Corporation would help farms diversify

February 19, 2007|by ANDREW SCHOTZ

WASHINGTON COUNTY - Washington County enthusiasts of a state agriculture corporation have visions of grapes.

The fledgling Maryland Agricultural and Resource-Based Industry Development Corp. (MARBIDCO) just started two financing programs for farmers and soon will have two more, Executive Director Stephen McHenry said.

In full bloom, MARBIDCO would help farms diversify, offering financing for high-yield but riskier operations, innovative changes and land purchases.

Some say state venture capital could spur wine production in Washington County.

Wineries are profitable and good tourism draws, said Suzanne Hayes of the Hagerstown-Washington County Chamber of Commerce's Government Affairs Committee and a member of a farm family.

"Maryland is behind the national curve in the expansion of its wine industry," the Maryland Wine and Grape Advisory Committee wrote in a 2005 report.


In 1979, Maryland and Virginia had the same number of wineries. But by the time the report was issued, Virginia had 94 wineries and Maryland had 15.

The committee cited MARBIDCO as a way to catch up.

Through a bill sponsored by Sen. Donald F. Munson, R-Washington, the state created MARBIDCO in 2004 - without funding - to boost the farming, forest and seafood industries and related rural businesses.

The state agreed the next year, through another Munson bill, to provide money.

As governor at the time, Republican Robert Ehrlich allocated MARBIDCO's first $1 million in the fiscal 2007 state budget.

Last month, Gov. Martin O'Malley, a Democrat, announced that he was tripling that by putting $3 million for MARBIDCO in his proposed fiscal 2008 budget.

Actually, O'Malley was required to put $3 million in the fiscal 2008 budget under the Agricultural Stewardship Act of 2006, which Ehrlich signed.

MARBIDCO must get $3.5 million in fiscal 2009 and $4 million a year over the next 11 years, the act says.

Regardless, the 2008 funding boost was welcome news to a Washington County coalition that considers MARBIDCO funding a high priority for an area where agriculture is prominent.

Washington County was fourth in the state for the number of farms as of 2002, the most recent year for U.S. Department of Agriculture statistics posted online.

Janet Shank Stiles, who owns Shenandoah Jerseys dairy farm south of Hagerstown, was named vice chair of MARBIDCO's board in 2005.

The local coalition - Washington County, Hagerstown, the chamber of commerce, the Greater Hagerstown Committee and the Hagerstown-Washington County Industrial Foundation - is paying lobbyist Michael V. Johansen to keep on top of four issues this session, including MARBIDCO funding.

"It is one of the things that can help a farmer pursue opportunities that have a higher margin than commodity crops," said Brien J. Poffenberger, the chamber's president.

Wine has been that type of industry in southern Maryland, a different opportunity for tobacco growers, he said.

Because a winery needs three to five years before realizing a profit, a farmer might have a tough time getting bank financing, Poffenberger said.

MARBIDCO can help with wine-making and other ventures, McHenry said.

In one of its new programs, the corporation would finance half of the credit needed for riskier projects and would charge 2 percent interest. The maximum loan amount is $100,000.

A second program aids rural businesses' attempts to improve energy efficiency. On a bank loan of up to $50,000, MARBIDCO will buy down the interest rate by 4 percent.

"We write a check to the bank," McHenry said.

He said the corporation has fielded many calls since the programs started Feb. 1, but has yet to make any financing agreements.

Two other programs are coming soon.

One is help for farmers or rural entrepreneurs with agricultural-related ideas that aren't fully developed. MARBIDCO would pick the best projects and hire a business consultant to help.

Another is a working-capital loan fund for rural businesses. McHenry said the interest rate probably will be 4 percent.

McHenry said a recently announced plan to create a Chesapeake Bay Green Fund in Maryland would help fund MARBIDCO's Young Farmer Land Acquisition Program, which has no money yet. The program would help people get their first farm in exchange for giving up development rights.

Jeff Semler, an agriculture and natural resources agent for the Maryland Cooperative Extension in Washington County, said MARBIDCO could help a farmer get into "agritourism," such as adding a farm stand, or "agritainment," such as building a corn maze.

MARBIDCO is another potential lifeline for farmers operating on a low margin, Munson said.

"It's becoming very expensive to become (a farmer) and there's not a lot of financial reward," he said.

Keeping farmland intact protects the quality of life and prevents development sprawl, saving the government from spending more money on utilities and other services, Hayes said.

"The best way to preserve land is to make farming profitable," Semler said. "At the end of the day, if you ask any farmer, none of them want to be rich. They just want to make a living for their family."

How to apply

The Maryland Agricultural and Resource-Based Industry Development Corp. (MARBDICO) is accepting applications for its programs to help rural businesses. Go to or call 410-841-5772.

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