Dr. Gillian Richards is a research associate at Brandon University’s Research Development Institute, and it’s quickly apparent that she is happy to discuss the institute’s research.
Hers is a mild English accent; she wants to take a practical approach to rural issues.
That, it turns out, is because the barriers to rural development can be overcome, but it takes resolve.
At interview time, researchers were analyzing data from a Growing Forward-funded study looking at how to reduce barriers to innovation in southwestern Manitoba’s agri-food sector. Richards was looking, too, at the results of two other studies, including one that did case studies of five food processing companies that have brought new products to market within the last five years, and a second that conducted a rural survey of over 200 people involved in lending, in running small businesses, or in economic development.
Access to capital was identified as a barrier in all three studies. That could include everything from venture capital to small loans, Richards says.
This is an especially steep hurdle in industries such as food processing. Often lenders want repayment within a short time frame, which doesn’t always work for food processors, Richards says. “Food processing is capital-intensive and slow,” she says. “Accessing dollars is difficult.”
The sheer amount of information some lenders and funding agencies want for a relatively small amount of cash can also be a barrier, she adds.
Developing the knowledge needed to run a business also came up repeatedly. To create a viable business, entrepreneurs need to research their market, customers, competition, supplies, pricing, profit potential, and many other aspects of the business, Richards points out.
“If you actually want to make a successful business, you have to be asking (many) of those questions, at the beginning and continually,” she says.
That knowledge gap isn’t solely a rural problem, Richards says. But rural entrepreneurs face a double-whammy because of the distance between resources and networks. No matter how hard organizers try to reach rural people, “rural people are going to have to travel a long way” to attend workshops, Richards notes.
Dan Ohler says the Sangudo Opportunity Development Co-op has also boosted the business IQ among active co-op members. Members have learned about everything from securities to tax issues, he says. And the process has been hugely beneficial to the entrepreneurs they’re supporting. Those entrepreneurs get help with business plans, they get an opportunity to explore different ideas, and they get help measuring the business’s performance.
Infrastructure was a top concern in two of the studies, Richards says. This includes infrastructure to support businesses as well as infrastructure to make communities attractive to potential employees. Buildings, medical services, telecommunications, and education all fall into this category.
Infrastructure is a bigger challenge for rural communities, she explains. And food processors in rural areas may have the steepest hill to climb when it comes to infrastructure. Once they’ve gone through the pilot/incubator stage, they need to find a site to make their product at commercial volumes and efficiencies.
But it’s very costly to put together a plant that meets health regulations. One option is co-manufacturing, which is where a manufacturer rents out their equipment and facilities to another business owner. A co-operative arrangement might work too, Richards adds.
Richards’ comments about infrastructure would ring true in Sangudo. For example, Ohler says the first few years were pretty tough for Sangudo Custom Meats. Margins are thin to start with in the meat business. When Jeff Senger and Kevin Meier took over the meat shop, they had to invest more money to upgrade the facility. The Growing Forward program kicked in some funding, and the co-op lent them some cash so they could participate in the program.
“I think they’re just at the point now where they’re starting to really make some gains,” Ohler says.
These aren’t the only challenges rural entrepreneurs and food processors face. Others can include the small scale of local markets, distance to market, people shopping in larger centres, and availability of skilled labour. These all made Richards’ lists of rural challenges.
Food processors in particular also face challenges around rules and regulations and market entry for new food products, she adds. And risk aversion may also slow innovation, although researchers were still analyzing the data they collected on that issue at the time of this interview.
Much of the research at the Rural Development Institute centres on food processing. Along with tourism, it’s an obvious type of economic development. It makes sense to process food near where it’s grown, Richards explains. It also creates a host of other benefits, such as improving the balance of payments and increasing exports, generating revenue, creating jobs, cutting transportation, and improving food security.
But given the long list of challenges, why should policy makers care about rural economic development?
Healthy rural communities are important, Richards says. “We can’t all live in cities. Somebody has to grow our food. And some people prefer to live in rural communities.”
Richards also points to one of her favourite quotes, from an interviewee in the research projects. “Companies have to innovate or they will die.”
It’s the same, she says, with communities.