Value Chain Construction Grantees
The Wealth Creation in Rural Communities initiative is fundamentally place based. Its starting point is not best practices that it seeks to spread, but tangible places – the most persistently poor places. How can development alleviate poverty and build livelihoods in those places? How do those places become integrated into larger economies in ways that benefit rather than exploit them?
The initiative aims to put real resources into selected regions to get development going across a whole value chain – inputs, production, processing, distribution, consumers, and policies and other enabling context – in particular sectors, such as healthy food; forests and certified wood; green and energy efficient affordable housing; community-based tourism; and energy conservation and renewable production.
The three places targeted by the initiative are Central Appalachia, the Alabama Black Belt and the mid-south Delta, and the Lower Rio Grande Valley in Texas. In 2009, four major, multi-year value chain construction grants were made in Central Appalachia. In 2010, eight grantees in the Alabama Black Belt and mid-south Delta received smaller value chain exploration grants and, in 2011, three grantees in the Lower Rio Grande Valley received similar exploration grants. In 2011, value chain construction grantees will be selected in the Alabama Black Belt and mid-south Delta, and in 2012, pending successful value chain explorations, Lower Rio Grande Valley grantees will be invited to apply for construction grants.
Grantees in Central Appalachia
- Central Appalachian Network (CAN)
- Federation of Appalachian Housing Enterprises (FAHE)
- Mountain Association for Community Economic Development (MACED)
- Rural Action
Sustainable Agriculture Value Chains – Central Appalachian Network (CAN)
For 18 years, the Central Appalachian Network of six nonprofits has worked as a learning network in the Central Appalachian states of Kentucky, Ohio, Tennessee, Virginia, and West Virginia to transform the region’s economy by deploying new economic strategies that create wealth and reduce poverty, while restoring and conserving the environment. For its WCRC work, CAN has embraced the wealth creation approach as a planning tool for its overall work and is actively building wholesale sustainable agriculture value chains in its sub-regions. CAN’s research found that:
- The region has a history of exporting food commodities and not value-added products.
- There is a lack of locally owned processing and distribution infrastructure that could add value to raw products.
- There is a growing market demand for healthy, sustainably produced, local foods, including in the urban centers surrounding the Central Appalachian region.
- The region’s small farmers are isolated from markets and from information about sustainable farming practices.
As part of the value chain construction process, CAN undertakes ongoing research to identify and address gaps in specific value chains in the region. For example, one gap in the value chain for regional grains is the lack of built capital in the form of processing, aggregation, and distribution (PAD) infrastructure in the region – the capacity to bring together the supply of many small farmers to process and distribute in response to demand in an urban center. In response, CAN provided support for the creation of Shagbark Seed & Mill Company, a PAD facility for locally grown grains, beans, and other staple foods. CAN continues to identify and bring together the key players who have a self-interest in investing and helping to build these sustainable agriculture value chains. Contact: Thomas Watson, Rural Support Partners, www.cannetwork.org. Read more.
Green and Energy Efficient Affordable Housing – Federation of Appalachian Housing Enterprises (FAHE)
Created in 1980, FAHE, based in Berea, KY, is a membership organization of dozens of low-income housing development organizations working in the Appalachian states of Kentucky, Tennessee, Virginia, and West Virginia to meet the affordable housing needs of the region’s low-income residents. For its WCRC work, FAHE is building a green and energy efficient affordable housing value chain in the Central Appalachian region. The need for this value chain can be seen through FAHE’s research:
- Rates of substandard housing in Central Appalachia are much higher than for the country overall, and substandard housing often translates into energy-inefficient housing.
- The region’s energy consumption is expected to increase at twice the national rate in the years ahead.
- Rising energy costs have left many low-income families in the region, particularly those who live in substandard or older homes, with housing that is no longer affordable.
- Existing systems that support energy efficiency and green building practices on the national level are not well suited to the high poverty, rural reality of Central Appalachia.
- FAHE members want to supply safe, affordable housing that improves the quality of life of low-income homeowners.
FAHE assessed the green and energy efficient affordable housing value chain – including the ability to build, inspect, and certify to a standard; obtain an appraisal that reflects the value of certification; and finance the unit through a mechanism that values energy efficiency – and determined that it was broken. To begin to construct this chain, one area of focus for FAHE was on building individual capital by training members to do energy audits, retrofits, and repairs that would, in turn, improve the energy efficiency and affordability of housing for low-income residents in the region. This is just one step in the value chain construction process that includes working with state housing finance agencies on uniform standards, working with appraisers so that energy efficiency improvements are reflected in the appraised value, working with lenders on green mortgages and energy-efficient loans, and continuing to facilitate shared learning on green and energy efficiency techniques with member organizations. Contact: Jim King, FAHE, www.fahe.org. Read more.
New Energy Value Chain – Mountain Association for Community Economic Development (MACED)
MACED in Berea, KY, has worked for over three decades to create economic opportunity, strengthen democracy, and support sustainable natural resource use in Central Appalachia. For its WCRC work, MACED is working to build a new energy value chain, defined to include energy efficiency and renewable energy. MACED identified the importance of this value chain for low-income Kentuckians through analysis that highlighted the following:
- Energy policy in Kentucky is focused on subsidizing coal, leading to relatively low cost energy as compared to other states, and higher electricity use per capita compared to the national average.
- Aging infrastructure, combined with federal energy policies, is pushing these costs higher, and that is likely to continue.
- The state spends far less on energy efficiency per capita than other states.
- Kentucky’s poorest families had an energy burden in 2007 equal to 55 percent of monthly household income.
Through their research, MACED knew that they had to intentionally create new energy demand – instilling values of efficiency and conservation into organizations involved in Kentucky’s electricity supply chain, as well as creating a robust and sound market where demand and supply for new energy can flourish. They also recognized the need to build shared interests, relationships, and new skills across actors in the chain – including contractors, builders, utilities, suppliers, and a range of government actors.
One of the strategies that MACED is using to build demand is How$martKY, a pilot project with regional distribution cooperatives that will allow families to do energy upgrades that save money and improve their homes, while paying for the work through savings on their energy bills. The policy approval and tools for doing so represent new forms of intellectual capital and political capital. Rural communities will also benefit from the building of individual capital in the form of skills for energy installers; natural capital in the form of reduced carbon emissions; built capital in the form of homes receiving energy retrofits; and financial capital through cost savings, increased home values, and job creation. Contact: Jeff Fugate, MACED, www.maced.org. Read more.
Wealth From Forests – Rural Action
As a 20-year-old sustainable development organization, Rural Action works to revitalize Appalachian Ohio, including introducing thousands of landowners to sustainable forestry. For its WCRC work, Rural Action is constructing a sustainable forestry wood products value chain, with strong links connecting regional/urban demand to supply from sustainably managed forests in the region. Rural Action identified a number of critical characteristics of the forest sector to illustrate the importance of constructing this value chain:
- Historically, Central Appalachia has exported its lumber products as commodities rather than creating value-added forest products.
- Forest lands in the region are most often held in small parcels without any management plans that improve ecosystem services or add value to timber.
- Small processors are disappearing from the region in record numbers, making it difficult to turn timber into finished products like cabinets, flooring, and trim.
- Regional and urban markets are seeking green sustainable building products, but have difficulty connecting to adequate supply.
- Very few parcels in the region are certified by the Forest Stewardship Council, making it hard for landowners to meet the demand for sustainable forest products.
Rural Action’s analysis – based on interviews with large institutions, builders, architects, retailers, trade associations, and brokers – identified a clear opportunity to connect regional/urban demand to small, mid-size, and large producers by motivating architects to specify Central Appalachian hardwood products, and by helping builders and installers purchase and use these hardwood building products (e.g. flooring, stair parts, trim, millwork). The construction of this value chain will enable consumers to purchase certified wood; landowners to engage in sustainable harvesting and develop new income streams; and buyers at retail and wholesale levels to access supply. The end result can be many forms of community wealth, including new jobs created in woodlands; an improved regional wealth base; and a range of increasingly critical ecosystem services.
As one example of strategies being pursued, Rural Action is working with other partners in the region, through the Center for Wood and Forest Certification, to build the intellectual, individual and social capital needed to support group certification – a need identified through research conducted as part of this initiative. Contact: Michelle Decker, Rural Action, www.ruralaction.org. Read more.