is a new way for us to do business," Vilsack said. "This is us connecting. We're going to be able to do more projects and create more opportunities as a result."

The funding, which will be managed by Capitol Peak Asset Management, is part of an ongoing effort by the Obama administration to focus on infrastructure improvements in rural areas. In 2011, the president established the White House Rural Council, and this February, he announced the "Made in Rural America" initiative, designed to help rural businesses export their products to new markets at home and abroad.

Investment in rural areas has been a core function of the U.S. Department of Agriculture (USDA) for decades. Just in the past five years, the USDA has funded $2.75 billion in rural development, which doesn't even include farm loans or subsidies. But the agency has also seen huge budget cuts--from 2010 to 2013, its operational budget was cut by $3 billion, or 12 percent.

That's made partnering with private investors look more and more necessary.

"Over the past six years, USDA has been a critical source of funding for [rural] companies today," Engel said. "But the agency has finite resources, and there's an understandable backlog of projects across many of these sectors. We have to do everything we can to facilitate the flow of capital to rural infrastructure projects."

In May, the USDA announced a $150 million equity fund uniting farm lenders with a large investment firm, Advantage Capital Partners. And more public-private funds like that one are under consideration, according to the Statesman Journal, which reported that one attendee of this week's conference is Blackrock Inc., the world's largest asset manager.

Now, with the promised $10 billion investment by CoBank and in partnership with Capitol Peak Asset Management Co., Vilsack hopes that more investors will join in by adding to the fund or creating their own.

"There's not much of a limit on this," he said. "We know the need is out there and we also know the profit opportunity is out there."

Last year, U.S. agriculture exports supported nearly one million jobs and reached a record value of $144 billion. The USDA predicts that by 2020, that value will have increased further.

Vilsack said the largest challenge is making sure investors know about the agriculture projects going on in rural areas. He said many investors expressed at the conference that they had not known about how much the USDA funds annually or that there was a waiting list of unfunded projects.

"These are loans that everybody would like to do," Vilsack said, citing transportation, waste-water treatment, and broadband construction projects.

Engel agreed, saying that CoBank, which already lends money to rural companies in all 50 states, is excited about the opportunity.

"Everyone in our country has a real stake in the long term health of rural America," he said.

Last year, the American Society of Civil Engineers gave the U.S. a D+ on infrastructure, estimating that the country needs to spend $3.6 trillion by 2020 to maintain maintenance levels of roads, waterways, bridges, and waste systems.

  • abigail bessler

Comments

CBSN Live

pop-out
Live Video

Watch CBSN Live

Watch CBS News anytime, anywhere with the new 24/7 digital news network. Stream CBSN live or on demand for FREE on your TV, computer, tablet, or smartphone.