Thursday, January 31, 2008

Great Rural Research

One of the main supporters of SARL is RUPRI (Rural Policy Research Institute) out of Columbia, MO. They have a wonderful website with lots of work on rural areas. One of their more interesting is a demographic and economic profile of each state in their Data & Research Section under State Profiles.

Each study looks at population trends, ethnicity, age distribution, educational attainment, poverty, health services, per capita income, employment structure, unemployment, agricultural production and my favorite—entrepreneurship. I learned that there is only one county in both IL and IA that has more than 30% of its people self employed. Both are very rural.

Check out RUPRI’s website and their great research.

Wednesday, January 30, 2008

Second Oldest Profession

No, I didn’t mean it that way! Here is my question: What is the second oldest aged profession in the USA? If you answered farmers, you would be correct. At 58 years of age, it is second only to drawbridge operators. We are neither building many drawbridges, nor is there much of a future for advancement in that field. So why is farming not attracting young people while keeping old folks on the farm?

I raised these questions during my talk to rural legislators from around the country at the SARL Conference in St. Louis. My third key in BoomtownUSA was Leveraging Your Resources and I think that many rural communities have some largely underexploited resources at their disposal. The problem is that these resources never get developed either for lack of vision, money or both. I also think that it is much easier to step out on a limb when you are 30 rather than when you are 70, so to fully exploit agricultural potential it is imperative to get more young people into the game.

Where did we go so wrong, so fast? Looking at the graphic here you can see that in Iowa (and the rest of the states are very similar) the percentage of farmers under 35 years of age went from 20% in 1987 to 1% only 15 years later. Meanwhile, the number over the age of 65 more than doubled from 16% to 35%. Essentially we went from one young farmer matched with one older farmer in 1987 to a 35:1 ratio of old to young in only 15 years!

Look at some of the other stats:
90% of farmers either work off of the farm or are over 65 years of age
48% of the land is owned by people over the age of 65 (24% over 75)
20% is owned by heirs out of state

It doesn’t make sense to me that we’ve got farmers still farming into such late years especially when you consider that farming continues to be one of the most hazardous professions. One participant at the SARL Conference told me, “I know of one 101 year old that is still farming with his 82 year old son.”

My blame for this demographic imbalance is the continuing progression of farm bills that both raise the cost of entry from farm subsidies being factored into higher land costs and discourage young innovative farmers from looking at alternative crops, techniques and enterprises because of the safety in sticking to the subsidized ones.

Payment caps that have been proposed would only aggravate the situation, resulting in numerous, often bogus firms and partnerships being set up that evade the letter of the law but that get around all barriers put forth by legislators. One immediate result would be an increase in the cash renting of land as opposed to more crop sharing, which helps to spread the risk of farming over both the landlord and farmer.

I would love to see rural communities blossom with a growth in new farmers. We could do that in this country if we refocused a small portion of the gigantic farm subsidies away from the traditional large commodity crops and instead focused them upon developing new, young farmers in niche and specialty areas. We’d still produce the same amount of corn, soybeans, wheat, rice and cotton but we’d have an opportunity to bring back more farmers into our small towns, the type of farmers who would need a local hardware store, ag input supplier and other small businesses that today are lacking in too many towns.

Tuesday, January 29, 2008

Handshake Deal

I love the idea of people doing deals on a handshake. I’ve built one manufacturing plant solely upon a handshake, although usually we have to get the lawyers involved to make sure that we have everything covered. But, if I had my druthers, I’d prefer to be able to do everything on the old fashioned handshake.

At the SARL Conference I sat next to Mark Dunn with the J. R. Simplot Company from Boise, ID. The company’s founder, J. R. Simplot, 99 years of age, still goes to the office on a regular basis. He started the company in 1923 at the age of 14 near the small farming community of Declo, ID (population 338). Today it is one of the largest privately-owned food and agribusiness companies in the world with annual sales of over $3 billion and one of the world’s largest frozen-potato processors, annually producing over 3 billion pounds of french fries and other potato products worldwide.

One of their biggest sales occurred in 1966 when Ray Kroc (McDonald’s founder) and J. R. Simplot shook hands on Simplot supplying the chain with more uniform, year-around frozen french fries. That handshake between the two titans stands to this day. Mark Dunn told me, “We still don’t have a written contract with McDonalds. We’re still working just on that handshake of 40 years ago.”

Don’t you wish that we could all do that?

Monday, January 28, 2008

Global Trade--Good or Bad?

Several of the candidates for president have made opposition to global trade a key plank of their campaigns. Strangely, I’ve yet to see one who has aggressively embraced trade, although several have made positive comments about it when asked.

The luncheon speaker at the SARL Conference was Ambassador Clayton Yeutter, past Secretary of Agriculture (1989-1991) and U. S. trade Representative (1985-1989). He served in the cabinet and sub-cabinet for four U. S. Presidents, was CEO of the Chicago Mercantile Exchange and has been involved in numerous agricultural and business organizations. His roots to agriculture are deep tracing back to his childhood days in Eustis, NE (population 464) in far western NE.

One of the topics that Yeutter spoke on at the conference was trade and how the national media seems to have a field day with attacking free trade, “We get our national interests all messed up every four years and it takes a year to get back on track with the negativity in the presidential campaigns. This despite the track record over the past 60 years on global trade having been superb. The U. S. has been the biggest beneficiary of the growth in world trade from only $58 billion in 1947 to over $10.4 trillion today.”

Ambassador Yeutter pointed out that the U. S. is the largest exporter in the world, capturing over 10% of world exports. We export more than half of Germany’s entire GDP and more than all of the GDP of India with their two million people.

He pointed out the differences between the U. S. and major trading partners like Japan and Western Europe, “Those countries have created a total of 1.5 million jobs since 2000 with trade surpluses, while we’ve created 9.3 million net new jobs during that same time but with trade deficits. During that time we’ve lost 3 million jobs in manufacturing but 90% of those were lost to technological innovation that had nothing to do with international trade.”

As to NAFTA his comments were, “it has been a spectacular success. We have increased our trade between the three countries by three times. Over 55% of our ag exports go to Canada and Mexico. Since passing NAFTA the unemployment rates in all three countries have gone down.”

Ambassador Yeutter also talked about the new farm bill, trade negotiations and subsidies, energy and the future of agriculture in the USA. His conclusion was that our best days lie in the future, 2008 is going to be much better than the records in 2007, but that the future is not risk free, “There will be a supply response from all over the world to the high commodity prices of today.”

Sunday, January 27, 2008

It's About Our Kids!

I wrote an op-ed piece for our local newspaper on a referendum for a new Sports Center in Effingham, IL. Here is what I wrote:

Over the past three years I’ve been invited to tour and talk in almost 300 towns in 44 states as a result of the research for my book, BoomtownUSA: The 7 ½ Keys to Big Success in Small Towns. I’ve gotten the opportunity to see the good, the bad and the ugly, but mostly seen some wonderful examples of what other towns are doing to make themselves more attractive for the future, in the hopes that their children will one day return home.

In studying these many towns, scattered all over our great country, I’ve become convinced that towns only get a finite number of chances to be able to transform themselves for the better. Some take advantage of these chances, create new opportunities, entice their young people to move back home and continue the process of reinvention. Others, miss these opportunities, become less attractive as a community and slowly age in place. Eventually they reach a “tipping point” when there are virtually no young families left in the town and the town slowly dies.

In my 55 years, all largely spent living in Effingham County, I’ve witnessed five major events that have either transformed the community or are having such an impact today. My five are: The rebuilding of St. Anthony Hospital after its devastating fire; construction of Lake Sara; Interstates 57/70 intersecting here; recruitment of the World Color Press headquarters; and the much newer Rosebud Theater. Each of these projects required the vision of one or a group of local citizens and a concerted effort by many in the community to happen, resulting in incredibly positive progress and growth. As I reflect upon each of these projects, they were not without controversy. There were always some who questioned their value or found fault with what was proposed. However, through vision and determination, each became reality and has in their own way had a tremendous impact in both creating new businesses and jobs or in improving the quality of life in the community which ultimately helps to attract and retain quality families.

But, we’ve had other community-altering projects get away. Because we never experienced them, we can never know how they might have positively impacted us. Some that come to mind are: The Lake Land College Campus; Louisville Lake; Caterpillar Plant and Future Gen. Thankfully, Effingham will still benefit greatly from Mattoon’s recruitment of the Future Gen project.

I believe that we have an opportunity for another community transforming project in the proposed Sports Center. This project would be the premier sports complex for within a 60 to 100 mile radius, offering such amenities as an ice rink and competitive swimming pool. It would not only help the community to become an amateur sports mecca for competitive teams in the Midwest but also greatly help to improve the quality of life in Effingham County which gives us a better opportunity to make us more attractive as a place where our young people want to move back home.

Effingham’s unique location and past visionary leadership has positioned us to both leverage these advantages and become a leader in amateur sports, but also to easily and conservatively pay for a project like the Sports Center. The many motel rooms (1,300+) will provide the bulk of the funding in the form of the Tourism Fund with the balance coming from specific TIF Districts set up many years ago in Effingham and which are now being copied by many neighboring towns. An additional “backstop” of a $3 million permanent endowment is being raised (70%+ completed) by the Effingham County Community Foundation to cover any potential operating shortfall. Incredibly, no funds are being used from the general funds or from general property taxes for this project, something that few other communities would be able to accomplish.

I’ve seen many projects like the Sports Center in my travels around the USA. Towns like Estherville, IA (population 6,656); Sioux Center, IA (population 6,002); Highland, IL (population 8,438); Duncan, OK (population 22,505; and Marshall, MN (population 12, 735) have already built and successfully operate similar facilities. As I visited these towns I often wondered why we couldn’t have something like this in Effingham County. If these towns, often much smaller and without our resources, could do such projects, why shouldn’t our young people have the same, especially when you consider our major natural attribute of a central location along a north-south and east-west interstate.

Trying to put together a project like the Sports Center is a complicated one. It takes a great deal of time, false starts and constant reengineering. There are a lot of moving parts and it is often complicated to explain. Opposition is much easier. All the opponents have to float is their often used phrases of, “Taxes and special interests” without having to fully explain either, only playing upon the natural fears of many people. In my research I’ve found opponents like this in every town. They are usually referred to as CAVE People, or Citizens Against Virtually Everything!

But while the CAVEs would like to frame their opposition around taxes and special interests, the real discussion should revolve around our young people and the future of our town. I’m convinced that one of the greatest assets that we produce in Effingham County is our young people. We give them a great education, impart a wonderful sense of morals and instill in them a tremendous work ethic. But, we often don’t offer them the opportunities that they can find in larger cities and we lose them. What can we do to keep more of them in Effingham County?

All of my ongoing research shows that this next generation is going to be much different from my Baby-Boomer Generation or that of my parent’s Greatest Generation. This next generation, called the Millennial Generation, is taking a different approach to where they want to live and work. Our older generations tended to look at where the best job opportunities were and moved to those opportunities. Due to the projected and growing worker shortage in the USA, the Millennial Generation is more inclined to choose where they want to live first, figuring that they are good enough “free agents” to be able to find the job that they want after they decide where they want to live. They are going to be more attracted to where the quality of life is the best and employers will flock to where they congregate. It is a paradigm shift and those towns that figure it out first are the ones that will set themselves apart and have the best opportunity to recruit them back home. The Sports Center is one of those quality of life components that are going to become much more important for towns like Effingham in the future.

The proponents of the Sports Center argue that Effingham has the potential to become the “Youth Sports Capital of America”, something that on its face might seem preposterous. However, I’ve seen towns much smaller than Effingham that envisioned themselves as the Bavarian Village (Leavenworth, WA—population 2,074), Christmas Town (Frankenmuth, MI—population 4,838), Orthopedic Capital (Warsaw, IN—population 12,415), Race City USA (Mooresville, NC—population 18,823), or my favorite, Branson, MO (population 6,050) as the “Live Music Capital of the World.” Each of these towns was much smaller than Effingham when they started with one small project like the Sports Center and grew it from there. And, each of these towns continues to grow, creating new jobs and opportunities in a dynamic manner. It is not a zero-sum game with winners and losers, rather each project led to more people visiting , more businesses being started, new jobs created, resulting in other community-improving projects. In the end the success in the community becomes self fulfilling, resulting in the rising tide lifting all of “the boats” in the community.

Neighboring state capital, Indianapolis, set about to become the “Amateur Sports Capital of the World” in the mid 80s. At the time they were ridiculed. My wife and I first started going to Indianapolis for one of their first major events, the Pan Am Games in 1987, having always being drawn to St. Louis prior to that. Since then we’ve been amazed at how Indianapolis has built upon their self proclaimed moniker to truly become what they set out to do. The NCAA moved its headquarters to the town, agreed to play its NCAA Final Four in Indianapolis every fourth or fifth year (men’s 2006 & 2010; women’s 2005 & 2011), and many other events have moved their competitions to city. Today if you Google “Indianapolis Amateur Sports Capital of the World” you will get over 350,000 separate mentions.

Much smaller Columbus, IN (population 39,059) decided to pursue midwestern amateur sporting events a few years ago, hosting 35 such events in 2005 and 67 in 2006. A study of the 2005 events showed that they drew 34,515 athletes and spectators, generating an estimated $9.6 million in revenue to the community.

The Sports Center is the type of project that can transform a town and a region. It is visionary, well thought out, conservatively financed and is a positive step-up for all of us. Most importantly, it will help us to keep our young people (your kids and grandkids) in the community and help us build for a better future. Will our future be brighter than our past?

Friday, January 25, 2008

Legislators Passionate about Rural

Carolyn Orr edits a wonderful weekly compilation of news article from around the world focused upon agriculture and rural issues called Ag Clips for State Agricultural and Rural Leaders, an association of the agriculture and state ED committees of the 50 state legislatures in the USA. She also puts on an annual conference for those legislative leaders and I was honored to be asked to give my BoomtownUSA talk to them last weekend in St. Louis.

St. Louis was an action packed event with a very engaged group of rural leaders who were obviously very passionate about their rural districts and states. The Q&A was the most engaged that I’ve experienced in doing 300+ talks around the country.

One of the co-presenters was Milan Wall, Co-Director of the Heartland Center for Leadership Development in Lincoln, NE. His organization is well known for having had great success in working with small towns starting in Nebraska but expanding out around the country.

Part of Milan’s talk dealt with the Five Myths of Small Towns.

Myth One: Towns that ‘too small’ have no future. Some have questioned whether towns of less than 300 or even 2,500 have any future but Milan cited the example of Nenzel, NE (up close to the SD border) that only has a population of 12 but was able to build a community and heritage center. Of course they used the 150 people in the surrounding farms and ranches to help them! Milan, “It is all about attitude!”

Myth Two: A community’s location is key to its survival. “Some will argue that it is location, location, location but don’t tell that to Wray, CO where 11 leaders got together and started to set some priorities for their town of 2,000. They raised money to build a recreational and rehabilitation center and then a new hospital. Today, they are doing a reverse migration, bringing doctors out of Denver to practice medicine in Wray.

Myth Three: Industrial recruitment is the best strategy for economic development. “When the key leaders in Jackson, MN were in Chicago calling on potential companies they learned that their largest industrial employer was closing its doors. They rushed back, decided to turn their ED efforts upside down and started concentrating on their own backyard businesses. In one year they replaced the 300 jobs that were lost but spread it around 10 different companies, not just one.

Myth Four: Small towns can’t compete in the global economy. Milan cited Cabela’s which is today selling products in over 140 countries around the globe. Cheyenne County, NE, where they are headquartered, is the fastest growing county in the entire Great Plains in terms of growth in per capita income.

Myth Five: The ‘best people’ leave small towns as soon as they can. Milan argued that in a post-9/11 world, young people are more security seeking. He cited a study that showed that more than 50% of high school students want to eventually return home, while 50% want to own their own business. And, this same study showed that 15% already own their own business while in high school!

The Heartland Center is on the cutting edge of revitalization in rural America. I’m glad that I was on the program with Milan.

Thursday, January 24, 2008

Local Commitment

Two individuals in Chico impressed me with both their commitment and investment back into the community. Both went to school at Chico State and have been investing in the town ever since.

Wayne Cook was a 1966 graduate who lived in Durham, NC and made his first fortune in investments in Florida. He moved back to Chico several years ago and started to make investments in old historic buildings in Chico’s wonderful downtown. One of his most memorable projects was the complete renovation of the Hotel Diamond where I stayed. This 1904 masterpiece featured one of the first automobiles in the town, a 16 passenger Studebaker that it used to shuttle guests to/from the train station. The hotel was shuttered in 1987 and sat vacant, a roosting place for pigeons. Wayne Cook started renovating the hotel in 2001, completing the project in 2005. I’m convinced that only a local person with a strong passion for this hometown, like a Wayne Cook, would ever make an investment like he made into an old downtown hotel.

Ken Grossman studied chemistry and physics at Chico State but his passion lay in home brewing. He opened a home brewing store in 1976, selling beer brewing supplies to other home brewers. Two years later he cobbled together a small brewing system from discarded dairy tanks and soft drink bottling equipment, naming the company Sierra Nevada for where he enjoyed going on long hikes. On November 15, 1980 the first batch of Sierra Nevada Pale Ale was offered to the public and the company has been growing ever since.

The product is still brewed in Chico, having grown numerous times from the small warehouse of its origin. In addition to the hundreds of jobs that the company provides, Grossman aggressively reinvests back into the community and is a well known philanthropist there.

It’s hard to properly judge the impact of people like Wayne Cook and Ken Grossman upon their hometowns. We need more of them in all of our small towns.

Wednesday, January 23, 2008

Thrilled to be back in Northern CA

I was back in northern CA to keynote the Tri-County (Butte, Glenn and Tehama Counties) Economic Forecast Conference in Chico, CA. Northern California is a wonderfully diverse area that encompasses 1/3 of the land area of the state but less than 5% of its population. From ocean beaches to soaring mountain peaks and wonderfully rich farmland to rugged mountain canyons, you can find it all in that part of the state.

Dan Ripke, head of ED for the region at Chico State took me on a flying tour of the three counties, landing in Willows, Red Bluff (an agurb®) and Corning. It was a great way to get a flavor for the vastness of the region and the wonderful diversity of crops grown. The most profitable crop the past few years have been almonds, although it is pronounced without the ‘L’ in northern CA. Thinking that perhaps my hearing was going, I asked why and was told by Dan, “When they harvest amonds, they shake the base of the tree to shake the nuts out. Out here we’ve shaken the ‘l’ out of them.”

While Chico is a much larger college town, the other three are traditional farming towns that have both diversified their crops and their economies over time. And from what I saw the innovation hasn’t stopped. We saw new plantings of olives in windrows for olive oil production (with a new crushing plant being built); growing organic production of rice, almonds and other crops; mega dairies; citrus production; specialty cheese (Pedrozo Cheese); and other interesting crops (the area is number one in queen bee production—you can’t raise almonds with or without the ‘l’ without them).

Olive Pit was one of the first ag niche companies in the region. Pete and Ann Craig started a hamburger stand over 40 years ago, naming it The Olive Pit, after the major crop in Corning, CA. Travelers would come off of I-5 thinking that they were going to find an olive store, so the Craig’s added olives. While they still will sell you a hamburger at the Olive Pit, today they ship olives all over the world and from the look of their store olives make up 90% of their business.

I’ll be back in Red Bluff and Tehama County, CA in March. More details on their wonderfully diverse ag economy after that visit.

Tuesday, January 22, 2008

On a Roll!

Council Bluffs, IA (population 58,268) is a town on a roll. It has a good, diversified manufacturing base and is quickly expanding an already strong retail base. In the past five years it has built/landed a new 60,000 sf convention center, 6,000 seat arena, a Bass Pro and many other retailers. I was there for their annual Chamber of Commerce meeting where the theme was Ignite Potential. And from what I saw there is plenty of potential to ignite.

Even though my impression prior to my visit was that Council Bluffs was an old river town, the actual old downtown sits about 3 miles east of the Missouri River due to flooding concerns in the 1800s. The town quickly developed as a major railroad center with three lines meeting in Council Bluffs. General Dodge (his old mansion is now a museum) started the first transcontinental railroad from here. Other interesting sites for me were the Squirrel Cage Jail which rotated around a central core so that one jailer could take care of 36 inmates and the Loess Hills, wind-blown glacial soils that are only found in western Iowa and China.

Last year Council Bluffs was chosen by Google for one of their server farm locations, creating 200+ high tech jobs in the town. Cheap power, abundant water (for cooling), central location and quality work force were key criteria for the company. Subsequent to making their first announcement, Google purchased an additional 950 acres south of town, indicating to me that there could be major expansion plans for Council Bluffs.

I love touring towns that are on a roll like Council Bluffs.

Monday, January 21, 2008

If You Can Dream It, You Can Do It!--Walt Disney

“If you can dream it, you can do it—Walt Disney” is the lead item in the Strasburg, IL (population 603) strategic plan. I was there earlier this month when they rolled it out to the community on a cold Sunday afternoon. With over 200 interested citizens in attendance, it was one of the largest percentages of residents that I’ve ever seen for such an event. People were obviously interested and engaged.

Strasburg is a traditional farming community that has slowly lost most of its downtown businesses. The cafĂ©, grocery store, gas station, hardware store and other retailers are long gone. Young people have moved out of town. The median age in the 2000 census was 48.7 years of age compared to the national average of 35.3. Other demographic data (education, median household income, poverty levels, etc.) are all positive. Strasburg’s main problem is that it is a community that is rapidly aging in place and will quickly hit a “tipping point” that will be difficult to recover from if they don’t do something to bring down their average age.

Fortunately, a passionate group of citizens have become engaged and have decided that they aren’t going to hit that tipping point. They‘ve developed a plan of action to make their community a better place in which to live, something that will hopefully attract young families back home to Strasburg.

The Strasburg action plan focused upon a very manageable five items:

1. Increase number of businesses in town
2. Continue to improve an already great school system with more parental involvement
3. Increase number of new houses in town
4. Improve water and sewer infrastructure
5. Improve the esthetics (curb appeal) of an already nice small town

An immediate goal that the group is working on is to find a convenience store operator who would open a new store in the town so that residents would have a place to be able to buy fuel, milk, pizza and other incidentals. They appear well on their way to having their first success and I’ll report on how they did it when the deal is announced later this year. Stay tuned to what a small group of dedicated, local people can do for their town.

Friday, January 18, 2008

The Virtue of Income Inequality

Mike Harvey writes one of my favorite newsletters from Winfield, KS. He is a Kansas native who started out in the oil patch, moved into construction and is now a financial planner.

Here are some excerpts from his lead article from last month’s newsletter:

People complain: The poor and middle class are held back by stagnation in wages, lousy schools, and growing health care costs! The reason is that the rich are getting richer! And the solution is more government regulation, higher taxes, and more spending. We are told.

These statements are all based on a false premise, namely that income inequality is a bad thing. While some of the problems critics point to are legitimate concerns, economic science tells us that income inequality is a virtue. It is a natural, desirable, and necessary condition of a free and prosperous society. We each set the price point of our own labor, physical and especially intellectual, by the value of the skills we bring to the markets we choose to serve.

When, at the age of forty, I wanted to earn more money, I spent four years studying finance, accounting, economics and related subjects in my spare time to prepare myself for the career and the income I now enjoy. Without income inequality, what incentive would I have had to improve and add to my life skills? None! And, I’m grateful to Paul Abram, the businessman who kept me productivity employed all those years, despite knowing that I had other plans for my future.

In America, equality should mean only one thing: Equal and Unbounded Freedom.

While I was on safari I read most of Allen Greenspan’s new book “The Age of Turbulence.” In it he spoke of a conversation with President Clinton about the connection between income inequality and economic progress, “Whenever you shift to a new economic paradigm, there’s more inequality. There was more when we moved from farm to factory. Vast fortunes were made by those who financed the Industrial Revolution and those who built the railroads. Now we’re shifting into the digital age, so we have dot-com millionaires.”

We’ve always had inequality, but one of the great advantages of the USA is that there are no restrictions like in so many other countries based upon class, lineage or caste that prevents people from moving up in life. The same applies to small towns.

Thursday, January 17, 2008

Investing Now for the Future

Harold Alfond’s parents emigrated from Russia where his father found work in a shoe factory in Kennebunk, ME. Harold bought his first shoe factory on a tip from a hitchhiker and went on to found the Dexter Shoe Company, later coming up with the idea of factory outlet stores. When he sold the company to Berkshire Hathaway for $400 million in Berkshire stock in 1993, he continued to run the company but significantly stepped up his efforts in philanthropy in his home state of Maine, donating over $100 million to various charitable causes.

Mr. Alfond passed away in November, the same month that his Harold Alfond Foundation announced a challenge program aimed at newborns in the state of Maine. Each new baby born in the state will have $500 invested in a NextGen account, a college tuition savings account managed by the Finance Authority of Maine. The accounts will grow tax-free if they are used to pay for college tuition.

The accounts are expected to grow to over $2,000 in 18 years (the power of compounding), but if matched by $50 monthly family contributions, to over $25,000. Last year 14,152 births were recorded in the state so the program will cost approximately $7 million per year.

Harold Alfond never attended college, but his legacy could help to send thousands of young people onto higher education.

Wednesday, January 16, 2008

High Tech Selling of a Low Tech Product

With the last of the Christmas trees having come down by now, I wanted to look at how technology might help to reshape what has traditionally been a fairly low tech industry, the natural Christmas tree.

The Germans first popularized cutting a pine tree, decorating it and placing it in the house during the Christmas season. The tradition came to this country with the German immigrants but was slow to take off here. The first White House Christmas tree was set in 1856, but it wasn’t until 1923 that the annual Christmas tree lighting ceremony started.

Today there are an estimated 30 million Christmas trees sold in the USA, compared to about 9 million artificial ones. Since the artificial ones can be used over and over, probably half of the trees are artificial and half are natural ones.

To buy a natural tree, the typical way is either to buy one that had been pre-cut at a lot or store in town or drive out to a Christmas tree farm and tromp through the woods to find the ideal tree. We’ve traditionally opted for the “tromp through the woods.”

A Norwegian company has simplified the tromp through the woods. Jule Tre Fra Skogen (Norwegian for “Christmas trees from the forest”) goes out and takes pictures of individual trees, putting them on its website. You then choose the tree you want, Jule Tre cuts it and ships it directly to you. Cost is US$54 plus US$18 for shipment directly to your door in Norway.

The internet is allowing companies everywhere, even in very rural areas, to connect with customers they would have never dreamed of reaching. Hopefully, we’ll see more rural companies utilize the internet to connect to a completely new customer base, even if they are selling something as old as Christmas trees.

Tuesday, January 15, 2008

Final Thoughts from Africa

We were enchanted by our 10 days in South Africa and Zimbabwe. Perhaps that should rather read…enchanted by South Africa and alarmed by Zimbabwe.

South Africa really appears to be booming, especially as we compared it to our visit of five years ago. There was a vibrancy and optimism in the air when we spoke with people on the street and in their homes. The future looks bright to them.

South Africa is experiencing the global commodities boom with the prices of many of its main industry mining (gold, diamonds, platinum, chromium, vanadium, manganese, uranium, iron ore and coal) being in a price escalation phase. The country is also a rich agricultural one and demand-led ethanol and food sectors are also very attractive.

South Africa’s next president is expected to be Jacob Zuma whose past leanings and support comes from the Communist Party. He has taken a particularly strong populist position on the issue of land reform, calling for the transfer of 30% of white-owned farms to blacks by 2014. South African experts warn that adherence to these rigid goals will lead to abandoned farms, rural poverty and a dramatic increase in food prices.

I hope that Zuma spends some time in Zimbabwe to see what 20+ years of what he is proposing can do to a country before he fully implements his plan.

The future of South Africa and the hope that its success brings to the rest of the continent could hang in the balance.

Monday, January 14, 2008

Interesting Signs

One of the fun things Betinha and I found in our around the world trip, was the number of humorous signs we saw. Our trip to South Africa and Zimbabwe yielded a similar sampling. Here are some of our favorites.

Now that all planes are non-smoking, who would have thought that you’d have to warn people not to smoke if the oxygen masks drop from the ceiling? Although I’m not a smoker, I’m not sure that having one last smoke would be the first thing that would pop into my mind.

We made sure to go Dead Slow when we saw this sign, although other vehicles seemed to ignore it.

We were sure glad to see that they still allowed walking, fishing and squatting in Stellenbosch, although not much else.

The Wolfgat Nature Park was even more accommodating, even allowing you to walk with someone!

Our son Joseph seemed intent upon promoting ZBT, his fraternity at Monmouth College, although we weren’t sure who, out on safari.

We were happy to see what the British bought from their colonies.

And, even though this photo was taken on our trip to Cambodia, it is still our favorite. Who knew that you had to let people know that this was how you correctly used a toilet.

Friday, January 11, 2008


We were enchanted by our experience on the safari. We stayed in the Sabi Sands Reserve, adjacent to the Kruger National Park which is the largest national park in South Africa, covering 7,322 square miles. Sabi Sands was established when 30 separate game reserves converted from hunting lodges into conservation viewing and fenced themselves off from the encroachment of humans but with open access to Kruger for the numerous animals that wonder about. Sabi Sands covers about 200 square miles. One of the 30 lodges is owned by Sir Richard Branson of Virgin Records and Virgin Air fame.

We made twice daily treks out into the bush with our guide and tracker in open aired Land Rovers that had been adapted specifically for game viewing. In addition to seeing the famous Big Five (Lions, Elephants, Leopards, Rhinos and Water Buffalo), so named for being the five most dangerous animals to hunt on foot, we also saw an incredible array of other animals like zebras, giraffes, wart hogs, impalas (even one albino one), hippos, cheetahs, hyenas, baboons, crocodiles and of course monkeys.

We witnessed two kills, one by a young leopard and another by a cheetah. The leopard carried hers up into a large tree, something that a cheetah is not strong enough to do. The leopard took its time in eating its kill, whereas the cheetah ate as quickly as possible. When a couple of hyenas approached, drawn by their acute sense of smell of blood, we quickly saw why as the hyenas quickly robbed her of her remaining meal.

Even though we were in an open vehicle, we had animals approach us within an arms distance. One memorable one was the young male lion that nonchalantly strolled right by our vehicle as though we weren’t even there.

One of the biggest problems that places like the Sabi Sands are facing is the rapidly growing elephant population. The reserve’s resident ecologist, Jonathan, told us, “They are starting to overrun everything. Our annual population showed us with 1,400. The main problem is that elephants eat 5% of their body weight daily which means that the average four ton one eats about 450 pounds of food and drinks about 50 gallons of water each day.

I’d been on several safaris in Kenya before and probably saw more wild animals on those, but was much more impressed with both how our South African hosts took care of us and how they were preserving their wonderful natural habitat. They have a wonderful asset that treated with the care they are showing will grow in value as more people flock to view Africa in the wild.

Thursday, January 10, 2008

Killing Elephants for Food

Despite my wife’s furtive glances, frowns and pokes I continued to probe our driver’s thoughts on the Zimbabwe economy. He related at the dire situations in the countryside with the lack of food, black market gasoline (none available at gas stations), high inflation (unknown, but estimated at from 50,000% to 120,000% PER YEAR) and high unemployment (80%+). His comments on his president were telling, “President Robert Mugabe did some good things when he first took over in 1980 but it has gone downhill from there and today is catastrophic.”

Mugabe was the Maoist leader who led the opposition to the white-dominated Rhodesian government during the Bush War from 1965-1979. He has ruled the country since taking over in 1980 and renaming it Zimbabwe. At the time Rhodesia was referred to as the “bread basket of Africa.” We met a number of refugees in Brazil in the late 70s and early 80s who fled there when Mugabe took over. They loved the country but had deep reservations about its future under Mugabe. From what we saw during our couple of days in the country, they were right.

One of the first things that Mugabe did was to expropriate virtually all of the land in the countryside, redistributing it to friends, colleagues and the landless. He also greatly increased taxes and began to run a cronyism-based economy. When the farm economy collapsed and prices rose, he implemented wage and price controls. What little was left of the economy quickly disintegrated. He is back to expropriating property he had given/sold when he took over in 1980.

One of our guides on our safari in South Africa was born in Zimbabwe, where his parents purchased a farm in 1980 from the government. They lost the farm through expropriation this past year.

Having lived through inflation that ran as high as 2,000% per year in Brazil in the early 1980s, I learned of its devastating impact upon everyone but especially the working class and poor. Paychecks were quickly turned into food and other necessities, often the same day. But, I wasn’t prepared for the impact of 100,000%+ inflation. During the worst of Weinmar Germany’s infamous inflation in 1923, a precursor to their collapse, when its inflation rate topped out at 32,400%.

We had prepaid for everything (hotel, meals, tours, etc) in the USA, having been warned not to use credit cards in the country. I nearly fainted when I was presented for our bill for our drinks and some laundry of ZB$22,088,363 when we checked out of the hotel. At the official exchange rate of ZB$30,000/US$ that was going to cost me $733. Fortunately, at the free market rate I only paid $22.

Betinha and I walked into a small town near the falls. At their only grocery store, the shelves were virtually bare. Bottles of shampoo and other non-necessities were lined up one deep and spaced out along the shelves. In the rice section (a basic staple) we saw perhaps 100 bags of small 2 kg. bags of rice for sale. I snapped the photo on the right, showing a 2 kg (4.4 pounds) bag of rice for ZB$7,800,000. With the largest bill being a ZB$100,000, that one bag would have taken 78 such bills. At the official exchange rate which most locals would have to use, that one bag of rice would cost US$260!

Several times we passed by the main bank in town and always saw a line stretching out the door of people trying to get their money out. Gas was last sold in the town nine months prior to our visit. Cars and trucks either had to make their way across the borders into neighboring countries or to buy it at highly inflated prices from backyard sellers of contraband product.

We were told that the situation around Victoria Falls was much better than the rest of the country because of all of the tourist dollars, euros and rands that were flowing into that area. The rest of the country was really dire, although I didn’t want to try to imagine that.

After returning to South Africa we learned that Mugabe had ordered the killing of 5,000 elephants by his army, to be used to feed people. Those who can, have left the country. Estimates are that 3 to 4 million out of its prior population of 13 million have already fled, mostly to South Africa. Many go on foot where their biggest concern is falling prey to the many lions in the bush. You’d have to be really desperate to make that trek.

It disturbs me greatly to see situations like what we witnessed in Zimbabwe. When the rule of law and property rights break down, the law of the jungle emerges and the lions like Mugabe rule, the rest of the country lives in a life of fear, hunger and terror.

Tomorrow’s blog will hopefully be more uplifting.

Wednesday, January 09, 2008

What a Contrast!

We had been warned that the conditions in Zimbabwe were much different than that South Africa but I don’t think we were as prepared as we should have been for the sharp contrast between the two countries. We flew from Cape Town to Victoria Falls, 1,200 miles NE of Cape Town. The falls divide Zimbabwe from Zambia and are close to where both Botswana and Namibia also border.

The Victoria Falls, known in the local language as “The Smoke that Thunders” are absolutely spectacular. They stretch over a mile in length and at 360 feet in height are over twice Niagara’s 167 feet height.

We stayed at the wonderfully historic Victoria Falls Hotel that dates back to 1904 and has hosted kings and queens, presidents and the Schultzs, although if you go, don’t expect our picture to be there on the walls. The hotel was very British and very “old British” at that with High-Tea served at 4, an old, very stuffy dining room and a much slower pace.

Besides seeing the falls, the highlight of our stay there was the Elephant Safari. No, we weren’t out looking at elephants, we were riding them!

Tomorrow I’ll relate the dark side of Zimbabwe.

Tuesday, January 08, 2008

Cape Town & Region

The flight from the USA to South Africa is a grueling one. We left home at 7 am to drive to St. Louis for the flight to Atlanta and then onto Johannesburg (via Dakar, Senegal), not arriving in Cape Town until 10 pm two days later! Fortunately, I was able to easily get our rental car, squeeze all five of us into it and rather easily make our way to our hotel.

Cape Town is a wonderful waterfront town. We had been there five years before and were impressed with the progress that we saw taking place in and around the city. A day trip out, down the Atlantic Ocean and then over to the wine region of South Africa was a great drive and one that we felt very comfortable in the entire time.

Most surprising was that we had no driving incidents despite driving on the left side of the road and only had a few times when we got off of the route I’d planned. My mother-in-law said that she felt comfortable with my driving and that I was her best son-in-law. In the interest of fairness, my wife thought I should tell you that I’m also her only son-in-law.

The highlights of the drives were Stellenbosch and Franschoek, small towns about an hour east of Cape Town. Both were old Dutch settlements that have evolved over time into destination towns built around a much diversified agricultural base. While wine is the predominate draw, there are also other wonderfully diverse offerings including brandy distilling, crocodile farms, cheese makers and many other niche producers offering their products. Several farms featured on-farm restaurants, something that our state departments of health probably would frown upon.

We returned to Cape Town invigorated and very optimistic about the long term prospects for Africa’s most important country.

Monday, January 07, 2008

Top Ten Trends in 2008

For the past four years I've been invited to tour over 300 towns in 44 states, a privilege that I've treasured in seeing this great country of ours. Here are the trends that I've seen from my journeys that will grow in importance in 2008 and beyond.

1. Millennials-This generation, ages 10 to 27, dwarfs the Baby Boomers in size. These young people are going to be the most entrepreneurial in the history of the USA. I'm finding incredible examples of what these young people are already doing. You need to be recruiting and retaining the Millennials.

2. Retirement as Strategy-The oldest Baby Boomer turned 60 in 2006. Several communities are actively recruiting young retirees to them. These young retirees aren't going to be passive, they are going to be starting new businesses, volunteering and transforming the communities that are able to attract them.

3. Education-This isn't Kansas, Toto! The jobs of the 21st Century are increasingly going to go to the well educated. Towns that have world class primary and secondary schools are going to be the winners. Entrepreneurial education is going to increasingly be pushed down to Kindergarten. Community Colleges will be the key to the constant retraining of the work force due to the rapid changes taking place in our economy.

4. Promises-It started with Kalamazoo, MI which promised to pay the college education for anyone who attended its grade and high schools. Newton, IA, and El Dorado, AR have followed suit. Several others are looking to follow. Huge driver of where the Gen Xers and Millennials are going to decide to raise their families. Employers will follow.

5. Water, Water, Water-You can't have enough of it. Boomers are going to want to live on it, the west is starting to fight over it and those that have control of it will rule.

6. New Urbanization-Downtowns are hot! Boomers and young professionals don't want to drive for everything. The old walkable neighborhood is back.

7. Enviropreneurs-Green is increasingly growing in importance. Many local entrepreneurs are investing everything to get in on the front edge of this trend.

8. Niche Ag-Farmers are increasingly diversifying from a dependence upon traditional commodity crops to new niche products. Local food production is also driving this trend as is the growing interest in all things organic.

9. Premiumization-It started with coffee but has been embraced in many other products like honey, chocolate, vodka, cheese, breweries and others.

10. Birds Beating Birdies-The fastest growing spectator sport in the USA is bird watching. Geo- caching, biking, hiking and extreme water sports are also growing in importance. Golf will still be important for some, but won't be as dominant as in the 90s.